Cryptobanks are all the rage these days. Crypterium (CRPT) which bills itself as a “Cryptobank for Cryptopeople” held the fifth biggest initial cryptocurrency offering (ICO) in 2018.
Crypterium reportedly raised $52 million through its ICO. Speculators obviously like Crypterium its 24-Market Volume reached $1.577 million on 7 September 2018.
The Market Volume gave Crypterium a Coin Price of 33.6¢ and a Market Capitalization of $26.656 million on the same day. There were 79.297 million CRPT Tokens in circulation out of a Total Supply of 99.984 million CRPT Tokens, on 7 September 2018.
Are Speculators Right about Crypterium?
Are the speculators right about Crypterium are Cryptobanks a good investment or are they just a fad?
There are a lot of cryptobanks around these days. Crypterium direct competitors include BABB, Nebeus, Rubius, Celsius, Jibrel Network, NOAH Coin, and TenX to name just a few. Ripple (XRP), Telegram, Pundi X, the Dai (DAI), Dash (DASH), and Bancor are potentially indirect competitors to Crypterium.
Like Nebeus and Celsius Crypterium is trying to develop a PayPal (NASDAQ: PYPL) for cryptocurrency. Crypterium is supposed to give anybody anywhere direct access to cryptocurrency payments.
Crypterium’s plan is to create a virtual credit or debit card you can access through the Crypterium App. Crypterium designed the virtual card to give you direct access to an altcoin balance, just as Apple Pay or Google Pay accesses your credit card, PayPal, bank account, or debit-card balance.
Crypterium’s Billion Dollar Idea
In other words, Crtoterium is planning an Apple Pay or Google Pay for cryptocurrency. Crypterium claims you will access the app through Apple Pay, Samsung Pay, and Android Pay.
Intriguingly, Crypterium claims its virtual cards will work in both Near Field Communications (NFC) and Quick Read (QR) Code. That is important because NFC and QR are the competing standards for mobile app-based payment.
NFC apps; like Google Pay, Apple Pay, and Samsung Pay, use a wireless signal to communicate with cash registers. The QR Code apps such as WeChat Pay, Google Pay (in India), Alipay, Chase Pay, and Walmart Pay use a camera to read a QR Code on a point of sale (POS) device. The code starts a direct link between the wallet and the retailer in the cloud.
Crypterium’s virtual cards are potentially a billion dollar idea if they work and payment providers accept them. App based payment is big business; the most popular solution Tencent Holdings’ WeChat Pay had 600 million users in August 2017, Statista reported. Alipay reportedly had 400 million users and PayPal had 210 million users in August 2017.
The flaw with that logic is WeChat Pay, Alipay, and PayPal work with established payment solutions. PayPal, Apple Pay, Google Pay, and Walmart Pay access credit card and bank balances that contain fiat currency.
Why Crypterium’s Virtual Payment Cards May not Work
There is no evidence governments, central banks, or major payment processors like MasterCard (NYSE: MA) and Visa (NYSE: V) will ever accept cryptocurrency. MasterCard CEO Ajay Banga has denounced nongovernment cryptocurrencies as junk.
Therefore, MasterCard will only accept a government or central-bank issued cryptocurrency. Furthermore, a major central bank such as the Bank of England, the U.S. Federal Reserve, or the People’s Bank of China will have to issue that cryptocurrency for Visa or Mastercard to touch it.
Banga is likely to view a cryptocurrency issued by the central bank of a country like Estonia as junk. The US Treasury has been trying to shut down Venezuelan president Nicolas Maduro’s Petro cryptocurrency scheme.
Why Crypterium might Be Worthless
Crypterium is probably worthless without a widely issued central-bank issued cryptocurrency. The cards might hold value as gift cards used at online merchants.
The only probable way I see for Crypterium’s cards to make a lot of money; without a central-bank cryptocurrency, is acceptance on a major online retailer like Walmart, Amazon, or Alibaba. All of those retailers accept MasterCard, Visa, and other gift cards that can be purchased with cryptocurrency.
Another end run that Crypterium can make around the banking system is a mechanism that provides instant conversion from cryptocurrency to fiat currency. Several organizations, including Ripple, Bancor (BNT), the Dai, and Rubius (RUBY), all claim to have such a mechanism but real world examples of its’ use are nonexistent.
What Crypterium will need to succeed
To succeed Crypterium will have to solve the cryptocurrency convertibility and liquidity problems.
The convertibility problem is the inability to quickly and cheaply convert altcoins into fiat currency. The liquidity problem is the inability to establish the value of cryptocurrency and spend it in the world.
These problems are slowly being solved by organizations like Dash (DASH) and Pundi X (NXPS) but the solution will take a lot of time, money, and work. For Crypterium to be profitable you will need to walk into most brick and mortar stores and make purchases with it.
That will require a direct connection to the electronic banking system and a solution to the blockchain scalability problem. The scalability problem is the speed limit that restricts the number of cryptocurrency transactions. Current versions of Ethereum only process 20 transactions a second because of the high level of encryption.
To be profitable, Crypterium will need to process a minimum of 10,000 transactions a second; so it will require a working solution the scalability problem. Many people including; Vitalik Buterin and our friends at the Raiden Network (RDN), are working on such a solution. Unfortunately there is no evidence anybody is close to solving the blockchain scalability problem.
Therefore, everybody but speculators with money to risk should stay away from Crypterium (CPRT) for now. The technology required to make it work probably does not yet exist.
Is Crypterium a Good Cryptocurrency?
Crypterium (CPRT) is apparently a decent cryptocurrency. It contains the ERC20 Standard; so the Ethereum Virtual Machine can convert it..
Therefore, it is theoretically possible to convert Crypterium (CPRT) into the second most popular cryptocurrency Ethereum (ETH) or any ERC20 token. More importantly, Crypterium should work with most of the blockchain platforms being built today.
The best way to view companies like Crypterium is as financial technology or Fintech startups. They need to show their ambitious business plans work in the real world to become viable investments.
Average investors and inexperienced speculators should stay far away from altcoins like Crypterium. Crypeterium is a risky speculative gamble, not an investment right now. Only purchase Crypterium if you can afford the risk.