What is OmiseGO (OMG)? A Payment Network with Ambitions to Abolish Bank Accounts
What is OmiseGO trying to do?
OmiseGO (OMG) is a decentralized exchange and payment gateway with a main goal to build a network that will allow people to pay with any tokenized value anytime and anywhere in the world. Think of OmiseGO as an eWallet where people can cash in and cash out even if they don’t have a bank account. The end user can access, manage, and transact with digital assets locally or across borders at very low fees.
OmiseGO is issued on the Ethereum blockchain and plans to facilitate frictionless transactions and transfers of value at scale by using the Plasma architecture. Plasma is the leading Ethereum Layer 2 solution for conducting secured off-chain transactions.
It is important to differentiate Omise from OmiseGO. Omise is the parent company of OmiseGO. Omise is a payment service similar to Stripe, handling payments across Asia since 2013. The company started off in Thailand and later expanded to Japan, Singapore, and Indonesia. Currently Omise has over 100 employees.
OmiseGO, the decentralized blockchain project, is based in Thailand. It was founded by Omise, but is owned by a community of users and token holders. The ICO of OmiseGO took place in July 2017 and successfully raised $25 million.
It was one of the most hyped projects in crypto and probably the main reason is that among the advisors of OmiseGO are known names like Vitalik Buterin – the founder of Ethereum, Joseph Poon – the Co-author of Plasma and Lighting Network, dr. Gavin Wood – Co-Founder of Ethereum.
One of the most interesting partnerships of OmiseGO is with McDonalds Thailand, which chose OMG to be their exclusive payment gateway for their website and mobile delivery app.
The technology that will “Unbank the Banked”
OmiseGO’s slogan vying to “Unbank the Banked” reveals how big the project’s ambitions are. The technology behind OmiseGO makes it a platform supporting multiple applications like white-label software development kit (SDK), digital asset gateway, decentralized exchange and clearinghouse.
All of these fancy words basically serve one goal – to provide an eWallet interchange without the need of a single centralized entity.
Imagine a world where you earned 1 000 000 points playing Candy Crush Saga or any other game on your phone. Then, when you enter Walmart you can convert these points for digital currency with 1 click and buy yourself a bottle of whiskey, a bag of cat food or anything worth $100.
Or another scenario – you go on a trip to Southeast Asia. All around Thailand you pay just with your phone, using the OmiseGO wallet on your phone. On the seventh day of your journey you decide to visit Angkor Wat in Cambodia. Well, guess what – because everyone in Cambodia also uses OmiseGO you won’t be charged with huge fees for credit card payments or ATM withdrawals.
This is the vision OmiseGO has for the future. It believes that in the next five to ten years decentralized exchanges will become mainstream infrastructures embedded in everyone’s lives and working in the background. This vision is based on the assumption that in the near future everyone will use smartphones and have access to global wi-fi.
In order to achieve such mainstream adoption, the OmiseGO technology should first support a massive amount of transactions per second. We may say that these huge ambitions of OMG are backed by the fact that it is the first implementation of Plasma and the Plasma Architecture theoretically allows for unlimited scalability with millions, and potentially billions of transactions per second.
However, OmiseGO mainnet is not launched yet. This is supposed to happen by the end of 2018. As of August 2018 the development team has released a beta version of their Wallet SDK, which allows businesses to connect to the OmiseGO blockchain. In order to do that they just have to access the open source code and embed it into their apps.
OmiseGO will use Proof-of-Stake (PoS) as a consensus mechanism for validating blocks, so anyone who holds OMG tokens at stake will receive rewards.
Who is OmiseGO competing with?
OmiseGO’s goal to build a peer-to-peer payment network that can be used by anyone with a phone without the need of a bank account is definitely revolutionary. However, OmiseGO is not the only one trying to make this happen.
Even the traditional banking services are offering various payment apps, so we can say that they are the biggest threat to OmiseGO, since they are also seeking to leverage the new digital technologies. In addition, they already have a huge advantage in terms of coverage.
Other cryptocurrency projects that are chasing a similar goal are Stellar, Nano, Ethos, 0x, Request Network. Many crypto projects can be classified as its competitors but probably what sets it apart from all of them is that OmiseGO is the first to implement Plasma and its Wallet SDK is really easy to integrate to one’s business.
OMG price spiked 40 times one month after the ICO
During its Initial Coin Offering (ICO), the average price of OMG token was $0.27. OMG started trading on cryptocurrency exchanges in July 2017 and by the end of August 2017 the token surged to above $11, which is around 40 times increase. Its current all-time high of $28.35 was reached on January 8, 2018.
OmiseGo was the first Ethereum ICO whose market capitalization went above $1 billion.
After hitting its all-time high the price of OMG dropped to as low as $8 on March 30 followed by another impressive run on the back of announcements of several partnerships including one with Shinhan, one of Korea’s largest commercial banks.
On April 25, OmiseGO was listed on Zebpay, one of India’s largest cryptocurrency exchanges and a day later on Bithumb, one of the biggest cryptocurrency exchanges in South Korea. On April 26, OMG spiked to $21.35.
Since then, the price of OmiseGO has been in downtrend trading for $5.2 in August.
Its circulating supply is 140,245,398 OMG, which places OmiseGo at number 21 of all cryptocurrencies with a market cap of $728 million.
The potential of Southeast Asia
The main advantages of OmiseGO over its cryptocurrency competitors are that its parent company – Omise has successfully been operating in Asia for five years and the list of supporters that back the project is more than impressive.
If OmiseGO manages to achieve a wide coverage of the vast Southeast Asian market, this could lead to impressive adoption rates. Only Indonesia has a population of 260 million, 75% of whom do not have a bank account. This means that the whole region represents a great opportunity for OmiseGO and any other payment services provider.
However, this also means huge competition. OMG has great core value proposition but in order to achieve its goal a lot of things should happen. First, we still need to see if its technology will work. Second, most of the unbanked people are generally uneducated. This means that they will have to deal with the challenge of using advanced technologies like peer-to-peer eWallets. Third, even businesses have to be educated why and how they should use the OmiseGO blockchain in order to see its potential.
I am not saying that OmiseGO cannot achieve all this, but if it does – it will not happen overnight. Probably it will take years. And still – there are too many unknowns. In my opinion OmiseGO is among the highest risk projects from all the top 25 cryptocurrencies and any investor with more conservative approach should keep that in mind.
The views and opinions expressed by the contributor in this text should not be considered financial or investment advice, neither treated as an expression of Cryptovest’s view. Neither the author nor the publication assumes any responsibility or liability for any investments, profits, or losses made as a result of this information. Cryptocurrency trading and investing are risky propositions, and market participants are advised to always conduct thorough research.
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