What is OmiseGO? A Comprehensive Guide
What is OmiseGO? A Comprehensive Guide
Founded in 2013, Omise is a venture-backed payment services company operating in Thailand, Japan, Singapore, and Indonesia. OmiseGo, created by this company, is a separately operated extension platform. It is owned by its users and token holders, not Omise.
OmiseGO (OMG) is a white-label eWallet, smart contract platform and ERC-20 token (the Ethereum code standard). OMG uses a proof-of-stake (PoS) algorithm and has a total supply of 140,245,398 with a current circulating supply of 102,042,552 tokens.
OMG is a decentralized bank, exchange, and asset-backed blockchain gateway. OMG’s ultimate goal is to be a “preeminent high-value exchange and settlement platform”. Think of a decentralized Ripple + universal remittance bridge to interconnect fragmented payment processors, legacy rails, and decentralized blockchains.
This means helping the unbanked get banking services (through their open-wallet infrastructure) and facilitating unprecedented interchangeability between the many siloed legacy rails (ACH, VISA, Paypal) and decentralized blockchains (like Ethereum). This could even potentially include more obscure assets like airline miles or loyalty points.
OMG is based on ERC-20 which defines recognized smart contract code functions across the Ethereum eco-system
This could include transferring a token or accessing general token data (symbol, supply, balance). This accelerates growth by allowing developers to leverage pre-existing components and code bases. There is a dedicated team in the hundreds with potentially thousands of auxiliary developers helping update and expand the Ethereum platform (which ERC-20 is based on).
This creates a predictable user experience and uniformity of operations without developers having to recreate, retest and relaunch blockchains. Wallets like MyEtherWallet, for example, support holding balances of any ERC-20 based token.
The problem with legacy financial network and what problems does OMG solve
Traditional payment networks like FedWire, CHIPS, SWIFT and ACH are currently in place to process local, national and even international payments. These services can extend to things such as asset exchanges and derivatives.
These centralized networks allow an entity to have unilateral control of above-mentioned legacy rails and financial services. This not only creates data security risks but also higher costs for end users and a monopoly like market environment.
Enter the blockchain and OmiseGo
Although new rails like Paypal and Venmo create pressure for a more competitive network, the same centralized counterparty risks apply. Also, most legacy networks are typically unwilling to allow interchangeability across providers instead are protecting their network with a “winner take all” mindset.
OMG wants decentralized wallet development and ability to send funds across networks
The goal is to build a fully decentralized peer-to-peer system to enable “asset agnostic” value exchange in real time on an Ethereum-based blockchain. (This means any decentralized or fiat currency pairs or ERC-20 tokens)
A Software Developers Kit (SDK) is a collection of pre-defined programming functions allowing developers to code faster and more efficiently
In the same way we “click” an app to open it, there are hundreds and thousands of lines of code behind that function. (Similar to any user interface on an operating system)
This a free open-source, white label “eWallet” model allows developers to create their own styles, designs and, even custom app integrations. This could handle cross-wallet transactions, payments, transfers and, even rewards points.
Omise will open up its current established base of financial services to OMG users and developers
Omise the company has an actual product and service namely being a payment processor for merchants including such giants as Alipay which opens them up to 450+ million Chinese consumers.
This is not including the potential for “unbanked” users who are many of the 6 billion cell phone users worldwide who will now have access to banking and merchant services through their mobile device.
Due to shared capabilities from their parent company Omise, OMG developers will have access to:
- Omise maintained payment gateways
- Credit and virtual cards
- Over the counter and direct debit
- Real-time settlement of transactions
This means all the current financial services offered by Omise will be bundled along with the decentralized open-source application and codebase allowing for a blending of the best of both worlds (centralized financial services supporting decentralized technology).
So, a wallet holds a balance of funds (ledger) but how does the interchange (trading) of funds work?
This is where a decentralized exchange comes in (similar to the Bitshares DEX). The wallet shows a balance of funds maintained by the OMG ledger but to take it to the next level an exchange mechanism is required.
Orders are synchronized and validated with every block in a decentralized order book.
Through Ethereum smart contracts, ether (the name for units of Ethereum) can be locked up with the activity of the OMG blockchain and allow eWallet pairs to occur over Ethereum and other cryptocurrencies, in effect creating liquidity.
What’s even more interesting about this potential is that not every payment must be on the decentralized exchange. The recent first-ever Lightning Network transaction of Bitcoin to Litecoin is a proof of concept that eWallets could leverage cross chain “swaps”.
Ultimately, the OmiseGO blockchain facilitates eWallet interchange with a decentralized exchange, cryptocurrency pair matching, order book validation, and compliant clearinghouses without ever taking full-custody of funds.
The OmiseGO Team
The OmiseGo team has already been recognized as up and coming “Fintech Rockstars” by Forbes for their contributions to date.
Omise contributed $100,000 in funding to the Ethereum foundation’s DEVGRANTS which is a program to help new Ethereum focused projects, develop the code bases and implement community evangelism. This indicates their commitment to the Ethereum ecosystem as a whole.
This has helped them amass a fairly stacked advisory board.
The OmiseGO board lists the co-founders of Ethereum, Golem, Tendermint, Cosmos and even the Lightning Network as advisors. That’s quite a justice league of crypto-superstars.
What’s So Special about OMG?
OMG holders earn tokens for validating transactions via a Proof of Stake (PoS) model
The OMG wallet application will also hold OMG tokens which are a critical part of confirming blocks as valid and adding them to the blockchain. Keeping X amount of OMG tokens “buys” you the right to confirm blocks.
Every transaction on the OMG blockchain will require a transaction fee, that transaction fee will be distributed among OMG holders as a “stake”. The more coins held in the wallet the more fees you will receive proportionally.
OmiseGo is the first implementation of Plasma, an Ethereum scaling solution co-developed by Joseph Poon (Lightning Network co-founder) and Vitalik Buterin
A big challenge that faces not only OMG but all digital currencies is the number of transactions the network can handle. As seen with Bitcoin congestion, this is a critical issue of today. OmiseGo hopes to solve this issue with Plasma.
Partnership with McDonald’s and the Thai Government
A partnership with McDonald’s could potentially bring any entity (regardless of their market) much more growth and usage. In this case, they’re helping McDonald’s take in money more efficiently and inexpensively.
Thailand and Japan seek to create a cashless society
The Thailand Finance Ministry launched a national e-payment master plan to promote electronic payments. In addition, they rolled out Omise’s FacePay technology which allows payments using facial recognition. Omise and Vitalik Buterin had a meeting with the Central Bank of Thailand which indicates interest in their work.
Strategic Alliances include investments from the Krungsri Bank of Ayudhya and SMBC
The Bank of Ayudhya recently made a 30 million dollars strategic investment in OmiseGO. They are a part of Japan’s largest financial group, Mitsubishi UFJ (MUFG) and holds $2.4 trillion of assets. Sumitomo Mitsui Banking Corporation (SMBC), another investor, is the second largest bank in Japan. Finally, Credit Saison, the third largest credit card company in Japan, is also partnering with OmiseGO.
Final Thoughts: OMG is a perfect acronym because it’s much wow
The payment processing industry is siloed, fragmented and extremely centralized, creating security and counterparty risks for everyone. Omise, the creator of OmiseGo is a well-embedded payment processor in Asian markets which encompasses a massive market of users.
Omise saw the writing on the wall and has opted to support the Ethereum network and decentralization with their DEVGRANT donations and close ties with developers. OMG’s Software Development Kit (SDK) bundled with Omise’s suite of financial services is a robust and powerful combination of tools. Current and future OMG blockchain developers can move faster with less friction without having to reinvent the blockchain and remittance wheel.
Finally, OmiseGo has backing from leading financial institutions and advisors like Vitalik Buterin among many other talented individuals. These plays put OmiseGo in a very competitive spot in the category of ERC-20 tokens, as well as in the decentralization and cryptocurrency world as a whole.
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ABOUT THE AUTHOR
ABOUT THE AUTHOR
Aaron has spent 10+ years in different start-up, business environments wearing hats in marketing, sales, management and operations.
After doing business development and content marketing for a Silicon Valley IT and Cloud services firm, Aaron realized how technology is transforming everything we do in our personal and professional lives.
This prompted a deeper professional interest in the Bitcoin and Blockchain space which he had been dabbling in since 2014 as a miner and trader. Aaron now writes about Blockchain Technologies and does content marketing and business development for CoinStructive, a Bitcoin and Blockchain consulting firm.