Vericoin has launched an innovative and potentially game-changing approach to gaining merchant acceptance that could shake up the altcoin world should the service gain broader usage.
Launched in May, vericoin is a proof-of-stake altcoin that features a variable interest rate which fluctuates depending on how many coins are staking. As more coins are used to stake and support the network, the interest rate climbs.
One of the ways in which alternative digital currencies seek a broader audience is through expanding merchant acceptance. Companies like Coinkite and CoinPayments.net enable payments in altcoins, but it remains unclear exactly how successful these efforts have been at expanding the number of merchants that take alternative digital currencies as a payment method.
To date, roadblocks have emerged owing to the infrastructure an altcoin needs to be accepted by merchants and the varied willingness on the part of these businesses to accept a potentially volatile digital currency.
Enter VeriBit
Vericoin sidesteps these obstacles entirely with VeriBit, a value-added service to the network that enables people to make smaller bitcoin purchases with their vericoin. VeriBit acts as a go-through for vericoin spenders, facilitating purchases for consumers at any business that accepts bitcoin.
This new service opens up the tens of thousands of merchants currently accepting bitcoin to consumers who wish to use vericoin.
CoinDesk spoke with co-creator Patrick Nosker, who said that prior to a feature like VeriBit, those who wanted to use an altcoin to make a payment had to exchange a set amount for bitcoin. But, because of factors such as exchange fees and the natural volatility of a marketplace, consumers face the real risk of losing value prior to making their purchase.
Nosker said:
“It’s not very simple for a beginner. So what we made is a transaction layer between exchanges and the user.”
VeriBit is geared toward smaller transactions rather than large ones. Currently, there is a spending limit of 0.15 BTC (roughly $87 at press time), though according to Nosker, this cap is expected to rise in the future.
How VeriBit works
VeriBit is designed to be a user-friendly way to pay for bitcoin purchases using vericoin. The vericoin development team acts as a payments processor for these transactions, operating one wallet for vericoin to be deposited into by a paying consumer and another one that pays out to the payment destination in bitcoin.
To make a payment, you first enter the address you want to send bitcoin to and how much BTC you wish to transfer. After you’ve entered in the information, VeriBit calculates how much vericoin you need to send, plus a 2 VRC transaction fee.
You then have 20 minutes to send your vericoins to the address, after which the wallet operators – currently the vericoin development team – complete the transaction and send out the BTC to its destination.
According to Nosker, the feature stays funded through donations and the exchange of vericoin fees for more bitcoin. He said that VeriBit was developed largely to build more services into the network rather than make money off of user transactions, saying:
“We didn’t want to get into the exchange business or make tons of money doing this. It’s really just to make vericoin usable immediately. [The fee] just covers the cost of doing it.”
Ultimately, he said, the goal is to create an incentive for consumers to use an altcoin by allowing them to spend it wherever bitcoin is accepted.
Vericoin’s anonymity service
In addition to VeriBit, the vericoin team has also developed several other services that appeal to both mainstream consumers and more seasoned altcoin users.
One of the major forces in altcoin at this time is the anonymous transaction movement. This cluster of altcoin projects, led by projects like darkcoin and XC, focuses on anonymizing transactions to render them invisible to detection efforts.
Nosker noted that anonymity, by and large, is not a feature that appeals to most people. But in acknowledgement of demand for such functionality, the team produced a tool to hide transations though it stopped short of instituting it across the vericoin network.
VeriSend is a transaction-mixing service that, for a fee, scrambles vericoin transfers and makes them harder – but not impossible, Nosker clarified – to detect.
He added that the vericoin team at one point looked into creating a standard anonymizing system, but ultimately passed on integrating one.
In the future, VeriSend will be added to the alt’s wallet, at which time users can opt to use VeriSend or not.
Text-based management
Another vericoin-based service, VeriSMS, functions as text-based gateway and wallet system that links the cell network to the vericoin network. Vericoin users can load vericoins onto this wallet and use the SMS network to make transactions.
VeriSMS works on an international level. According to the VeriSMS webpage, there are a variety of gateway numbers that can be used in the US, Europe and Asia.
The service offers three commands to users. The balance feature can be used to actually create a wallet address and later utilized to check the amounts currently deposited. Users can type in addresses to send transactions and set passwords for their wallet. This creates a simple security feature should a person’s phone be compromised.
Nosker cautioned that VeriSMS remains in the alpha stage, and that there are risks to using it, telling CoinDesk:
“It’s not perfect. We’re still ironing out bugs with it.”
Nosker added that the team is exploring other projects, including one that could facilitate vericoin-to-fiat transactions, that tie in to the ultimate goal of making an altcoin that is as consumer-friendly as it is functional.
Image via Vericoin