Pay-in broker is a type of an exchange broker that provides alt-currency acceptance for the network. It’s a critical piece required to enable any digital currency acceptance at the POS with the wallets of user preference.
Payment Gateway provides a layer between the payment terminal and a network that’s meant to handle business logic and part of the remote wallet functionality.
With their approach, Electroneum is effectively following the centralized model of Bitpay, Coinbase, Coingate, GoUrl.io, and many other centralized crypto payment processing gateways in that they issue an authorization immediately as the transaction enters the transaction pool, without waiting for confirmations on the network. There is little innovation in this approach which is well-known to the industry. With centralized entity in the middle, the buyer and the merchant must rely on trusted party just like with traditional plastic payment processing, which means compromise on privacy, security, and a single point of control.
Unlike Bitpay and other centralized payment gateways, Electroneum shifts the risk of transaction not getting confirmed onto the merchant rather than absorbing it themselves.
The vendor does not get the cryptocurrency instantly, but our system acts as a trusted 3rd party to ensure the ETN or other cryptocurrencies such as Bitcoin is sent (our patent covers ETN, Bitcoin and other cryptos). The vendor knows the payment is sent and will make its way to the blockchain, so they can allow instant checkout – and the customer can walk out of the store with their cup of coffee or checkout online etc.
https://electroneum.com/2018/06/12/announcing-instant-payment-beta-vendor-application/
This illustrates the fundamental difference in approach where GRAFT is decentralized and utilizes an independent authorization sample (selected from the distributed network of supernodes) to validate the transaction, and independent exchange brokers to handle off-network (alt currency) acceptance risks when handling real-time payments.
GRAFT’s approach not only minimizes the risk of real-time transaction processing, but distributes to remaining risk (and reward) to the right party. It also allows acceptance of alternative cryptocurrencies, where Electroneum’s current approach is limited to ETN currency.
Finally, but importantly, GRAFT builds a payment network eco-system as opposed to providing a single vendor solution, which is the essence of decentralization that’s at the very core of the blockchain-based cryptocurrencies like Bitcoin.
*** Note that our intent is not to pick on Electroneum with this article – we’re merely trying only to bring some clarity in what sets GRAFT apart from other payment solutions, using Electroneum as one of the better representatives of this class of centralized solutions.
We will be publishing a full development update soon shortly.
Square has made the news recently with a patent on Cryptocurrency payment network with real-time transactions.
We’re very excited about this development as it completely validates the approach we’ve taken with the GRAFT blockchain!
Another important question one might ask is “Will GRAFT project be impacted by this development”?
We will be studying Square patent further and any action we might want to take, but we wanted to provide a brief summary of our initial thoughts on the subject:
Additionally, the fact that the patent was granted proves that there was little known prior art (GRAFT nonwithstanding) before July 2017 which is when GRAFT white paper was published and Square provisional application filed.
Finally, patent doesn’t equal product. Square and its competitors will be considering whether to develop these systems in-house or to use an existing public network like GRAFT.
All in all, we view this development as a very positive one both for the industry and for GRAFT.
With that said, we would like to ask for our community’s help in raising the visibility of the fact that GRAFT implementing the system that Square has attempted to patent – this is a very opportune time to do this building on the attention this patent has generated. Please help bring this up on the appropriate social media and discussion threads.
Exchange Brokers are a critical component of the system, paving the way for pay-how-you-want-it / receive-how-you-want-it capability. Exchange brokers (pay-in / pay-out / interchange) are open to both large and small participants. Watch the new video from All Things GRAFT about how the exchange brokers work
The Blockchain Payment solutions space has recently become a very hot topic, with both legitimate developments and a multitude of questionable claims. This article attempts to separate facts from fiction by outlining the lay of the land and Graft’s competitive positioning based on our view of the space.
With that in mind, let’s start with some definitions of key components of the electronic payment chain:
Payment processor — a service provider that processes a payment authorization, settles the transaction, and deposits a merchant payout.
Payment network — a network (or protocol) that provides an infrastructure for processing payments by coordinating the activity among multiple participating parties.
Payment gateway — a service that provides access to a payment network. These categories are important when deciphering what various providers are trying to do.
Source: PYMNTS.com
Processing a payment at the point of sale is a complex chain of events that includes obtaining pre-authorization or authorization from the issuing bank through the acquiring bank, putting funds on hold, releasing the payment for settlement, and, finally, clearing the payment by transferring the funds from the user’s issuing bank to the merchant’s bank account.
In the case of cryptocurrencies, use of such a network implies pre-authorization by verifying and placing funds on hold in real-time, transferring the payment from the payer’s wallet in the currency of their choice, converting that currency into the currency of choice for the merchant, and distributing the fees — all this is accomplished by accepting and coordinating services from service providers. This is exactly what a network like GRAFT is doing (while providing integration points for the point-of-sale applications, and in a decentralized manner to boot!).
There’s only one other network-like solution (other than GRAFT) that’s looking to resemble some fragment of a payment network: the Lightning Network. However, the Lightning Network concerns itself with instant currency swaps, without much regard for fees or compatibility with the merchant point-of-sale systems and processes. It also relies on pre-existing payment channels, making it suitable for repeat transactions as opposed to what you would see in the point-of-sale environment.
Here are some “giveaways” that can help identify suspicious projects:
There is quite a bit of disinformation in the cryptocurrency payment processing space, so it’s important to understand how payment ecosystems work in order to tell fact from fiction as you proceed to navigate this treacherous market space.
Pay-in, pay-out and interchange brokers (aka exchange brokers) are a critical part of the system, and will likely be quite lucrative!
True to decentralization principles we’re also working on making it super-easy to launch an exchange broker – straight from the wallet!
** Exchange brokers are subject to laws and regulations of their jurisdictions
We hope the patent will help secure “freedom to operate” protection from patent claims in the future. While decentralization is at odds with patent systems in general, the system participants such as merchants, service, technology, and distribution providers might be interested in getting extra protection in the jurisdictions where they operate.
* Additionally the patent opens up potential licensing opportunities for private (non-competing) uses of the code, providing the project with additional revenue streams to help sustain operations and ongoing research and development.
With RTA Supernodes release, GRAFT makes first step into the era of blockchain being a viable option at the point of sale, providing level of service comparable to that of the credit/debit card networks.
Supernodes (aka Masternodes) are gaining traction in the blockchain space as a mean of expediting transactions. They work by constructing a second layer network around the nodes that maintain the blockchain itself, and are able to provide additional functionality on top of the blockchain such as “off-chain” transaction processing or governance. Supernodes/ Masternodes usually run on a Proof-of-Stake model requiring staking for collateralization, and provide passive income to their owners, which explains their popularity.
GRAFT is building an eco-system of Supernodes – some are used to perform quick (credit-card speed) transaction authorizations, others to provide external system connectivity, yet others to act as service brokers performing currency exchanges and hosting various applications for merchants.
Enabling cryptocurrency to pay for goods and services has been a hot topic recently, with integrated payment providers like BitPay and Coinbase, enabling e-commerce payments via a gateway solution of their own. These services act as fully integrated service providers performing settlement and payout functions. Multiple (predominantly online) merchants have rolled out alternative payment options based on these integrated services, with most notable example of Expedia, however rolled them back citing high unpredictable fees, high risks, and lack of universal coverage. Stripe’s short-lived experiment to offer cryptocurrency payments is another example of the centralized approach failure.
GRAFT is working to give the space an equivalent of a payment network (such as the ones provided by Visa, Discover, and Mastercard) by offering a network fabric that connects gateways and services together, crossing locales and making sure the network works with existing point-of-sale solutions and payment terminals. In fact, GRAFT utilizes the recently added ability of the leading payment terminal networks to run 3rd party applications on their platforms. Most notable is GRAFT’s integration with Verifone’s Enagage line of terminals.
“GRAFT’s solution makes a lot of sense both technically and economically, staying true to decentralized model of cryptocurrency, and enabling regular people to service various parts of the network. We look at it as people ARE the network.” – said Dan I, one of the GRAFT Blockchain project leads. “At the end of the day the network functions – hosting blockchain nodes, doing authorizations / validations, providing exchange services, ensuring compliance, taking care of distribution and support, and even offering credit is best done by lots of individuals or small businesses and that’s the promise of ultimate decentralization”
GRAFT Network was originally conceived by Slava Gomzin, author of “Hacking Point of Sale” and “Bitcoin for Nonmathematicians” – some of the seminal work in the point of sale and cryptocurrency spaces. The network is designed to address all issues that cryptocurrency faced at the point of sale – speed, fee, and privacy, while taking advantage of the “smart” nature of digital money backed by the smart contract capabilities. The project is an open platform / open source and the network is free to use with the low 0.5% network fee paying the Supernodes for their service.
The RTA Supernode alpha release is scheduled tentatively for August 1st and will be released on a TestNet with the RTA test volunteer team. To sign up for Supernode testing, follow the link
More information about GRAFT Blockchain can be found on WWW.GRAFT.NETWORK