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Digital payment trends of 2019

Digital payment modes to simplify our lives

Have you faced the challenge of making cash payments at the grocery store? Have you fumbled up due to the lack of cash? Not anymore, with the digital payment system in the offing. Significantly, the digital payment system is the buzzword in the contemporary payment market.

By definition, digital payment systems connote the electronic transfer of money, as opposed to the physical cash payment. This is through different modes like; payment via an app, net­banking, contactless cards, etc. Going
ahead, digital payment is the need of the hour in consonance with a lot of benefits. Of these, multiple payment options, payment tracking, safety, and security take priority.

Digital payment modes
Learn about the digital payment modes which simplified transactions.

In this blog, I will walk you through the sought after payment modes of 2019.

1. Digital payment using E­ Wallets

E­wallets connote virtual wallets used to make payments with the help of a mobile or a computer device. This isakin to holding the personal, physical wallet under one head. Herein, the account details of a user linked to the
wallet to bring in ease of mapping of a user’s personal information. It comes with security features like passwordauthentication, KYC check, etc.

Advantages of E­wallets

  • E­wallets do not require you to key in precise details like CVV, the expiry date of the card, mobile number,etc. With these added security features, payment fraud reduced.
  • The user interface of E­wallets is easy to navigate. You won’t experience the hassle of keying in personal details for payment.
  • In other words, the preloaded data facilitate easy payments. As a result, payment processing takes place in a quick and hassle­free manner.
  • Data secrecy happens through the wallet to a wallet or the bank to bank transactions. Hence, this complies with the data security clause of government organizations.
  • On a different plane, e­wallets come with financial incentives and offers. Going ahead, this provides a good return on investments on payment processing.

Disadvantages of E­wallets

  • While e­wallet is changing the face of payments, it is not affordable due to the lack of internet and mobile connectivity.
  • Besides, e­wallet set up requires costly investments in the form of software and hardware.

2. Digital payment using Contactless card payments

This digital payment mode makes use of near field communication (NFC) or Radio Frequency (RFID) technology to facilitate card cum mobile payments. It includes credit/debit cards, smart cards, etc.

On the one hand, Radiofrequency technology involves the use of electronic fields to store data in the form of tags. The tags scanned during a transaction results in payments. Similarly, Near field communication technique makes use of magnetic fields to bring in an end to end transaction connectivity. Some of the key contactless payment providers include Wirecard, SecureKey Technologies, Tyfone, Dynamics, etc.

Advantages of Contactless card payments

  • It brings in fast payment transaction and settlement. Also, NFC avoids the waiting time associated with contact card payments.
  • Due to the inbuilt data encryption, there is an added level of security.
  • It brings in the room for prospective innovation.

Disadvantages of Contactless card payments

  • The cards are propense malware attacks. So, this brings in a security risk.
  • Being an advanced payment mode, the payment option is costly which everyone cannot afford.
  • Since it is an advanced technology, very few merchants use this technology.

3. Digital payment using Payment Cards

This digital payment mode deals with electronic money transfers via cards like debit, credit, smart, etc. Besides,the cards are electronically linked to a customer’s bank accounts. The card authentication takes place with the help
of PIN, CVV, etc. Also, these cards are used at ATMs, POS machines and online payment platforms. The subsequent usage charges are very low.

The technologies associated with the cards are magnetic strip technology, embossing, and smart card technology. In a magnetic strip card, card data stored in the magnetic strip is read by swiping it. In a smart card, hologram and ICs bring about counterfeit prevention.

Advantages of Payment cards

  • Easy and convenient transactions by avoiding physical cash. Herein, transactions take place conveniently by using the inbuilt data present in the cards.
  • Payment cards have inbuilt payment tracking. With the credit history tracked, it keeps a check on taxation issues.
  • Besides, the cards come with offers as incentives for online payments. Hence, this creates a favorable payment environment in the long run.

Disadvantages of Payment cards

  • Payment cards create a culture of debt accumulation. For example, with credit card purchases the repayment happens with the added interest rate.
  • Also, the increasing debit/credit card frauds compromise with the precious personal data of users.

In a nutshell, choose the payment platform which best suits your business requirements. While E­wallets are common amongst small e­commerce players, a contactless card is the upcoming payment trend. Besides,
debit/credit cards support a variety of customer base. Hence, digital payment modes are fast changing the face of payments across the world.

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Blockchain & Crypto

Best Articles On Blockchain Technology – 3 – Making Sense of Cryptoeconomics

In these series of blogs written like a tweetstorm, we are summarizing the best articles on blockchain technology (in our opinion) published on the web.

Read the first two articles here and here.

This blog will summarize third such article – about what is cryptoeconomics.

Some key points in the article are:

1. In simple terms, cryptoeconomics is the use of incentives and cryptography to design new kinds of systems, applications, and networks. Cryptoeconomics is specifically about building things, and has most in common with mechanism design – an area of mathematics and economic theory

2. Cryptoeconomics is not a subfield of economics, but rather an area of applied cryptography that takes economic incentives and economic theory into account. Bitcoin, ethereum, zcash and all other public blockchains are products of cryptoeconomics.

3. Cryptoeconomics is what makes blockchains interesting, what makes them different from other technologies. As a result of Satoshi’s white paper, we have learned that through the clever combination of cryptography, networking theory, computer science and economic incentives that we can build new kinds of technologies. These new cryptoeconomic systems can accomplish things that these disciplines could not achieve on their own. Blockchains are just one product of this new practical science

4. Bitcoin is a product of cryptoeconomics. Bitcoin’s innovation is that it allows many entities who do not know one another to reliably reach consensus about the state of the bitcoin blockchain. This is achieved using a combination of economic incentives and basic cryptographic tools.

5. Bitcoin’s design relies on economic incentives and penalties. Economic rewards are used to enlist miners to support the network. Miners contribute their hardware and electricity because if they produce new blocks, they are rewarded with amounts of bitcoin.

6. Economic costs or penalties are part of bitcoin’s security model. The most obvious way to attack the bitcoin blockchain would be to gain control of a majority of the network’s hashing power – a so-called 51 percent attack – which would let an attacker reliably censor transactions and even change the past state of the blockchain.

But gaining control of hashing power costs money, in the form of hardware and electricity. Bitcoin’s protocol intentionally makes mining difficult, meaning that gaining control of a majority of the network is extremely expensive – enough that it would be hard to profit from the attack. As of August 16, 2017, the cost of a 51 percent attack on bitcoin would be around $1.88 billion in hardware and $3.4 million in electricity every day

7. Bitcoin also relies on cryptographic protocols. Public-private key cryptography is used to give individuals safe, exclusive control of their bitcoin. Hash functions are used to “link” each block in the bitcoin blockchain, proving an order of events and the integrity of past data.

Cryptographic protocols like these give us the basic tools necessary to build reliable, secure systems like Bitcoin. Without something like public-private key infrastructure, we could not guarantee to a user that they have exclusive control over their bitcoin. Without something like hashing functions, nodes would not be able to guarantee the integrity of the history of bitcoin transactions contained in Bitcoin’s blockchain.

Without the hardness of cryptographic protocols like hashing functions or public-private key cryptography, we would have no secure unit of account with which to reward miners – no confidence that our record of past accounts was authentic and exclusively controlled by a rightful owner. Without a carefully calibrated set of incentives to reward an industry of miners, that unit of account could have no market value because there would be no confidence that the system could persist into the future.

8. One of the most common mistakes in this industry is made by those who view blockchains only through a lens of computer science or applied cryptography. In blockchain technology, this leads many people to assume or abstract away the crucial role of economic incentives. This is one reason we see meaningless phrases like “blockchains are trustless,” “bitcoin is backed only by math” or “blockchains are immutable.” These are all wrong in their own way, but all have the effect of obfuscating the essential role of a large network of people whose necessary participation in the network is maintained through economic incentives

9. Cryptoeconomics is not the application of macroeconomic and microeconomic theory to cryptocurrency or token markets. Cryptoeconomics has most in common with mechanism design, a field related to game theory. Cryptoeconomics, like mechanism design, focuses on designing and creating systems. Like in our auction example, we use economic theory to design “rules” or mechanisms that produce a certain equilibrium outcome. But in cryptoeconomics, the mechanisms used to create economic incentives are built using cryptography and software and the systems we are designing are almost always distributed or decentralized.

10. Bitcoin is a product of this approach. Satoshi wanted bitcoin to have certain properties – for instance, that it be able to reach consensus about its internal state and that it be censorship-resistant. Then, Satoshi set out to design a system that would achieve those properties, assuming people responded in rational ways to economic incentives

11. “Permissioned” blockchains that are centrally managed and do not use proof-of-work have been a source of constant controversy since they were first proposed. This area of work is often referred to as “distributed ledger technology” and is focused on financial and enterprise use cases. Many partisans of blockchain technology dislike them – they may be blockchains in the literal sense, but there is something about them that feels wrong. They seem to reject the thing that many people see as the whole point of blockchain technology: being able to produce consensus withoutrelying on a central party or traditional financial systems.

A cleaner way to make this distinction is between blockchains that are products of cryptoeconomics and blockchains that are not. Blockchains that are simply distributed ledgers and do not rely on cryptoeconomic design to produce consensus or align incentives might be useful for some applications. But they are distinct from blockchains whose whole purpose is to use cryptography and economic incentives to produce consensus that could not exist before, like bitcoin and ethereum. These are two different technologies, and the clearest way of distinguishing between them is whether or not they are products of cryptoeconomics


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Blockchain & Crypto

Best Articles On Blockchain Technology – 2 – Which Blockchain Initiatives Are Taking Off First And Why?

In these series of blogs written like a tweetstorm, we are summarizing the best articles on blockchain technology (in our opinion) published on the web.

Read the first article here:

This blog will summarize second such article – about which blockchain initiatives are finding adoption in the mainstream first and why.

The key points in the article are:

1. The key features of blockchain making it disruptive are: shared ledger, immutability, timestamped audit trails and cryptographically secured transactions

2. Because of these features, the opportunities that blockchain technology offers can be broadly classified into two buckets: creating efficiencies via streamlining existing processes by sharing information that currently sits in silo; and building new products / services using the power of technology and removing intermediation

3. Blockchain’s capability to create a shared distributed immutable ledger between various participants combines the power of distributed storage with cryptography and therefore the inability for any one party to change the state of the ledger without consensus. Shared ledgers will mean that need for reconciliations between various parties is reduced and manual or email based information and document exchange can be digitized away with online forms/documents that can be stored in an immutable ledger.
Some key examples of such applicability are Settlements in Capital Markets, Syndicated Loans in Banking, Supply Chain and Trade Finance in trading

4. A very interesting applicability of the fact that blockchain provides a clear timestamped immutable audit trail of all transactions and a great source of data linearity is that by virtue of having your information persisted onto a blockchain, you get automatic compliance – all you need is to create a node for your auditors/ regulators, and hey you are sorted. Tremendous effort can be saved in trying to collect and report on all the right information to your regulators, and this even makes any potential litigation efforts minimal

5. Another interesting category which enjoys maximum number of announcements from start-up organizations on applying Blockchain is one creating new business models. Cross border remittances is a great example of this category. Start-ups like Ripple, Abra and Venmo have made money transfer seamless for immigrants cutting multiple costs on the way. This obviously means that large financial institutions will lose out on market share in the space and the associated fees which has forced these organizations to look at blockchain and start experimenting with it.

6. Blockchain has this capability of helping to create new products and generating new revenue opportunities. Some examples of blockchain applicability creating new products are peer to peer renewable energy trading in the energy sector, flight delay insurance or micro-insurance in the insurance space, cryptocurrency based funds and assets in capital markets and new token based loyalty programs.
All these new products could very well also be launched using traditional technologies but blockchain offers them the ability to provide seamless and truly digital customer experience because of the shared ledger among the various parties involved in the servicing of the product.
This coupled with clear auditability and therefore reduced operational costs is a win-win for businesses

7. Despite these opportunities, there are challenges to blockchain adoption in the mainstream the top among which  are: budgets, management sponsorship, technology, culture etc

8. Because of the aforementioned hurdles, projects that are taking off and becoming real first are those that create new revenue streams for organizations. The key reason why this is the case: blockchain is an ecosystem solution. Unlike other technology advancements like AI, Cloud, IOT and analytics that can be implemented within your own enterprise to seek efficiencies, blockchain requires that suppliers, competitors and regulators collaborate and agree to come onto the same platform and create an ecosystem that delivers a new experience for the end customer. Creating such an ecosystem for existing processes can be a complicated, time-consuming and costly proposition.This is one reason enterprises find it more rational to use blockchain for a brand new product or service as it is much easier than to bring together several organizations with a common goal to create something new and generate new monies

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Blockchain & Crypto

Best Articles On Blockchain Technology – 1 – What Is Blockchain

In these series of blogs written like a tweetstorm, we will summarize the best articles on blockchain technology (in our opinion) published on the web.

This blog will summarize the first such article published in the WIRED magazine which explains what is blockchain. The key points in the article are

1. The world is split between experts who think blockchain is either the most innovative technology since the internet or a solution looking for a problem

2. The digital currency bitcoin is the source of the original blockchain, the software for which was released to the public in January 2009. Blockchain is essentially a distributed ledger consisting of linked batches of transaction known as blocks (the reason for the term ‘blockchain’). Close to 200,000 computers make up the bitcoin network and an identical copy of the ledger is stored on each of the computer

3. Any entity making a bitcoin transaction (transferring digital coins) has to prove they are the actual owner of the coins; this is accomplished by cryptographically signing each change to the ledger. Since the information on each transaction/change is transmitted to every node in the bitcoin computer network as soon as the transaction is recorded in the ledger, the technology ensures no one can commit a fraud

4. Another well-known cryptocurrency Ripple began as an exchange for digital IOUs between parties; it was a prototype of a system for issuing tokens that could be traded with others in exchange for computing intensive work. The idea was to both keep track of how each unit of the virtual currency is spent and prevent unauthorized changes to the ledger. The upshot: No bitcoin user has to trust anyone else, because no one can cheat the system.

5. Advocates have seized on the idea of a decentralized, cryptographically secure database for uses beyond currency. They believe blockchains can not only replace central banks but usher in a new era of online services outside the control of internet giants like Facebook and Google. These new-age apps would be impossible to censor, advocates say, and would be more answerable to users

6. The idea could eventually show up in lots of places. For example, your digital identity could be tied to a token on a blockchain. You could then use that token to log in to apps, open bank accounts, apply for jobs, or prove that your emails or social-media messages are really from you. Future social networks might be built on connected smart contracts that show your posts only to certain people or enable people who create popular content to be paid in cryptocurrencies

7. One of the first projects to repurpose the bitcoin code to use it for more than currency was Namecoin, a system for registering domain names. The traditional domain-name management system—the one that helps your computer find our website when you type—depends on a central database, essentially an address book for the internet. Internet-freedom activists have long worried that this traditional approach makes censorship too easy, because governments can seize a domain name by forcing the company responsible for registering it to change the central database. The US government has done this several times to shut sites accused of violating gambling or intellectual-property laws. Namecoin tries to solve this problem by storing .bit domain registrations in a blockchain, which theoretically makes it impossible for anyone without the encryption key to change the registration information. To seize a .bit domain name, a government would have to find the person responsible for the site and force them to hand over the key

8. In 2013, a startup called Ethereum published a paper outlining an idea that promised to make it easier for coders to create their own blockchain-based software without having to start from scratch, without relying on the original bitcoin software. In 2015 the company released its platform for building “smart contracts,” software applications that can enforce an agreement without human intervention. For example, you could create a smart contract to bet on tomorrow’s weather. You and your gambling partner would upload the contract to the Ethereum network and then send a little digital currency, which the software would essentially hold in escrow. The next day, the software would check the weather and then send the winner their earnings. At least two major prediction markets have been built on the platform, enabling people to bet on more interesting outcomes, such as which political party will win an election. So long as the software is written correctly, there is no need to trust anyone in these transactions

9. Ethereum and other blockchain-based projects have raised funds through a controversial practice called an initial coin offering or ICO. The creators of new digital currencies sell a certain amount of the currency, usually before they’ve finished the software and technology that underpins it. The idea is that investors can get in early while giving developers the funds to finish the tech.The catch is that these offerings have traditionally operated outside the regulatory framework meant to protect investors, although that’s starting to change as more governments examine the practice

10. Meanwhile, despite the fact that bitcoin was originally best known for enabling illicit drug sales over the internet, blockchains are finding acceptance in some of the world’s largest companies. Some big financial services companies, including JP Morgan and the Depository Trust & Clearing Corporation, are experimenting with blockchains and blockchain-like technologies to improve the efficiency of trading stocks and other assets. Traders buy and sell stocks rapidly, but the behind-the-scenes process of transferring ownership of those assets can take days. Some technologists believe blockchains could help with that.

11. In 2015, some of the largest financial institutions in the world, including JP Morgan, the Bank of England, and the Depository Trust & Clearing Corporation (DTCC), announced that they would collaborate on open source blockchain software under the name Hyperledger. Several pieces of software have been released under the Hyperledger umbrella, including Sawtooth, created by Intel for building custom blockchains. The industry is already experimenting with using blockchains to make security trades more efficien

12. However, all is not sunshiny. Despite the blockchain hype—and many experiments—there’s still no killer app for the technology beyond currency speculation. And while auditors might like the idea of immutable records, as a society we don’t always want records to be permanent. Blockchain proponents admit that it could take a while for the technology to catch on. Also, security is another issue. In 2016 a hacker made off with about $50 million worth of Ethereum’s custom currency intended for a democratized investment scheme where investors would pool their money and vote on how to invest it. A coding error allowed a still unknown person to make off with the virtual cash.

13. All said and done bitcoin/blockchain proved that it’s possible to build an online service that operates outside the control of any one company or organization. The task for blockchain advocates now is proving that that’s actually a good thing.

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