10 Мая 2019

GEO Pay: a local P2P payment system with integration into the global Internet of Value

Опубликовал geoprotocol

The GEO Protocol startup has been developing its own technology for the last three years: a protocol solution for the Internet of Value – that is, a global network for transfer and exchange of any assets and their equivalents, an innovation that is meant to merge traditional finance and cryptocurrency realms. In the near future this can change the world of money just as the ordinary internet has changed the world of information exchange. And recently, the GEO startup received an investment from a known US fund.

The GEO technology itself is very flexible and versatile, and is suitable not only for integrating existing solutions and services into the global network, but also for developing completely new fintech solutions from scratch.

And this is not just a theory. Already there are services using the GEO Protocol for the purpose of integration, as well as those fully based on it. GEO Pay is one such use case.

In essence, GEO Pay is a P2P payment network deployed in one of the regions of Ukraine, uniting the local community of people and businesses (including shops, financial institutions, and cryptocurrency exchanges). GEO Pay is in its third year and is used for simple and fast payments without intermediaries and bank charges.

Around 10,000 people and dozens of businesses are already connected to the GEO Pay network. The functions currently available are the website, the mobile application, fund transfers without fees, payments with a mobile phone, cashback, etc. The functionality and the network itself are constantly expanding.

The distinctive feature of this P2P network is that it is based not on trustlessness, which is more common for blockchain systems, but on the contrary – people’s trust to the people they know, since the system functionality is based on trustlines. That is why the GEO Pay network is still mainly concentrated within a certain territory.

However, thanks to the GEO Protocol technology, an extensive network of trustlines allows payments to also be made between completely unfamiliar network members not directly connected by trustlines, according to the principle of transitive trust. GEO technology also provides automatic search for closing debt cycles (cycled clearing).

Unlike in conventional payment systems, GEO Pay users can exchange the equivalent of existing fiat or cryptocurrency which they add to the system through partner banking institutions, exchangers or cryptocurrency exchanges, as well as internal currencies (non-backed by external assets), which can be created by users within the GEO Pay network.

In fact, such internal currencies can act as regional currencies – an interesting and well-known economic phenomenon aimed at the development of local economies (especially during crisis periods), which has recently been experiencing a renaissance, not least through the emergence of new technologies like GEO.

In contrast to fiat money, which has a deficit nature based on interest rates, internal GEO Pay equivalents do not have this characteristic, since they are emitted (essentially in the form of debt obligations – IoU) at the moment when a particular trade happens, and subsequently are “burned” at the moment  when these obligations are repaid. Thanks to this property, there is a self-regulation of the total money supply, which always strives for an optimal economic value. This effect is also enhanced by the aforementioned GEO algorithm for automatic finding and closure of cyclical debt.

Today, there are not many decentralized P2P payment solutions in the world similar to GEO Pay, which is an attractive and promising alternative to traditional payment services.

In general, GEO Pay is a successful example of how developers can build a self-sufficient payment system with a wide and original functionality, providing a number of benefits and additional features for its users, and hence competitive advantages for the product itself.

However, one of the main advantages of GEO Pay as, indeed, of any service based on the GEO Protocol technology, is its initial out-of-the-box integration into the Internet of Value​​, which gives many advantages to the participants of this global network of value exchange.

Today, an isolated computer or even a local data exchange network represents little value. At the same time, a computer or a local area network of computers with access to the global internet is far more valuable. And this value, moreover, increases exponentially depending on how many other local networks and computers are connected to the global network. Thanks to this setup, everyone wins.

This means that in the near future, unisolated and self-contained solutions that can utilize this network effect to increase their own capitalization will see demand.