On the 2nd April 2019, Nimiq announced that the crypto project had acquired a 9.9% stake in WEG Bank AG.
This move further reinforces Nimiq’s pre-existing strategic partnership with WEG Bank and Agora.Trade on a potentially revolutionary crypto-to-fiat bridge.
In this article, we’ll take a look at how all the pieces of the Nimiq puzzle fit together, how this acquisition and partnership could just be the beginning of wider disruption for both the cryptocurrency and fin-tech industries.
Nimiq’s acquisition of a stake in WEG Bank means that the project is committed to dedicating their top developer talent to execute the blueprint for an innovate crypto-to-fiat bridge called Nimiq OASIS. This fin-tech solution is customer facing and aims to connect the traditional banking system, via WEG Bank, to the cryptocurrency markets using Agora.Trade.
At one end of the bridge, you have WEG Bank and Agora.Trade (a decentralized exchange) is at the other end. At the center of the bridge is Nimiq OASIS which is what connects the banking and cryptocurrency worlds together and enables value to be transferred between the two ecosystems. This is made possible by Nimiq OASIS making fiat currencies like the USD or EUR, blockchain compatible.
Now the value transfer problem between cryptocurrencies and banks has existed ever since Bitcoin was first introduced into the world.
This pain point has seen the emergence of cryptocurrency payment processors like Bitpay and Simplex, who step in as a middle man to bridge these two ecosystems. Indeed, Charles Hoskinson, the founder of Cardano (ADA) recently spoke about the current state of crypto markets and commented:
What we are seeing is a collection of standards being created [that] will inevitably converge over the next three to five years to create a situation where you can move information and value between all these different systems ー not just Bitcoin to Litecoin to Ethereum to Cardano ー but also your regular bank account
Nimiq OASIS aims to achieve the transfer of value between cryptocurrency and a normal bank account. Furthermore, the target date for release is Q4 2019 and the first iteration of Nimiq OASIS is looking to support Bitcoin, Ethereum and NIM. The potential of Nimiq OASIS is nearly endless with Team Nimiq stating that:
Nimiq’s vision is to further expand Nimiq OASIS reach to other fiat currencies like the USD and additional crypto assets as other banks and cryptocurrency platforms can also be enabled to interface with Nimiq OASIS and provide their customer bases with a convenient and cheap way to buy or sell different cryptocurrencies with a bank account
So, in a nutshell, the Nimiq OASIS blueprint aims to deliver an easier and cheaper way for people to buy and sell cryptocurrencies using their bank account. This eliminates the need for crypto payment processors and can remove an additional fee layer. Now, that’s very disruptive in itself, but there’s more.
Nimiq OASIS can also enable transactions to be processed without a single, centralized intermediary (like an exchange or payment processor) controlling the two assets being exchanged, and without the private keys of the crypto asset ever being entrusted to a third party.
Maybe all that sounds like a word salad, but consider the QuadrigaCX situation earlier in 2019 and how $190 million in crypto assets became inaccessible to the exchange.
This issue demonstrates the benefit of a crypto owner never trusting their private keys to anyone else. Indeed, if all those QuadrigaCX users had held their own private keys then they would still have access to that $190 million worth of crypto.
WEG Bank’s part in the Nimiq OASIS blueprint is critical, for it is the way through which Nimiq OASIS can access the SEPA Instant network and enable the buying or selling of crypto with any bank part of that network.
This means that users wouldn’t have to have an account at WEG Bank to use Nimiq OASIS. Nimiq’s partnership and acquisition of a stake in WEG Bank demonstrate the commitment to making this fin-tech solution succeed.
Currently, there are few banks looking to actively work with cryptocurrency projects or develop crypto-based solutions. Enabling retail banking customers to buy crypto doesn’t sound like that big a deal, however, the Financial Conduct Authority in the UK recently released a report and conducted a survey asking people why they were not buying cryptocurrencies.
An incredible 20% of people replied that lacked knowledge on how to buy cryptocurrencies. Nimiq OASIS could make buying crypto as simple as sending an online bank transfer and this highlights the benefits of making the buying and selling of crypto as simple as possible.
In the area of crypto payment processing, Nimiq OASIS could end up being a very disruptive force. The reason why is that many merchants don’t want to use a crypto payment processor like Simplex due to fees of up to 5%.
Now many online retailers operate off average net margins as low as 0.5% to 3.5%. That’s a huge disincentive for many merchants to accept cryptocurrencies and for some, accepting crypto payments could even result in the merchant making a loss.
With Nimiq OASIS comes the potential for significantly lower fees by removing crypto payment processors as middlemen. The potential is there for Nimiq OASIS to actually spread the wider merchant adoption of cryptocurrencies by offering a cheaper alternative.
The stable-coin market could also be impacted. Today, these markets stand at around $2.8 billion, with the main use case of stable coins being to hedge against the volatility of crypto.
However, that hedge does come with some risks if people are using certain popular, unaudited stable-coins. Nimiq OASIS could offer crypto enthusiasts a different alternative to hedge against the markets with actual fiat.
No one really knows how large the crypto over-the-counter markets are. However, many agree that the volume on OTC desks is larger than that transacted over cryptocurrency exchanges. If you are not sure what OTC markets are, it’s just a complicated way of saying that crypto buyers, with fiat, are matched with crypto sellers wanting to sell for fiat currency.
Usually these markets are reserved for only high-value transactions and the OTC broker takes a cut of the transaction for making it all happen. If Nimiq OASIS gains high levels of liquidity, then it could offer current OTC buyers and sellers with an alternative option for their trades and enable Nimiq OASIS to eat into OTC market share.
From Nimiq’s recent stake acquisition, WEG Bank has further strengthened its partnership with Nimiq and this could make a lot of strategic sense when you know that the bank is focusing on expanding into the crypto niche. Matthias von Hauff, CEO of WEG Bank AG went on the record with the following comment.
For the past 12 months, we have been looking at various ways to expand our core banking activities into the blockchain community. With Nimiq, we have been able to develop not only a landmark payment interface which has the potential to revolutionize the way we deal with cryptocurrencies, but also an innovative and powerful partnership
Not only does WEG Bank play a critical role in the Nimiq OASIS solution, but the acquisition of a stake in the bank also opens up other opportunities for Nimiq. Prominent crypto projects like Litecoin and Tokenpay are already existing shareholders and twenty cryptocurrency projects are set to be selected for corporate accounts at WEG Bank, with Lisk already being confirmed.
The WEG Bank connection certainly brings with it the potential for Nimiq to grow even more meaningful partnerships and collaborative efforts.
The thing to know is that Nimiq OASIS is just a single initiative that makes up the Nimiq project. Nimiq is a decentralized payment system, with an extensive ecosystem of apps, in which the NIM token is used as a store and transfer of value.
Sure, this sounds very similar to the the numerous other crypto payment systems out there like Dash.
However, Nimiq does differentiate with its cutting edge browser-based blockchain, which allows users to connect to it using only a web browser. This creates a installation-free experience, geared towards ease of use. Nimiq also compounds this approach by going to extraordinary lengths to make user interfaces simple and easy.
This approach and emphasis on simplicity have been inspired by Nimiq’s vision of making a cryptocurrency for the masses and not just the tech savvy. The focus on ease of use is probably a wise strategy given that companies like Apple have been able to achieve astonishing rates of product adoption by keeping things as simple as possible for users. Nimiq is built with a similar ethos in mind and this can be seen throughout the project.
The Nimiq ecosystem is full of the teams and the best ideas from the Nimiq community.
Nimiq has created a frictionless, one-click pay webshop where you can get your hands on branded merchandise. However, one of the most promising components of the ecosystem is a new checkout flow, which is set to be released shortly to enable different e-commerce stores around the world to accept NIM as a payment method. This could be a critical part of Nimiq’s future if combined with Nimiq OASIS and this could provide merchants with a viable alternative to crypto payment processors.
If you scout around the Nimiq forum you’ll also be able to see that it appears that plans are already being hatched for Merchant adoption, with Nimiq publicly disclosing a list of merchant targets.
The Nimiq ecosystem also includes numerous tip bots for platforms like Reddit, Twitter, Twitch, Telegram, and Discord. It even has a browser-based Crypto-Tamagotchi game too.
Nimiq’s acquisition and strategic partnership with WEG Bank can be viewed as a smart springboard to further expand the project’s ecosystem, whilst enhancing its use-case as a payment system. Nimiq’s work is by no means done yet. However, there appears to be a lot of promise and potential there and it might be worth keeping a closer eye on project developments.
WEG Bank is a German bank founded by CEO Matthias von Hauff. The bank has gained a reputation for being one of the best institutions in the German real estate banking sector and has set its sight on expansion into the corporate, crypto and retail sectors.
With Nimiq on board, it seems that the project could play a key role in helping WEG Bank expand into the cryptocurrency markets and get a head-start over other less progressive thinking banks.
Agora.Trade is a decentralized exchange under Swiss and Maltese ownership. They are led by Forbes 30 under 30 listmaker Reto Trinkler. The exchange has also partnered up with WEG Bank through their connection and involvement in Nimiq OASIS.
In addition, Reto is also collaborating on other cutting-edge blockchain research with Nimiq through his other company called Trinkler Software. This collaboration appears to be bearing fruit, with the proposed Albatross consensus algorithm being the first thing to out of this collaboration.
Albatross is a new proof-of-stake consensus algorithm and its believed that this is able to perform close to the theoretical maximum for a single chain. This research is currently being put to the test, however, it could provide a foundation for Nimiq to shift to proof-of-stake in the future.
Nimiq OASIS has the potential to play a big role in shaping the future landscape of the wider crypto and fin-tech sectors. The acquisition of a stake in WEG Bank further supports Nimiq’s commitment to delivering Nimiq OASIS and the strategic partnerships with both WEG Bank and Agora-Trade.
It also opens the door for Nimiq to forge additional partnerships with substance, with Litecoin and Tokenpay already being stakeholders, some of the twenty crypto projects set to be selected for corporate accounts might synergize well with Nimiq and lead to even more future collaborations.
However, it must be noted that Nimiq OASIS is only a blueprint right now and that the first Nimiq OASIS transaction isn’t expected till Q4 2019. Sometimes development work takes longer than anticipated and that target date is certainly not fixed.
What’s particularly interesting about Nimiq OASIS is that it has never been intended to be used exclusively for NIM. From the get-go, Bitcoin and Ethereum support are anticipated, with Nimiq already suggesting that the vision is to enable support for other cryptocurrencies. This means that the Nimiq OASIS effect could be felt out throughout the entire crypto market in the future.
If Nimiq OASIS succeeds with help from WEG Bank and Agora.Trade, it will certainly be interesting to see if this fin-tech solution starts to change the attitudes held by other banks towards cryptocurrencies. Maybe WEG Bank will be the first of many to embrace this new technology?
Only time will tell what the true impact of Nimiq will be…
However, given the scale of the possible disruption, it might be a good idea to keep closer tabs on the project and keep up to date with the project’s developments.
Featured Image via Nimiq
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