Cryptocurrencies as a method for industry- and company-specific payments has been a hot topic in the cryptosphere for a long time, although no single company has managed to create a product that has truly taken hold.
One of the companies that are working to become the go-to payment provider for companies seeking blockchain-based options is the Atlanta-based BitRail. Recently, Finance Magnates spoke with Cameron Chell, BitRail co-founder and vice chairman.
”No Payment Rail Existed for the Coins to Be Used as Tender Within the Existing World of Payments”
“BitRail is a payment platform similar to a PayPal or Stripe. However, it is built around blockchain infrastructure, so it allows companies or brands to build their own corporate currency, enabling them to provide their own branded payment option to their customers,” Chell explained.
Chell explained that the creation of BitRail arose from his previous company’s work with the KodakCoin project. “At ICOx we built and designed the KodakCoin, and realized that no payment rail existed for the coins to be used as tender within the existing world of payments,” he explained. “From both a regulatory and practical perspective this was an important problem that was not being solved.”
“At the same time, Steve Urvan of GunBroker.com approached us, wanting to solve the difficulties of ensuring secure electronic payments in the firearms industry. Together, we created BitRail,” he said.
BitRail’s Collaborations Have Included KodakCoin and GunBroker.com
Thus, the company’s primary associations have been with two rather controversial projects. The first project of BitRail’s parent company, ICOx, was KodakCoin, which came under fire after reports emerged of a botched ICO and unpaid invoices; and FreedomCoin, the result of the collaboration with GunBroker.com, a site that matches firearm sellers and buyers. FreedomCoin was launched at the end of January this year.
“We’ve heard the pain points of our merchant community. GunBroker.com is tapping blockchain technology to replace the need for other costly and time-consuming payment options,” explained Patricia W. Huff, Director of Marketing at GunBroker.com, in a press release announcing the launch of FreedomCoin.
Costly and time-consuming, perhaps, because of the negative attitudes that some more traditional payment processors have with firearm purchases–which, depending on which side of the gun-control argument you’re on, can either be a good thing or a bad thing.
Our Co-founder and Vice Chairman @CameronChell and Patricia Huff, Director of Marketing for @GunBroker discuss @FreedomCoinCC , the stable coin token available for simple trusted transactions using our #blockchain-backed platform. https://t.co/pnLhaPYi45 @stevegrubershow
— BitRail (@BitRailofficial) January 30, 2019
“Anyone who has purchased a firearm knows how painstakingly brutal it can be to deal with traditional credit card companies and other financial institutions,” GunBroker.com’s CEO and CTO, Steven F. Urvan, said in the same statement, adding that “now we can virtually eliminate that problem and expose a whole new segment of gun and outdoor enthusiasts to the world of digital payments.”
How “Crypto” is BitRail?
And of course, BitRail has stressed many times its efforts to be as compliant as is possible. “BitRail is a compliant platform integrated with U.S. banking and state money transmitter licensing,” Chell told Finance Magnates.
Also, in a press release on January 15th, Chell explained that “BitRail tackles the regulatory challenge head-on by acquiring state money transmitter licenses and offering KYC and AML verification for our clients through the platform.”
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“The technology provides the same buyer protections users are accustomed to with credit cards, with an additional layer of trust and security through blockchain verification and two-factor authentication. Also, unlike the cryptocurrencies you hear about in the news, such as Bitcoin or Ethereum, the cryptocurrencies approved to run on the BitRail platform will lock-in transaction values to eliminate pricing volatility.”
The technology provides the same buyer protections users are accustomed to with credit cards, with an additional layer of trust and security through blockchain verification and two-factor authentication. https://t.co/Pz3PmFuoil pic.twitter.com/jsp29mM86a
— Cameron Chell (@CameronChell) February 16, 2019
Still, in a post for DecryptMedia, author of Attack of the 50-Foot Blockchain David Gerard pointed out that “GunBroker calls FreedomCoin an ‘exclusive cryptocurrency,’ BitRail says ‘compliant cryptocurrencies’ and ICOx says ‘cryptocurrency and blockchain-enabled infrastructure’… but it sounds very like FreedomCoins are a centralized database entry—like frequent flyer miles, Quadriga Bucks, or a loyalty program, rather than anything the slightest bit ‘crypto’ in practice.”
In other words, Gerard thinks that stablecoins created by BitRail may be more centralized than other, more widely-used stablecoins; on the other hand, centralized networks can sometimes offer protections that decentralized networks can’t, including reversal of fraudulent transactions.
BitRail’s Regulatory Features Could Help Industries Like the Firearms Industry, But How Necessary is the Formation of a New Cryptocurrency?
And indeed, there are at least some aspects of BitRail’s offerings that operate as centralized services. Chell explained to Finance Magnates that BitRail was designed to provide several different services: “in addition to providing payment functionality, it can also be multifunctional and used as, for example, a reward and loyalty mechanism, gift carding mechanism or even a sports betting and settlement mechanism.”
BitRail has been primarily designed to serve “established companies who want their own payment processing function so they deepen their brand relationship with their customers, reduce their own processing fees and provide additional features such as reward and loyalty to their user base.”
Additionally, “online marketplaces where buyers and sellers want options to credit card or traditional processors are well suited for this, as well as highly regulated industries that require a high degree of compliance in order to transact,” like the firearms industry.
It will be interesting to see how this works in practice rather than in theory. True, industries like the firearms industry do require different levels of identification for different kinds of purchases.
What Does the Future Hold?
All the same, cryptocurrencies like Bitcoin have been used (legally and illegally) to purchase firearms in the past–and some gun enthusiasts don’t see the point in creating a new cryptocurrency to handle firearms purchases, particularly if it’s more difficult to use than pre-existing options.
Josiah Wilmoth, the gun enthusiast and the US editor at crypto news site CCN, wrote that “GunBroker, I think it’s great that you have recognized the value of cryptocurrency payments for industries that face discrimination from mainstream financial institutions and payment processors.”
“However, speaking as one of the gun-toting bitcoin users you’re hoping to attract to the platform, this isn’t the cryptocurrency we are looking for…Bitcoin has name recognition, liquidity, and a decade-long track record of security.”
If FreedomCoin is as successful as its creators are hoping, however, BitRail could be a force to be reckoned with in the future. Industries with difficult relationships with payment providers–like the firearms, adult entertainment, and legal marijuana industries–are definitely in need of payment solutions.
The company hasn’t explicitly stated interest in targeting clients in these industries, but its association with GunBroker.com may be an indication that these are the industries that BitRail is seeking to serve. But will BitRail be the answer? Time will tell.