When I wake up in the morning the first thing I do is check out CoinMarketCap. Check my cryptos and thank the odds to be in our favor [most times]. One of these times I was scrolling through CMC and noticed how Crypto.com Chain [CRO] was now on the 20th position. Cosmos [ATOM], ChainLink [LINK], and BitFinex’s UNUS [LEO] were some of the coins that were expected to enter the pop-league but Crypto.com? What is it about?
As someone who likes to take deep dives into crypto-whitepapers, who likes to analyze the project’s strength, weakness and how good of an investment it could be, this paper came off as a disappointment. So I did some digging! And here’s what I found.
The domain “Crypto.com” is one of the best domains one can have in this space, it sure sounds to be one of the most expensive domains to buy too.
But what was uncanny is the information available online on this particular domain.
As observed this particular domain was bought in 1993, which means it was bought almost 16 years ago by Perfect Privacy, LLC. And can you take a wild guess on who there are?
Perfect Privacy is basically a risk eliminator and data protector, it ensures that one’s personal information stays private. Which means that whoever brought Crypto.com didn’t want others to know it.
TechCrunch covered an article a year ago on how the Crypto.com has been sold to a company previously known as Monaco with MCO tokens. Now take a wild guess at who Monaco was? The same company that runs Crypto.com! The team after a bit of backlashing on their crypto asset MCO decided to rebrand and bought the domain crypto.com for over 10 million USD.
Curiosity is the fuel for discovery, inquiry, and learning; that said, I dug a bit more. Let’s hop into the crypto angle of Crypto.com chain now to understand how this really works.
The conventional fiat payment mechanisms rely on traditional technologies that are not feasible with the current updated infrastructure, for example, blockchain and cryptocurrencies. Some of the limitations that these mechanisms carry are centralization, restricted participants, inflexible payments and several challenges related to cross-border payments.
In addition to this, in the current ecosystem of blockchain and decentralized digital assets, scalability and inefficiency are one of the biggest problems. To tackle the issues of traditional and existing decentralized payment mechanisms crypto.com innovated CRO – A solution that can be used to pay in crypto, get paid in crypto, in any crypto; anywhere in the world.
The team at Crypto.com are strong believers of decentralization, they claim to work on their product [an app] that is built to build a better society for everyone by accelerating the world’s transition to cryptocurrency. For this, Crypto.com is building a network of cryptocurrency projects on one side and is focusing on the pool of merchants to increase their ability to accept crypto payments on the other.
Crypto.com is headquartered in Hong Kong and is a pioneering payment platform that aims to increase crypto adoption through various payment channels including Visa cards. It claims to offer zero fees and sells itself as the best place to buy crypto [saw that on their website].
Umm, okay? But what’s their tech about?
Crypto.com Chain claims to be the next generation decentralized mobile payment protocol. It is intended for mobile payments, they have proposed an architecture that needs to “reflect the inherently federated nature” [Federated means to set up a single centralized unit within which each state or division keeps some internal autonomy. Not sure, how they’re gonna tackle centralization though].
Crypto.com Chain is designed on the bases of Design Axioms ( DAn ), they’re listed by the order of their priority, as stated in the whitepaper:
○ protect from fraud;
○ highly compliant.
DA2: Highly Scalable & Fast
○ peak performance on par with centralized payment providers;
○ fast confirmation, targeting < 1 second.
○ high transactions per second (TPS), targeting 50,000 TPS,
through different means (e.g. P2P payment channels);
DA3: Augmented Decentralization
○ self-managed settlement;
○ phased validator node set evolution;
○ automated treasury rewards and sequencing.
DA4: Upgradable and Fast In Innovation
○ flexible process for chain upgrades;
○ low dependency on other networks.
DA5: Data Privacy Protection
○ encrypted on-chain pseudonymous transaction data, only
relevant parties involved in each transaction can decrypt it;
○ efficient transaction validation.
○ integration of new acquirers or customer/merchant seamlessly
with low technical barriers, right incentives and strict
Additionally, Crypto.com’s network consists of nodes in different layers where each node layer is designed to serve different the needs of different users.
Node 1: Council Nodes
Initially, Crypto.com Chain servers will run the council nodes. Council Nodes have rights and obligations to execute settlements, maintain a whitelist log of Council Node identities, Acquirer Node identities, and Settlement Agent Node identities. Additionally, they can even, order transactions and reward CRO in limited supply, verify all transactions, send/receive transaction and even read the data.
Council Nodes run a BFT [Byzantine Fault Tolerance] consensus protocol among themselves which resolves the final order of transaction sequences. The initial prototype will utilize the Tendermint Core9 consensus engine. Tendermint works well for PoS / PoA networks, allows high transaction throughputs and gives instant finality.
Node 2: Acquirer Nodes
Acquirer nodes will be working under the customer acquirers and merchant acquirers. Acquirer Nodes can settle on behalf of others, provide an escrow (“Proof of Goods & Services Delivered”) service, and more including reading data.
Node 3: Settlement Agent Nodes
Anyone who has the capability to settle between CRO and currencies that are stable can run a settlement agent node. This kind of nodes can sell CRO for other stable currencies, settle for oneself, send/receive transactions, verify related transactions and again, read data!
Node 4: Community Nodes
Anyone and everyone can run community nodes. These nodes have the basic right of reading data, settling transactions for themselves and reading data.
CRO – the dubious lord
When you check out CRO on CMC, you can see that the coin has a market cap of 751 million USD with the current price of 10 cents [At the time of writing]. Along with that, when you notice the markets that CRO is being traded at you will observe a large volume coming from OkEx, Bittrex, UpBit, CoinTiger and DigiFinex.
And when you check out the CRO token holders on ETH Explorer, you will find that 92% of the circulating CRO tokens are held by only 5 wallets.
Then how did they rise above ETC, NEM, Tezos and 2000 more digital assets?
The answer is – strategy.
The total supply of CRO is meant to be 100 billion, but only around 7 billion has entered the market by being purchased from their application [Crypto.com].
This 7 billion can be traded freely.
With a CRO airdrop for MCO holders “released” monthly, the structure gets pretty complicated!
How much of the monthly circa 170 million CRO you get depends on how many MCO you held as an average for 12 months.
Then, once the CRO is allocated, you can’t move the funds for 12 months.
Concluding, how-much-ever CRO you technically have will not matter much if there are price pumps cause at the end of the day you can’t actually liquidate your own funds.
So here’s the window where people hodl crypto cause you haven’t left them, with another option.
How are they exactly going to do what they have claimed?
Apparently, Crypto.com chain plans to execute their plan in 4 stages.
Phase 1: A solution for online merchants to accept crypto. “Crypto.com Pay” button, integrated via API with a few lines of code. Merchants will be incentivized to deploy it by not paying any fees and additionally being able to offer substantial discounts to their customers. Customers will pay using the Crypto.com app. Although, the settlement will happen off-chain.
Phase 2: Following the launch of our Chain.com’s TestNet, they will onboard more cryptocurrency projects to allow customers to pay with multiple apps. The team will onboard merchants, both directly and via integrations with existing payment gateways and e-commerce providers. The settlement for this will still happen off-chain at this stage
Phase 3: Following the launch of Crypto.com’s MainNet, the team will switch settlement to onchain. Crypto.com will still play a substantial role in the network. This is also where offline merchant acquisition will begin.
Phase 4: Post all the 3 phases gradually the network will turn decentralized, with independent parties replacing Crypto.com, which will move from a key settlement agent role to the protocol code contributor & maintainer role.
Right from the way the whitepaper and technical paper was put up most was of the information was not explained well. The consensus mechanism, the blockchain or the app – nothing was put out clear.
Not just this, after analyzing the paper all I can say is there’s a thin line between a decentralized coin and a centralized coin claiming to be decentralized.
PS:- This article is not a piece of investment advice.