Note: The instant payment system is still under development and will enter beta testing on 1 July 2018.
Electroneum has created and patent a revolutionary instant payment notification system, that will enable vendors around the world to start accepting cryptocurrency payments with instant, real-time confirmations.
This is groundbreaking technology in the cryptocurrency industry that bridges the gap between blockchain’s decentralization and the modern world’s fast payment technology.
Let’s start our discussion by describing the problem that the instant payment system is trying to solve.
The Problem: Waiting Time
Blockchain technology is simply too slow to compete with today’s fast-paced checkout systems.
If you were to go to a store (online or offline) and try to buy something using a cryptocurrency – say Bitcoin, you would have to wait a while for the transaction to complete securely.
First, the transaction must be broadcast to the world and picked up by miners. If you’re lucky, your Bitcoin transaction will be included in the blockchain within 10 minutes. But that doesn’t guarantee a successful transaction yet. To be absolutely sure, you’ll need to wait for the transaction to be confirmed in 5 more blocks – making for a 1 hour total wait time!
These wait times are simply inadequate and unable to compete with the near-instant confirmations of Visa and Mastercard.
It’s true that there are other cryptocurrencies with faster block times that might be better alternatives, but even Ethereum will require you to wait 5 minutes for the usual 20 block confirmations.
For most people, that’s simply too long.
So clearly, a way is needed for cryptocurrency payments to be confirmed faster. Enter Electroneum’s instant payments…
The Solution: An Instant Payment Notification System
Electroneum has created and patented an instant payment notification system in which they will act as a trusted third party between the buyer and seller, and facilitate the transaction between them.
In this way, they could be seen as a payment gateway backed by the blockchain.
The role they will play in the transaction works like this:
Once the buyer transfers ETN to the seller, Electroneum confirms the transactions in real-time to both parties. Behind the scenes, Electroneum “reserves” the funds in the buyer’s wallet so that it can’t be spent again, and proceeds to send the reserved ETN to the seller’s wallet via the ETN blockchain.
If the transaction fails the first time (perhaps by being mined on an alternative chain that later expired), Electroneum will re-attempt the transaction behind the scenes until it is successful.
As per their blog post describing the technology, the seller should have his/her funds within an hour.
How A Typical Transaction Works
Electroneum released a demo video showing how a transaction will work on the instant payment system.
According to the video, here’s how the process will work.
- A buyer picks an item to buy (whether online or offline) and proceeds to checkout.
- At the checkout, the seller enters the details of the transaction and a QR code is generated on his screen.
- The buyer scans the QR code using his/her Electroneum app and enters his PIN number.
- Both devices get instant confirmation that the transaction was successful.
- The buyer can now leave the store with his/her goods.
After the transaction, the following takes place:
- The funds are “ring-fenced” in the buyer’s Electroneum app wallet, so he won’t be able to spend it on something else.
- Electroneum will submit the transaction to the blockchain and re-submit it if unsuccessful.
Electroneum will also share the buyer’s email address and ETN wallet address with the seller so that funds can be reversed and customer service be administered if the need arises.
Take note that regular, conventional blockchain transactions are still possible. A buyer does not need to use Electroneum’s instant payment to make a transfer. He can still transfer the funds using traditional blockchain methods but will need to wait longer to see the transaction confirmed.
Along with the front-end, the Electroneum team has created an API system that allows virtually any device or website to tap into their instant payment system and start accepting payments.
On release, the following platforms will be supported:
- Electroneum’s vendor app on a tablet (to be used at restaurants, bars, or festivals)
- Traditional Point of Sale (such as in a grocery store)
- E-commerce websites
- Other websites that integrate with the API
The functionality will also be available on mobile phones, working via an app-to-app basis. So any two app users will be able to perform a transaction and get instant payment confirmation.
The instant payment system is currently under development and will start its beta testing phase on 1 July 2018. Vendors will be able to apply for the beta program.
This system is revolutionary to the cryptocurrency industry. And once it launches, it will place Electroneum at the forefront of cryptocurrency payments (considering they hold the patent rights to the technology), and therefore also at the forefront of mass adoption.