Comprehensive business and financial blockchain platform
The customers need not the disjointed technologies and services, but modern multifunctional financial ecosystem, which can meet challenges of the various financial and business tasks, providing the additional benefits and values. The project goal is to provide the customers with the universal blockchain mechanisms of financial and business transactions (platform, codenamed Tokamak): payments for goods and services, loan services, remittance, check drawing, clearing and settlement system, financial planning services, currency exchange, business services and payments, etc. These services can be accessed either directly or integrated through API into the social networks (Facebook, Twitter, Google+, Instagram, etc), messengers, games, e-mail, mobile and desktop applications, etc. with the commission paid to the channel owner. There are options to enlarge the API platform by means of the modules for interaction with external online and offline channels (banks, exchanges, auctions, investment funds, bookmaker’s offices, various payment systems, marketplaces, etc.). The support of smart contracts provides the ample opportunities for the flexible intellectual management of financial and business processes. Also legacy financial institutions by means of API platform will be able to provide the modern interface and advanced services for their clients. This will let them stay competitive and keep their market share and the sources of profit.
Multicurrency & CryptoPair
This key feature of the platform guarantees the execution of transactions with both traditional fiat currencies and crypto assets (including currencies and tokens). At the same time for each asset type it is possible to create not only a separate account, but also to keep a record of these assets both in sub-accounts and in individual dimensions of the account or sub-account. The assets can be stored on the platform as well as in the external purses and processed by OpenAPI. To ensure the multifunctional and versatile capabilities of the platform there is a granted issuance of the crypto pair: the publicly traded cryptocurrency MGCoin and the settlement cryptocurrency MGCash (MGH). The rate of the cryptocurrency MGCoin (MGC, Magic) is traded freely in the open market are known as the free float. The access to the part of the platform’s functional will be provided only for the owners of a certain quantity of MGCoin. This limitation concerns also the third-party developers, who can get the maximum opportunities in integration of their services in the platform when gaining assigned amount of MGCoin. Institutional clients (banks, marketplaces, messengers, stock exchanges, etc) also will get the whole access to API of the platform, when buying the necessary amount of MGCoin. The final users will have the free access to the services.
Capitalization of a private person is the mechanism of the automatic determination of the credit or other rating of a user, based on the data of their financial transactions and various other information. This will let the users to get loans at minimum rates fast, to provide priority services, pay later service, interest-free installments and other benefits. It also provides for the accumulation of non-financial reviews (from stores, hotels, employers, colleagues, resorts, friends, etc.) in order to capitalize them. Third-party developers can design their criteria for user rating and keep them in the database of the platform for being provided to any interested individuals. The reservation of those or other data, and their provision will be realized by the permission of a user, who can block or delete unwanted information.
The key element of the platform is the concept of a global structured smart account with the capability to link sub-accounts with various traditional financial institutions (including by means of OpenAPI). Also you can use SmartAccount as virtual account, as personal account, etc. With the help of flexible settings for the access rights to the account and sub-accounts (family, corporate, share, joint and other) it is possible to significantly improve the efficiency of financial management. For the convenience of customers there is a mechanism allowing automatic creation of accounts, subaccounts, or additional dimensions upon the receipt of funds. The additional flexibility of the platform is provided by the capability to create detachable accounts — such an account can be transferred from one customer to another with all assets, liabilities, contracts, etc.
One of the most significant disadvantages of crypto-currencies is their high volatility that is not unacceptable for the real economics. Manufacturers and sellers of goods must be sure, that the cost of their basic currency will be stable for a long time. Otherwise, they will not be able to identify for hat price they should sell their goods, purchase accessories, what salary to pay to the worker, what part of the cost of a good will be for logistic, warehouse and other services. And though crypto-currencies were designed as the alternative to the traditional currencies, the huge interest in them caused the substantial fluctuation of exchange rate, that holds back the pervasion of crypto-currencies into real life. The decision of this problem is the use of the settlement cryptocurrency in the platform. The settlement cryptocurrency MGCash (MGH) is positioned as a payment instrument, recognized by all participants of the ecosystem, and has a rigid regulation of the exchange rate with the regard to the basket of fiat currencies. All this ensures its low volatility and high reliability. The platform architecture provides for the mechanism of the MGCash inflation management to support economic growth in correlation with the average world inflation. The developed bank stock serves as the backing of the MGCash. Any client always can buy or sell the necessary amount of MGCash currency from the platform reserve for established exchange rate. The funds from the sale of MGCash will be accumulated in the reserve fund and serve as a provision of MGCash and buy-back. It’s planned to conclude the agreements with small and medium-sized business for the provision of more profitable price for the goods and services in MGCash, rather than in traditional currency (for example, by means of the decline of tariffs for financial services of the platform or within the confines of marketing actions). An important characteristic of MGCash is the provision of the high speed of transactions confirmation at low cost of the execution of such transactions, and also the opportunity of scaling the system for processing of hundreds and thousands of transactions in a second. The maximum facilities of the platform are available with the use of MGCash only, that along with the stable exchange rate will form the inquiry for this crypto-currency and stimulate its wide use. The volume of emissions MGCash will be regulated by the platform, the community and the platform board (details in the White Paper Book 2). Besides, the opportunity of the support of government-defined MGCash, such as MGCash.USD, MGCash.EUR, MGCash.AUD and so on, was provided. Also it can be just supporting government established cryptocurrencies. The emission volume, exchange rate, rules of circulation and other characteristics these cryprocurrencies will be determined in accordance with the demands of corresponding countries. The need of the users in the investment instrument into the platform can be satisfied with the help of crypto-currency MGCoin.
An important part of the platform is the organization of a payment system MGPay for the convenient payment for goods, assets, services and so on both online and offline in different currencies (including cross-border payments and micro payments). The low commissions for business and capitalization of financial history for payers will serve to increase the attractiveness of the system for the market participants. The payments industry is enormously big and continues to be one of the most important and fastest-growing areas of the financial services sector worldwide. In 2016, the payments business overall, including balances on current accounts, totaled $1.2 trillion. Core payments revenue, excluding interest income, represented $0.8 trillion, or 20% to 25% of global banking revenue. The value of global payments transactions stood at $420 trillion, or 5.5 times global GDP. By 2026, BCG70 expect global payments revenue to increase by $0.9 trillion as emerging markets continue to grow and cashless transactions become more widespread. A gradual recovery of interest rates in mature markets will further boost account balances. BCG expect the compound annual growth rate (CAGR) of revenue in mature markets to increase to 4% from 2016 through 2026. According BCG, the global payment revenues should reach USD 2.13 trillion over the upcoming few years. The main part of transactions now is executed with the use of legacy technologies. However, many experts agree that this segment will significantly change its structure — the main part of payments will ne executed online. And our platform is designed considering this simple forecast. MGPay will provide API for both traditional financial institutions (such as banks, card networks, etc.) and non-traditional channels, for example wallets, various mobile apps, games, social networks, messengers, digital offline checks and bills, etc. The users of any channel, integrated into the platform, will be able to use all the opportunities of the platform for financial operations’ execution. Both traditional financial mechanisms (such as credit, debit, pre-paid, gift cards; bank accounts, etc), and SmartAccount platforms, API third-party developers, integrated into the program, can be involved in operations’ execution. An important task is to provide the use of MGPay by a big number of merchants and service providers, for users of the platform to have the opportunity to pay for goods and services in as many places as it’s possible. In small and medium-sized enterprises there will be provided low commissions for that, and a number of additional services for the shifting of transactions with the suppliers and other contractors to the platform with the use of MGPay. The support of many various crypto-currencies is invocated to make MGPay more attractive for the market. In MGPay there will be automatic menu call (MGAutoMenu) when connecting to the certain Wi-Fi access point, entering the certain geographical zone, scanning the company QR-code, etc. For example, when parking a user will be suggested to pay the service in one click, or entering a movie house it will be possible to buy a ticket for the necessary film at once. In a café you can order the dishes from the suggested list, not waiting for a waiter and in the public transport pay for the passage quickly. There will be formed a menu with the choice of the goods and services for every provider of goods and services with prices and opportunity of order formation on the smartphone. You don’t have to stand in line stand in line to the cashier or the terminal in McDonalds to order something. The quick access to the purchase history will let make the payment faster and more comfortable. There is an opportunity to get bills directly in MGPay and the payment in one click.
Wallet & Mobile App
For users’ convenience the digital wallet, realizing all the opportunities MGPay (including the MGAutoMenu function, the payment by QR-code, the access to purchase history and subsystems of remittance, P2P lending, currency exchange, etc.), will be designed. The development of the special mobile application for standard business operations and access to additional services is planned for small and medium-sized businesses.
Creation of private community
The interested parties are granted the opportunity to organize the closed financial spaces, i.e. to some extent a VPN (for a pool of organizations, a territorial unit from a city to a state, a brand, an industry, a community, etc.) with its own rules of operation and access to all mechanisms of the platform (payments, business services, currency exchange, loans, etc.). The access to external services controlled by the space administrator. API for the emission and management of crypto assets (tokens, coins, etc.) of these spaces.
According to The Federal Reserve Economic Data (FRED), in 2015 the bulk of the deposits world-wide was 49.54% of the world GDP, whereas the whole amount was 68 trillion USD. Respectively in 2015 the sum of the deposits reached 33.6 trillion USD. Currently the approximate value of bank deposits in the world is 38-40 trillion USD. Herewith the rates on deposits sank to historical minimums or even became minus in the number of developed countries. In the USA the rates on deposits are insignificantly above zero. Under such circumstances the interest of customers in gaining some additional income from their capital is obvious and P2P lending market provide that opportunities. Today, according to the Morgan Stanley’s research and opinion of other analytics, P2P platforms are among the fastest growing segment in the financial services space. So, in 2010 the volume of loans, given out in the USA, China, Australia and the UK, was US$1B in total, and by 2014 it increased 20 times — to $23.7 billion. On the preliminary estimates of Morgan Stanley, the volume of P2P lending global market by 2020 can reach $490 billion. The report of Statista indicates, that by fact Transaction Value in the «Marketplace Lending» segment amounts to US$208.9B in 2017. In the same time Morgan and Stanley assessed the market in US$182.5B in their forecast of 2015. Also, according to Statista, Transaction Value is expected to show an CAGR 2017-2021 of 34.8% resulting in the total amount of US$688.9B in 2021. In fact, this is about fundamental transformation of the credit market, existing for hundreds of years — now the individual users can credit to other users or business, bypassing banks’ agency. The meeting of a creditor and a borrower happens on the online platform, where they conclude an agreement. Not only private individuals can act as creditors, but also institutional investors. The advantage of P2P lending over traditional bank crediting is the high speed of bargains, getting credit by the individual, not interesting for banks, more profitable conditions both for a borrower and an investor. The integration with the credit history database and using scoring system will let minimize the risks. The platform provides functionality for performing P2P lending transactions in various currencies both without security and on security of crypto currencies and traditional assets. The own scoring system and the use of information being accumulated on the platform to assess the credit applications will significantly reduce the risks for creditors, and to obtain a better interest rate for the borrowers.
There are tens of millions of enterprises that need the financial and business infrastructure for their work. Nowadays there are the huge opportunities of work efficiency increase of these businesses and we offer the platform for placement third-party business services. In near future many companies will use the IT-technologies for decline of expenses, increase of profit, calling in of new customers and gaining competitive advantages. That, who will stand aside of this process, risk to lose the share of the market, decrease the selling and profit, and finally to leave the market. That’s why the attention of business to the inculcation of advanced technologies will grow. Besides nowadays there is the market’s transformation, during which many professionals are becoming freelancers, working in the mode, comfortable for them. According to the experts’ forecast, this trend will grow stronger in the near future. Obviously, the freelancers also need a convenient financial infrastructure for their everyday tasks. The platform will provide API for the following business transactions (operations): billing and invoicing (including automatically based method on customer requests); payments; the control of business processes; the conclusion and execution of smart contracts; the payment tracking; token-based loyalty solutions; clearing; settlement; notarization services; the predictability of the total cost of a transaction; payroll; multi-currency accounting; smart management and forecast of cash flow and currency exposures; calculation and payment of taxes; stopping of unwanted payments or perform payment recalls; the direct payment to the supplier of goods transferred for sale, etc. The important features of the platform are the intellectual management of the distribution of funds to sub-accounts; the flexible system of access rights; the consistency in payment processes and regulations in each market; the quality and completeness of remittance information sent with payments; the availability of arbitration. For corporate accounts it is possible to link sub-accounts with the affiliated companies.
According to World Bank, after two consecutive years of decline, remittance flows to low- and middle-income countries (LMICs) are projected to increase by 4.8 percent between 2016 and 2017, to $450 billion. Market remittance is rather interesting, but not demonstrating an attractive growth dynamics nowadays. Nevertheless, this segment is extremely interesting when designing a complex financial platform, because it lets not only earn money by means of remittance, but provide the promotion of other platform services, enlarge customer base. On the other hand, the availability of range of services, their strong correlation and capitalization of a person, based upon the transactions carried out or other data must become an important factor for the customers when choosing a financial provider. As it stated above, the cost of a remittance is a key factor for a customer. That’s why the cost decline of such a remittance is a key to success. The most evident way of the cost decline is the set –off of oncoming transfers. In fact only the sum, showing the difference between incoming and outgoing payments in the specific channel, crosses the border in this case. However, this scheme has a limited potential, because the volumes of incoming and outgoing payments often differ much. This gap can be compensated due to the expansion of the capital traffic by means of supply of additional financial services. So, a good effect is reached by the combination of remittance and P2P lending. But even in this case the necessary balance can be not always reached. We see the decision in the including B2B money transfers in the whole process
In the previous sections it was pointed out that the cost of transactions is one of the most important factors for the customers. That’s why the provision of lower fees and charges than legacy financial institutions and FinTech competitors is one of the strategic tasks for the project’s success. And we managed to design the model that can provide the necessary result. Due to obtaining synergetic effects from the interaction of various areas of financial transactions, it is possible to establish minimal commissions for the exchange of currencies, payments and other transactions. A significant part of operations with MGCash can be conducted without fees and charges. An important role in it also belongs to the use of paperless technologies, automation of processes and the inculcation of cutting-edge IT-technologies.
As the main trend of the platform’s work is the provision of financial services, it’s necessary to attract the participants of the market, as many as possible, for cooperation. The financial marketplace will be created for that. This is a sort of Alibaba for financial products. The members of the ecosystem can place their offers (credit, pension and insurance products, etc.) for the maximum number of customers and gain access to the customer’s credit score (with his/her permission). An important feature of the platform is the blockchain API provision for the conclusion of deals, their arbitration and verification.
Options for expanding
he project concept provides the third-party developers with the option to develop external modules for the integration of various existing and future services into the platform ecosystem. This will allow providing the customers with the additional services of expense analysis, cash flow forecast, billing, budget planning, voice assistant, AI, etc. The developers will be able to use various schemes of monetization of their services. The part of the profit will be gained by the platform operator.
Security & KYC
When designing the platform the needs of market participants in respect of ensuring the confidentiality of financial transactions were taken into account. Therefore, the data in the blockchain is stored in encrypted form and unauthorized users will not be able to read them. The important part of the platform is the subsystem of account management. According to the legislation of many countries it’s necessary to obtain the information about the identity and address of the customers. This procedure is known as «KYC» (Know Your Customer). KYC is important because it helps to ensure that the application and other details are real. There have been instances of fraud and siphoning off of money from accounts. By ensuring the identity of individuals, it would help to prevent fraud. The Know Your Customer practice has been in vogue for many years now. In these latter days the use of biometrics (face and voice recognition, finger print, etc.) is inculcated. Also, customers will be given the opportunity to confirm transactions through independent channels (for example, by SMS). The platform will provide all interested customers with the access to the service KYC for free, including third-party services, not integrated with the platform. The access to the personal information will be provided by the user’s permission. The integration with the existing database of ID confirmation is supposed