Written by Gregor Kozelj
An inflated debate about the advantages and disadvantages of one or the other blockchain protocols is currently taking centre stage on blogs and forums. It appears that Ethereum has received more punishment by the critics recently. The primary reason is the problem with the scalability of Ethereum, and the second is the complexity of the protocol, including the need for transaction fees when using the network.
Ethereum could be doomed, as some have even suggested, while others have said that it can never achieve real adoption or be integrated into payment processors. This article offers an alternative perspective to the cost and scalability debate being tossed around.
Payment and transaction fees
One of the main virtues of a high-quality currency is a low transaction cost. This is extremely important and underpins the value preservation capacity of a currency when it circulates and exchanges hands frequently. As a challenge to the Ethereum protocol, other protocols such as EOS and NEO have come forward with the possibility of conducting transactions within their network without fees, a solution where the business model reallocates economic burdens with a different cost/benefit formula for users of the network.
Nevertheless, the community at the moment is not discounting the possibility, that the same thing may be possible in Ethereum itself. As most know, this particular blockchain is based around an idea that the network (Ethereum) is the driver for different apps that run on it and provide various functionalities to the network. These functionalities create the ecosystem and things that the network knows how to do. The key questions for Ethereum remain: which functionalities can exist through these apps, and do these apps strategically help fulfill Ethereum’s purpose and to add value with new business activity?
Apps that mitigate cost and drive business
Essentially, what Ethereum needs first is an app within the system, that continuously provides a stable gateway for payments, whereby the value preservation principle is not destroyed by fees. This is a scenario where a »zero fee environment« exists for users of the payment solution. This solution would provide a better balance for Ethereum against all the other chains.
The core of the argument against Ethereum is that the current structure doesn’t allow stable tokens to exist on its platform because of the aforementioned costs and issues. These fees inevitably erode any potential stable token’s value given enough time. However, most of these concerns would be redundant with a new app in Ethereum able to reverse this process and reverse transaction costs for the user with the help of a new AI.
AI feeds blockchain with a recurring cashflow
Even the inventor of Ethereum, Vitalik Buterin himself pointed out several times that blockchain systems need to show real activity, real business and cash flow first in order to justify their lofty market cap figures. The infrastructure for this activity is currently being put into place, but the most interesting part is the potential of the protocol. With a capable bridge such as Artificial Intelligence, the traditional and digital domains could become connected in unprecedented ways, paving the way for further human achievement.
Generally, when we think of business activity, we imagine lines of customers waiting to get a service or to buy a product. The higher the activity that we imagine, the longer these lines of customers need to be entering and exiting through the doors of the business to create a positive bottom line. Today however, this is very much an outdated view.
The market unknowingly utilising Ethereum benefits
One such bridge is called ARM AI (Automatic Reserve Management AI). It now offers service from the Ethereum network and can deliver this service outside of the boundaries of the network in order to capture value and bring it back into the network. The best real-life example is a traditional business that exports and imports between different currency zones. Being completely unaware of the interconnectivity of today’s financial marketplace, such a business wants to hedge and protect profit margins against excessive currency fluctuations in its operating markets. For illustration purposes, let’s use a mid-sized corporation, that may want to hedge currency risk between the USA and UK, and the USD and the GBP respectively.
There are many businesses like this looking to do something similar. What these companies want is the best price for their conversion. The breakthrough for Ethereum at this point has become its new ability to start competing in this worldwide market, providing the best prices to these customers regardless of location. As a result, the tables have turned so that excess capital from within the Ethereum network is actually providing liquidity in the traditional global currency market. For ARM AI and the Ethereum protocol, this is a huge perpetual opportunity to demonstrate value.
ARM AI gives the system the ability to find optimal connections between various participants in the market and there is no need any more to bring them through the business’ door and sit them behind the table or an online portal to generate activity. Thanks to its High-Performance Computing capabilities, ARM AI can identify the best potential partnership in the market and can offer a connection to multiple businesses and enables them to obtain more efficient conversion rates for all parties.
The payment token effect
In light of the activities mentioned, the network is making an earning for itself, yet the users in the global market don’t even need to know about Ethereum’s technicalities and complexities and this is where the true potential can be recognized. This facet provides a double-sided benefit, first, stability and the value preservation link is established between the inner ecosystem and the surrounding environment. The link is the special construction of the multi-currency reserves backing the payment token operated by the AI. This active and diversified backing together with gold acts as an anchor that cannot easily be moved by any institution, even not by a big Central Bank.
The scalability issue is also improved at the same time; transactions that happen outside the boundaries of Ethereum do not burden the network, but they still do increase the value of the network with every transaction that the mechanism helps to facilitate in international trade. The payment token operated by AI can be spent or fully converted for by FIAT, in which case the network itself again is not put under load with every transaction.
With the benefits of ARM AI, an overall cost-effective stable payment solution can exist on the Ethereum network which eventually is able to cover all the transaction costs from the automatically generated activity and services provided by the network as a whole. This self-sufficiency will allow these services of the Ethereum network to become available to the broader financial world.
X8 currency taking the industry to unseen levels
X8 AG is a fintech company from Zug, Switzerland and is the IP owner and the operator of the ARM AI. The company created a solution around the portfolio risk management platform to create a stable payment token called the X8C currency token (X8currency) and has so far accumulated 32 months of track record in a live trading environment for an institutional account.
With this track record, X8 AG is proving that as a system, ARM AI and X8currency can help neutralize effects of inflation and transaction costs for conservative investors in blockchain, who prize risk control and robust value preservation independent of any individual currency fluctuations. The company is integrating a cryptocurrency payment processor, which will launch concurrently with X8Currency and will enable a frictionless transition for both cryptocurrency and FIAT into this first true value preservation digital currency token.