SovereignWallet, a blockchain-based and virtual wallet service, plans to increase the level of inclusion within the cryptocurrency industry by allowing users to transfer assets directly from their smartphones. The service will also allow those without bank accounts to create cryptocurrency accounts with mobile app wallets on their phones easily.
By owning one of these online wallets, users can easily send Ethereum and MUI (the Sovereign utility coin) to other recipients and also receive transaction notifications. The firm has stated that its service will support other virtual currencies as time goes on.
WHAT IS SOVEREIGNWALLET?
SovereignWallet is a mobile cryptocurrency wallet that aims to make it possible for users to transfer digital assets as easily and as quickly as sending a text message. It is led by Seokgu Yun, Founder and CTO, along with Frances Kim, Co-Founder and COO.
Founded in 2015, the company will offer users the following services:
- A secure banking-grade mobile wallet for the storage and transfer of cryptocurrencies, with support for MUI and ETH.
- An instant messaging service containing a secure and private chat interface.
- Asset transfer and remittance.
The company aims to give users, especially those in countries that have suffered an economic crisis like Greece and Venezuela, a way to transfer and hold stronger assets than their national fiat currencies. This empowers even those who have no bank accounts to store their assets securely as they are gradually accumulated. SovereignWallet is the firm’s direct response to a host of issues that currently affect how cryptocurrency users and non-users carry out transactions.
CURRENT ISSUES FACED DURING CROSS-BORDER PAYMENT TRANSACTIONS
Like any other emerging blockchain service, the firm behind SovereignWallet has analyzed the industry and the problems that users encounter when handling their assets. Since the cryptocurrency and blockchain are relatively new, there are still a lot of these problems. While traditional fiat payment systems have presented these issues for a long time, blockchain is showing the finance industry that they can actually be solved. Such issues include:
1. HIGH TRANSACTION FEES
Despite the advanced technology used in modern payments systems, the fees associated with remittance remains high. According to the World Bank, annual remittance is about $600 billion, of which transaction fees account for $30 billion. The average fee on each cross-border payment is about 5%-7%, which means that a user who decides to send $400 across borders, may end up paying up to $28 as a fee.
SovereignWallet aims to solve this problem by offering users a way to send assets across its network without paying these exorbitant fees. A cryptocurrency like Stellar Lumens (XLM) which has a fixed low transaction fee of 0.0001XLM (0.00000245 USD), shows that it is possible to drastically reduce remittance fees on such networks.
2. SLOW TRANSACTION SPEEDS
According to SovereignWallet, its service could enable users send money faster than they’ve been doing. Naturally, there are several factors that contribute to slow transaction speeds. Some of these factors include:
- Delays in communication between involved parties.
- Third-party activity between the sending country and the recipient country.
- Programming errors on the back-end.
- Network issues, including an overload.
SovereignWallet claims that it will eliminate these pitfalls by allowing users to transact on a blockchain without the need for third-party clearing houses. It will also address other pitfalls that can make the process of sending assets less convenient, including huge energy demands and even security flaws. In this case, user data would also be protected due to the decentralized nature of the network.
3. LOW SECURITY
SovereignWallet continues to argue that although blockchain has proven to be secure through its operating mechanisms, the same cannot be said for its underpinning infrastructure. This lack of secure infrastructure increases the risk of major network breaches like those that have been seen on various networks.
For example, the Bitcoin lightning network was attacked in April 2018 by a group called BitPico. While the network has been safe for users so far, the possibility of such attacks reduces the confidence that investors have in cryptocurrency. This, in turn, makes it more difficult for new investors to enter the industry. In both the short and long term, this will have a negative impact on adoption rates.
Exchanges are not exempt from the security concerns in the industry. A few like Bithumb have also been in the news recently for various attacks in which hackers made away with huge sums of digital assets. SovereignWallet has warned its users in the past, stating that centralized exchanges are a ticking time bomb.
According to the firm, these exchanges have been attacked as a result of their flawed security. The situation is worsened by the fact that these institutions constitute a large portion of the cryptocurrency market. This means that security breaches on their platforms eventually have a huge negative impact on the market.
SovereignWallet claims that it will apply over 20 years worth of experience in creating secure products for governments and financial institutions to solving the issue of security. One major feature that the wallet app contains is a secure instant messaging system that offers end-to-end encryption.
According to the firm’s whitepaper, all chats on the app, including group conversations, will stay completely private. This is made possible by an encryption mechanism that does not store chat histories on the app server. Messages which are mistakenly sent by any of the users can also be deleted instantly.
To secure its remittance and transfer processes, the SovereignWallet app uses a complex cryptographic address which is connected to another identity-based address. SovereignWallet states that its network will run on blockchain 3.0m which will serve as a more advanced version of older blockchains and offer improved performance. It will also contain updated smart contracts, sustainability, interoperability, and scalability.
4. MARKET VOLATILITY
Fiat payment systems are not the only ones with issues affecting remittance, their cryptocurrency counterparts have them too. One property that sets the virtual currency market apart from others is its high volatility. The market shifts are often extreme and difficult to predict. Some currencies like Stellar Lumens have seen almost 10,000% gains in a few months, followed by equally large declines. Bitcoin, despite heavy gains in December 2017, saw up to weekly 50% losses in January.
Daily, the markets experience extreme gains followed by price corrections which make them unsustainable as a store of value. It also makes them an impractical choice for use as a means of exchange during everyday purchases. SovereignWallet has created its own utility asset, an ERC20 compliant token referred to as MUI, which will support its ecosystem. According to the firm, its token is designed to combat the high volatility seen in most cryptocurrencies.
SOVEREIGNWALLET’S PLANS FOR THE FUTURE
The firm recently announced that its app will now support other cryptocurrencies including 0x Protocol (ZRX), AirSwap (AST), and OmiseGo (OMG). Any of these tokens can now be transferred using the app interface. The company will also offer Initial Coin Offering (ICO) services to new startups and allow users to access its decentralized exchange. SovereignWallet hopes that it will successfully reach the people who are most in need of its service, while creating better opportunities for them to thrive financially.
Developing countries like Venezuela have been facing an extreme financial crisis that has impoverished a huge portion of their populations and weakened their national currencies. While using cryptocurrency to give individuals in these countries more control over their financial assets may seem like a viable solution to these problems, there are still a number of hiccups.
Many cryptocurrency networks function as they are intended to, but still face issues with scalability, slow speeds, high costs and even storage problems. SovereignWallet hopes to tackle each of these problems by making the improvement of individual lives in these developing countries their priority.