Blockchain Compatible Fiat is Coming! What Does This Mean?

On February 21st, Charlie Lee of Litecoin took to Twitter and made a cryptic tweet about WEG Bank’s exciting product pipeline. Needless to say, the promise of a traditional banking institution getting more heavily involved in cryptocurrency went down very well in the Crypto Twitterverse:

What exciting new products were Charlie Lee hinting about? A week later, it seems like we have the one of the answers and it appears that it involves WEG Bank’s new partners, Nimiq and Agora Trade.

The Blueprint For A New Crypto-to-Fiat Bridge

Nimiq, a disruptive crypto payment system, recently announced that the project has created the blueprint for making fiat currency (USD, EUR, etc) blockchain-compatible. Work on this new Crypto-to-Fiat bridge has been pursued in collaboration with both WEG Bank and Agora Trade.

In a nutshell, this innovation is focused on making fiat currencies, like the Euro, directly behave as if it were a token on the blockchain. This enables seamless value exchange between the crypto and traditional banking worlds.

Furthermore, Nimiq has removed the need for a single centralized intermediary eg. payment processors and exchanges, to control the two assets being traded. Even better, this functions without a third party ever controlling the private keys of the crypto asset.

Now, this may sound like a word salad to many people. Put simply, all this means is that Nimiq has found a way for crypto holders to sell their coins directly to fiat bank account holders and vice versa, without entrusting crypto assets to a third party like an exchange.

Anyone who has actually bought or sold crypto assets for fiat currency, will know that it’s not as straight forward or seamless as it should be. Indeed, you could be waiting for a couple of days for your fiat deposit to hit Coinbase and then you have to transfer Bitcoin or Ethereum to a crypto-to-crypto exchange to buy that altcoin you want.

All this creates a chain of hoops to jump through and the truth is that many people just give up. That’s bad news for wider crypto adoption.

In addition, the Quadriga scandal, where a cryptocurrency exchange allegedly lost the private keys to $135 million of user funds, highlights the benefits of giving crypto holders an alternative way to sell their coins for fiat currency, without having to entrust private keys to an exchange.

Nimiq’s new approach is aiming to revolutionize how value is exchanged between the traditional banking system and the cryptocurrency universe, by removing many of the complications and barriers that exist.

Not only is this innovation disruptive for current cryptocurrency holders, but it has the potential to make cryptocurrency markets significantly more accessible and safer for new crypto supporters too.

Blockchain-Compatible Fiat: How Is It Disruptive?

Nimiq’s new blueprint has the potential to eliminate unnecessary middlemen for crypto holders and merchants alike.

Online crypto payment processors:

Smooth out the friction that exists between the cryptocurrency and traditional banking world, by enabling value to be exchanged between the two ecosystems. The problem is that these middlemen (like Simplex) typically charge up to 5% on transactions and add yet another layer that needs to be trusted by crypto holders.

Nimiq’s new crypto-to-fiat bridge could completely disrupt and remove the need for online crypto payment processors. By directly integrating with decentralized exchanges, it eliminates the need for third-party custodial processors like BitPay.

Over-the-Counter (OTC)

According to TABB Group research, these markets are three times bigger than exchange markets and they simply match high-value crypto holders with high-value fiat buyers.

Needless to say, OTC operators charge significant fees for this service and if Nimiq’s new solution reaches scale, it could pose a significant challenge to these markets by offering a convenient and efficient solution to match and execute transfers between crypto and fiat.

Stablecoins

This market currently stands at ~$2.8 billion. One of the main uses of stable coins (which attempt to replicate the value of the dollar) is providing a convenient way for crypto owners to hedge against the volatility of crypto markets.

Nimiq’s new crypto-to-fiat bridge is set to give crypto owners a new and convenient way to move their funds to real fiat, whilst also removing the need to trust unaudited stable coins.

Hello Nimiq OASIS

Nimiq, working with WEG Bank AG and the non-custodial cryptocurrency exchange Agora.Trade, is pioneering a totally new approach to how banks deal with crypto by building a crypto-to-fiat bridge.

If those names sound familiar, it is because Litecoin and TokenPay each hold a stake in WEG Bank and Reto Trinkler made the Forbes ‘30 Under 30’ list.

This is a revolutionary collaboration that could provide the disruption needed to usher in mass adoption of crypto by making it far easier to interface between fiat and crypto.

The groundbreaking blueprint allows fiat currency, like the Euro itself, to behave as if it was a token on the blockchain. The tech is called the Nimiq OASIS (Open Asset Swap Interaction Scheme), which is the middle layer solution connecting Agora Trade to WEG Bank.

Because it enables fiat to crypto exchange, this functions without needing to issue or use stable-coins. More details of this innovative solution can be found on Nimiq’s official blog.

Nimiq OASIS could completely disrupt how crypto is bought and sold with fiat currency. The wider vision is to allow other exchanges, bank, fiat and cryptocurrencies to integrate and leverage Nimiq OASIS in the future. This would allow even more crypto users and financial institutions to eliminate middlemen like payment processors and enable convenient value transfers between the two ecosystems.

Nimiq’s current partners made the following statements on the collaboration. According to Matthias von Hauff, CEO of WEG Bank AG:

For the past 12 months, we have been looking at various ways to expand our core banking activities into the blockchain community. With Nimiq, we have been able to develop not only a landmark payment interface which has the potential to revolutionize the way we deal with cryptocurrencies, but also an innovative and powerful partnership

And, according to Reto Trinkler, the co-founder of Agora Trade:

Overregulation and lack of innovation lead to the development of custodial exchanges and financial intermediaries such as stablecoins. By combining an easy­-to-­use payment token, a non­custodial exchange and an innovative fiat bank we go back to the heart of what blockchain is all about; Self­-sovereignty and removing unnecessary middlemen

Agora Trade also took to Twitter after Nimiq’s official announcement was made. One thing is clear, Nimiq OASIS to closing the gap between the traditional banking system and cryptocurrency markets.

World watch out, blockchain-compatible fiat is coming!

Disclaimer: The author holds some NIM in their portfolio and is compensated in a long-term independent consulting capacity by Nimiq. This article must not be construed as investment advice. Always do your own research.