The future of cryptocurrency is services like CoinSwitch and Uphold rather than new tokens.
Instead of creating and selling tokens, Uphold and CoinSwitch make it easy to buy, sell, and trade cryptocurrency. For instance, Uphold offers access to over 1,000 currency pairs. Meanwhile, CoinSwitch offers access to over 300 currency pairs.
Essentially, CoinSwitch and Uphold’s radical new business model is to charge cryptocurrency users a fee for fast access to money. Thus, a good way to think of CoinSwitch and Uphold is as trying to creating a PayPal (NASDAQ: PYPL) or a Stripe for cryptocurrency.
Uphold and CoinSwitch want to be the PayPal of Cryptocurrency
To explain, PayPal and Stripe do not create the money or offer goods or services. Instead, Stripe and PayPal make it easy to pay for services or get paid for goods and services.
This business model can be lucrative, PayPal reports a gross profit of $1.901 billion and a free cash flow of $913 million for 4th Quarter 2018. Moreover, the privately held Stripe raised $450 million in investments between 2011 and August 2018, Expanded Ramblings reports. In addition, Stripe had and estimated value of $9 billion in October 2017.
Importantly, payment platforms like Stripe and PayPal can grow big fast. For instance, Stripe claimed to be used by over 100,000 businesses in 120 countries in 2018.
In addition, PayPal had 267 million registered user accounts in 4th Quarter 2018, Statista estimates. That number grew by 17% form 229 million in 4th Quarter 2017.
Plus PayPal’s total payments volume grew by 28%; from $451.27 billion to $578 billion, between 2017 and 2018, Statista calculates. Hence, Uphold or Coinswitch could easily become the first blockchain or crytpcourrency company to grow into a lucrative big business.
How CoinSwitch and Uphold are building ecosystems
CoinSwitch and Uphold are trying to do the same thing by making it easy-to-use cryptocurrency to buy and sell.
For instance, I noticed Uphold when I added Brave Rewards to a website. If I earn any Basic Attention Tokens (BAT) through Brave I can convert them to cash or other cryptos through Uphold. Uphold’s Wallet impressed me because I could install it and verify my identity quickly with no problems.
On the other hand, CoinSwitch concentrates on application phase interfaces (APIs). An API is a payment app they build into digital platforms and tools. For instance, gaming platforms, games, e-commerce platforms, wallets, and exchanges.
Customers will use the CoinSwitch API to pay businesses by converting their altcoins into a currency the business. Thus you could use CoinSwitch to pay a gaming platform with your Bancor (BNT) by converting into Bitcoin (BTC) or US dollars.
Uphold offers Instant Conversion in Precious metals
In contrast, Uphold claims to offer instant conversions to four precious metals, nine cryptocurrencies and utility tokens, and 23 fiat currencies.
Thus both Uphold and CoinSwitch are exchange marketplaces. That means their APIs and apps offer access to a variety of cryptocurrency exchanges. Hence, you can sell altcoins through several exchanges at once.
Thus, what Uphold and CoinSwitch are really selling is seamless connectivity to cryptocurrency exchanges and payment networks. Importantly PayPal and Stripe sell the same service seamless connectivity to the banking and credit card systems.
In addition, Uphold attempts to offer seamless connectivity to the payments ecosystem by letting users create digital payment cards. However, Uphold does not offer MasterCard or Visa cards yet. To be fair, both MasterCard (NYSE: MA) and Visa (NYSE: V) refuse to give cryptocurrency card issuers access to their payments networks.
Can Uphold and CoinSwitch make money?
I think both Uphold and CoinSwitch have the potential to grow into huge payments platforms, potentially bigger than Coinbase’s.
To explain, both US based Uphold and India-based CoinSwitch can tap the growing cross-border payments and remittances markets. To explain, cross-border payments are all the funds businesses send to other countries. Both, CoinSwitch and Uphold are well-placed for cross-border payments because they offer fast conversion of currencies.
Cross-border payments is a huge business which grew to $1.9 trillion in revenue in 2017, McKinsey estimates. Moreover, McKinsey predicts cross-border payments will grow to $3 trillion soon.
Meanwhile, remittance payments the money people send to individuals in other nations grew by 7% to $613 billion in 2017, the World Bank estimates. Remittances are a growing business because immigrants use them to send money to friends and family back home.
Importantly, Uphold claims to offer the ability to send money to people in 150 countries. Hence, Uphold is already in the remittance and cross-border payments business. Moreover, Uphold, like PayPal offers the capability to email money to people all over the world.
Uphold and CoinSwitch solve one of the Biggest Cryptocurrencies dilemmas
Uphold could be ideal for remittances because it can convert funds into Ripple (XRP).
Ripple is building a worldwide cryptocurrency remittance network that could make remittances cheaper and faster. For instance, a company called BeeTech used Ripple Remittance Corridors to cut transaction fees from $20 to $2 per remittance, a Ripple press release claims.
Uphold could solve one of the biggest problems facing Ripple remittance recipients converting the XRP into fiat currency. For example, a woman in Portugal could use Uphold to convert Euros into Ripple, then send the Ripple to her business associate in Brazil via a remittance corridors. The associate can use Uphold or CoinSwitch to convert the XRP into Brazilian Reals she can spend at her local store.
This solves one of the biggest problems facing cryptocurrency users; convertibility into fiat currency. To clarify, convertibility means turning the crypto into something you can spend at the supermarket or the gas station.
How will Uphold and CoinSwitch make money?
Uphold and CoinSwitch will make money in the same way that PayPal and Switch do. To explain, CoinSwitch and Uphold charge fees on each transaction.
The fees are tiny but the business plan is to get millions of customers making tens of millions or hundreds of millions of transactions. Importantly, Uphold claims to have over one million members on its platform.
Consequently, Uphold or CoinSwitch can only make a lot of money they develop large mass markets for their services. Unfortunately, developing such markets will take years.
That could benefit cryptocurrency speculators by increasing the use of altcoins, the demand for altcoins, and coin prices. In addition, it could create large commercial markets for specific altcoins that might stabilize cryptocurrency market.
How Uphold or CoinSwitch can take cryptocurrency mainstream
Every cryptocurrency speculator needs to watch services like Uphold and CoinSwitch closely because they the potential to change the cryptocurrency market beyond recognition. Specifically, the success of Uphold, CoinSwitch or something similar could make paying with cryptocurrency as fast, as easy, and as convenient as paying with PayPal.
If that happens, crytpcourrency will go mainstream. However, we will know if that has happened until there are CoinSwitch or Uphold users who do not realize they are making cryptocurrency payments. When that occurs, cryptocurrency will be mainstream.