PayPal’s CEO Daniel Schulman predicts “crypto will redefine the financial world” but before it does so three hurdles need to be overcome before crypto becomes a viable means of payment. The wallet that overcomes these hurdles is well placed to lead the way in turbo charging crypto payment adoption globally.
The first hurdle is FOMO, fear of missing out on my coin’s upside potential. If I spend my Ethereum or Bitcoin Cash then gone for ever is the opportunity to see my coin moon during its next bull run. Michael Sayler, CEO of MicroStrategy calls selling your Bitcoin the biggest mistake of all. It is like killing the goose that lays the golden egg.
The second hurdle is the liquidity trap. Because I don’t want to miss the upside potential of my coins, I’ve got very little to spend. My net worth is tied up with the coins I own. This does not leave me with much to take on a shopping spree. De-Fi platforms like Aave and Compound enable me to borrow against some of my coins. But if I go down this route I have to give my coins over to a platform I trust, pay interest and my assets are at risk from a margin call. So even though I may look good on paper this does not necessarily mean I have money to spend.
The third hurdle is tax. In most jurisdictions crypto is treated as property. When I buy movie tickets with my crypto I pay tax if the value of the coin has gone up since I bought it. If I pay for the movie tickets with fiat there is no tax. In effect paying with crypto includes a tax penalty adding to the amount I pay. For most people this is a real turn off.
If I want to pay with crypto there is no shortage of wallets. I can choose between Atomic Wallet, Jaxx, Trezor, Coinmama, eToro, Bitpay and many more. Yet to date not one has navigated the FOMO, liquidity trap and tax hurdles. This may soon change with the deployment of a new protocol called goosie.
It works like this…
As I deposit my Ethereum or any other supported coin into the protocol the smart contract immediately mints US dollar-pegged money, goosie for me to spend. In an instant I no longer have to part with my beloved Ether and lose out on its next bull run.
In the same instant I am no longer a pauper with all my net worth tied up in assets. Suddenly I have money to spend. I keep my assets and solve my cash flow issues in one go. When I want my coins back I simply burn the same US dollar value of goosie as I have minted against them.
As I deposit my Ethereum or any other supported coin into the protocol the smart contract immediately mints gold-pegged money, goosie for me to spend. In an instant I no longer have to part with my beloved Ether and lose out on its next bull run.
In the same instant I am no longer a pauper with all my net worth tied up in assets. Suddenly I have money to spend. I keep my assets and solve my cash flow issues in one go. When I want my coins back I simply burn the same amount of goosie as I have minted against them.
The goosies minted by the smart contract are in effect a loan to myself. This makes a big difference compared to getting a loan from a De-Fi platform like Aave or Compound. To begin with there is no need to hand over my coins to a third party. I retain total control over my private keys. Also, as a self-loan I am not charging myself any interest. Finally, and perhaps most importantly, my coins are never at risk of being sold to cover a margin call. With goosie there are no margin calls.
The self-loan nature of goosie also clears the tax hurdle. If I take out a loan from a bank I do not pay tax on the loan. As goosie issued by the smart contract are also a loan this means like a bank loan there is no tax to pay. The tax penalty for paying with crypto disappears.
Because goosie is a protocol it can solve the hurdles of FOMO, liquidity trap and tax for Atomic Wallet, Jaxx, Trezor and others as soon as they integrated it into their offering. This may cause a shakeout in the burgeoning crypto wallet industry. If I can keep the upside potential of my coins, have money in my pocket and avoid tax why would I keep my coins anywhere except in a wallet that supports the protocol? The first wallets to adopt the protocol may just be those that take crypto payments mainstream.
About the author
Branton Kenton-Dau has a long term passion for stable decentralised money. Goosie is his fourth project in the field. Before falling for the blockchain Branton was CEO of predictive analytics firm VortexDNA.