Despite all the investment speculation and hype, cryptocurrency has so far struggled to find meaningful use cases. Now there is some effort from Singapore to make the general public crypto adopters through blockchain payments.
Cosmose AI, a nine-year-old company that uses AI analytics to track in-store foot traffic and engage with customers online, has teamed up with Near, one of the blockchain protocols competing with Ethereum. The pair are building a payment system that will allow users to shop with crypto for low transaction fees, saving money for both buyers and sellers.
As part of the partnership, Near Foundation, the non-profit arm of Near that supports the development of the protocol’s ecosystem, has made a strategic investment in Cosmose. The round, the amount of which will not be disclosed, raises the company’s valuation to $500 million, up from $100 million when it closed its $15 million Series A financing in 2020.
Cosmose’s suite of retail solutions includes the KaiKai app that allows customers to discover stores in their physical environment and an online targeting platform, both of which are getting a blockchain makeover with the help of Near.
Miron Mironiuk, the company’s founder and CEO, had no intention of riding the crypto wave; rather, he was looking for a solution that would make online payments cheaper for consumers and merchants that Cosmose serves.
“I’m not sure you are aware of how expensive and slow it is to process online payments. It’s absolutely crazy,” Mironiuk told MinRegion in an interview.
He gave the example of buying a $5 cup of coffee. Payment processors like Stripe and PayPal effectively charge upwards of 10% for small transactions, so the seller ends up raising prices, forcing the buyer to pay 6-10% more. A year from now, the coffee drinker could easily spend an extra $200 just because the transactions are handled by middlemen like Stripe.
Pay with cryptocurrency
With its Near-powered blockchain payment system, KaiKai, where users can discover nearby products and pay through the app, claims to reduce the transaction costs of one’s annual coffee consumption to just $4, which is 50 times less than the Stripe or PayPal -method. according to Mironiuk.
“Imagine how much you could save if all payments were moved to blockchain,” said the founder.
Not all blockchains are cheap to use. One of the biggest challenges to cryptocurrency adoption is the exorbitant costs involved. Without a centralized settlement system, cryptocurrencies rely on a distributed network of validators to verify on-chain transactions. That process on Ethereum is notoriously expensive, so alternatives like Cardano, Pokadot, and Near have sprung up to make crypto cheaper and more scalable.
KaiKai, Cosmose’s store discovery app, handles payments in its native stablecoin Kai-Ching, which runs on Near’s network. The app creates a crypto wallet for users, who can top up Kai-Ching with fiat currencies. In the future, users may have the option to convert Kai-Ching back to fiat.
Cosmose maintains a treasury for Kai-Ching, which is pegged to US dollars (1 Kai-Ching = 1 USD cent) and is only tradable within the app to avoid value instability.
KaiKai first launched the option to pay with crypto last September in Singapore, where the government is in the process of formulating a stablecoin regulation. Since then, Kai-Ching has processed more than 1 million transactions in the form of payments, refunds and rewards.
Prices are automatically reduced when users choose to pay in Kai-Ching. More than half of Ka-Ching’s users are Gen Z, and they are “super comfortable” with crypto because they know that “the coins are on-chain” and “they own them,” the founder noted.
The company declined to disclose how many crypto users it has accumulated, but one data point sheds light on user behavior: One-third of transactions are paid with Kai-Ching. Given the traction in Singapore, it won’t be surprising if Cosmose brings Kai-Ching to other crypto-friendly jurisdictions in the future.
Own your data
Cosmose and Near are on to something that seems even more ambitious. One of the promises of blockchain-based applications is to return control of personal data to users instead of keeping it with Big Tech’s centralized servers.
Essentially, Near Cosmose helps migrate user data to its blockchain and build a system where users can see how the company tracks them, including their location, when they open the app, the products they view, and how long they stay.
The goal is to store user data on their phones using edge computing and let people decide how they want to be tracked to receive more or less accurate product recommendations and rewards.
“It’s not just a technical challenge. It’s also a challenge for the user experience to do it in a way that people can actually check it out and get insights and make quick decisions,” said the founder.
Since its inception, Cosmose has served more than 20 million stores and reached one billion phones worldwide, with China accounting for “hundreds of millions”. The company has a team of 80 employees in Warsaw, the technical base, as well as in Shanghai, Hong Kong, Singapore, Tokyo and Paris.