OmiseGO is an Ethereum-based financial tool to be used with mainstream digital wallets; it allows real-time, peer-to-peer payment exchange and services, regardless of the users’ location in the world. While it is designed to improve upon traditional banking services (and reach “unbanked” people – those without access to banking services), it does not aim to disrupt existing cryptocurrency platforms: instead, it intends to build a bridge between traditional and cryptocurrencies and to facilitate the use of both. In this way, it can help make cryptocurrencies more mainstream.
OmiseGo (OMG) Chart
The Southeast Asian market
OmiseGO started out as just Omise, in 2013, a payment gateway specifically for Southeast Asia, which remains its home base and primary market. As opposed to the European Union, which – largely – has its common currency tying its economic markets together, Southeast Asia has no such thing.
Its market remains extremely fractured and many migrant workers are struggling to transfer money from one country to another, especially if they have no direct access to traditional banking services. Because of this, e-wallets and online platforms are increasingly popular in Southeast Asia; OmiseGO is attempting to make the use of such online platforms easier for users.
Connectivity between platforms
Most specifically, OmiseGO aims to solve issues caused by the presence of an increasing number of closed platforms for financial transactions, such as PayPal, Venmo or ApplePay. It can be hard to transfer money from one account to another if users are not subscribed to the same service; the Omise system strives to make this easier, and has developed the OmiseGO tool for this purpose.
This also means that any form of currency – euro, dollars, Bitcoin, ETH, even harder-to-access currency variants such as giftcards or airmiles – can be used to pay using any service, which also makes international transfers easier and international money exchange in a sense redundant.
OmiseGO also has a number of additional advantages. Because it is based on blockchain technology (and works via the Ethereum platform), this means it is decentralised and trustless; as opposed to traditional banks or digital payment services like PayPal, transactions happen on a public ledger system, which means no single person or authority can tamper with or in any way control the payments.
In addition, OmiseGO uses the new plasma.io Ethereum project as its basis; this project’s main goal is to dramatically increase scalability. This means OmiseGo is able to carry out transactions much more rapidly than traditional banks and payment services and also much more rapidly than many other cryptocurrencies.
Thirdly, the decentralised nature of OmiseGO means that it can afford to be much cheaper than other payment options, such as either banks or services like PayPal, which charge often high fees for international transactions. Since OmiseGO essentially cuts out the middleman and verifies transactions on a publicly available blockchain, fees can be much lower.
OmiseGO also has its own token, the OMG. This token is used, on one hand, to fuel the network, so that users will need it in order to make full use of OmiseGO’s functionalities. At the same time, the OMG token also enables users to “own” a stake in the company; they are now invested in the company and its success makes their investment worth more. This hints at a final way to look at acquiring OMG: as an investment, to sell on at a later date, for profit. Nonetheless, it is important to remember that OMG’s primary use is not to replace fiat currencies by its native currency, but instead to facilitate trading between fiat and cryptocurrencies.
ICO sale and exchanges
Like many cryptocurrencies and blockchain platforms, Omise decided to use an Initial Coin Offering (ICO) sale in order to launch its currency; this is also a straightforward way to instantly raise money to fund the platform.
Omise organised this in the summer of 2017 and sold $25 million in OMG, up from a cap of $19 million previously to accommodate more investors, as well as a wider range of people. Minimum investment was $5,000, maximum investment was $100,000: in this way, Omise attempted to ensure one or two “whales” did not buy up the total amount of coin, thus creating a monopoly.
For those not involved in the ICO, OMG can now be purchased via exchanges, as it is the case with most cryptocurrencies.
Selecting an exchange
In choosing an exchange, users must consider a number of factors. These include the exchange’s reputation and security level, and whether or not it can be accessed from the user’s country. Users must also make sure their exchange of choice allows them to purchase OMG, especially since not every payment method can be used to buy OMG – in part because OMG is a fairly new cryptocurrency.
For this reason, buying OMG can be more complicated than buying Bitcoin, which can be done using various payment methods. Users can thus consider purchasing Bitcoin first and then use another exchange to trade Bitcoin for OMG.
When the user has located an exchange and has decided to purchase OMG, he must submit some personal information in order to register on the exchange. Once he is registered, he can purchase OMG on the exchange.
Such purchases will be initially stored within the user’s exchange account, but users should transfer these coins from the exchange into a wallet as soon as possible. This is especially important because in this way, the coins can no longer be stolen either by those running the exchange, or in case the exchange gets hacked. Once transferred into a user wallet, the OMG are entirely owned and managed by the user and protected by his own security protocols.
OmiseGO as a system does not currently support mining. OmiseGO uses a proof-of-stake rather than proof-of-work system; this means that all users who own a stake in the system (i. e. who own OMG tokens) will be able to make more OMG by verifying blocks and thus helping to maintain the blockchain.
At the same time, however, it is different from a proof-of-work system as used by Bitcoin and many other cryptocurrencies in that this is not really a question of “mining” but more of “harvesting”; users simply receive the fees paid by others on the transactions within the blocks they verify. This does mean that the reward per block is entirely random and that no new currency enters the system with each block mined: the only way for new coins to enter the system is when they are introduced by Omise.
The harvesting system has one big advantage compared to cryptocurrencies like Bitcoin. In the case of Bitcoin, the technological requirements to mine the currency become more and more advanced as time goes on, since this is how Bitcoin decides who successfully mines a block and receives the reward. Omise, however, only considers the user’s “stake”, i. e. the extent to which he is invested in the system. Users thus don’t need to invest heavily in particular equipment in order to be able to mine OMG.
One key factor in deciding whether or not to invest in OMG is, of course, its price and the fluctuations of this price. This page will give a brief overview of how cryptocurrency prices evolve, well as of the impact of some key concepts such as volatility on the decision whether or not to invest.
OMG: the story so far
OMG is a relative latecomer to the cryptocurrency market, so it does not have a particularly long price history to reflect upon. Nonetheless, its initial ICO in summer 2017 clearly demonstrated that its declared intention to disrupt traditional financial institutions and offer a decentralised exchange and transaction platform for both traditional and cryptocurrencies made it a potentially valuable asset to many investors. OmiseGo organised a pre-sale via Bitcoin Suisse and originally set aside $4 million worth of currency, but received expressions of interest up to $60 million.
Since OmiseGo wanted to maintain long-term interest, however, it decided to have a capped sale instead; this was capped both in terms of the total amount of coins (worth up to $19 million, then expanded to $25 million) and in terms of the amount of coins able to purchased by a single user (between $5,000 and $100,000), to ensure a monopoly could not form. All the coins offered for sale were sold out during this capped sale, and over the course of the time since, OMG has gradually risen in value.
Nonetheless, a few general warnings should be observed when investing in cryptocurrencies.
Firstly, cryptocurrencies have the reputation of being more volatile than fiat currencies, which can be a danger for investors; such volatility, seen for example in terms of Bitcoin and Litecoin both, tends to consist of very rapid inflation followed by brief “crashes”.
Throughout the brief history of cryptocurrencies, they have proven to be far more volatile than traditional currencies, which means users can quickly gain, but also quickly lose, money as their investments are impacted by this. As an example: between 2010 and 2014, the annual year-to-year volatility of Bitcoin was over 100%, which is eighteen times greater than that of the US dollar.
There is no clear indication whether OMG will or will not follow this trend in future months and years, but since cryptocurrencies are entirely deregulated, this is an issue to bear in mind.
Such heavy price fluctuations have also given rise to rumours about cryptocurrencies, which include OMG, as a potential economic bubble. An economic bubble is a situation in which the price of a particular product or service sharply exceeds its intrinsic value, often due to the excessive optimism of initial investors and their belief in transformative technology. This then causes the price to rise and rise until it inevitably collapses and leaves investors facing a loss of funds.
Such rumours would then lead investors to sell their OMG at lower prices in order to recoup some of their expected future losses, which in turn leads to a devaluation of the currency itself.
Cryptocurrencies are stored in “wallets”, but these do not quite function like the physical wallets we use to store mainstream currencies. Instead, they simply allow the user secure access to his coins through the transmission of a secret code. OmiseGO itself, however, is not simply a cryptocurrency in its own right, but also a tool that can be integrated in various wallet systems to make them more easily transact and exchange both fiat and cryptocurrencies; this page will introduce a number of different wallet formats which can be used both to store a user’s OMG and to enjoy the functionalities of OmiseGo.
Desktop and mobile wallets
The first option is a desktop wallet, which is simply a software program installed on a desktop computer. It gives the user complete control over the wallet – which is stored on his own PC – but also means the user is entirely responsible for the installation, maintenance, and security of the wallet. Users can then use this desktop wallet to create an OMG address to manage their transactions and store a private key to access this address.
A mobile wallet is a similar application which is installed on a smartphone or tablet, for use on the go. It is worth noting that OmiseGO itself has the ambition to launch its own native OMG wallet, which will be optimised for use with the Omise platform.
Desktop and mobile wallets can be either full clients or lightweight clients. The distinction lies in the way in which they access the blockchain: full clients download (and verify transactions through) a full copy of the OMG blockchain, whereas lightweight clients access, but do not download, the entire blockchain. Lightweight clients are thus a better option for mobile wallets, since they require less processing power or storage space.
Web wallets can, like mobile wallets, be accessed from anywhere, without any specific device or tool. They are hosted by a particular provider and thus require less setup and specialised knowledge from the user. This does also mean, however, that the user must have complete confidence in the provider’s security protocols, to protect his funds against hacking or theft.
Hardware wallets are another option: they are specific devices which only serve the purpose of managing cryptocurrency transactions. The user’s credentials are thus not stored online, but only exist within this one device, which makes them harder to steal or hack. It must however be borne in mind that as opposed to many other non-physical wallets, hardware wallets must be purchased; they are not free.