Beginners Guide to Proton Chain: A Bridge to Traditional Banking
The choices we make each time we make a purchase are so ingrained, they’ve become unconscious. If we purchase from a merchant online, we hand over our credit card or bank account details. If we pay by check, we often have to provide ID to back up our purchase. It’s a continuous trade-off between identity, privacy, and making the financial expenditure we need.
Proton chain exists to overcome these compromises. It’s a secure blockchain protocol that aims to unite fiat and crypto payments ecosystems under a single platform.
History
Proton started as a joint venture between two separate companies, Metal, and Lynx. Both companies had a similar vision of bringing cryptocurrencies to everyday consumers; however, each implemented this vision in different ways.
Metal developed a blockchain-based payment processing platform, intending to become the crypto equivalent of Venmo or PayPal. It was launched in June 2017 with a $3m ICO and has since opened up its applications on iOS and Android. It now also offers a marketplace with fiat onboarding where users can buy and sell cryptocurrencies.
Meanwhile, Lynx has evolved into a key player within the EOS ecosystem, having built the leading EOS wallet for US users. The company was also one of the earlier pioneers of EOS gaming, having processed millions of dollars worth of transactions through EOSBet. Ultimately, Lynx decided it could improve upon the design and capabilities of EOS and developed its own Lynxchain as a fork of EOS.
Early in 2020, the two companies decided to combine the best features of each into Proton chain, creating a bridge between traditional finance, cryptocurrency, and blockchain-based applications.
Problems Proton Chain Aims to Solve
Proton aims to address several issues facing traditional banks and crypto finance. In traditional finance, when the sender authorizes a payment, it’s usually sent over some kind of telecommunication channel, which exposes it to interception by malicious third parties. Furthermore, the prolonged period it takes for merchants and banks to verify transactions only increases this risk.
In the crypto space, there are no native compliance tools covering anti-money laundering legislations, with operators left to engage third party providers, which increases overheads and introduces complexity. There is also no way to push or pull funds between a blockchain and legacy finance systems.
Features of Proton
Proton chain allows a user to move cash into their wallet, where they can then use it to buy or sell any supported cryptocurrency, which can also be used seamlessly in dApps.
The protocol operates based on a system of verified user identities to ensure that funds are only allocated where they’re supposed to be.
The identify verification part of the Proton chain platform works by using a decentralized network of KYC validators and money service businesses. This network will verify the identity of any user signing up for the platform, assigning them with their own @ name and the status of “trusted user.” The naming protocol is comparable to Twitter, and the trusted user status will appear on any application using the Proton naming protocol.
The first use case for Proton chain is Metal Pay. However, in the future, the team envisages that any fiat or crypto payment service such as Venmo or Alipay could sign up to use the service. The platform uses “push signing,” meaning that users authenticate their payments by providing their verified @ username.
Furthermore, users can move money between any Proton-enabled account seamlessly and instantly.
The Proton network can handle up to 5,000 transactions per second, which is faster than either Ripple or PayPal.
Token
XPR is the native token of the Proton chain. Like EOS, Proton chain works through the delegated Proof of Stake (dPoS) consensus, allowing users to stake their tokens as a way of voting for which nodes get to produce blocks.
The project has minted an initial supply of 200 million XPR, with 5% annual inflation. The inflationary tokens will be split between block producers (2.5%) stakers (1.5%) and the Proton Steering Committee (1%.)
Block producers validate network transactions with a two-third majority consensus required to write to the blockchain. Transactions are considered final after three minutes has elapsed.
Staking one token confers one vote to the token holder. Stakers must agree to a minimum one-month staking period, and their tokens are bonded, meaning they will lose out if their delegated block producer doesn’t perform to a minimum standard.
The XPR token is available on the Metal X exchange, along with external platforms, including Bithumb and HitBTC. It can be stored on the Lynx Wallet.
Roadmap
The Proton chain launched on mainnet at the end of April 2020, and the Metal and Lynx companies officially merged in mid-May.
The entire team is now dedicated to the development and launch of Metal Pay 3.0, which will be rolled out over two phases.
“Red Falcon” will be the first phase, aimed at making Metal Pay 3.0 the first wallet capable of interacting with the Proton chain using authentication and push signing. This will involve every Metal Pay user having their own unique @ name, stored on the Proton blockchain, and use their @ name to respond to payment push requests.
Furthermore, this phase will involve the implementation of a non-custodial “crypto-tab” within the Metal Pay app, allowing the users to send and receive Proton tokens. It will also launch a feature enabling users to “wrap” coins purchased on a third party exchange on the Proton chain.
The second phase, called Snow Owl, will add new features to the established Metal Pay 3.0 framework, including multiple fit currencies, a Proton-based stablecoin, and a web client.
Team
The Proton team comprises members from both Metal and Lynx.
Marshall Hayner is the co-founder and CEO of Proton. Before founding Metal, he also founded crypto companies, including QuickCoin and Block.io, and was the tenth employee on the Stellar launch team.
Fred Kreuger is the co-founder and President, and former founder and CEO of EOS Lynx. Educated at Cornell and Stanford, he’s also the inventor of the “Currency Index Swap” and has over $500m in exits.
Glenn Mariën is co-founder and CSO with over ten years in full-stack development experience. He created Dogecoin.info, the first online wallet for Dogecoin, which was later acquired by Block.io under Marshall Hayner.
Early investors in the project include Erik Voorhees, founder and CEO of Shapeshift, and Brian Kelly of CNBC Fast Money, who also runs the BKCM LLC investment firm.
Conclusion
Cryptocurrencies do have a severe UX problem, with too much friction between the digital asset and fiat worlds. Proton’s vision is to overcome this, while at the same time creating a more secure environment for authorizing and spending fiat currencies using traditional payment providers.
It’s an ambitious goal. However, if the project team can pull it off, it would represent the first time that any project has been able to create an effective bridge between fiat and crypto, but also bring blockchain’s security benefits to traditional payment processors.
A critical enabler of the project’s success would be to onboard a couple of established payment providers. Therefore, a credible demonstration of the capabilities of Metal Pay 3.0 powered by Proton chain will be a big step towards making this happen.
The post Beginners Guide to Proton Chain: A Bridge to Traditional Banking appeared first on Blockonomi.
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Oliver Dale, @Khareem Sudlow
