This episode of ICO101 was a paid ICO preview conducted by host Aaron Paul. The following blog is the accompanying write up by CRYPTO101 writer Ryan LaMonica and reflects his own assessment of the project in question.
“Without thousands of employees, miles of high-rent real estate and the baggage of legacy systems, companies in our industry have a big structural advantage over traditional banks. This advantage has to accrue to the benefit of the mass market, or our industry will remain the exclusive domain of technophiles and speculators.”
There’s a first time for everything.
The Universal Protocol Platform (UPP) website caught me completely off guard when I began to familiarize myself with their efforts and checked out their site for the first time. Here’s what I saw:
Yes, for the first time, I ran into a blockchain protocol project that kicked off my U/I with their content…with a warning. Maybe that word is a bit too hyperbolic, but I could’ve sworn that I was being reassured and protected. We’re doing something serious here, and we hope that you are, too. Let’s stay safe together. Slick marketing at best? Perhaps – this is still our industry after all. But I have a hunch that we’re dealing with a potentially disruptive juggernaut. There is an unmistakable, impactful, and beautifully simple purpose throughout the Alliance’s online content that echoed just as strongly during our interview with Mr. Thieriot: connectivity, security, and insurability. The Universal Protocol Alliance is ready to welcome “the next 100 million users of crypto” and here’s a quick look at how they plan to do it.
A Proxy Token ecosystem will drive the platform’s ability to translate value across a single blockchain. After introduction of the protocol, these ERC-20 compatible tokens (UPP) will represent any underlying asset that is held by the platform’s reserve. That’s right, at a 1:1 ratio, every cryptocurrency (or other tokenized asset) that has been translated into the standard Ethereum language via a Proxy Token will be backed up by the actual asset in the Uphold Reserve. More on that below.
For financial institutions, the commonality of ERC-20 will mean that a single logic implementation will be required for them to provide support to their customers and expeditiously facilitate the integration of any (compatible) asset. Cross-chain capabilities are not unique, but even when combined with the other features of UPP, this basic crypto blocking and tackling is still quite significant.
On the retail level, UPP looks to provide “a more practical and spendable way of holding cryptocurrencies” for participants by allowing them to both borrow currency (including fiat) against their Proxy Token holdings and/or earn a competitive rate of return on their deposits. These basic banking functions are familiar to the fortunate but remain out of reach for so many. Enterprising populations who either lack palatable risk profiles or are simply unbanked can now seek access to capital with less administrative burden.
Another obstacle for potential retail participants is the assumption of responsibility for safeguarding their own assets. While many yearn to evolve beyond the established limitations of traditional banking and asset storage options, the thought of serving as your own vault is enough to make the palms of even the most passionate crypto user a little sweaty.
Fortunately, UPP will introduce a couple of features to ease this concern. There will be an opportunity for participants to enjoy a key-recovery service (if needed), whereby trusted third-parties retain portions of a customer’s key in such a way that preserves the sovereignty of each part of the data until needed. There will also be an option whereby total private key custody is completely optional and a detachable wallet within the ecosystem can be authorized by the customer for “self-custody” at partnered exchanges. The details of these feature are not finalized, but if the team can deliver, this will surely go a long way toward rebuking some fundamental fears of current non-adopters.
UPP participants will engage with confidence thanks to the utilization of the Uphold Reserve. A financial services firm that has combined a platform application model with payment connectivity since 2015, Uphold has transacted more than $3B USD of value (30+ currencies, cryptocurrencies, and commodities) for a membership that hails from more than 150 countries. The Reserve’s funds will be secured on public blockchains and subjected to quarterly, third-party audits to provide proof of solvency.
This is a key component of the vision when you consider current barriers for mass-adoption of cryptocurrency. With significant consumer (and regulatory) doubts about existing USD-backed stable coins (such as Tether), it is imperative for the UP Alliance to distinguish itself.
In addition to crypto-based Proxy Tokens such as Universal Bitcoin (UPBTC), the Project announced the launch of Universal Dollar (UPUSD) in October. Like its crypto brethren backed in the Reserve, UPUSD will serve as a transparent digital asset that is also collateralized 1:1 with U.S. dollars to be held at U.S. domiciled, FDIC-insured banks. How much? Right now, $250M USD is available (and backed) in the Uphold ecosystem.
The use of a reserve should be familiar to most amateur financial historians. It harkens back to the reserve model of a gold-backed U.S. dollar. While this centralization of assurance may dampen the spirits of crypto purists, it serves as a reasonable olive branch to potential market participants - you know, those 100 million folks who have, thus far, watched the rest of us take our crypto licks from the safety of fiat harbors.
The UP Alliance might be this project’s most comforting quality. Name recognition and impressive resumes certainly aren’t everything in this industry – but it can’t hurt. In this case, the Advisory Board boasts members with significant records of success in multiple industries. Longevity is difficult to preserve in the tech industry’s never-ending churn of tomorrow’s talent, but Brave Software’s Brendan Eich has thrived with the best of them.
Brave Software’s Brave Browser is an eloquent and secure browser that aims to economize a pay-to-surf business model with their Basic Attention Token (BAT). The UP Alliance and UPP will play a critical role in the rollout of this highly-anticipated use-case.UPP’s own leadership team blends in well with their advisory partners. Teeming with impressive international pedigrees, a plethora of Ivy League diplomas, and even their own econo-physicist, most of this group have already cut their teeth for many years in the eCommerce, remittance, and financial sectors with great success. Chairman Dan Schatt and CPO Maxim Rokhline are both PayPal veterans while the bench also boasts legal, funding, regulatory, and computer science expertise.
The team is reasonably represented and impressively active on social media, which is always a good sign. In fact, the only weakness I can suggest is a lack of diversity within what is unquestionably a very impressive group. I would challenge UPP and the Alliance to seize this tremendous opportunity to strengthen its acumen with valuable new perspectives. Not only will this endeavor surely enrich the high-quality innovation that is already underway, but it is sure to complement its core mission of mass appeal to “the next 100 million”.
I look forward to watching the progress of Universal in the months to come as they rollout a fully functioning platform in conjunction with their parallel services and products. While 2018 failed to materialize as the year of arrival for mainstream crypto and blockchain adoption, Universal’s vision may very well be the relevant, scalable solution that lives up to its ambitious name.
About the author: Ryan LaMonica is a management consultant and blockchain enthusiast with a background in engineering, marketing, energy, and risk management. The views reflected in this article are his own and do not reflect those of his employer. He currently resides outside of Atlanta, Georgia where he and his wife manage the energy and risk of their four amazing children.
You can follow Ryan on Twitter, @ryanlamonica.