Money as we know it was first introduced around 3000 B.C. in Mesopotamia, when the barter-based exchange was replaced by the commodity-based exchange. This transition progressed as gold and silver became a functional means of exchange approximately 2600 years ago. The critical importance of commodity-based money is the notion that this method of exchange typically was accompanied by a central network like a government or a bank. This made it easy for value to be exchanged but also created some economic shadows in the background, which many governments and wealthy used to control populations. This is a huge setback of centrality.
Cryptocurrency is designed to transfer the payment structure away from the current model, which can be called peer-to-business, by removing a “middle man” to make it directly a person to person means of exchange, also known as peer-to-peer, or P2P.
What is P2P?
Peer-to-peer payments or peer-based transactions is a process of exchanging money or value directly from one person to another. By default, P2P works by ruling out any third party hands in the process of buying goods or services.
Let’s say for example we have two people, Alicia and Steve. In a P2P system, if Alicia needs something, let’s say she needs to hire a website developer for her business, Steve could create the website for her and in exchange, Alicia could pay Steve directly.
The Contrast of P2P vs Legacy Payments
The current modern process of using money for goods and services goes like this: you receive money by whatever means, you then typically send the money to a bank or central hub, then you use a card to pay for goods and services. This takes several other forms like checks, money orders, remittances, loans and credit cards, and even things like gift cards. These “services” provided by banks or governments can be frustrating, from dealing with delays in payment that can last days or even weeks, being stuck with operational hours where you can’t access your funds or services on weekends or holidays, and also the painful process of dealing with potential thefts or stolen identities.
Peer-to-peer systems work very differently, which results in not having to wait on a third party for payment processing, closing hours, or a central point of failure.
Significance of P2P Payments
The key advantages of cryptocurrency for P2P payments provide a comprehensive benefits package to the way people can do business with each other.
– Failure Reduction: by the current global adoption standard, payments are mostly done by using a central point of exchange. However, as mentioned above this can lead to numerous issues that cause a failure of a transaction from one person to another to occur. This includes issues like waiting times for transactions, holds on checks or deposits, or just not having the proper payment method to pay someone. Cryptocurrency and P2P solves this by working directly to a user with both of you using your own funds. No extra step is needed which makes things able to run smoother.
– Focused on User Needs: P2P is a user-centric model and focuses on the simple solution of peers being able to do business together for their own interests. Central points of exchange like banks are there to make money, as any business would do, but as such, people become products with luring advertisements, interest rates, plans, and services, instead of being able to simply purchase things as they please.
– Isolated Information: With a P2P exchange, data and information is kept in a closer circle, likely with just the parties involved to know about the goods and services rendered. This greatly reduces third parties knowing your purchasing history, targeting you with ads, or potentially selling your data to others.
– Increased Security: Cryptocurrency is encrypted heavily by default, which means it’s much more secure to use as opposed to a 16-digit number on the front of a card for everyone to see, or a 4 digit pin that’s easy to hack. This also eliminates the ability of a mass break because users control their own money and not banks.
Introducing Hydro Pay
Project Hydro has been hard at work. We just released our new roadmap that shows the next line of products and services we plan to release to make cryptocurrency and blockchain adoption a reality. One of the newest upcoming projects we are pleased to release soon is Hydro Pay. This new project will provide three key features. First, this will be a P2P payment and transaction app that allows users to send and receive crypto to each other. Second, different types of cryptocurrency tokens can be used and swapped back and forth for user convenience. Third and just as important, these transactions will be gasless, which means the users will not pay fees to swap from one token to another!
Hydro Pay Version 1 will be released in the coming months.
The benefits to using P2P far outweighs the benefits of using central payment methods and cryptocurrency is a means to make that happen. We are on the road to remove the need for third-party participants in a monetary and economic world. Hydro Pay is a first and the first step in allowing anyone to pay each other directly instead of going through a bank or other means.