Despite all the investment speculation and hype, cryptocurrency has so far struggled to find meaningful use cases. Now, Singapore is striving to turn the general public into crypto adopters through on-chain payments.
Cosmos AIa nine-year-old company that uses artificial intelligence analytics to track in-store traffic and engage with online shoppers, partners with Close, one of the blockchain protocols competing with Ethereum. The pair is building a payment system that allows users to make purchases with crypto at low transaction fees, saving money for buyers and sellers.
As part of the partnership, Near the Foundation, the non-profit arm of Near that supports the development of the protocol ecosystem, has made a strategic investment in Cosmose. The round, the amount of which is undisclosed, brings the company’s valuation to $500 million, up from $100 million when it was closed its $15 million Series A funding in 2020.
Cosmose’s suite of retail solutions includes the KaiKai app that allows customers to discover retail stores in their physical neighborhood and an online targeting platform, both of which are being redesigned of the blockchain with the help of Near.
Miron Mironiuk, founder and CEO of the company, had no intention of riding the crypto wave; rather, he was looking for a solution that would make online payments cheaper for consumers and suppliers served by Cosmose.
“I don’t know if you know how expensive and slow it is to process payments online. It’s absolutely crazy,” Mironiuk told TechCrunch 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. In a year, the coffee drinker could easily spend $200 more just because the transactions are handled by intermediaries like Stripe.
Pay with crypto
With its quasi-powered blockchain payment system, KaiKai, where users can discover nearby products and pay through the app, claims to cut transaction costs from its annual coffee consumption to just $4, 50 times less than the Stripe or PayPal method, according to Mironiuk.
“Imagine how much you could save if all payments were moved to the blockchain,” the founder said.
Not all blockchains are cheap to use. One of the biggest challenges facing crypto adaptation is the exorbitant fees involved. Without a centralized settlement system, cryptocurrencies rely on a distributed network of validators to verify on-chain transactions. This process on Ethereum is notoriously expensiveso alternatives like Cardano, Pokadot, and Near have emerged to make crypto cheaper and more scalable.
Cosmose’s shopping discovery app KaiKai settles payments in its native stablecoin Kai-Ching, which runs on Near’s network. The app creates a crypto wallet for users, which can top up Kai-Ching with fiat currencies. In the future, users may have the option to convert Kai-Ching back to fiat.
Cosmose holds cash for Kai-Ching, which is pegged to the US dollar (1 Kai-Ching = 1 cent USD) and tradable only within the app to avoid volatility in value.
KaiKai first launched the pay-with-crypto option in Singapore last September, where the government is in the process of formulate regulations on stablecoins. Since then, Kai-Ching has processed over a million transactions in the form of payments, refunds and rewards.
Prices are automatically discounted when users choose to pay in Kai-Ching. More than half of Ka-Ching users are Gen Z, and they’re “super comfortable” with crypto because they know “the coins are on-chain” and “they own them,” observed the founder.
The company declined to disclose how many crypto users it has amassed, but one data point sheds light on its user behavior: one-third of transactions are paid with Kai-Ching. Given the traction in Singapore, it will come as no surprise if Cosmose takes Kai-Ching to other crypto-friendly jurisdictions in the future.
Own your data
Cosmose and Near are onto something that seems even more ambitious. One of the promises of blockchain-based applications is to return control of personal data to users rather than keeping it with Big Tech’s centralized servers.
Essentially, Near is helping Cosmose migrate user data to its blockchain and create a system where users can see how the company is tracking them, including their location, when they open the app, the products they browse 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 for more or less accurate product recommendations and rewards.
“It’s not just a technical challenge. It’s also a UX challenge to figure out how to do it in a way that people can actually check it out, get insights, and decide quickly,” the founder said.
Since its inception, Cosmose has served more than 20 million stores and reached one billion phones globally, with China counting “hundreds of millions”. The company has a team of 80 people in Warsaw, its engineering base, as well as in Shanghai, Hong Kong, Singapore, Tokyo and Paris.