Digital currencies are now being developed at an unprecedented rate, though they face significant barriers to mainstream adoption.
What are those barriers?
- Trust
To garner trust from the general population, digital currencies need to be able to present a comparable or superior user experience to mainstream financial services and currencies. This experience includes the breadth of financial services available, and the liquidity of funds. Digital currencies can address these trust challenges by integrating with other currencies and settlement systems (be they mainstream or emerging) using the IFEX Protocol.
- Competitiveness
The IFEX Project's IFEX Protocol provides a mechanism for end users, financial service providers and merchants alike to accurately compare digital currencies and settlement systems with the established mainstream competition based upon measurable properties such as transaction latency, fee structure, fraud liability, chargeback/reversal/cancellation potential, in real time. In essence, IFEX seeks to provide the first true platform for a truly open and free financial services market in which service providers compete based upon the quality of their offering.
- Ease of financial endpoint identification
While many solutions such as QR codes, protocol handlers, custom URL structures, nickname/alias systems have been proposed to reduce the friction of financial endpoint identification within digital currency based settlement scenarios, these tend to fall down on various levels due to factors such as inapplicability to all settlement scenarios, technical complexity, domain-name style squatting. The IFEX Project proposes IIBAN, a robust financial endpoint identification system based upon the European Union's IBAN proposal. IBAN was developed based upon decades of real mainstream banking industry experience. It advocates a fixed length code with a built in checksum to vastly reduce transcription errors. IIBAN builds further on this system by mandating only upper case letters (further reducing transposition errors), proposing a democratic assignment policy for account numbers that supports innovation (registration is independent of legal registration as a bank in ISO-approved nations, with a structurally compatible namespace effected under a parallel internet 'nation'), and avoiding problems of chosen-name squatting.
- Reliable Inter-system Vocabulary for Currency Identification
Conventional currencies are normally identified via ISO 4217 codes, typically alpha-3 codes such as 'EUR' and 'CNY'. The IFEX Project has proposed X-ISO4217-A3 as an IANA-managed registry of currencies and currency-like commodities not backed by the political recognition of a conventional nation-state that do not fall within the classical purview of the ISO, for example digital currencies. Since reliable inter-system identification of any financial asset type is a requirement for reliable communication, and conventional foreign exchange liquidity with conventional currencies is often perceived as a soft-requirement for digital currency adoption, X-ISO4217-A3 should assist the digital currencies community with the development of a ecosystems supporting both conventional and emerging asset types: exchanges, hosted wallets, banks, etc.
In short, the IFEX Project can help digital currency and settlement system developers to address some of the most important challenges they face by providing tools to compete with established systems and facilitating a free and open market for financial services. |
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