It’s been nearly five months since OmiseGo (OMG), the Thailand-based project with Vitalik Buterin conducted their ICO and raised US$25 million. We’ve picked up some OMG from the exchange a few months back. Today we’ll take a look and see whether it’s time to buy more or cash out.
In their crowdfunding white paper released on June 19, 2017 OmiseGo made a commitment to disrupt the Southeast Asian banking industry on a completely unprecedented level. They promised to cater to the 73% of the 650 million people living in Southeast Asia who currently do not have access to formal financial services.
But that’s not all. For the remaining 27% they also promised to “unbank the banked,” that is, to provide a more efficient, cheaper and decentralized alternative to traditional banking options.
Quick Overview on OmiseGo
The OmiseGo network will offer a variety of financial services including payments, remittances, payroll deposits, B2B commerce, supply-chain finance, loyalty programs, asset management and trading, and other on-demand services.
Now, there is certainly no shortage today of E-payments and fintech companies seeking to make a dent in Southeast Asia’s unbanked population. But most of them are differentiating from one another with surface level bells and whistles and are not interoperable with one another.
But the fundamental issue is with transferring money (or value) from one system to another. For example from Venmo to Alipay, or Bank of America to HSBC or any other combination of cross platform/border transactions requiring similar coordination efforts. Interoperability is the real issue that needs to be addressed.
Our traditional banking system is inefficient, slow, and expensive. Payments that cross financial systems and borders are quite complicated and involve a myriad of intermediaries and clearinghouses to ensure the safe transfer of money for all parties involved—including the banks themselves. More on how money moves around in the banking system here (https://gendal.me/2013/11/24/a-simple-explanation-of-how-money-moves-around-the-banking-system/).
Upon a deeper look, it is clear that the OmiseGo team recognizes this and another white paper from OmiseGo co-authored by Joseph Poon, addresses this specific issue head on by proposing a highly scalable decentralized exchange and payments platform.
OmiseGo will build a decentralized network that will allow all such independent financial networks to interchange with one another seamlessly and efficiently. Essentially a universal network to connect all networks. In order for this to happen OmiseGo needs to build a full suite of APIs and white label wallet SDKs for existing financial networks to interface with the OmiseGo network.
In their own words, OmiseGo is:
a next-generation Ethereum-based financial platform enabling real-time, peer-to-peer value exchange and payment services agnostically across national jurisdictions and organizational silos, and across both fiat money and decentralized currencies; enabling true financial inclusion as well as freedom from monetary limits that are not aligned with the people’s interests.
From a business and operational perspective the initial phase of OmiseGo’s rollout strategy entailed:
- Legal and operational setup within Bangkok and Poland.
- Marketing and general awareness of their mission and product.
- Partnerships with banks, E-money service providers, and regional and national conglomerates.
Their product roadmap outlined their mission to build a suite of open source technologies that will lay the groundwork for the next generation of financial services.
The three core components of these technologies are:
- The Wallet SDK.
- The Decentralized Exchange (DEX)
- The OmiseGo Network built to scale according to Plasma architecture.
Their product milestones are:
- (Q4 2017) – Design and Develop Priority features for the wallet SDK and release.
- (Q1 2018) – Add additional features (loyalty programs) and more complexity to the wallet SDK
- (Q1-Q2 2018) – Development progress and release details on Plasma
- (unset date) – Ability to move in and out of fiat and a Omise payment gateway interface
- (unset date) – First peak of Plasma with novel bonded consensus mechanism
- (unset date) – Deploy plasma across OmiseGo network via cross-chain-compatible decentralized exchange Plasma chain.
OmiseGo Project Progress
From a business and operational perspective, It’s evident the OMG team has been quite productive.
- July 6 – Omise acquired Paysbuy, the online payments business of local telco Total Access Communication [https://www.techinasia.com/omise-acquires-paysbuy]
- July 12 – Omise partners with Arcadier [https://www.omise.co/arcadier-partners-with-omise-to-expand-into-thailand-and-southeast-asia], the “Shopify for Marketplaces”
- August 10 – Version 1.1 of the OmiseGo IOS App (not to be confused with their white-label wallet SDK) is released.
- September 21 – Omise awarded Digital Start of the Year [https://www.omise.co/omise-awarded-digital-startup-of-the-year]
- September 24th – 5% of total OMG issued airdropped to 450,000 addresses anyone owning a minimum of 0.1 ETH at the time.
- September 25 – Omise partners with McDonalds Thailand to provide seamless payment experience for online and mobile orders.
- September 28th– Krungsri Finnovate, a subsidiary of Krungsri (Bank of Ayudhya) invests and partners with Omise
From a technology and product perspective it is a lot less clear what exactly has been achieved at this point.
- OmiseGo’s first product milestone, the white-label wallet SDK has still not been released. Although, to be fair they still have five more weeks until the end of Q4 (their initial self-imposed deadline).
- A quick look at Omise’s github [https://github.com/omise] account shows the team is rather active so they are definitely actively building things.
- Active repositories include Omise’s payment gateway extensions for Prestashop and Magento,
- Equally active are Omise’s API, IOS, and Android development repositories.
Our Verdict on the OmiseGo (OMG) Project
It is clear the OmiseGo team has been quite busy forging partnerships, building awareness, and rolling out the operations of their organization. And to that extent they have proven quite successful as OMG is one of the most well-known altcoins on the market today.
OMG’s market cap today is around US$800 million. OMG’s ICO contributors have enjoyed a return of nearly twenty-five times their initial investment in under five months. It would be a massive understatement to say that OMG has done well for their supporters.
While it is evident the OmiseGo team has done quite well by their investors it still remains to be seen how well they will do by the 400 million unbanked people in Southeast Asia they vowed to serve.
Their true users don’t need another online credit card gateway or fancy payroll services. They need a reliable and cheap way to send money home to their villages after a long week of hard labor in the city. They need access to affordable short-term loans. They need banking solutions that don’t exploit their inability to maintain a minimum balance.
Understandably OmiseGo has a noble mission and they do need to start somewhere if they are to achieve true banking disruption. But with Southeast Asia’s credit card adoption rates still in single digits one has to wonder who Omise’s actual customers are.
We are, admittedly, big believers in OmiseGo and the mission they stand behind. They are one of the few players in the world today with the tools, resources, and ambition to catalyst a true disruption to a 100-year-old banking system. But at a market cap of US$800 million we’re looking for a bit more just an active github account.
We own OMG tokens and we will continue to hold as we do see a glimmer of light at the end of the tunnel. But we are not adding to our position at the moment until we see more.
Token Name: OMG
ICO Date: 6/27/17
Crowdsale Token Ownership: 65.1%
ICO Price: $0.244
Current Price: $7.89
Token Return: 2423%
Market Cap: $804,739,196
Disclaimer – We have a position in OMG
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