What Is Electroneum?
Electroneum is a blockchain-based payment platform designed specifically for use on mobile devices like smartphones. It’s claimed to be the first Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) compliant cryptocurrency. ETN, Electroneum’s native crypto, is virtually mined using mobile devices.
The cryptocurrency has a massively loyal and committed following – its marketing strategy has tended toward virality, which has gained it over 2.7 million registered users (January 2019).
As well as an impressive 129k Twitter followers, the project has attracted 143k Facebook users – interesting because FB is not a platform not known for crypto projects. Many don’t even have a Facebook page. This could illustrate that there is a strong following beyond crypto devotees – which would, of course, be exactly what the team would want to see.
Of course, 2.7 million registered users does not measure active use, just as Bitcoin’s 22 million wallets doesn’t suggest that 22 million people are using Bitcoin today. But it’s a remarkably strong performance – and proves the power of integrating with major players like Google’s Play Store.
The core development team of 12 is headed by SiteWizard co-founder Richard Ells. Its initial goal during its 2017 inception was to replace in-game currencies for mobile games. Gambling platforms were a natural evolution, as were mobile payments. Based in the U.K., the project is also still focused on emerging economies with large unbanked and underbanked populations.
It was initially a soft fork of the Monero code but hard forked on May 30, 2018 at block 307500 to its own code. Part of the reason was to streamline code, and the other was to welcome ASIC rigs to the network, as Monero forked to resist GPU-based ASIC mining.
Now the project is focused on mobile payments and has partnerships including telecommunications payment behemoth XIUS, e-commerce company BMedia, and more. But that doesn’t mean it isn’t still true to its gaming roots – its partnership with Mobile Streams PLC’s gaming platform exposes it to the service’s 750,000-strong subscriber base in Latin America.
Is Electroneum the next big chain on the block, or is it all just a great white hype?
We’ll start our research by examining the market performance of ETN, Electroneum’s proprietary cryptocurrency token.
ETN Cryptocurrency Summary
The peak price of ETN so far was $0.185470 on January 6, 2018. There’s a total supply of 21,000,000,000 ETN. The team chose 21 billion over Bitcoin’s 21 million cap to encourage user adoption and satisfaction of earning a full coin instead of a minute fraction of one.
The Electroneum ICO crowdsale occurred from September 14 through October 23, 2017. Twenty-nine percent of the total supply was made available to the public during the ICO, raising $40 million worth of ETH.
ETN is mined using the Cryptonight Proof-of-Work (PoW) algorithm. Other Cryptonight coins include Monero, Bytecoin, and Karbo.
ASIC mining is a big deal in the Cryptonight community, as the coins were initially designed to use ASIC-resistant CPU mining. While Monero pulled away from ASIC minings rigs by adapting the Cryptonight algorithm, Electroneum forked to bring them back. Bytecoin also released a statement that ASIC mining will continue being supported through 2018.
ETN can also be virtually mined using a mobile phone. This system runs a virtual ETN miner on your mobile device and airdrops ETN based on your device specs. It’s not actual mining, and instead more of an intro to mining and a proof of concept of its gaming idea.
Creating an account with Electroneum automatically creates a mobile wallet which is accessed through the Electroneum Android app. At the time of writing, there is not an iOS app for iPhone users, although the website notes that it’s coming soon.
Electroneum Is Picking a Lot of Fights
Things seem to be going Electroneum’s way, but with its hands in so many pots, it has a lot of competition.
Pundi X built a network of retail POS devices across Latin America and parts of Southeast Asia. Indie developers like MyDream Interactive and Decentraland, along with platforms like Signal Zero and GameCredits are working on video game cryptos.
And these are just the blockchain and crypto competitors – let’s not forget legacy companies you’ve heard of like PayPal, Facebook, Google, Apple, Samsung, Visa, MasterCard, and everyone else fighting for mobile payments dominance.
In fact, PayPal dominates mobile payments in the U.S., with $155 billion in mobile payment volume, representing over 70 percent market share. Also both Pundi X and Electroneum debuted blockchain-based mobile phones in early 2019, alongside industry giant Samsung. This followed heavy debate closing 2018 whether it would be the crypto powering Samsung’s mobile wallet.
The video game industry is another $138 billion industry Electroneum is hoping to disrupt. And major existing developers like Blizzard and Valve are constantly trying new ways to implement crypto into their games. World of Warcraft once used Blizzcoin to integrate Bitcoin, but it now uses WoWCoin to integrate real-world money into its existing auction marketplace.
KYC and AML compliance only got Electroneum’s foot in the (admittedly exclusive) door. Now it’s fighting in the big leagues.
Every country and region has players in the mobile payments space, and ETN is going to need to spend a lot of marketing dollars building up consumer and vendor acceptance in its two-sided marketplace. It also needs to draw developers, more specifically video game developers.
This is why it created the mobile app and virtual miner. Mobile miners aren’t processing any blockchain transactions. They’re simply acting as a viral marketing program to spread the usage of cryptocurrency and mining to the masses.
Under the Hood of Electroneum
Because it’s built on the Monero code base, Electroneum uses the same built-in privacy features. It doesn’t market itself as a privacy coin, but it uses randomly generated public and private keys to anonymize send and receive addresses.
Ring signatures are the key to this end-to-end encryption. We break it down a bit more in the Monero coin intro. Take a look if you need more information on how it works.
Of course, unlike Monero, Electroneum requires you register under your real identity. This highlights the security weakness of privacy coins, which is that your transactions can be traced by you. So you can be physically compelled to access your own account in many cases you don’t want to think about involving criminals and law enforcement.
While ETN transfers are marketed as “instant,” that’s a bit of a stretch. Technically the receipt of the transfer is instant, but blockchain processing and verification can experience a delay.
This has caused some critics to suggest that the tech is merely an escrow service – but the website illustrates that this is not exactly the case either:
So it’s more of a combo: an escrow service, a crypto-friendly payment system, and a merchant anti-volatility tool. Putting the tools together is the secret sauce that makes Electroneum a serious contender.
Like Uber and Lyft, transaction fee pricing on Electroneum depends on network traffic. When things get busy, prices increase, but the majority of transactions cost less than 0.2 ETN in fees.
The Electroneum team sees ASIC mining rigs as helping the network’s security and verification. ASIC rigs also increase processing speed, making Electroneum a nimble network that can afford to ‘fake’ mining on mobile devices.
It managed partnerships with Algoz and SistemKoin in 2019, and a strong year of growth could draw more investors and users to this ambitious project.
Electroneum is a blockchain-based financial platform aiming to be the leading mobile payment provider. It has a mobile-first direction and partnerships that reflect its lofty goals of bringing cryptocurrency to underdeveloped markets in Africa and South America. If Electroneum succeeds, it’ll be due to these key features.
- Electroneum is based on the Monero privacycoin code. It hard forked from Monero to separate itself from Monero’s war on ASIC mining.
- ETN is CPU or ASIC mined using the Cryptonight algorithm. Mobile devices virtually mine using the Electroneum app, which doesn’t process the blockchain and acts as a marketing airdrop.
- Electroneum is focused on mobile gaming and mobile payment markets to allow the unbanked and underbanked to earn and spend money through a mobile device.
With these pieces in place, Electroneum built a viable blockchain network.
Its business model is attractive to institutional investors and VC firms. If it can successfully get ETN into the right hands, Electroneum can become a powerful fintech company.