Payments remain the large unsolved use scenario of the internet. When we buy something online, we usually use a traditional payment method, such as a credit card, which is not ‘own’ for the experience. Your ability to carry out transactions with a seller is verified by a third party (such as a bank), which increases costs and entails a lot of discomfort for buyers and sellers.
Despite the enormous growth of online trade in the last thirty years, most transactions take place outside the browser. Marc Andreessen, the creator of Netscape, calls this the ‘original sin’ of the internet. “You would think that it was most obvious to build in the browser to spend money, but you may have noticed that that didn’t happen,” he said in 2019. “I think the Hard sin was that we “It is not that economy, that is, money, the core of the internet is.”
This is important because the costs are enormous and are worn by us all. Economists have calculated the total costs of retail payments in the United States on no less than 2% of GDP, which is almost as much as the American defense budget. Sellers often mention the costs for processing credit cards as one of their highest operating costs. That is why many will ask you to pay extra costs for the use of a card in a store, or to set a minimum to the amount that you must spend. Despite all their ingenuity, the United States have some of the highest social costs of payments in the developed world, according to countless studies.
We tend to forget that Bitcoin was presented for the first time by Satoshi Nakamoto as a “peer-to-peer electronic money system”, because many crypto today is not aimed at this usage scenario. But perhaps the next iteration of crypto development will help solve this.
That is certainly the hope of Tyler Spalding, the founder of Anvil, a new Decentralized Financing Protocol (Defi) that again conceptualizes credit, which forms the basis of all monetary systems.
How it works
Anvil is a system of smart Ethereum contracts that manages collateral and secures credit. This allows individuals and companies to create credit letters (LOCs) instead of traditional forms of money. You use it by locking it or USDC in the ANVIL safe and you will receive a locomotive for the specified amount. In fact, the system looks a lot like a bank check that is collected in your account, except that there are no paperwork, delays or worries about whether the money will be transferred.
Spalding sees Anvil as a new form of money, covered by crypto. “By issuing transparent and generalizable credit, Anvil ensures sustainable liquidity – which in essence is created familiar money for the global economic system,” he said. “Decentralized technologies without permission can transform the way in which collateral is managed by making the process safer and more transparent.”
At the protocol level there are no costs associated with transactions with ANVIL, said Spalding, and the technology is open source. It is owned by the community and 60% of governance tok distribution to partners and users, who can vote on operational matters. Spalding, who was previously co-founder of Flexa, a blockchain-based payment network, sees usage scenarios for ANVIL in traditional loans, Defi-opposite partners (for exchanges or liquidity providers), asset breaking and payments. Three partners have indicated that they want to build services using the protocol: Amdax, a provider of digital assets trade and custody; Empowermint, which provides cash loans to private individuals; And Flexa, which uses the protocol for the collateral of assets against payments on its network. Because Anvil is open source, these partners use the protocol freely and build their own services.
Anvil has no investors. The protocol was started by Spalding and its employees for two years of development. The systems were checked by Open Zeppelin and Trail of Bits, and Immunefi organized two Bugbounty programs to find mistakes that had to be remedied. Spalding is confident that the system is safe because of its ambitious goal of separating banks from payment transactions and the traditional credit issue process.
“We have been working on it for a long time. We love this stuff, “said Spalding about his goal to bring local payments to the internet and to do a fine for the original sin of Andreessen. “We want to ensure that other people can use this. It is a practical example. That is the only thing that counts. “
