Understanding where Mobilio fits in the new world of digital money
Cryptocurrencies became widely known in the context of the enormous price increase of Bitcoin in 2017. The digital currency, which was founded in 2009 but had almost no value until 2012, reached an all time high of USD 19,783 in December 2017. Today, according to the popular market aggregator CoinMarketCap, there are 2,244 different cryptocurrencies with a total market capitalization of USD 286 billion, and Bitcoin accounts for nearly 60% of that value. Although cryptocurrencies are the newest and fastest growing asset class of the last decade, they are still on the fringe of the financial system, accounting for only 0.3 percent of the global money supply (M3, 12/2018).
With the precipitous decline in value of practically every cryptocurrency through most of 2018 – some even losing around 90% of their value from their all time highs of late 2017, early 2018 – many predicted that they were all but finished. But as top cryptocurrencies have stabilized and rebounded in 2019, and with the recent announcement that the biggest social network in the world, Facebook, will launch its own coin, the prophecies of doom for the nascent crypto industry have largely subsided. Cryptos are on the rise once more, and it seems that they will accompany us – in one form or another – for a long time to come.
It is a mistake, however, to paint cryptocurrencies with a single brush. The technology that has allowed software rather than precious metals or government fiat to form the basis of new currencies enables design parameters that far exceed traditional money. The differences between Bitcoin, Ether, and Facebook’s proposed Libra coin, for example, are vast. Each are designed to serve very different needs, so it should be no surprise that the architecture, governance, specs, and functionality of each differs greatly.
To understand where our currency, Mobilio, fits into this new ecosystem of software-driven digital money, let’s compare it to the mother of all cryptos – Bitcoin – as well as to the proposed giant, Facebook’s Libra Coin.
Structure, ‘Intrinsic Value’, Openness, and Transparency
Bitcoins are created, or ‘mined’, by solving mathematical problems, and they are released on a gradually decreasing inflation (‘deflationary inflation’) schedule embedded into the open-source software that forms the protocol. The ‘value’ of a bitcoin is garnered in part by the proof that computer processing power has been spent on solving the math problem needed to unlock a new coin. This process is known as ‘Proof of Work’. Ownership of bitcoins, meanwhile, are tracked on a public ledger called a blockchain, with the entries updated every ten minutes (adding a new block to the chain) and the status of each block agreed upon by global consensus. This system is not controlled by a single institution, but instead by the consensus of the participants of the network. Anyone can mine, buy, hold, and sell Bitcoin with the security of knowing that all transactions are stored in a decentralized manner and that the rules of the protocol cannot change unless by consensus.
Mobilio is similar to Bitcoin in that it is minted in a decentralized fashion according to a protocol that is set in stone, and using a method to ensure that work has been done in exchange for the coin. While bitcoins are mined by dedicating processing power (‘Proof of Work’), Mobilio tokens are, in effect, mined by distraction-free driving through a process we call ‘Proof of Safe Driving’. For every minute that your phone is not used while you’re at the wheel, you get one point. Points can then be exchanged for Mobilio, an ERC-20 token that is minted linearly according to a predefined schedule. The exchange rate between points and Mobilio depends on the number of participants and their driving behaviour. We call this the “difficulty” of earning Mobilio and it too is comparable to Bitcoin in that, as more participants join the network, it becomes more difficult to earn Mobilio. Just as Bitcoin’s value is in part derived from the proof that processing power has been spent – with the difficulty of Bitcoin’s Proof of Work algorithm increasing as more processing power is added to the network – Mobilio’s value is also in part derived from the fact that it can only be earned by proving you are engaging in distraction free driving, with the difficulty of ‘Proof of Safe Driving’ increasing as more people join the network.
Transparency of minting and ownership of Mobilio is also, like Bitcoin, guaranteed. Mobilio is created on the Ethereum public blockchain so all transactions are publicly visible using a ‘block explorer’ (software for examining the ledger) just as with the Bitcoin public blockchain.
According to the recently published Libra whitepaper, Facebook’s cryptocurrency will derive its ‘intrinsic value’ by being backed by a basket of assets. Instead of being minted by ‘Proof of Work’ as with Bitcoin or ‘Proof of Safe Driving’ as with Mobilio, Libra are minted by the Libra Association which currently consists of 28 partners, including Facebook, Uber, Visa, and Andreessen Horowitz. Becoming an association member is subject to an approval process but, once approved, members have equal rights, and control each other within the network. Facebook hopes to onboard 100 partners by the targeted launch of the network in the first half of 2020. Libra are backed by real-world assets held in approved Libra Association partners’ bank accounts, with the exchange rate being stabilized by a basket of national currencies and government bonds. Dividends generated by rehypothecation of the reserve assets are distributed amongst Libra Association members.
In contrast to Mobilio and Bitcoin’s public blockchain structure, Libra is proposed to start as a ‘Permissioned’ or private blockchain, meaning only approved members can validate and verify the database of users’ transactions. In the Libra whitepaper, the designers propose starting a transition to a permissionless structure five years after network launch, with superior transactional throughput and scalability cited as the justification for starting off as a permissioned network.
Bitcoin was initially conceived as a currency to facilitate transactions on the internet. However, due to its deflationary money supply, and – in the modern digital payments environment – relatively high cost of transactions and slow transaction confirmation time, Bitcoin currently makes sense mostly as a speculative store of value. As a speculative vehicle, Bitcoin has experienced extreme price volatility in its 10 years of existence. The volatility of Bitcoin and its speculative potential mean that for most people it is no longer used as a method of payment, but instead as an investment or so-called ‘digital gold.’
Mobilio tokens are created by safe driving and are intended to be used as currency by insurance companies and other stakeholders benefiting from road safety, or interested in finding touchpoints with a risk-aware audience. On the one hand, insurance companies and other stakeholders can accept the coin for products and services, and on the other hand they can use it to reward their customers for low-risk behaviour. The value of Mobilio depends initially on the number of participants and their driving behaviour. We expect the price of Mobilio to rise as users join the network, then stabilize with relative market penetration. Mobilio will not be volatile due to speculation because it will primarily generate its value within a specific ecosystem – a kind of marketplace for safe driving.
Libra, like Bitcoin before it, is intended to be the default currency of the internet. Taking a lesson from the failure of Bitcoin in this regard, the creators have placed strong emphasis on Libra’s price stability. Libra are not pegged 1:1 to any national currency, but instead are backed by reserve assets that are designed to be as stable as possible such as stable national currencies and government bonds. The stability of Libra is intended to simplify the transaction of money between private individuals as well as companies. The Libra whitepaper emphasizes several times that it intends for Libra to be the currency of the internet in places where traditional banking systems present barriers to entry to the “1.7 billion adults globally who remain outside the financial system.”
Bitcoin started off as a toy for computer geeks and ‘cypherpunks’, and still there is a relatively high technical barrier to entry. With Bitcoin, you are basically your own bank so you have to install wallet software and carefully manage your private keys. Buying Bitcoin through an exchange typically involves registering your identity and credit card or bank information. All of this work is required to buy a highly speculative asset, with most people purchasing Bitcoin as an investment rather than a currency.
Mobilio was born as a currency. Anyone can download the Mobilio app and automatically ‘mine’ tokens by driving a car without using their phone. Thus, the prerequisite for adoption by the masses is accomplished.
Libra is supposed to simplify payment transactions and has a number of well-known companies in the background that will be helpful in spreading the word and dealing with the considerable regulatory backlash (that has already begun). By hedging against a basket of strong fiat currencies and government bonds, exchange rate stability is ensured. This means that if Libra can overcome regulatory challenges, it has a better shot of overcoming Bitcoin as the default currency of the internet, at least in the short term.
Money is one of the most powerful technologies to be deployed in the history of civilization. In existence for at least 5000 years, it’s also one of the oldest. Now, with the advent of cryptocurrencies, money can suddenly take on new and previously unimagined forms.
Bitcoin, for its part, seems to have captured the “digital gold” use-case, with the potential to replace gold itself as the world’s primary long-term store of value. Time will tell if Libra (or something like it) can replace national currencies as a medium of exchange on the internet which is, increasingly, the marketplace of choice for day-to-day transactions.
Mobilio takes its place in this new ecosystem of money by creating a marketplace for safe driving. The medium of exchange in this marketplace is the Mobilio token, a currency backed by ‘proof of safe driving.’ With driving being the most dangerous activity engaged in by most people on a daily basis, the adoption of Mobilio has huge potential to make the world a safer place.