A few years ago when we were all first getting used to the idea of bitcoin, many of us were imagining that there’d be one digital currency to rule them all – a kind of borderless millennial moolah, a global groat for a global village.
But it’s not working out like that.
There were more than 900 cryptocurrencies floating around the planet midway through the year, with a jumble of serious and weird names (InsaneCoin. Cabbage. VGINA). And now here’s another one: Telcoin.
Why should anyone care? Will this be the last you ever hear of Telcoin?
Its creators, Claude Eguienta and Paul Neuner, think it’ll have staying power because it’s not just another cryptocoin get-rich-quick scheme for early buyers – it’s a genuinely useful thing that could be adopted by countless people, particularly those without bank accounts.
Helping people send money home is a good first step.
Their digital coin is starting out with a focus on online remittances, transfers, and payments – great for those who are just getting into the swing of online shopping but don’t have credit or debit cards, and for people who need to send part of their wages to family.
“Money transfers are a big market where the biggest players still control most of the market share because of their reach and branding. We see disrupting this state as a perfect application for a currency available worldwide,” says Claude Eguienta, Telcoin co-founder and CEO. “We also believe that if we want to solve financial inclusion, helping people to send money home is a good first step.”
Around 2.5 billion of the world’s adults don’t use banks or microfinance institutions to save or borrow money, according to a McKinsey report. Nearly 1.5 billion of those are in Asia. And yet nearly 5 billion people have mobile phones.
Tapping the phone companies
To get Telcoin off the ground, the experienced duo – Eguienta’s last #startup focused on the blockchain; Neuner has a background in telecoms, security, and fraud management software – is tapping into the huge reach of mobile network companies.
So they’re making the unusual move of distributing their global groat to telcos, who can then offer it to their subscribers for use in transfers and payments.
This might prove to be effective in developing nations, where people tend to rely more on telcos than tech giants.
And Telcoin is designed to work with any mobile wallet app – so long as apps add in support for it – so that the digital coin should be easy to convert into cash or mobile money to buy, say, groceries on the streets of Kathmandu.
“In the developing world, where most telcos provide mobile money which is a good equivalent to cash, we will allow for instant exchange to mobile money,” Eguienta says. “One of the reasons why we are starting with remittances is that as most of the transfers go from the developed world to the developing world, cashing out will be very simple for most of those users who want to.”
It’s not meant to replace whatever mobile money system a telco might’ve already set up. Indeed, the mobile wallet and the cryptocoin can work in sync.
“The majority of global remittances go to countries where mobile money exists and is commonly used, but last year mobile money was involved in less than one percent of the US$500 billion worth of remittances,” Neuner tells Tech in Asia. “There is a clear opportunity for telecoms to be involved in a larger share of the remittance market, and Telcoin will help them do this.”
ICO on the horizon
Telcoin, based on the Ethereum blockchain, is set for an ICO on October 30 which will raise an anticipated US$25 million for the young startup. Or maybe more. “[It’s] a target, and not a cap,” points out Eguienta.
“It might sound large compared to a seed round, but we have a team, a sales channel, and a product, and we do not want to go back in fundraising mode in 18 months,” he adds.
Indeed, its fundraise is in line with this year’s boom in ICOs that’s seen startups raise US$1.4 billion from January to July by issuing their own digital coins to folks like you and I.
Eguienta and Neuner have also secured some cash from a VC – an undisclosed amount from Tech in Asia backer East Ventures, which Neuner describes as “a strategic partner more than a financing source.”
With all that ammunition from the ICO, the duo can focus on establishing the telco partnerships that’ll get Telcoin into people’s phones.
Telecoms companies are not exactly known for their innovation, which is why the entrepreneurs think they’ll be keen to get a leg up from a startup. Telcos tend to have issues with “user experience, international interoperability, fast-paced software development, and ability to take risks in a competitive environment,” says Neuner. Therefore a startup “like ours can help mitigate” those problems.
Eguienta agrees, seeing that telcos can branch out successfully when they make an online service that’s easy to use.
“I think it’s interesting to compare the success of telco-led mobile money in Kenya with the failure of bank-led mobile money in Nigeria,” says the CEO. “This is not a trust issue or cultural issue – people simply want a seamless experience. If Telcoin can help make mobile money more usable, people will use it.”