What is UTRUST?
There are now so many alt-coins out there that it’s almost impossible to keep track of which projects are legitimate and which are garbage.
This article is the third entry in a series I will write for Hacked which will give summaries and context around a specific crypto project.
The topic of today’s summary is Utrust.
So what is Utrust?
Utrust is basically trying to be the Paypal of the post-blockchain world.
They see two problems with the status quo of escrow solutions.
We can break these into two separate categories.
1. Centralized escrow solutions (Paypal, Venmo etc.)
2. Decentralized escrow solutions (Smart contracts, etc.)
The decentralized and somewhat nature of cryptocurrencies makes them a prime target for scammers who often can simply take funds and then disappear without delivering the promised good or service. More elaborate schemes like the so-called “Man-in-the-Middle” attack one are also a concern.
Another major security risk can also occur when a supposedly trustworthy third-party arbiter simply steals the funds they are ostensibly safeguarding and disappears. Many fake ICO’s did this exact thing. This fraudulent behavior is commonly referred to as an “exit scam.”
While there are escrow services one can use, these are often unreliable and expensive, complicating what should otherwise be a simple transaction process.
The lack of reliable and streamlined solutions to this problem has become a huge issue for the overall mass adoption of cryptocurrency to overcome. If this is then combined with the fact that cryptocurrencies already have a low entry barrier (where anyone can buy small or large amounts), then the overall crypto market transforms into a highly speculative space, with more investors than actual users of the platforms that tokens are supposed to be used on.
Utrust attempts to solve this by leveraging key points from traditional payment processors as well as the advances of blockchain technology.
Utrust works by allowing the user to purchase goods or services with their cryptocurrency or token of choice. The merchant on the other hand automatically receives their payment in fiat currency.
This, in theory, creates an ecosystem where users are not forced to exchange their coins and sellers are not forced to deal with the inherent volatility of cryptocurrency.
Essentially, Utrust is trying to force adoption of cryptocurrency as quickly as possible. Besides the simple interoperability of cryptocurrencies and their consumer-protection system, Utrust also differentiates itself by offering a competitive fee model.
In this model, a 1% fee is charged on purchases, which outcompetes PayPal’s 2.9% + $0.30 USD flat fee. This also has the benefit of allowing smaller transactions to take place in the platform.
One particular focus of Utrust that distinguishes them from their competitors is its consumer protection program.
Utrust employs a (controversially) centralized escrow system to ensure that the funds are kept safe until the buyer receives his/her product or service. Once the transaction is complete, the funds will be sent.
In the event of a dispute, the Utrust dispute resolution team mediates between the two parties to solve the dispute. This automated system allows users to enjoy the benefits of crypto without worrying about additional escrows or multi-sigs.
While this is arguably far more convenient for both buyers and sellers then escrow solutions with more steps to traverse, it should be noted that the very parts of security that are “annoying” are what make it secure in the first place.
The Utrust platform also features its own ERC20 token. It is reasonable to question why this platform needs a token at all, given that the model above even seems complete without it. This is a good question to ask, but Utrust thankfully provides a reasonable answer.
According to the official whitepaper:
“We decided to go a step beyond, and wanted to offer the chance for anyone in the world to become a backer, leveraging the power of an Initial Coin Offering (ICO)….In essence, the UTRUST token will act as an investment stake from our backers, as a transactional token, that buyers can use in the UTRUST Platform itself alongside other major coins, and as a financial mechanism linking the Utrust token value to the Utrust Platform value – our strategic value-coupling mechanism.”
According to the project, the advantages of holding the UTK token are simple:
1. No fees charged when using the UTK token.
2. Part of the profits generated by the 1% fee will be used to buy-back and burn the UTK token, reducing its total supply over time. With a finite and ever-shrinking supply, the token should appreciate in value if the platform is successful.
3. The token can be bought/sold from many exchanges at its market price.
To summarize, In the view of this analyst, Utrust solves the issue of convenience when it comes to the everyday use of cryptocurrency. That is a major accomplishment and should be lauded. But this convenience comes at a price.
I have yet to see a method of security that is both the safest and the most convenient. Until one arrives, Utrust seems to offer a viable solution for the present and the future.
Featured image courtesy of Shutterstock.