It's been a month now since we started operating the Fiat Blockchain for Pesos, and we have been using it as the underlying transfer system in the Tagcash Wallet app. Anytime someone does a transfer or payment in the wallet, it reflects on the chain, which can be see at http://php.tagcash.com
So, where are we headed with this, and what will be possible?
Our primary goal here is to make the movement of digital cash transaction free, easy to transfer to others, and to offer a user the opportunity to control their own cash, albeit with the responsibility that entails.
This is the way that it currently works:
A customer registers with Tagcash (or any other app using the blockchain), and then is given a public address and a private key (just like Bitcoin, but the tokens represent Pesos at 1 to 1 basis). That combination of public and private key can be moved to any site or app that uses the Tagcash Blockchain. At the moment, Tagcash stores both keys on its servers, but if imported into another site or app, then it should be stored locally on your device. The address is given receive and send permissions on creation, and can accept up to a limit of 5,000 pesos sent to it. For more than that, or for withdrawal to cash, KYC ID Verification has to be done but if you have already done it via the Tagcash KYC Blockchain, you won't need to.
Customers can now transfer to anyone else's address, it does not matter which app or site is using the Blockchain, it will just show in your account within seconds, again exactly like Bitcoin. For those technically minded, blocks of transactions are created every minute if transactions are broadcast (the chain can handle 1000 TX per second)
This also means merchants can receive payments free of any charges, using whatever method they like. At Tagcash we are creating solutions using QR codes, NFC and Sonics, but anyone can build their own solutions.
Deposits into the wallets can be done via most of the banks, 7-Eleven, agents and Bitcoin and withdrawals are via banks, agent, remittance center or Bitcoin.
Now let's take this a bit further - Hierarchical Deterministic Wallets (HD) may be known to most Cryptocurrency afficonados, but not yet to the general public.
The address you use to receive and send money can be seen publicly on the public block explorer, so if someone links the address to you, they can see how much you have in your account and any transactions done in the past. Good for proof, stopping corruption, charity etc, but most people don't like the transparency so much. So HD wallets allow for many addresses to be created, each with their own private key that lets you spend that money. The HD wallet can be backed up by writing down or printing a series of 12 words and at any time in the future can be restored using them. You can have an unlimited number of addresses in your account, and you can decide which of them are used to send and receive money. Each address you create is automatically permissioned with send and receive using your KYC verification record.
In this case, no one controls your money except you, not even Tagcash. But if you lose your backup phrase, or someone else gets hold of it, then you may lose your money. With control comes responsibility. However, because it is a permissioned blockchain, there are steps that we can take to recover money, including revoking permissions on the old address and issuing new money to new addresses.
The wallet you use will handle all this for you, showing a total balance, making it easy to transfer and automatically picking which accounts to use. But the control to do more is there should you want it.
On the backend, and for regulation purposes, we have to do certain things with the addresses created by you. We have to track on the blockchain, how much is being received over a rolling 30 day period. There are limits set for individuals, according to KYC status, and for businesses will depend on limits set by Tagcash. These are set under Electronic Money Issuer rules set by the Banco Sentral Philippines (BSP). Tagcash is currently processing its own EMI application which should be approved within the next couple of months.
The servers that validate all the transactions are currently run by Tagcash, but any bank or regulated Fintech company can be added as a "miner", with consensus set at 75% for any removals or additions of other miners. Tagcash holds ultimate admin control of the Blockchain, but even this can be shared with regulators or partners, and again on the same consensus basis.
The advantages of using the blockchain for Fiat storage and transfer are many. It means there is no need for any companies (including banks), to build an API allowing for integration into their accounts. For example, a bank can hold a central Tagcash wallet with multiple addresses, one or more of which corresponds to a customer. The customer can now send or receive an amount via use of public addresses, and the Blockchain will handle the settlement. The bank would just set their system to monitor incoming transactions, so they can credit the customer account that they use internally. Imagine if this was used by all Fintechs, banks, ewallets. It makes moving your money around super simple.
As a merchant with a website, app, or retail presence, it is also very simple to accept payments by just showing an address to pay to and can be tied into merchant created rewards which also run on the Tagcash Blockchain. If an app or service wants to go further and offer a wallet type experience, then that can be done with no need for regulation or authorization.
For the remittance business, this also proves useful. An onramp FX exchange that converts local currency to Pesos, simply transfers pre-bought Peso tokens directly to where the customers want, either into their own ewallet for further disbursement or spending, or to any other address that is allowed to receive it. And there are no fees for doing so. How the onramps BUY the tokens is another matter..they can do it via Bitcoin, or by sending money the traditional way via wire transfers. They make their money in the FX exchange at the point of converting it into Pesos for the customer, the Blockchain makes it easy to send.