Cryptocurrency created in Cóbano achieves agreement for transactions in Europe and plans to do the same in Costa Rica via Sinpe

Reading Time: 4 minutes ;  Published: 7 months ago on June 30, 2021

Nimiq announced an agreement with TEN31 bank in Germany to carry out operations on the platform with virtual or national currencies

El desarrollo de la plataforma de Nimiq es descentralizado: un equipo en Santa Teresa y diferentes grupos de trabajo en otros sitios. (Foto Alejandro Gamboa / Archivo)
The development of the Nimiq platform is decentralized: a team in Santa Teresa and different working groups in other locations.

Nimiq, whose main development core is in Santa Teresa, in Cóbano de Puntarenas, and the German bank TEN31 will implement the Nimiq OASIS (Open Asset Swap Interaction Scheme) blockchain platform for purchases and transactions with cryptocurrencies through bank transfers.

The agreement was described by Yahoo! News as "a breakthrough in the compatibility between blockchain and traditional banking". Blockchain is technology that facilitates the development of cryptocurrencies with higher levels of traceability.

The alliance will allow the use of Nimiq OASIS, the Nimiq Wallet digital wallet and the NIM cryptocurrency in a variety of services and payments, which will be enabled in stages. "The user will be able to make daily payments," explained Ricardo Barquero, in charge of communications at Nimiq.

In Costa Rica, the initiative will submit an application to the Central Bank of Costa Rica (BCCR) next July to join Sinpe and allow the population to make transfers and payments with cryptocurrencies. At press time the BCCR had not responded to EF's queries on this issue.

If digital change puts pressure on commerce with online sales and new business models, cryptocurrencies put pressure on the monetary system and the centralized scheme of central banks, as they enable decentralized finance (transfers, currencies and credits) without high costs or commissions.

The challenge lies in the knowledge of its benefits and risks. "The authorities, including the BCCR, must increase their knowledge about cryptocurrencies, because it will allow them to consider the integration into the local system a trend that will not stop," said businessman Adrian Garcia. "There are already people accepting payments and with investments in cryptocurrencies. More people, more companies and more governments are going to enter."

El Salvador has already approved its use, especially focused on remittances sent from the United States and other countries.

Globally, there are some 10,000 cryptocurrencies that are as oblivious to the controversy over bitcoin's price volatility (it fell from $64,000 to $36,000 between last April and May due to Elon Musk's tweets) as the 12,000 participants in a recent event on the first virtual currency in Miami, including Jack Dorsey, CEO of Twitter and payments company Square, were oblivious to it.

Facilitar acceso

Within this framework, the purpose of the Nimiq OASIS protocol is to facilitate secure access to virtual money with a view to the mass market, allowing to buy, exchange and sell euros, dollars, Swiss francs or other currencies and cryptocurrencies, as well as to perform other transactions and payments.

"Nimiq OASIS is a revolution in cryptocurrency trading," TEN31 CEO Mattias von Hauff told Yahoo! News. TEN31 was created by WEG Bank AG of Germany to drive innovation in its services, especially in the field of virtual currencies. WEG Bank AG will be renamed TEN31 Bank AG in the coming months.

With this step, bank customers with an account in the Single Euro Payments Area (SEPA), the European Union's transfer and payment system similar to Costa Rica's Sinpe, can make transactions with bitcoin, NIM or other cryptocurrencies in the 27 markets of that economic region.

This opens up the possibility of connecting Nimiq OASIS with traditional payment networks, so that a person can make payments in retail stores. Discussions are also underway with card-issuing brands. This last step is expected to start in 2022.

The development of the Nimiq platform is decentralized: a team in Santa Teresa and different working groups elsewhere. There are about 20 Costa Rican, German, French, Portuguese, Hungarian and Romanian computer scientists led by Philipp von Styp-Rekowsky and Elion Chin, under the umbrella of the Silicon Paradise movement, which has other initiatives. In addition, they are supported by 15 other external partners.

Another feature is that it uses a programming language called Hash Time Lock Contract (HTLC), which is a type of smart contract with the ability to create payment channels.

Barquero pointed out that, unlike other forms of currency exchange, the system guarantees transactions through smart contracts (known as Fiat Smart Contract) that operate with blockchain, where the transfer of money is completed when each person fulfills their part: if dollars are purchased, for example, transfers of colones and dollars are effective only when each person makes the corresponding deposit; if one does not comply, the other withdraws their money.

For the maintenance and operation of the platform, a commission of 1.25% to 1.50% of each transaction is charged, which the developers qualify as "very low".

Another purpose of Nimiq OASIS is to solve several problems related to bitcoin transactions: in duration (currently 20 minutes, decreasing to one minute and then to one second), energy consumption (bitcoin uses powerful servers) and the associated economic and environmental costs.

On top of that, Nimiq (currently priced at $0.006) stands out because it allows the use or purchase of bitcoins (and in the future of different cryptocurrencies) and national or regional currencies (such as the euro) for this "atomic" currency swap between individuals and companies.

Jeffrey Esquivel, blockchain developer at Nimiq, explained that euros, dollars or colones can be exchanged without the need for cryptocurrencies. In the case of a digital or physical store that does not accept cryptocurrencies, the user can pay with virtual money from his wallet because the system converts them into colones, dollars or the local currency of use.

In order to integrate with local systems such as Sinpe, there would be no major technical difficulties, since Nimiq OASIS is a programmable API-type interface. Barquero affirmed that they already have a corporation established in Costa Rica and are registered with the Superintendencia General de Entidades Financieras (Sugef), but this does not mean a regulated supervision of the company's activities.