By: Carl Mullan – Senior Advisor on Dig IX’S Advisory Board
Published on: LinkedIn Mar 23, 2016
Digital currency, also known as cryptocurrency, represents the future of financial transactions, but to date, adoption has been hampered by a lack of user identification. Without the identification of users, the world of commerce has not yet embraced new digital currencies as a medium of exchange. The development of GreenCoinX (digital symbol XGC) could be the breakthrough that brings digital currency into the mainstream.
GreenCoinX is the first Cryptocurrency to combine beneficial features of the blockchain with the security and assurances of a regulated financial business. The developers of this platform have solved the cryptocurrency KYC issue by creating a convenient in-house software platform that meets existing financial regulations on customer identification.
Digital currency systems function as closed electronic ledgers with numbered accounts. Online payments are digital units moving over the Internet between numbered accounts within that ledger. This online accounting is the basic structure for all digital currency payment systems including PayPal, WebMoney Transfer, Bitcoin and many others. An offline digital ledger is also how electronic money is accounted for as it moves through a regulated bank. A centralized digital ledger keeps track of balances and transactions for each account and reconciles the entire system.
Any other account features, mobile apps or benefits that may evolve from this basic structure are additional creations and build-outs that software designers have added according to the demands of system operators, users, and regulatory agencies.
Many of the older digital currency systems use centralized digital ledger software operating from one or more individual servers. Newer cryptocurrency platforms use a distributed digital ledger that functions without a central location or server. Blockchain transactions move from person to person, and each client throughout the entire system maintains an individual copy of the digital ledger. The blockchain protocol allows all users to record the network’s activity, and there is no need for a central operator, server or supervisor.
With early digital currency and online payment systems, such as e-gold in 1996 and PayPaI in 1998, the system administrator that operated the software platform had both the access and ability to control customer accounts and transactions.
An operator’s ability to “own” the system and the client account information was provided through accessing the records on the centralized ledger. For a transaction to be completed and recorded in the digital ledger, the units had to move through that centralized server. This central point for all transactions, allowed an operator to close accounts, block transactions, reverse operations and even manipulate the data and balances in customer accounts.
On top of this basic centralized platform, system designers had the ability build out required features and designs based on the operator’s requirements. For example, PayPal has reversible transactions integrated into the payment platform. Also, if a PayPal customer is unhappy with a purchase, they can withhold the payment or block it, and freeze the funds. The e-gold operators purposely did not feel the need to build such conveniences into their system. In the old e-gold system, no transaction could be reversed, blocked, frozen or changed. “Get Paid and Stay Paid,” was the e-gold motto.
PayPal requires customer identification and verifies each person’s information including address, phone and government issued identification. Meeting these account requirements are features that developers had to build on the original basic online payments platform. The PayPal system follows the strict compliance requirements of U.S. financial regulations. Those U.S. rules also include AML, and other KYC regulations focused on preventing the system from being exploited by criminals.
While e-gold had the ability to add compliance requirements and optional features, the operators chose not to integrate the fundamental elements of a Know Your Customer program. Consequently, year after year, the e-gold payment system was exploited and misused by criminals. Eventually, the system operators were charged and convicted of multiple felonies directly related to the customer’s criminal activity.
In 2016, there is a critical need for stronger boundaries in the cryptocurrency industry. As history proved, it will be beneficial for both merchants and users, engaged in legitimate online business, to distinguish themselves from the infinite backdrop of today’s digital unknown. GreenCoinX provides these critical safeguards. The XGC system software and online platform create precise boundaries that meet current financial compliance requirements, protect users and discourage potential misuse of the digital currency.
GreenCoinX cryptocurrency is innovative blockchain technology that delivers legitimacy, protection and the financial compliance required for use in global commerce and efficient integration with the regulated financial industry. In the Bitcoin network, no single point exists where financial regulations or even common sense rules could be administered to all users or wallets. By design, the ability to implement outside controls over user accounts, in bitcoin, just does not exist. Because the value of a bitcoin transaction moves from person to person, it cannot be blocked, frozen, reversed or even properly supervised. Furthermore, neither the sending wallet nor the receiving bitcoin wallet can be proactively registered in a user’s name. The ability to “own” bitcoin customer accounts does is no “Bitcoin” company, no officers or employees to create and enforce KYC or AML programs. Through the decentralized ledger, Bitcoin facilitates the direct movement of value between users without supervision or control. For anyone seeking to hide their online payments, bitcoin is an exceptional solution. For others looking to avoid government imposed financial restrictions, Bitcoin is a savior. In these situations and others, Bitcoin’s blockchain has transformed the global economic landscape.
However, as digital currency history has revealed, unregulated and unsupervised online payment products can be universally exploited by bad actors. The more cash-like features a digital currency presents, the more convenience it delivers to both good and bad users. Throughout the dozens of unregulated digital currency products that have emerged since the mid-1990s, all of the systems which did not actively verify customer identities were exploited and used for criminal activity.
Without a proper “Know Your Customer” (KYC) program, every digital currency system that has operated since 1996, was widely used for illegal activity.
From online HYIP Ponzi schemes, responsible for stealing billions of dollars from unsuspecting victims to anonymous online payments for narcotics and child pornography; unsupervised digital currency has become a convenient medium for transacting illegal activity.
Any Internet business that accepts anonymous and pseudonymous payments, from unidentified digital currency customers, runs the risk of becoming a victim. In today’s world, customer identification and payment verification are absolute requirements for any online payment platform.
GreenCoinX has implemented critical compliance policies and procedures for prohibiting the use of its digital currency by Internet bad actors. Since the creation of Bitcoin and its innovative decentralized blockchain, the practical implementation of a Know Your Customer program has been impossible.
Without the ability to identify customers and permanently connect a verified person to the operation of a cryptocurrency wallet, a majority of U.S. businesses, financial companies, and banks have refused bitcoin transactions.
There is no current effort to add KYC or AML programs to the bitcoin platform.
However, a cryptocurrency alternative is available that offers a permanent solution for the identification of customers, merchants and wallet owners.
GreenCoinX was created, from the ground up, as an identifiable online digital currency for modern global commerce and financial transactions.
By design, GreenCoinX only allows customer accounts that have been carefully verified through a strict Know Your Customer compliance procedure that is comparable to programs used in commercial banks. Additionally, all GreenCoinX wallet IDs are permanently linked to the verified customer.
Cryptocurrency software experts designed GreenCoinX for compliant integration with regulated financial products and commercial payment networks throughout the world.
Any individual or business that is seeking to gain the advantages of blockchain technology, without the KYC risks that accompany bitcoin, can now employ the secure GreenCoinX platform.
GreenCoinX offers the blockchain’s beneficial features paired with modern customer identification tools and financial practices. This system is a turnkey blockchain solution that promotes the integration of cryptocurrency payments with any existing regulated financial business, merchant service or government agency.