Technology-focussed investing company Blue Star Capital announced on Monday that its investee company, SatoshiPay, has agreed to partner with the Stellar Development Foundation (SDF) as the underlying cryptocurrency ledger for SatoshiPay’s settlement system.
The AIM-traded Blue Star owns approximately 31% of the equity in SatoshiPay.
It said that, since its 2015 initial product launch, SatoshiPay has relied on the Bitcoin network to settle ‘nano payments’, adding that initially Bitcoin transaction fees were negligible, however due to Bitcoin’s rising popularity in 2017, combined with stalling scalability improvements, it had become clear that Bitcoin’s original vision of a peer-to-peer electronic cash system was “no longer viable” for everyday transactions.
“To sustain and enhance SatoshiPay’s business model based on frequent low-value payments, SatoshiPay has been exploring alternatives to replace Bitcoin with a more suitable distributed ledger technology,” Blue Star’s board explained in the statement.
During the process of designing the software architecture for a switch to a new ledger technology, it said it had become evident that hardwiring a new cryptocurrency to SatoshiPay’s updated system was “potentially inefficient”, and instead they started abstracting all cryptocurrency ledger operations – like wallet creation – into a layer between SatoshiPay’s business logic and the underlying ledger.
Using that layered approach, the switch from one default ledger to another would reportedly become “relatively easy”, and SatoshiPay would no longer be locked into a specific ledger or blockchain.
“This multiple ledger approach should ultimately allow SatoshiPay to use different ledgers depending on the requirements of corporate clients or industry verticals of its nano payment settlement platform.”
Having carried out extensive testing on alternative ledgers, Blue Star said SatoshiPay concluded that ‘Stellar’ would be the preferred default ledger.
Stellar was founded in 2014, and is headquartered in San Francisco, having received initial funding through credit card payment processor Stripe, with IBM recently announcing that it was to use Stellar in its blockchain banking platform.
Blue Star said Stellar’s cryptocurrency ‘Lumen’ had a current market capitalisation of approximately €423m.
“SatoshiPay’s decision to chose Stellar was based on its extremely low fees – currently 0.00003 cents per operation – and fast settlement – approximately 5 seconds to confirmation – allowing SatoshiPay to settle all transactions in real-time and directly on the distributed ledger,” the Blue Star board explained.
“This should mean that in the future, publishers using the SatoshiPay network will receive funds within seconds after a consumer pays for content.”
Starting in 2018, all of SatoshiPay’s transactions are expected to be via the Stellar network.
As part of its marketing program, SDF has pledged to credit the first 100,000 users creating a wallet through SatoshiPay with 500 Lumens each which have a current value of approximately 13 euros.
“SatoshiPay’s business model continues to evolve and the upcoming launch of the new ledger technology through Stellar is further evidence of the company’s ability to evolve in a fast changing environment and to attract strong partners,” said Blue Star Capital CEO Tony Fabrizi.
“The ability to switch between different ledgers depending upon the requirements should provide significant benefits and allow SatoshiPay the widest possible flexibility to meet customer requirements.”
SatoshiPay CEO Meinhard Benn added that the company was “thrilled” to be working with Stellar’s technology to deliver its updated product to market, in what the board believed was the fastest way possible.
“We expect the generous 50 million Lumen which Stellar is giving to be a significant help in growing our user and client base,” Benn added.
Jed McCaleb, cofounder of Stellar, also commented that the business was “excited” that SatoshiPay had selected Stellar as its primary ledger technology, and looked forward to inviting SatoshiPay users to the Stellar community.
“Cryptocurrencies and blockchain technology are facilitating open innovation and revolutionising the payments space, and we’re thrilled to be working with SatoshiPay to help lead the way by making micropayments much faster and less costly than ever before,” explained McCaleb.