Smile Coin was founded in 2021 to address payments challenges faced by online gaming companies, according to CEO Nick Bucheleres. High fees, slow payment processing and domestic banking regulations all present hurdles to Smile Coin’s clients, and Bucheleres believes that decentralized finance using blockchain technology can be the solution.
“The three real pillars [of payments] are speed, costs and security,” he told PYMNTS in a recent interview.
Blockchain meets all three requirements better than any other approach, he said. Additionally, newer protocols enable even more efficient and less costly transactions. All of this is accomplished through cryptographic protocols, rather than a third party.
“You can transfer thousands of dollars for pennies, you can receive and send funds in under five seconds, and there is very robust custody and receipt of funds,” Bucheleres said.
An Immutable, Public Ledger
Blockchain’s chain of custody sets it apart from any other payments approach. The public nature of that immutable ledger also adds trust, Bucheleres noted.
“When you talk about the community’s ability to audit or inspect where funds are flowing to and from — that’s an added layer that banking doesn’t include,” he said. While traditional finance relies heavily on the accreditation and reputations of those involved in transactions, blockchain enables users to actually see transaction histories and behaviors for themselves, he said.
“With enough time and Red Bull, you can really unravel a lot, and you can empirically determine your own level of trust,” Bucheleres said.
Making Use of the Public Ledger
Transparency also enables innovative use cases. Smile Coin leverages the public nature of blockchain transactions for its rewards system, Bucheleres said.
Gaming platforms integrate the Smile Coin software development kit into their payments platforms, after which Smile Coin scans for any transactions to or from that gaming platform’s account. Rewards are then automatically distributed to player accounts based on the volume of transactions sent and received.
At the same time, the rewards system is completely transparent and easily audited by any party. Even potential Smile Coin clients can see for themselves how the system works.
“There is true accountability with the system, because the rest of the network — or the rest of the rewards recipients — can rest assured that they are on an even playing field,” Bucheleres said.
Making Finance Work for Online Gaming
Blockchain’s biggest advantage for online gaming platforms is as an alternative to closed doors. Online gaming is one of several industries that, despite being legal and operating in compliance with state and federal rules, are shut out of traditional finance, Bucheleres said.
“If PayPal and Stripe and Braintree won’t take your business, you don’t have a business,” he said.
Bucheleres said the gaming industry is even larger than the movie or entertainment industry. Nevertheless, growth is being stifled by a lack of access to payment platforms and traditional finance. That is the ultimate inspiration behind Smile Coin and a central tenet of decentralized finance: removing roadblocks for legitimate transactions that are disfavored in traditional finance.
“One of the major reasons we started Smile Coin and the Smile Coin payment gateway was to allow real-money gaming businesses with great ideas, great business models and awesome communities to actually be businesses,” Bucheleres said.
Making Blockchain Worth the Investment
Enabling those online gaming platforms to succeed takes more than just a desire to make it possible. With a sector that is still growing, one company might not be able to have much impact without a scalable framework.
“If you don’t have scale, you just have a nice little project,” Bucheleres said. “Scale is what really revolutionizes the industry and brings the technology mainstream.”
When looking at which blockchain to use, Bucheleres said that Smile Coin took into account the “informal studies” by white-hat hackers that have tested how many transactions it takes to overwhelm different blockchain platforms. Smile Coin also looked at the stats related to different blockchains.
On top of the number of transactions per second (TPS) and block time — the time it takes for a new block to be created — Bucheleres said it is also important to look at transaction fees, an area where some of the newer players in the field have a distinct advantage.
The public nature of blockchain makes it possible, though not always easy, to test and evaluate the best blockchain to use for a given purpose. That transparency takes a lot of the guesswork out, but it still requires businesses looking to use blockchain to do their homework and ensure that they are making wise investments.