If you’ve been invested in cryptocurrency for a decent amount of time, you’ve probably heard of a coin called, OmiseGO. The purpose of this article will be to give you an overview of the coin, its purpose/solution it purportedly solves, team behind it, progress thus far in the community, and an in-depth overview of the coin’s technical specifications as outlined by its white paper.
To begin with, I’ve personally seen a lot of buzz about the OmiseGo coin, in general. Being the scholar and researcher that I am (hardy har), I decided to do a little investigating into this coin to see what all the hype was about! So, without further ado — I present to you:
Background on $OmiseGO’s Creation Company
No, that wasn’t a typo in the title — the coin is actually named OmiseGO with the two capital letters at the end. Yes, I was wondering about this too.
To begin with, the coin itself is derived from a company called, ‘Omise’. Here’s their website: https://www.omise.co/
From the outset, the connection between this company and the creation of a cryptocurrency seems relatively intuitive. However, before getting into the actual coin, $OMG, I think it’s important to understand what this company is and who runs it first.
Here’s some basic information about the company itself, according to the company’s website: https://www.omise.co/about
Pluses here are that the source of funding is transparent, seems like the company is at least medium-sized with over 130+ employees allegedly employed there and, if the other two statistics are accurate, they’ve exhibited a high level of growth over the past two years.
Here are the company’s ‘hubs of operation’ as well — located on the same page.
So, true to its advertisement, they’re primarily based in Asia.
This is the leadership structure that they posted too. I always like seeing faces with the names because it makes me feel as though the company is at least attempting to be transparent. Please keep in mind that all of this information that I’m giving you pertains to the company Omise and not the cryptocurrency $OMG (OmiseGO). I just like to give an in-depth review of a company in order to get a better feel for whether the management of the company itself is competent.
What Do Outside Sources Have to Say About Omise?
The first source that I came across that took a look at Omise’s company information was Bloomberg — https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=270376581
On their site, everything appears to match, however I noticed one small discrepancy:
That name that I circled above is not listed on the site. Seems like something picky to look into, but if you’ve read any of my prior articles, you know that all I do is dig for everything! Another reason I find this odd is because he’s an executive, so he’s one of the important guys in charge of things that would be primarily responsible for making decisions. It’s possible that Bloomberg’s list was simply out of date, but if this is not the case, then I’d want to know why this comapny could not bother to update their website to include the title and name of their Chief Procurement Officer.
What the hell is a ‘Chief Procurement Officer?’
Here’s a brief definition below:
When you look at their website, this position isn’t even listed. So, they either axed it entirely or they’re not very sharp on their website. So, let’s look him up shall we?
This is all the information I got when I typed in ‘Sanjeev Kumar’ into Google. Little to nothing for a man worthy of earning an executive position at such a prestigious firm.
Here’s what Bloomberg has on him too:
So, basically this guy doesn’t really exist. No conclusions can be made here. At this point, I want to just take a little look into all of the individuals that were listed on the website as being members of the executive team at Omise Co.
Omise Co., Executive Board
Jun Hasegawa — CoFounder and CEO
Here’s what I found out about him on Crunchbase: https://www.crunchbase.com/person/jun-hasegawamal>
Vague. Could be self-written. No mention of any specific projects before he hopped on board with Omise.
Ezra Donnie Harinsut — Co-Founder and Chief Operating Officer
Immediately stumbled on his Twitter profile:
This is good because it shows that they at least have a face out there, and his main objective on there seems to be the promotion of the coin itself — so, we know that this is probably what the company is staking its future on.
However, in terms of him as an individual — there appears to be little to no substantive information about his existence on planet earth prior to his co-founding of the Omise company in 2013.
I won’t go too much further into the company’s executive board — I’m getting the feeling that all of the individuals exist in pretty much the same boat.
Here, I wanted to take a look for a second to see if any of this financial information about the company’s apparent ‘success’ can be verified.
Here’s what I’ve seen about the company on Crunchbase: https://www.crunchbase.com/organization/omise-co-ltd
Once again, a wealth of information about how they’ve been successful in their endeavors to raise money, but not seeing any substantive operations that have been launched since their inception in 2013.
However, here’s something of note (albeit from Omise’s website): https://www.omise.co/omise-partners-with-mcdonalds-thailand-to-provide-seamless-payment-experience-for-online-and-mobile-orders
Another one from TechCrunch:
The acquisitions do bolster my confidence that the company is at least attempting to grow and create additional value for its stakeholders — which is important, because it appears from these links that those individuals are probably those that helped them raise funds through the ICO — i.e., the coin holders of $OMG themselves.
However, I’m always wary when it comes to coins whose success are predicated on the companies that created them. I feel that this practices essentially makes an investment in the cryptocurrency an investment in the company itself and rather than relying on the technology, you’re relying on a centralized group of individuals to make the appropriate choices to ensure adoption, which is antithetical to the core philosophy of the cryptocurrency movement.
I think I’ve seen enough regarding the parent company. My verdict is that there isn’t anything to guarantee to me that they have a board of competent individuals with a strong direction. Perhaps I’m failing to spot certain information, but I’m also not seeing anything substantive that would lead me to believe that they’ve successfully erected a high-capacity business in Asia that’s handling tens of millions of transactional payments per day/week/month/year.
However, I’ll give them the benefit of the doubt and see what the whitepaper reveals.
OmiseGO White Paper Review
The link to the actual OmiseGO whitepaper can be found here: https://cdn.omise.co/omg/whitepaper.pdf
From the outset, the white paper announces the purpose for the coin’s inception as well as the ‘OmiseGO team’ and an individual named ‘Joseph Poon’. I’m assuming those are the writers and thus, the primary individuals responsible for the creation of the coin itself and tech infused within it. Therefore, it would only be right if we did our due diligence on these parties.
From what I stated above, I think there’s more than enough information to get an overview of the parent company of this coin. As mentioned before, there’s inherent about its executive team (based on research) or company design that makes me feel as though there’s a level of expertise on the team sufficient enough to erect a fully functioning blockchain capable of scaling to handle the number of transactions that this coin claims it can handle.
What About Joseph Poon?
From what I’m seeing, it appears that Joseph Poon is one of the primary founders/creators/workers of the Lightning Network.
GitHub is empty for this guy.
Keep in mind that Lightning Network hasn’t actually launched at the time of writing. So, this guy’s involvement doesn’t necessarily guarantee a good project or coin. Regardless, we’ll evaluate the rest of it objectively and see if it makes sense.
From first look, this appears to be a very similar setup to Ripple ($XRP). Claims that it uses a proof-of-stake blockchain consensus mechanism, so it’s a public blockchain — which is a major difference.
Looks like the prime feature here can be found in the statement, “This high-performant distributed network enforces exchange across asset classes, from fiat-backed issuers to fully decentralized blockchain tokens (ERC-20 style and native cryptocurrencies).”
I can only guess that this means that it essentially is performing the duty of atomic swaps? However, I don’t want to make any unnecessary assumptions, so reading forward in the whitepaper will more than likely yield more useful information about this coin.
Above is another excerpt from the whitepaper (page 2). Once again, the structure of what they’re doing appears to be highly reminiscent of Ripple’s payment settlement proposition.
What They Want To Do
However, as I read on I got more of the gist of what Omise is attempting to do with OmiseGO. Essentially, they’re one of the cryptocurrencies that are implementing the idea of having their blockchain effectively act as an exchange. It looks like they want to plug into wallets in order to allow people to liquidate whatever form of value they’re holding (fiat or cryptocurrency) by using another form of value.
For example: Let’s suppose you own Litecoin and you want to obtain Dash. Typically, there are no LTC/DASH pairs on any exchange, so you’d have to liquidate LTC into BTC, then you’d have to turn BTC into DASH. What it appears $OMG can do is usher that transformation instantly between LTC and DASH without requiring one to use the intermediary method of swapping to BTC or possibly fiat currency in order to do so.
As if this proposal in itself weren’t ambitious enough, the whitepaper also states that the $OMG coin also seeks to liquidate between fiat to any cryptocurrency as well. Each of these transactions would also take place on $OMG’s blockchain.
While this isn’t too difficult of an idea to wrap one’s head around conceptually, it’s the technical aspect that will probably be the most confusing part to understand. Blockchain in itself is already a somewhat confusing monster, so the idea that one could essentially launch a decentralized exchange on said blockchain is an ambitious undertaking to say the very least. However, I’m willing to give $OMG the benefit of the doubt.
Before continuing though, it’s worth mentioning that the $OMG coin runs on the Ethereum blockchain and that’s how they plan on creating this means of settlement through a regular wallet. A few things that are confusing/vague to me from what I see at this point in the whitepaper is: how will they get people to use this coin and how does this settle on the blockchain? How will they ensure that the equivalent value for a coin to another coin is given without plugging in some sort of price reading algorithm or API from another exchange? Is it simply based on the market that the general users create? How are all of these settlements recorded on the blockchain itself?
I have a few more general legal questions about this as well, but I’ll allow the whitepaper itself to expand before I start really digging into it on a more theoretical basis.
Let’s see what the whitepaper says about the coin’s tech, shall we?
Technical Features of the Coin
Confused? Don’t worry I was too. However, it states that a “trading engine is built into the OMG blockchain, orders are published and matches are performed as part of every block when a matched order has reached sufficient number of validation confirmations”.
So, in a way, this makes sense. It looks like it takes the fundamental idea of cryptocurrencies and attempts to take it a step further.
I’ll Offer a Translation
For example, in Bitcoin, the only thing that the blockchain is designed to track is the path of Bitcoins. Since Bitcoins aren’t a fungible asset, it is crucial for the integrity of the blockchain that things are never too out of place. It cannot merely “re-balance” the ledger so that all of the wallet balances are even. The specific coins that were sent to a specific location must be there — and only those coins are truly eligible.
However, it appears that $OMG tracks a bit more than just the passage of $OMG. According to the whitepaper, it has a decentralized exchange integrated onto the platform itself to allow for the swapping of cryptocurrencies, fiat or tokens interchangeably based on what their value is on said exchange.
Pretty much, imagine if Bittrex was a coin. Every time you trade on Bittrex, the settlement would be processed and recorded on Bittrex and Bittrex itself is actually a blockchain. That’s more or less what $OMG is attempting to do. How feasible is this? Can’t say. The whitepaper should tell us more though.
What Are They Saying Here?
So this information tells us a bit more about the mechanism by which $OMG operates. As I expected — exchanging LTC to DASH would be difficult, and if one attempted to maintain a currency pair for each and every single possible swap, it would be damn near impossible. However, it looks like what $OMG is proposing is that they should use BTC and ETH tokens (remember this is on ETH’s blockchain) pretty much the same way that banks use the Automated Clearing House network.
What the hell does that mean?
How the Automated Clearing House (ACH) Works
Okay, so suppose you bank at Capital One and you want to pay someone who banks at Wells Fargo. It’s not as easy as just “sending money”. Typically, it’s not even that easy when you want to just send someone money that’s from your actual bank too, but that’s a whole different story — we’ll get into that later.
However, for now we need to understand how THE Automated Clearing House Network works.
So basically, ACH is how money is moved directly from one account to another. This is somewhat different from ‘payment’, even though it’s used for payments.
So What’s the Difference Between ACH and Regular Payments?
Check this out:
Suppose you go to the grocery store and you buy some milk and eggs. You decide to swipe with your debit card. If you go to your bank and check your account afterward, you’ll notice the exact amount that you paid for is gone out of your account. However, it’s not actually ‘gone’ — it’s on hold. As the vendor, you haven’t technically received your money yet either, it’ll probably be pending. Your account may or may not be credited with the money yet.
Why is this?
Because the payment has to be sent to the Automated Clearing House by the vendor.
Why Not Do It Yourself?
Because the ‘hold’ gives you a sort of “guarantee” that you’re going to get the money. If the money is not there for a ‘hold’, then the transaction will more than likely be declined and the grocery store will know right then and there that you don’t have the money.
If they were to opt for all ACH payments instead, they would have to wait for the Automated Clearing House to clear the payment itself before finding out if you had the funds or not. Therefore, in an environment like a shopping mall, grocery store, or small venue where random people can walk in and out and have no legal obligation to ever return, you want to ensure that you can get your money immediately. Thus, ACH would never be a good option in these situations.
However, when it comes to situations where you’re billing someone monthly for something, ACH is a GREAT idea. Remember, debit/credit cards are merely like ‘public keys’ to a wallet. However, just because a public key is invalid doesn’t mean that the wallet is empty. To put it in simple terms, if you lose your card, that doesn’t mean that your bank account is lost. You just lost an access key for your bank account — so you can’t use intermediary methods to access your funds. By doing ACH payments, you avoid this problem because you can ensure that the account storage itself is directly tapped rather than going through the intermediary credit card.
Fees are also WAY lower when using ACH versus a credit card itself.
If this still isn’t clear — go ahead and visit this link, it’ll help: https://www.linkedin.com/pulse/pros-cons-ach-vs-credit-card-processing-john-santos
So How Does OmiseGO mimic this “ACH” system?
So, as I stated earlier — $OMG wants to use Bitcoin or Ethereum as its means of settling these payments. In order to do so, there are a few things that must occur.
● The funds that are to be traded (for example, 5 DASH for 2 LTC) must ALREADY be stored somewhere and ready for the swap.
● $OMG itself must possess the necessary liquidity to perform these swaps.
● Bitcoin and Ethereum must be reliable enough (on-chain scalability + consistent off-chain sustainability) to support such transactions.
Reading through the whitepaper, I can see why Joseph Poon was recruited for this endeavor and it’s more than likely that he manifested this idea himself.
For those who are relatively unfamiliar with cryptocurrency tech, settlements between cryptocurrencies, atomic swaps, instead transfers, etc., must be handled off-chain. No exceptions. Thus, launching as an ERC20 token is a great idea for the $OMG coin because Ethereum is built to support this as well as smart contracts. Therefore, obtaining the necessary liquidity in ETH in order to make such transactions possible is a plausible idea.
How Will They Provide Liquidity Into The Chain?
According to the whitepaper, the developers state that, “By bonding Ethereum into a smart contract, it is possible to lock up Ether onto the activity of the OMG chain to allow for eWallet pairs to occur over Ether or other cryptocurrencies, creating a liquid market (if every pair crosses with ETH, spreads would be much smaller provided low currency volatility).”
The issue is that cryptocurrency by nature has been as volatile as volatile can get. So, these transfers would need to happen instantly to ensure that the liquidity is not lost during the transfer itself.
I’ll just go ahead and post the full excerpt about their plan to attempt to implement this extraordinarily difficult blockchain system.
Now I’m going to get into the part where $OMG just doesn’t seem like a viable idea to me at all:
There’s a lot that I just posted here, but bear with me — I’ll try to dissect this in as thorough of a manner as possible.
As mentioned earlier, I’m not surprised that the theory behind transaction settlement on such a network would mimic the pending Lightning Network rollout. It also appears that this coin has been modeled in such a way that would make it contingent upon the Lightning Network rollout.
However, from the very start of this section, one thing that I really don’t like is the idea of ‘decentralized hubs’.
I feel that the term ‘decentralized hub’ in many ways is an oxymoron. If you have a hub with a central leader, then by definition, you just have many little centralized structures.
I’d like to take you to this outline that someone did of what the Lightning Network hubs will look like once they’re implemented on the Bitcoin:
Bitcoin Core lovers will always hate me for bringing this to the table, but it’s just a consequence of the proposed structure of Lightning Network and subsequently $OMG if this proposed system is to function properly.
Here’s the Breakdown:
As I stated above, in order for this system to work, there must be a LOT of liquidity and the transactions have to be occurring OFF-chain in order to give $OMG’s blockchain room to breathe.
However, if ETH or BTC are to be used as “ACH” (not sure why BTC of all coins would be the preferred choice for an ACH-imitation), then parties must be connected through a ‘hub’ or channel with a central person or “banker” in the middle that serves as the liquidity provider for the network.
Here’s an example:
-You own 5 LTC
-Sally owns 8 Monero Coins
-You and Sally come to the agreement that you’ll trade your 5 LTC for Sally’s 8 Monero coins.
In order for this scenario to work, you and Sally must be connected to a liquidity provider of some sort:
So, if this looks pretty much like what happens at banks, that’s because it is. $OMG has pretty much introduced a clever backdoor way to insert banking right in the center of cryptocurrency.
Apologies if you came here expecting this to be a glowing review of $OMG! My opinion has dramatically changed the more that I’ve evaluated this cryptocurrency.
I mean, if you think that people will be rushing to create entire sidechains with their own independent consensus rules whilst potentially staking tens of thousands of their own money into a pooled network with other individuals and binding all of this loosely through smart contracts that can be terminated at any user’s free will, you must be out of your mind.
I’d be lying if I said I even fully comprehend what they’re going for here with $OMG. I’ve read a lot of whitepapers and I’ve even suffered through some of Vitalik’s blog posts (which are the wordiest, most technical things you’ll ever read in mankind) — but THIS is one of the more convoluted things I’ve ever seen in cryptocurrency. Truly. Much more so than IOTA’s tangle.
The whitepaper almost feels like someone wrote down the thoughts of the team while they were spitballing ideas.
I’m not even going to dig into the proof of stake consensus mechanism, block size, or block time at this point because I’m not sure if $OMG is a legitimate enough project to where those factors warrant any concern. It would be akin to me feigning concern about a messy room in a house that’s on fire.
My Criticisms (There’s a LOT)
After reviewing $OMG, this might be one of the shittiest ideas for a coin that I’ve ever reviewed in my entire life.
In a nutshell, it literally looks like $OMG decided “Hey, let’s replace the banks with other banks!” Between the KYC/AML laws that could get the entire project shut the hell down to the issue with the ‘decentralized hubs’ (an oxymoron if I’ve ever heard one), to the sheer amount of liquidity necessary to make this anywhere near adoptable to the fact that this coin comes with the implicit assumption that cryptocurrencies will become so valuable that the demand to liquidate them between every currency on planet earth will become an absolute necessity + no one will mind doing it in an insecure off-chain manner — -> this coin doesn’t look like it’s anywhere near close to ever being a viable project.
Even if we assume that all the HUGE potential negatives somehow bode in $OMG’s favor, I can’t see how it would be adopted in under 3–4 years. And that’s lowballing it.
$OMG may be one of the most audacious attempts at centralization I’ve ever seen in my life. It’s like XRP/Ripple level centralization to be honest with you. Except at least XRP is transparent enough to let you know what’s going on and the centralization is among banks. $OMG is moving this agenda forward like a sheep in wolf’s clothing and the worst part is that the centralizers are probably just entities with a lot of money.
If anything, the whitepaper for $OMG confirms the idea that LN is predicated primarily on the establishment of decentralized hubs.
How can I make such a statement? The co-founder and creator of Lightning Network wrote the damn whitepaper.
It’s a shitty idea. And the parent company that created OmiseGO? They’re called Omise and we have almost no information on them.
All the executives? Didn’t even exist before 2013 if you ask the internet. All on unnamed projects. Nothing substantive. All from Singapore or some shit. I can’t see any evidence that the platform is actually being used for anything legitimate. Sure, they’ve gotten a couple of partnerships — but I haven’t seen any evidence of the networks ACTUAL use.
Creating a ‘decentralized exchange’ that relies on the off-chain coordination of every damn cryptocurrency in existence with “decentralized hubs” that act as Automated Clearing Houses for off-chain currency swaps in a sustainable way where there’s enough incentive for people to even attempt to provide such liquidity is absurd. Reducing this tech/process into a feasible system is even more absurd. The irony is that this is something that seems to inherently compete with LN. I don’t even understand why Poon would have placed this idea in the paper. If Bitcoin Core is to be as popular as people speculate that it will be, why the hell would people use $OMG? Wouldn’t Core already have liquid pairs with everything on earth? Doesn’t it already have liquid pairs with everything on earth? Why not just go to an exchange and liquidate your crypto into BTC and trade w another pair? Why use a coin that requires you to move your coins off-network (additional step), then arrange the swap through the exchange (additional step), then contact some RANDOM liquidity provider ( additional step) to handle the transaction for you? How is that decentralized? How is this even feasible? Who’s providing the liquidity? Because it isn’t either of the traders (according to the Whitepaper not me). How do we expect people to grasp these concepts and adopt this in a fluid manner? It’s a hell to the no for me personally.
If what I just typed sounds complex and confusing as fuck, that’s because it is. I actually can’t break down $OMG’s concept to be any simpler than that. And that alone should be a red flag in itself.
Let’s not even get started with $OMG’s proposed structure lol.
So “you” want to trade 5 LTC to “sally” for 10 pieces of Monero. You guys would need to use the “liquidity provider” like an ACH transfer. AKA — someone plays bank.
Oh, and don’t even get me started on the company — I touched on that a little bit in this criticism but:
10,000 $OMG coins to anyone that can verify that these people have done anything on planet earth before 2013
Don’t you think that someone that’s the Chief Technology Officer of a company that started in 2013 would have some sort of substantive credentials that you could Google up?
I’m sorry, this shit’s a hustle to me. I haven’t even actually broken down the coin’s tech yet.
And then there’s this:
Once again — 10,000 $OMG to the person that can read this and decipher what the hell they’re even proposing at this point.
I hate to do this but I end my review here. This is a no-buy, never-buy, even if hell freezes over — don’t buy.