The cryptocurrency market will reach nearly five billion USD by 2030, according to recent market research. With impressive returns and projected growth, it’s no wonder people want to get involved in decentralized finance (DeFi).
But for those who don’t already understand crypto assets, there are significant barriers to entry. What’s a wallet? Do I need one, and how do I get one? What are keys? How do I protect them? What platform do I use?
And there’s also the problem of risk. Crypto users have grown comfortable taking chances in the space. But the average person is used to more trust, assurances, and transparency when it comes to their money.
Public Mint, Inc. (Public Mint) envisioned making the blockchain ecosystem more accessible to non-experts by reducing or eliminating its challenges. Ideally, its solution would also allow other companies to more easily transact with their users. Could one platform do both?
Public Mint, a Fintech firm with offices in the US, UK and Europe, decided to create a graduated introduction into blockchain-based investing. “There are really interesting things happening in the finance space with blockchain and cryptocurrencies,” says Paulo Rodrigues, COO of Public Mint. “People should be able to tap into DeFi use cases or their high annual yields. But they’re not available to everyone because the user experience is too challenging for those outside the blockchain space. This does not seem to favor equality.”
So Public Mint began with what users already know: traditional banking and fiat currencies like the US dollar.
The first challenge was uniting blockchain innovations with the regulated fiat currencies people are happy and comfortable using. Public Mint wanted a platform with a one-to-one equivalency between US dollars and a synthetic version of the dollar on their blockchain. This means every synthetic “on-chain” dollar maps to a corresponding US dollar held at one of Public Mint’s regulated custodian partners.
Users would not move dollars from one account to another, the same way traditional banks do. Rather, the physical dollars stay in a custodian bank. Users transfer ownership of these physical dollars using an instant-settlement, low-cost blockchain.
The synthetic dollar is created when someone deposits money into their Public Mint wallet. When someone takes that dollar out of a Public Mint wallet, the synthetic dollar gets destroyed. At the same time, the physical dollar leaves the US custodian account. Then it goes to the location or account specified by its owner per the user’s instructions like a conventional wire or transfer.
This way, Public Mint users could use and move their money, like adding funds or making transfers, in a familiar way. Because the physical dollar is in a regulated custodian partner, like a bank or trust company, users benefit from the same protections of FDIC insurance but without the need for a traditional bank account. To users, the synthetic version of the dollar doesn’t operate much differently than the electronic version of money they’re already used to using when transferring money in current payment systems.
Before Public Mint developed its system, it sought informal feedback on the concept from the Office of the Comptroller of the Currency (OCC). The OCC is an independent bureau of the US Department of the Treasury. According to the OCC website, it “charters, regulates, and supervises all national banks, federal savings associations, and federal branches and agencies of foreign banks.”
The OCC did not point out any fundamental problems, which was enough for Public Mint to get started.
Its next challenge was choosing the technology stack.