Minerva — the world’s first reverse merchant processor.

Being the world’s first reverse merchant processor means that Minerva will pay the transaction fees to merchants who accept the OWL cryptocurrency as payment. For that, they will be using Proof-of-Transaction.

Today’s issues with cryptocurrencies

Let’s take a step back and understand what are the issues faced today by cryptocurrencies. According to Minerva, and I agree completely, today’s cryptocurrencies have a serious problem. They’re rarely used as currency.

The main contender to be used as cryptocurrency is Bitcoin. However, one of the issues is that bitcoin has scalability problem. These problems refer to the limits on the amount of transactions that the bitcoin network can process. It is a consequence of the fact that the blocks in the bitcoin blockchain are limited in size and frequency. The transaction processing capacity of the bitcoin network is limited by the average block creation time of 10 minutes and the block size limit. The transaction processing capacity maximum is estimated between 3.3 and 7 transactions per second, which is much smaller than for example Visa or Mastercard.

There are various proposed and activated solutions to address this issue. Solutions such as the lightning network and Tumblebit have been proposed to operate on top of the bitcoin network to allow payments to be effected that are not immediately put on the blockchain.

The Lightning Network is an undergoing project that aims to fix the bitcoin scalability issue. In fact, the payment provider Bitrefill tweeted in December 2017 claiming it was the first lightning transaction operating on the bitcoin network. Last month, Blockstream launched a payment processing system for web retailers called “Lightning Charge,” and noted that lightning was live on mainnet with 200 nodes operating as of today and advised it should still be considered “in testing.

How minerva plans to solve this issue?

Anyhow, leaving this aside, let’s see how Minerva hopes to solve the issue.

Minerva plans to tackle this issue with four steps:

Address the volatility issues present in cryptographic assets.
Incentivise merchants with a “reverse transaction fee,” which is more or less a system of sustainable cash back for merchants.
Request that approved merchants, in turn, pass their earnings onto their clients in the form of discounts or bonuses.
Facilitate trials and monthly subscription memberships with smart
contracts and cryptocurrency.

The OWL Token

In terms of technology. OWL is an ERC20 token and Minerva is a payment processor running on top of smart contracts built on the Ethereum blockchain. However, and due to cost and scalability problems present in the current Ethereum protocol, Minerva plans to hard-fork to a more suitable blockchain.

You might be wondering, how is Minerva profitable if it PAYS transaction fees?

They address that question in their Frequently Asked Questions by saying that they will tax a portion of paid out reverse transaction fees for operational costs.

Although I was still left a bit confused, so if they pay the merchants the fees and then only tax a portion of those transactions fees they will still be at a loss, right? But the they address that issue in the white paper by saying that Minerva will use two advanced methods to increase and decrease the OWL supply.

The first method mints new OWL and inserts them into the circulating supply when an approved merchant accepts OWL as a payment method. So, they call “reward rate”, the rate at which OWL are currently entering the economy. The reward rate is directly proportional to the price of OWL: as the price rises, the reward rate rises.

They go further to say that the reward rate will rise until it increases the total supply enough to prevent violent short-term price swings.

When the reward rate is greater than zero (0), a portion of the rewards are taxed to sustain Minerva, and another portion is sent to a smart contract to be stored for incentivising future MVP and voting participants.

The second method sterilizes OWL when its price is decreasing. They say in the white paper that instead of a negative reward rate, they will create a system which incentivises users to temporarily take their OWL out of circulation. Thus, users will freeze their OWL with their MVP contract in exchange for a potential bonus after their funds stay frozen for a certain amount of time. Then they say, “in the event of a prolonged decline in which the MVP vault funds are exhausted, OWL will have to naturally regain stability as they cannot issue bonus OWL unless they exist”

Another good question is, why would people spend OWL instead of fiat currency or other cryptocurrencies?

and here they partly answer the question by saying that OWL is preferential to fiat currency because of the incentives approved merchants will be provided based on the rewards system. In other words, approved merchants receive rewards when OWL is used. Then they suggest that these merchants offer their customers discounts, freebies and exclusive content for paying with OWL.

They did not address the issue with other cryptocurrencies, but I guess the reasoning would be the same. So, by using OWL, merchants would get rewards and save on the fees.

They go in more detail in the white paper about how the Minerva economy works. However, in a nutshell it uses OWL tokens, an MVP contract, and Voting tokens.

Rewards for approved merchants are directly introduced to the economy as OWL tokens,
The MVP contract becomes accessible during episodes of price decrease. Its purpose is to incentive users to temporarily take OWL tokens out of circulation in order to effectively decrease OWL supply and bring the OWL/USD price back up.
Then the Voting tokens are exchanged for users “voting” on the current OWL/USD conversion rate to a smart contract. These are necessary because votes are still required during prolonged periods of price decrease, and they cannot guarantee immediate rewards since the MVP vault which holds rewards for voting can sometimes
become exhausted.

In summary, their goal is for OWL to become a stable cryptocurrency which allows businesses to accept it as a method of payment. They will try and incentivise this use by providing a generous reward system, which is similar to a “cashback” incentive.

They also have User Incentives, mostly in the form of discounts, freebies and exclusive content given to them by the merchant. In turn, as we have discussed before, merchants can be paid bonus OWL at the time of each approved transaction.

Furthermore, they already have a use-case. A live-streaming service, whose name they cannot yes disclose, that has 20 million dollars in revenue and over 10 million users. Minerva promises on the white paper to then show a clean and concise before-and-after revenue impact of integrating with Minerva.

Finally, they want to create the Minerva Smart Money Alliance (MSMA) which will be a group of organizations that either accept OWL as payment or are strategically partnered with Minerva.

That’s all for now about Minerva, let me know if you have any questions in the comments and as always thank you for watching and I will see you next time.