When someone mentions cryptocurrency mining, Bitcoin (BTC) and Ethereum (ETH) mining is the first thing people think about. That’s because these two currencies are the most popular ones, and have the highest market cap and value per coin. However, since the crypto market has more than 10,000 digital currencies, there are many other altcoins that can also be mined by crypto enthusiasts. More recently, the crypto community has shown an interest in mining cryptos that use proof-of-stake (PoS) algorithms such as Cardano (ADA), Algorand (ALGO), or OmiseGO (OMG).
However, proof-of-stake-based cryptos can’t be mined and OmiseGO is one of many such cryptocurrencies. The OMG project is a very interesting Ethereum-based ERC20 token with numerous real-world use cases and functionalities that make it a great currency to invest in.
Let’s take a detailed look at how the OmiseGO cryptocurrency works, what its main features are, and why it can’t be mined.
The story of OmiseGo begins with Omise, the company behind the cryptocurrency. Omise was founded in 2013 by Jun Hasegawa and its goal was to establish an online payment service similar to PayPal or Payoneer. Back then, online payment gateways were becoming increasingly popular as a method for simplifying payment processes.
Omise managed to create quite a popular online payment platform in Thailand and Southeast Asia, which was of huge use for the launch of OmiseGo in 2017. The project was even officially supported by the Thailand Ministry of Finance and the Bank of Thailand. The support of these financial institutions was vital for the adoption rate and user trust in the OmiseGO crypto from the get-go. Also, Vitalik Buterin, the founder of Ethereum, was one of the chief advisors during the development of OmiseGO.
OmiseGO was first widely popularized by the Omise payment network as an addition to the payment options supported by the company. One of the main features OMG brought its users was lower fees for all sorts of transactions, such as exchanging cryptos or fiat money, sending funds, or paying for products and services.
Many retailers and companies in Asia accept Omise payments, but that doesn’t mean that they automatically accept payments using the OMG token, although this is one of the plans of the company – to massively expand OMG token acceptance within the Omise payment network. The possibility of thousands of retail chains accepting this cryptocurrency as a payment method is something that could open many doors for OMG holders. Also, as the acceptance of OMG grows, so does its value, which means that it’s a nice investment opportunity for crypto traders.
The OmiseGo Plasma Network
Basically, the OmiseGO cryptocurrency’s main focus is fast, secure, and cheap transfers of funds, and above all, payments. The OmiseGO network is among the first cryptocurrencies that started utilizing Ethereum’s Plasma Network, which is a child chain of the main ETH chain.
This network was developed to run on top of the ETH blockchain as a smart contract network with huge scalability potential. It’s created to handle up to 1 million transactions per second, which is more than enough for entire enterprise networks. For example, the Visa network, one of the fastest non-crypto payment networks, is able to process 50,000 transfers per second. This means that the scalability potential of the Plasma Network combined with OmiseGO is quite sufficient to handle the needs of the Asian financial market, which is the largest one in the world, given the fact that more than half of the world’s population is in Asia.
OmiseGO launched its Plasma Network functionalities in 2018 and showcased how powerful this smart contract technology can be in the context of payment services, which were fully enabled by the OmiseGO system in 2019. Users have been very satisfied by the quality of the lightning-fast and low-cost transactions on the network. It truly brought new possibilities to the financial market. The fact that OmiseGO’s Plasma Network is incomparably faster than classic bank transfers and other payment services means that users don’t have to worry if their transfer is going to get processed on time, because they know it will arrive instantly at its destination address.
This Plasma Network child chain is able to lower usual ETH transaction fees by a staggering 90% thanks to transaction data grouping, a method that allows the network to process multiple transfers at once.
OMG: An ERC20 Token Built on the Ethereum Blockchain
The Ethereum blockchain is among the most popular blockchain for developing decentralized applications and smart contract functionalities. One of the fundamental features of the ETH network is its open-source technology that enables developer teams to create their own cryptocurrencies, built on top of the Ethereum blockchain, and utilize all that it has to offer. The ERC20 token standard is the most popular set of rules for creating tokens based on ETH and numerous developer teams use this standard to launch their own cryptocurrencies.
Omise chose the ERC20 standard to build the OmiseGO token and launch the currency on the crypto market. Even though the token follows an ERC20 standard, the OmiseGo blockchain isn’t a classic proof-of-work blockchain like BTC or ETH. Instead, it’s a proof-of-stake system.
When the OMG token was launched in 2017, it had a set hard cap of 140,245,398 OMG coins. This amount of coins was fully launched into circulation in 2019 and no additional coins will be created. No new coins mean no mining necessary.
Just like many other cryptos, OmiseGO had an ICO (Initial coin offering), when 25 million USD worth of funds were raised and 65% of the total token supply was distributed. Some 5% of OMG coins were distributed as an airdrop strictly for Ethereum holders, another 10% were distributed among the developers, and 20% of the tokens were kept by Omise for further development of the network and related expenses.
Omisego is available for fiat money purchases in some Asian countries, such as South Korea and Thailand, and on local crypto exchanges. Users outside of Asia can buy OmiseGO on cryptocurrency exchanges such as Coinbase, Binance, and Kraken with cryptos like BTC or ETH.
OmiseGO Proof-of-Stake System
OmiseGO uses a proof-of-stake consensus mechanism to validate transactions. Compared to proof-of-work blockchains like ETH or BTC, this mechanism consumes much less energy and works much faster. Proof-of-work blockchains work with the help of network nodes, i.e. miners and their computers that process and check each transaction on the network to make sure it’s legit before validating it.
Transaction fees and block rewards are the incentives for miners to check transactions and search for the appropriate transfer hash for each transaction. When they find the appropriate hash, they automatically present it to the rest of the network as proof-of-work. This takes a lot of time, computing power, and electricity. Needless to say, this causes a strain on the environment.
Meanwhile, proof-of-stake mechanisms don’t require miners to check transactions and there are no complex mathematical tasks that need to be solved before a transfer can get validated. Instead, users that have OMG tokens, literally stake them as a guarantee for the transactions they automatically validate. When you store OMG tokens in a crypto wallet and stake them to validate transactions, you get rewarded proportionately to the amount of tokens you are staking. So basically, staking your OMG means contributing to the network and validating transfers. The staking rewards you earn are a part of the transfer fees.
This system is much faster than proof-of-work and cryptos that utilize such a model can process a lot more transfers per second than classic proof-of-work coins. Proof-of-stake cryptos also use much less electricity because there’s no mining involved.
Why Isn’t OMG Mineable?
The main reason why OMG can’t be mined is because of the proof-of-stake consensus mechanism of its blockchain. There simply isn’t any need for miners, since the transfer validation process doesn’t require mining. Also, since the total supply of OMG tokens is hard capped and it’s already in circulation, there aren’t any new coins that could be mined.
If you want to get OMG tokens by mining and not by directly investing in the token, the only way you can do so is by mining some other, proof-of-work-based crypto such as BTC or ETH and then exchanging that crypto for OMG.
OmiseGo Goals and Use Cases
One of the main OmiseGO use cases is to provide people with an online payment network that integrates cryptocurrency functionalities, thus providing innovation to traditional financial systems that rely on slow bank account transfers, credit card payments, and payment services that take hours to verify a transaction. Speeding up payment processes without sacrificing security and quality is the main goal of the OMG cryptocurrency. Online payment providers such as PayPal or Payoneer work well with fiat money, but OmiseGO takes those services a step further by providing users with its native OmiseGO coin.
Another goal of OmiseGO is to provide financial transfers and banking services to millions of unbanked people in Asia. The term unbanked refers to people who aren’t part of the traditional banking system, which has proven to be quite expensive for many people in developing countries. The OmiseGo network aims to provide these people with cheap yet reliable and top-quality services by letting them use their cryptocurrency to facilitate transfers and payments quickly, online, with their mobile devices.
In some aspects, Ethereum, Solana, and NEO can be regarded as OmiseGO competitors because they offer numerous smart contract functionalities and development possibilities in the DeFi (decentralized finance) sector. However, the OMG platform’s real competition are payment service providers and payment card companies such as Samsung Pay, Visa, PayPal, and Mastercard, companies that provide the same services OMG wants to dominate in the Asian region.
The OmiseGo network has developed a very advanced wallet called the OmiseGo eWallet Suite, which offers a bunch of useful functionalities for OMG users and lets them store OMG tokens along with Ethereum network tokens such as ERC20 tokens, and ERC721 tokens. Users can also store tokenized assets that were created on the OMG network. You can even tokenize some fiat currencies.
The wallet comes with an API (application programming interface) and it helps developers to create apps and plug-ins based on the Omisego open-source technology. For instance, special software plug-ins for the wallet enable fiat money exchange. The front-end interface of the eWallet suite allows users to send and receive coins and tokens, as well as see their transaction history and other useful information.
The eWallet suite has so many integrated programming resources that anyone with some relevant programming knowledge can use them to create their tokens and assets on the OmiseGo network.
A Few Final Words…
Crypto developers always tend to create projects with some characteristics that make them stand out from the competition, which is a difficult task because there are more than 10,000 altcoins on the market and only the best projects manage to achieve some success. The OmiseGO network’s OMG token might not currently have as huge a market cap as the top 50 cryptos on Coinmarketcap, but it does have enormous potential on the Asian financial market, especially if you take into account the rise of cryptocurrency adoption in the retail payment sector.