VELO is a company based on south Asia whose core mission is to allow easy transfer of payments within different countries. Despite an increase in international business, there are still many steps which have to be followed to make money transfers. In regions like South Asia, where different countries are close yet scattered, it becomes even more difficult. Working professionals often travel back and forth from these countries. It becomes difficult to transfer money in such cases. As a developing region, many remote areas may not even have access to a bank to receive the money sent by a family member. In this blog, we will be discussing everything you need to know about Velo token and why its a good option to invest in Velo tokens.
Such problems create a lot of delays, frauds and costs high fees for people. Experts say that out of 100$ only 80$ is received by the end party. Almost 20% of the money is spent on transaction fees charged by the middlemen. Another difficulty faced by people is the acceptance of cryptocurrencies as a regular mode of payment. Due to its high volatile nature, people are still reluctant about cryptocurrency. Many of these currencies keep the identity of the person hidden which also causes frauds.
This is where Velo company comes in. It eliminates all the middlemen involved in the transaction process. It also thoroughly checks the background of the companies before partnering up with them. A Velo token is issued which not only acts as a collateral but is also an entrance requirement into the Velo ecosystem. “Velo’s objective is not to replace existing banking infrastructure or fiat money, but instead to complement and connect them to a wide array of partners through a blockchain payment system that also provides for trustless, guaranteed settlement”. Thus, the company works with established monetary institutions, business companies and uses digital currency to transfer money from one country to another.
How money transfer works with Velo tokens
As mentioned, there are a lot of steps involved in the transfer of money from one country to another. Working professionals often send money to their family which is also known as ‘International remittance’. There are 5 steps involved in the transfer of fiat money from one place to another.
1) Capture: As the name suggests, the first step in the process is taking the money from the sender. The sender may opt for a formal way of transfer like a bank. Or he may choose other intermediaries like an agent or MTO.
2) Messaging: This step involves the collection of information needed to transfer the money. It includes name, bank account details, amount of money and even KYC. As different countries are involved, middlemen may charge additional fees to transfer this information too. In extreme cases, collection of these details even leads to frauds.
3) Settlement: One of the most important and complicated steps in the process is that of settlement. It is the actual step where money is transferred from one place to another. Just like other steps, it usually involves more than 2 middlemen. All these middle parties also charge a fee for their services.
4) Liquidity: The second last step in the process is taking the money to the actual receiver. People receiving the money may not have formal bank accounts and thus the money has to be transferred to another person, who in turn gives the money to the receiver.
5) Disbursement: The last step is the money being received by the person to whom it was intended for.
Clearly, at every step, a nominal fee is charged. Velo Labs works to eliminate these steps and enable a direct transfer of funds from the sender to the receiver.
The Velo Protocol
Apart from enabling direct transfer of funds, the company is also highlighting the use of digital currency on a day to day basis. Common people are often reluctant to use digital currency due to its high vitality and are also not accepted in many areas of the world. As the digital platform refrains from proper identity checks, it is also prone to frauds.
The Velo Protocol provides solutions to all these problems. The company prevents frauds by allowing a public display of all the Velo token transactions using the blockchain technology. It also thoroughly checks the ‘Trusted partners’ before allowing them to issue Velo currency.
As the company is widespread in most parts of South Asia, people can easily convert their Velo tokens into fiat money.
As stated above, the companies planning to partner up with Velo Labs go through a vigorous process of checkup. Out of many, only a few are allowed to work as a partner. “Trusted Partners are then able to purchase and stake VELO tokens as collateral to issue digital credits tokens that correspond to any fiat currency.”
The Velo token is very different from any other form of digital currency. The tokens are issued only to the Trusted partners of Velo labs. Velo tokens perform a dual function of both acting as a collateral in the payments as well as a requirement to enter into the Velo ecosystem. To put simply, an individual must possess Velo tokens to utilize the services provided by the Velo labs.
These tokens can easily be purchased online as well as through other modes like open market or borrowing from other entities. Velo tokens are also issued by depositing the fiat money into the Velo system and obtaining the tokens of the similar amount. As the company is working towards a higher usage of digital currency, There Velo tokens can be converted back into fiat money at any point. This is one of the major features which distinguishes it from other cryptocurrencies.
Apart from being an entrance requirement, Velo tokens also serve as a collateral in the digital world. The Digital Nerve System of Velo labs ensures that the ratio between the Velo token and the fiat money remain 1:1. “The Digital Reserve System achieves this by automatically adding or removing tokens to or from a Trusted Partner’s staked collateral as the price of the VELO token fluctuates.” Thus, if the price of Velo tokens increases, the system will remove the tokens from the Trusted partner’s collateral and place them in the ‘Reserve pool’. If the value of the tokens decreases, the system will add the tokens from the reserve pool back into the Trusted Partners account.
According to the company, the Reserve pool contains more than 50% of the Velo tokens issued to maintain the ratio. Just like a formal financial institution, the Velo labs also follow many protocols to ensure liquidity of Velo tokens.
To summarise, the Velo token is a ‘Utility type’ token on the Steller platform. Each and every transaction using the Velo token is pubilicy recorded using the blockchain technology. The Initial Circulating Supply, according to Velo Labs, is 75M and the total circulating supply is 30M. There are many listing exchanges where interested parties can purchase the token. The most popular cryptocurrency website, Kucoin also holds Velo tokens and puts them on sale regularly.
Economists worldwide are suggesting people invest in Veto Token. It is expected to become a popular cryptocurrency in the upcoming years.
Source : https://velo.org