On Day Two of SmartCon #1, Flexa Co-founder Tyler Spalding delivered a keynote about how the Flexa’s digital assets payment network taps into decentralization’s true value. He kicked off his talk with a meme showing how ubiquitous the call to “decentralize all the things” has become. Despite the world’s growing enthusiasm, Spalding pointed out that the move toward decentralization is rarely dictated by technologists and innovation; it’s usually decided by demand.
So where is the demand for decentralization? The answer, Spalding explained, is where decentralization enables products and services that are faster, better and less expensive.
He used a lesson from history to illustrate the importance of satisfying user demand. Speaking to an older audience of “people [who] might remember BitTorrent,” Spalding explained why the decentralized peer-to-peer content sharing platform was ultimately overtaken by Netflix’s centralized content streaming service: BitTorrent’s value was simply access to content – not faster, better, cheaper access to content.
In the realm of digital retail payments, however, Spalding believes decentralization delivers distinct, enduring value that solves the root cause of card fraud, chargebacks and payment processing fees costing retailers billions of dollars each year: payment validation.
According to Spalding, the problem with centralized transaction validation is that it relies on multiple parties to process payments through proprietary gateways. “It’s not so much that the process doesn’t work,” he said. “It’s that it costs a lot of money and it’s very slow.”
Decentralized payment verification using distributed ledger technology offers a faster and more affordable alternative, but it needs to be easy for merchants to implement in order to achieve mainstream adoption. Spalding said Flexa takes a “hybrid approach” to bridging this gap as a centralized entity that decentralizes access through any existing application, allowing merchants to accept instant, secure, collateralized payments in dozens of digital currencies with minimal risk and overhead.
Flexa simplifies payment settlement by transacting directly between customers and merchants without middlemen. Users who provide the system’s collateral receive all of its economic benefits – an incentive model Spalding said simply wouldn’t be possible without a decentralized system. “If you have to trust a centralized entity,” he said, “the whole thing falls apart.”
In March, Flexa integrated Chainlink Price Feeds to determine asset prices and collateral value. Spalding called Chainlink’s decentralized price oracle “the beating heart of how all of this works,” because it determines value based on the entire ecosystem instead of one centralized entity.
At the end of the day, Spalding believes mitigating risk is decentralization’s key value, because risk accounts for the overwhelming majority of transaction cost. This, he said, is why Flexa combines standard “old school” technology with blockchain and decentralized oracles. “It’s the market driving us toward the best, most impactful result.”
Watch Tyler Spalding’s full SmartCon keynote.