Blockchain technology has managed to influence every walks of our life in a very short period of time. While the benefits of the technology far outnumber the mixed reaction it has received from the crowd, blockchain technology offers a lot of scope for innovative applications. Subscription economy and recurring payment systems are some of them.
The 8x Protocol is a new concept ensuring a leading standard in the management of recurring payments with the help of blockchain technology. The protocol combines the subscription economy with blockchain technology creating unique opportunities as well as challenges that are utilized by it.
Recurring Payments also called Auto Pay can be defined as mechanisms where a business concern or say a bank is authorized by the customer to automatically collect a certain amount during a particular period. For example, banks are authorized to automatically deduct credit card charges, at the beginning of every month. This helps in avoiding the issues of late fees or fines.
The Main Issues with Recurrent payments
Recurrent payments while a convenient mode of payment in most cases has its limitations as well. Some of the most common issues of recurrent payments are: –
- The instability or volatility of payments made
- A push-based system that complicates the payment procedure
- Lack of scheduling option to smart contracts to schedule payment at a later phase
These issues of recurrent payments can be addressed well with the help of 8x protocol.
What is 8x protocol?
8x protocol is a protocol that enables decentralized recurring payments with a technology built on Ethereum. With this protocol, it is possible to authorize businesses to automatically deduct an approved amount from the account in a prescribed period, eliminating the need for constant manual payment.
Why 8x Protocol?
8x Protocol brings about a remarkable improvement in the way recurrent payments are conducted today. Some of the prime features of the protocol are as follows.
The 8x protocol allows the entity to take the tokens directly from the user’s wallet. With this protocol, the need for an escrow account can be eliminated. It also eliminates the need for advanced upfront payments.
The protocol eliminates volatility with the use of stablecoins, Dai, in its collaboration with MakerDAO. This helps in the elimination of volatility for both users as well as businesses. 8x is an ERC20 algorithm.
On-time collection of payments is ensured with the help of a network of distributed service nodes that are run by token holders.
The working of 8x protocol
Businesses create a subscription plan specifying the frequency, amount, and fee. The subscription with a dynamic fee helps in conveying the importance of paying on time. Customers subscribe to the subscriptions offered by the business. If they do not have the necessary token at hand, they can conduct an atomic swap (to convert Dai to ETH).
The feature of volatility is not available in the presence of stablecoin. Once the date is due, the service nodes are notified or kept on waiting for the subscription to be processed. If the subscription meets the criteria set by the service nodes, the transaction is executed and the funds are transferred from the user account to that of the business.
The 8x protocol facilitates recurring cryptocurrency payments without exposing businesses or consumers to the volatility of cryptocurrency.
Want to learn more about cryptocurrency? Here’s a reading list for you.
- What is Blockchain Technology?
- The Working of Cryptocurrency Mining
- Best cryptocurrency Wallets, Everything you need to know
- How to trade cryptocurrency?
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