DEPLOYMENT

3

Retailer gets the white-labeled or co-branded apps and cards. Retailer motivates customers to install the consumer app, sells or freely distributes the cards (depending on the properties of the loyalty program). Management is instructed about the back-end app.

USE

The system is now ready for operation. No data centers required, the system leverages the technology of blockchain. For topping up the cards and customers' mobile wallets retailer can operate on its own and directly use the emission tool. In case it is not legit for the retailer to operate with monetary surrogates, a relevant institution such as retailer's bank can be approached. A bank would have to mimic a circulation of ordinary digital checks, and no significant legal costs should be involved. Conversion of funds from the cards and wallets into cash or vise versa may occur the usual way at cash registers or in the bank that operates the mentioned digital checks. Alternatively, Mycelium can supply the retailer's circulation with digital cash backed up elsewhere.

Consumers can now pay via cards or the mobile app. Payments, of course, take place in the native currency of the retail chain, instantly and securely. The system may be fine tuned through the use of several internal currencies with relevant exchange rates.

No significant expenses to maintain the system and keep the money turnover is required on the retailer side. No bills from networks, settlement and clearing houses, etc. The Mycelium agreement may be executed in two ways: one time fixed price technology acquisition or a small percentage of every transaction, which is an order of magnitude less compared to traditional interchange fees.

Balance Check

To check the current balance the card holder needs to push and hold the button "1".  Also the balance is being prompt on the display after each payment completed.

Make Payment

The default mode of the card is "Pay". To pay the card holder needs to enter the two digit invoice number and click OK. The payee can use any channel of communication to inform the payer (the card holder) what the invoice number is: verbally, visually or any other way. This communication does not necessarily have to be secure. Invoices can be created either with a card or Mycelium mobile or web application. If the card finds the needed invoice in the ether it displays the item name and the amount to be paid. At this point the security measure to prevent a man-in-the-middle attack  is applied: both parties need to compare the keywords displayed on their screens. The card performs a "handshake" with the interlocutor by exchanging a common secret (ECDH key exchange) and thus establishes an encrypted session. The common key for this symmetric encryption is stored aboard the card and can be used again if the same cards need to perform a P2P transaction once again.

Receive Money

To receive payment the card holder needs to push and hold the button "3", after with the card shows the invoice number that it is currently transmitting to the ether. That invoice number needs to be communicated by the card holder to the payer.

Change PIN Code

Mycelium cards use recombination tables instead of PIN codes to confirm payments. The reason is that plastic gets scratched by nails, so the frequently used buttons become visible. Card holders can change the authorization code any time, right from the card: one needs to push and hold the button "8" to prompt the code changing mode. A card can also be completely reset with a PUK code. This way, by having blank cards in storage, users can restore the lost card at any time with no assistance from financial institutions needed.

The brief description of the underlying technology

MYCELIUM HUB

MYCELIUM CARD

The Mycelium card is the container for coins, not the access key to the account. The card is the user interface and POS terminal in one: it is equipped with a display and a keypad. The Mycelium card is battery operated, it allows completely autonomous operation. The Mycelium card can be connected to a computer through a Mycelium reader that allows charging the battery and accessing transaction records with a full-size interface. A user can complete up to few hundred payment operations with one charging cycle.

The card is initialized with the issuer's public key and the authorized Mycelium public key(s). At initialization, the card generates a unique private-public key pair securely and randomly thanks to a dedicated random generator developed by Mycelium that combines three different sources: the silicon built random generator, radio noise and data coming from users keyboard usage. The issuer can personalize the card with the card holder’s KYC information if needed.

Transactions between two cards can be done without a hub and connection to the Internet. Such transaction data is stored in the flash memory of each card. When one of the cards meets a hub, it dumps all stored transactions through that hub to the blockchain. Each transaction is acknowledged by a Mycelium server as it goes into blockchain; after that, the card removes it from its flash. As transaction insertion is idempotent, no harm is done when the other card tries to push out its copy of the transaction(s).

DIGITAL CHECKS

Mycelium is self sufficient unlike «Apple/Android/Samsung/etc. Pay», it does not use large card networks’ «digital enablement programs» and POS networks. Unlike Visa/MC, Mycelium uses very compact open infrastructure. Mycelium is A COMPLETE alternative, it offers total solution while incumbent systems represent part(s) of a complicated framework.

Both physical channels (card and smartphone) are equally powerful. Online and in-store payments work the same, having the exact same user experience, with no compromise in security or any other important aspects.

True perr-to-peer: the system is actually based on a p2p architecture. Banks can be bypassed in the future when legal framework allows.

TRANSACTIONS

MERCHANT SETUP

USER CONTROL

COSTS

Current payment services are resource-intensive compared with what the best options could achieve. The costs reduction that Mycelium can deliver, using the most modern blockchain technology, is drastic.

Payment costs have traditionally been charged via hidden and non-transparent price markups, float revenues, or low interest on payment capital. Thus, there is very little information available on the total costs of different incumbent payment instruments, which would include the costs for payers, payers’ banks, payees, payees’ banks and interbank infrastructures. As a result, neither public nor industry participants know the total costs of incumbent payment services.

A non-transparent and cross-subsidized pricing gives, in most cases, completely wrong price signals to end users. In contrast to that, Mycelium, being a self-sufficient blockchain based system, can provide an absolutely clear all-inclusive cost structure:

SPEED

When discussing transaction speed issues, one has to first mention that the incumbent payment systems do not provide peer-to-peer payment as an option (besides paper cash of course). Therefore, the speed is primarily the derivative of the star shaped system architecture. An interbank payment infrastructure plays an essential role, otherwise customers could only make payments to other customers of the same bank. Hence, in order to provide generally accepted private payment instruments, banks must cooperate in designing the interbank infrastructure, as well as the rules and conventions for common payment services and instruments. This need for interbank cooperation in payment services limits competition and very often results in quasi-monopolistic, and therefore slow and ineffective, infrastructures.

On the contrary, systems like Mycelium - those that are blockchain based – work through peer-to-peer channels. This is a core property. Therefore, the speed is fundamentally limited only by the underlying blockchain performance. For instance, currently an average Bitcoin blockchain based payment takes few seconds if supported by smart devoted nodes infrastructure. A plain transaction can take long to confirm on the blockchain, but there are heuristics that allow quick estimation of a transaction’s chances to confirm. Popular blockchains such as Bitcoin are being constantly improved by large self-managed developer communities. Mycelium is a smart add-in to the blockchain infrastructure, so Mycelium users keep automatically benefiting from such improvements for free.

SECURITY

The development from barter to cash occurred over several centuries, creating a need for trusted centralized entities – cash issuers. The changeover from cash to account-based paper instruments has also been a long process, taking about one century, resulting in even greater need for centralized trusted entities. The most recent transformation from paper based to electronic account transfers has been quite rapid, continuing the same trend. The transition from barter to e-payments has made payments and money increasingly more abstract, and every development in payments has required the users to trust more and more new devices and new institutions. Users have generally been cautious because of the values at stake, and in many cases for good reasons.

Security which assumes that users do not make mistakes by themselves can be measured as the number of possible points of system failure, divided by the number of users, and - as paradoxical as it may sound – overall security has been declining over centuries, while the need for various insurance instruments has been increasing. Payments are easier to do now than years ago, but the infrastructure that the society has to pay for to keep payments secure is monstrously huge. When moving from coins with metal value to notes, users asked if they could trust the written words of exchange on paper, and on many occasions in history the issuing banks have not been able to redeem their notes in full. For money stored in accounts, users have to trust the deposit institutions and their systems, and bank runs have historically affected the trust in such accounts. Currently, many e-payment systems are provided by non-banks, and users need once again to extend their trust. The need to trust, to rely upon someone is the main source of unreliability.

Now, we are finally at the start of the next transformation process, in which payments will become to a great extent decentralized, and the underlying commercial processes will become integrated and fundamentally less dependent on institutions. So far, blockchain technology has proven to be extremely robust. Various approaches to building distributed ledgers actively compete to attract mainstream financial institutions. New projects appear on a regular basis with accelerating tempo, insuring that this evolution will keep the blockchain-based financial world well equipped.

COMFORT

With the development of technology and the wide adoption of networks, mobile telephones, and other e-based solutions, the transport methods for payments moved to a completely new level of comfort and efficiency. However, incumbent e-payments are still built upon the old paper-based segregation of the payment process from the underlying commercial activity. Mycelium service integrates the underlying commercial processes and the payment process itself, thereby creating considerable synergy benefits. This kind of integration can be seen in, for example, the modern ordering and e-invoicing processes provided by us.

Mycelium is unique even among the new type of payment providers that use smartphones and blockchains as the backbone of their systems. We are the only company which offers both smartphone and smart card physical user interfaces. Our mobile application has been running for years, from the very dawn of the blockchain era, and has proven itself as one of the most secure in the world. Our smart cards are actual blockchain hardware wallets, not just access keys to some centralized server gateways, thereby inheriting all the security benefits the blockchain has to offer.

Mycelium instruments offer a previously unthinkable amount of control that users can enjoy right from a mobile device or a smart card. For example, Mycelium cardholders can change PIN codes right from the card, or read the entire transaction history without a need to connect to anywhere online. The new possibilities are so numerous that the comparison even with the most advanced Internet banking becomes pointless and even looks unfair to traditional services: the new underlying technology is just so much better, and we use it to the full extent. What users have gained from these developments is not only efficiency and convenience, but also new level of confidence.

INTEGRATION

Payment instruments are heading towards a synthesis. The current differences between instruments will disappear when we move to real-time payment processing and to a real-time economy in general, with everybody connected all the time to rapid and low-cost network services. Mycelium has been originally designed the way where payments themselves are only one integrated part of the overall economic transaction process of quoting, ordering, delivering, invoicing, etc on one end; and asset creation, money emission, clearing, secure storage, etc. - on another.

We have already considerably blurred the boundaries between the different stages of the payment process. For instance, when you order your meal with Mycelium your smartphone acts as a POS terminal, so consumer becomes “integrated” with merchant on a technical level.

Even more important is that each component of our system is initially universal. Mycelium works equal way for offline and online payments from the very beginning. Using global distributed ledgers allows us to bypass a need for localization except for interfaces' languages. Conventional payment systems have been following the path from being local to being global for decades, but they started from very distant point, that’s why Mycelium enjoys a huge handicap. That is one of the main reasons for the slow development of payment services, that payments have mostly been local between consumers and nearby service providers. Incumbent payment services have been governed by local regulations and processing centers, resulting in local development paths; Mycelium system is designed from scratch in globally accepted terms, thus it completely lacks such bad legacy.

At this time we can only accept preorders from compact communities such as college campuses, municipalities or commercial ecosystems. We can not yet supply cards to individuals because some critical mass is needed for the network to operate in a healthy manner. The denser the community the lower the critical mass.