France-based startup, called NeuCoin, has raised $2.25 million in investor funding. The company will use the money to develop a new digital currency for online micropayments.
NeuCoin uses economic model and proof-of-stake (PoS) design, what eliminates the need of having more computing power to get more coins. It is the first cryptocurrency that will be sent to those who help to raise it value and utility.
NeuCoin is given freely to users who just start using the cryptocurrency and for those who recruit new ones. The companies, facilitating the use of the new digital currency, including payment processors, exchanges and others, are also given NeuCoin. Besides, a certain amount is sold to investors in the virtual currency.
There are a number of reasons why NeuCoin decided to create a new cryptocurrency. The key one is multiple disadvantages of other digital currencies. Bitcoin, the most popular cryptocurrency, is too risky to be used for microtransactions. Moreover, it is rather difficult for mainstream users to understand how it works and what the bitcoin wallet is.
In addition to these factors, there is always a risk of the mining process turning into an oligopoly, what does not comply with the main idea of bitcoin – avoiding banking fees.
“Strategic currency distribution is a huge advantage over Bitcoin and other Proof-of-Work coins,” said Dan Kaufman, one of the NeuCoin’s founders.
“Instead of handing all the currency to miners, where its value is essentially spent on computing and electricity costs, NeuCoin channels the value of the currency into user growth and projects that make the currency useful for regular consumers,” he added.
“The main reason that Bitcoin and other digital currencies haven’t been widely adopted is that they don’t provide benefits over traditional currencies that mainstream consumers care about,” Kaufman stated.
“Many believe that new business models and behaviors based on micropayments (transactions from $.01 to $1.00) where traditional payment methods just aren’t viable might be digital currency’s killer app. Armed with freemium distribution, this is NeuCoin’s focus.”
Investors include Patrik Stymne, King co-founder, Facebook head of growth, Rob Goldman, Emil Michael, Uber SVP of business, Hotwire president, Henrik Kjellberg, and others. Strategic advisors include Alex Norstrom, vice president of growth for Spotify, Dogecoin creator Jackson Palmer and Brock Pierce, the member of the Bitcoin Foundation board.
The first partners include media website Mongo and music service Jango, which will enable users to tip media creators and musicians. NeuCoin will provide 25 NeuCoin for consumers who want to tip someone.
NeuCoin is going to launch this spring. Currently, the company wants to attract more attention from the bitcoin users and increase people awareness.