Where do I even begin with OmiseGo? This has been a red hot coin for the past few months. I’m going to be completely honest, I’ve seen the rise of OmiseGo but sat in the sidelines the whole time. Each time I thought a NEO-esque consolidation was imminent ($60 to $20), it surprises me and goes up by double digit percentage points. I blame my inaction on a combination of a personal distaste with OmiseGo’s inappropriate marketing tactics and my blatant ignorance of OmiseGo’s technology and potential. After a busy few weeks, I’ve finally found time to do a deep dive into OmiseGo and realized that it has a lot of potential. In fact, I would go so far as to say OmiseGo’s idea is gamechanging. It has a great company behind it, and its tech looks strong, at least on paper.

However, a word of warning. There are quite a few red flags with OmiseGo that a investor cannot ignore. It does not have a product yet nor does it have a public Git repo showing work in progress. This is atypical for cryptocurrency projects. Additionally, the CEO, Jun, has been using very very questionable tactics to market OmiseGo including blatantly pumping the coin by teasing announcements of announcements. I also want to call out the unprofessional way he handled the entire McDonald’s Thailand affair and it has left a really bad taste in my mouth (read more about it in the “OmiseGo’s Risks” section of this post).

State of the project

OmiseGo was kicked off with a capped, $25 million ICO that concluded at the end of June this year. The ICO was fully funded. OmiseGo currently exists as an ERC20 token on Ethereum but will eventually be its own blockchain. The blockchain is slated for release in Q4 2017.

Market misinformation and what OmiseGo actually is

Turns out, most people have a very poor understanding of OmiseGo’s potential. I’ve watched several YouTubers explain OmiseGo and have been rather dissatisfied with their explanations. I can’t fault them, OmiseGo’s whitepaper is a hefty read and its value proposition isn’t stated very clearly among the technical and financial jargon.

For example, here’s Boxmining’s TLDR of what OmiseGo is:

  • Ethereum based financial technology: Ease of use - no bank account needed
  • People who don’t have bank accounts or who, for whatever reason, don’t want to deal with the financial system now have more options.
  • Affordability – low transaction fees: Using traditional remittance methods make it difficult for a lot of their target market to send money home. The fees will take up a large percentage of the total amount. OmiseGo can offer almost instant transfers at low cost.
  • Allows easy transfer between fiat currencies and also digital currencies

There are so many things wrong or missing with this TLDR that I’m pretty sure he spent maybe 5 minutes skimming OmiseGo’s website and whitepaper before writing it. Yes, I have a pisspoor opinion of many cryptocurrency YouTubers and can often tell when they’re talking out of their asses.

Here is what OmiseGo actually is:

  • OmiseGo is a blockchain-based decentralized exchange. An OmiseGo wallet can hold many different kinds of currencies and assets including fiat and crypto and the blockchain facilitates real-time asset transfer and conversion.
  • The central OmiseGo asset is Ether. Ether will have trading pairs with every other asset for exchange liquidity and efficiency. If every asset on OmiseGo had a trading pair with each other, less popular pairs will be highly illiquid with abysmal spreads.
  • OmiseGo’s blockchain uses an Ethereum smart contract to store the decentralized exchange’s Ether reserves.
  • OmiseGo is a proof of stake blockchain, with wallets earning fees from the completed exchange orders in blocks they validate.
  • OmiseGo targets the long tail of eWallet platforms (i.e. Venmo, Alipay, Paytm, Omise) and provides them with a central clearing house where they can interoperate with each other. eWallets are unwilling to use centralized clearing houses such as SWIFT and ACH since this requires significant trust-related overhead costs. OmiseGo will provide an SDK for the eWallet platforms to build wallets on OmiseGo’s blockchain
  • OmiseGo will be a super fast, super cheap decentralized exchange that facilitates the real-time exchange of all sorts of digitized currencies and assets

OmiseGo’s fundamentals

If OmiseGo’s idea is realized, it will revolutionize cryptocurrencies and the global economy

As mentioned above, OmiseGo targets the long tail of eWallet providers. Adoption of OmiseGo means having many eWallet providers building wallet services on top of OmiseGo and then using the blockchain to issue inter-eWallet payments.

If OmiseGo succeeds as a platform, i.e. many eWallet providers adopt it, you can imagine a world where a user using Venmo (USD) could travel to India and pay a user using Paytm (rupee). The same user could then go to China and pay another user using Alipay (yuan). That’s revolutionary. It breaks down monetary borders and introduces unprecedented liquidity between currencies and assets.

If implemented on a global scale, OmiseGo would create a monetary system that behaved like it had a singular global currency, even though there would still be many many currencies. OmiseGo would be the next big globalization force after free trade.

Of course, this is the most ideal scenario and OmiseGo will probably be utilised in a much more limited scope, if at all. But the underlying point is that OmiseGo’s idea makes sense and it has significant potential.

More immediate, guaranteed applications of OmiseGo

If the vision of getting many other eWallet providers to integrate with OmiseGo proves to be difficult, Omise (OmiseGo’s parent company) could just use OmiseGo internally. Given that Omise has a pretty extensive payments service itself in Southeast Asia, the OmiseGo network will still be well utilized.

Parent company Omise

Omise is OmiseGo’s parent company. As mentioned above, Omise is a white label payments service provider. It’s based in Thailand but operates throughout Southeast Asia. Omise does business in these countries: Singapore, Thailand, Japan, Indonesia, and Malaysia. The company was founded in 2013 and received at least $20 million in combined funding (seed, series A, series B). The company also received an undisclosed amount of funding from Golden Gate Ventures in 2015. Currently, Omise has more than 100 employees.

The two founders of Omise are Jun Hasegawa and Ezra Don Harinsut. They currently serve as the CEO and COO of Omise, respectively.

Prior to the OmiseGo ICO, Omise had already been processing payments with many leading Thai brands. It announced on May 2nd this year that its payments service will support Alipay, which will be great for Chinese tourists. Shortly after the ICO, Omise acquired Paysbuy, a Thailand-based payment services provider that also has a customer facing eWallet service. Although the annual transaction volume for Omise is unknown, we do know that Paysbuy has an annual transaction volume of 2 billion THB, which is about $70 million USD.

It’s been rumoured that Omise will be a payments processor for McDonald’s Thailand. Many seem to consider this as fact but there is nothing concrete about a deal. I’m almost inclined to say that OmiseGo purposely misled its investors into thinking it’s true. I’ll elaborate below.

Technology: Vitalik Buterin and Plasma

OmiseGo hasn’t released a public blockchain nor has it open sourced any of its work. However, Omise is a well-to-do company with enough resources to provide OmiseGo with a strong engineering team to create a working blockchain. Compared to a random new startup, there is a lower risk of OmiseGo not delivering a product.

Vitalik Buterin (creator of Ethereum) has also shown significant interest with the project. This is not only because of the close relationship between the OmiseGo and Ethereum blockchains, it’s also because OmiseGo plans to be one of the first adopters of a proposed upgrade to Ethereum’s network called Plasma. Plasma is a revolutionary off-chain scaling solution for smart contracts. According to its website, Plasma enables “persistently operating decentralized applications [to operate] at high scale”. Vitalik visited OmiseGo’s offices to teach the team about Plasma and guide OmiseGo’s implementation on it.

OmiseGo’s risks

Questionable marketing practices

OmiseGo has been aggressively pumping its token’s price through their official Slack group and Twitter, for whatever reason. Excitedly talking about your project in public is fine, but teasing announcements over and over while tweeting out suggestive photos with no substance is not okay. I’ve been especially unhappy with how they had behaved on social media when Vitalik visited the office to teach the team how to work with Plasma. During that time, OmiseGo’s Twitter account tweeted out photo after photo of Vitalik in the office. This generated a lot of hype, which led to lots of unhealthy speculation. If the price rose just because everyone’s excited that Vitalik is at the office, what happens 1 to 2 months from now when the hype dies down? Keep in mind OmiseGo hasn’t released a working product yet. Many investors will be hurt, and not for a good reason.

Here are some questionable tweets from OmiseGo’s and Jun’s (CEO) Twitter accounts.

OmiseGo’s account teasing announcements.

Jun, the CEO of Omise, also loves to tease announcements.

This one is especially inappropriate. OmiseGo is teasing an announcement and the CEO teases the tease by tweeting out a winky face?

The OmiseGo Twitter account absolutely LOVES to tweet Vitalik’s face.

They also like to tweet pictures with large entities teasing vague business deals

A vague tweet on a “deeper partnership discussion” with Google. There is nothing substantial here and only encourages speculation

“discussed the future of the Thai economy” - it doesn’t get more vague than this

McDonald’s deal controversy, does a deal actually exist?

Probably one of the worst marketing sins commited by OmiseGo is how they handled the McDonald’s rumour. Jun teased a major McDonald’s deal on Slack in mid July. He claimed that McDonald’s Thailand would, by the end of July, would switch to Omise as their primary payments provider and there would be a “big PR with McDonald’s soon”.

Again, this is teasing an announcement, which is highly unprofessional. No large company would ever go on a public chat group to tease an upcoming announcement. OmiseGo’s price jumped from sub $1 to a high of $2 from the McDonald’s Thailand rumours.

Come the end of July and there’s no news from McDonald’s, Omise, or Jun on this supposed deal. OmiseGo investors shrugged off the broken promise and the token’s price kept rising.

Then finally at the end of August, Jun tweets out this vague tweet on formally confirming a “relationship” with McDonald’s Thailand. There is absolutely no details on the deal, no press release from Omise nor McDonald’s. Omise doesn’t even have a blog post about it. If an important deal was confirmed and formalized with McDonald’s Thailand, it’s definitely newsworthy enough that Omise wouldn’t pass up on at least blogging about it right?

At the moment, everything we know about the deal comes from Jun’s singular tweet. This is very weird and it definitely feels like he’s just trying to cover the broken promise he made in July. What’s worse is that many people actually believe that McDonald’s Thailand will be using Omise as a payments processor. Nothing has been confirmed. A vague tweet does not count.

Don’t forget that Jun also promised a “big PR” event for this. Where is this big PR event?

UPDATE: Omise officially announced a McDonald’s Thailand payment processing partnership on September 25th. Omise will be the exclusiv payments gateway for McDonald’s Thailand’s website and their delivery mobile app. Although this is great news for Omise, it still does not excuse Jun for teasing the announcement 2 months before anything was finalized, and then tweeting about a “relationship” (without including any details) a month before. This kind of behaviour only serves to meaninglessly pump OMG’s price. If the OmiseGo project is worth what Jun hypes it up to be, let the project speak for itself.

Not open source, no GitHub, no blockchain

OmiseGo does not have a blockchain right now. It doesn’t even have a public Git repository (a public Git repo would demonstrate to investors that the project is progressing healthily). This not only goes completely against the traditional openness of cryptocurrencies, it also forces investors to invest in a set of promises manifesting as a series of tweets and photo ops.

If the OmiseGo blockchain is going to be public anyways, why treat it as proprietary technology? OmiseGo should be open and show their work, show that it will live up to the hype generated by their relentless Twitter marketing.