If you haven't heard about AMP before this week, you might want to consider reading up on what the project is, how it works, and where it's headed because it has serious potential to transform real world transactions; after finishing this post, of course. If you have, you've probably heard about how it's a, "cheap, fast, and secure" way to make payments but you might not have gotten an explanation on why that is. That's what I aim to address here in a short and digestible manner along with what I think gives the network pretty strong potential moving forward.

So what is AMP actually used for besides making mad gains? I'm glad you asked. AMP strives to provide an alternative and superior payment system for "brick and mortar" companies compared to traditional payment systems with credit and debit cards. To summarize what the token itself is, AMP is used on the Flexa network and acts as collateral for transactions that happen on the network.

A lot of crypto doomers always ask why crypto is an important technology so let's explore why exactly this is such a revolutionary project, starting with the "cheap" aspect. Every time you swipe your card when you're checking out, a percentage of that money is siphoned away from the merchant and sent to the card company. This is a pretty low rate and at first glance, wouldn't seem to result in much profit loss with seemingly negligible rates, right? Well let's look at some numbers from Walmart back in 2013. Due to interchange fees, they paid an estimated $3 billion dollars to card companies (1). While that would have constituted less than 1% of their revenue, that's still a lot of money. What Flexa does is it provides cheaper transaction fees by cutting out costs that arise from steps the money goes through between the consumer and merchant because it's acting as a direct path between the two. With over 40k locations already implementing Flexa, they clearly have established a degree of adoption in the market already. With a growing list of places using Flexa, its reputation improves, leading to a positive feedback loop where both the list growth and reputation feed off each other.

Now let's look at the "fast" aspect. This is where the collateral nature of AMP comes into play. Because PoW and PoS networks each have their pros and cons in context of the "finality" of a transaction (that is, when the asset value has completely transferred from the sender to the receiver), utilizing collateral allows the network to instantly provide that finality for the merchants (2). The collateral comes from massive AMP staking pools where people can place their AMP for rewards and to actively contribute to the health of the network. 

Lastly, there's the security aspect. Security can mean many things for a network. In this post, I'll focus on the security of the transaction for the merchant and consumer. From the white paper, one of the constraints of the "collateral manager" is that, "The network must be able to liquidate supplied collateral if a payment is not settled." Essentially, what this means is that the merchant gets paid no matter what. Why is this so important? Well, with traditional card transactions, the finality (or settlement) occurs roughly 1-3 days after a transaction is initially made. If there is a chargeback or some other form of fraud that prevents the transaction from settling, merchants essentially gave their goods or services for free (not to mention those pesky fees that already cut into profits). By collateralizing the transaction and liquidating the amount needed, the merchant is protected from this. Nothing is free so who takes the loss? The stakers. Although this may sound worrying for anyone who stakes, as the "collateral power" of the staking pool increases, the impact of such losses decreases because the risk is distributed across the entire pool.

Okay, so now that those vague claims make a little more sense, how does this realistically make things better for the consumer? Or in other words, what incentive is there to push adoption? Well, lets say you're in another country and you don't really want to deal with exchange rates in order to have any buying power in this country. You use Flexa, of course. Why? It all comes back to AMP acting as collateral. You put fiat A in, the merchant gets paid in fiat B. Or maybe the merchant is crypto friendly and offers cheaper prices if paid in BTC. Here, you pay fiat A and merchant gets paid in BTC. Or lets flip things around where maybe you don't have a lot of fiat that you can part with at the moment but the merchant still prefers fiat. Here, Flexa collateralizes your crypto A and the merchant gets paid in fiat B. This amazing feature makes it a perfect global hub for all sorts of transactions (3).

The last cool little tidbit I want to touch on in this post is the ability for merchants to provide "enhanced" transactions (3). Two examples listed are age-restricted and loyalty-based transactions. Another example would be membership-based transactions, similar but distinct from loyalty-based transactions. What other applications can you think of? 

Hopefully this post on the, "cheap, fast, and secure" claims made about the Flexa network make a little more sense and you have an overall better understanding of what makes AMP a valuable cryptocurrency to consider investing in!