An emerging leader in digital nanopayments

22 Oct 2018 / Corporate research

SatoshiPay is a developer of micropayment solutions for the digital economy. Its blockchain-based platform facilitates payments of small, even fractional, sums for online content and services. This delivers a much-needed monetisation platform for publishers against a backdrop of pressure on digital advertising revenue.

  • Market leadership in prospect: Traditional payment systems, debit and credit cards in particular, are incompatible with micropayments, due to high minimum fees per transaction. Blockchain is inherently better-suited to micropayments, but even the leading blockchains and cryptocurrencies have seen transaction fee escalation and processing congestion. SatoshiPay has an opportunity ahead to take substantial share in a rapidly-expanding new market.
  • Substantial end-markets: The company’s addressable markets encompass digital online content, internet video, the Internet of Things (IOT), in-game purchases and other similar closed loop systems. These are multi-billion-dollar markets and growing at double-digit CAGRs. Solid sales execution will, of course, be key, but the relatively benign competitive landscape and sheer scale of opportunity are key potential drivers of revenue growth.
  • Digital content publishers are under pressure: The traditional digital advertising-based revenue model is decreasingly effective in the face of adblocking software. Similarly, paywalls for journalistic content are exerting an adverse impact on website traffic for these publications. Yet, on demand content consumption is a growing habit. Micropayment is emerging as a potentially important monetisation mechanism for content publishers.
  • Platform: Over the past four years, SatoshiPay has developed an entirely cloudbased, high-performance, enterprise-grade payments platform. Its blockchain underpinnings facilitate exceptionally low transaction costs, fast processing and high levels of security. Scalability runs to hundreds of transactions per second. SatoshiPay has a partnership with the Stellar Development Foundation, which is giving away 50 million units (or some $10m) of its native currency, called Lumens, to drive adoption and liquidity. SatoshiPay has been given allocations of Lumens to use as part of its user-acquisition initiatives.
  • Contract wins: SatoshiPay recently announced a contract win with City A.M., a free London daily newspaper. This followed a contract win with The Register, a high-traffic technology news website. SatoshiPay is presently in advanced discussions with a number of potential large and well-known clients, including a major European publisher, which, if concluded successfully, would result in a significant step change in revenue.
  • Risks: The company has a strong core technology platform but, in terms of customer acquisition and revenue development, the business remains in its relative infancy, in turn inevitably creating execution risks and uncertainties with respect to the financial trajectory of the business over the next year or two.
  • Investment summary: SatoshiPay may be an early-stage business, but it has the opportunity to deliver very strong revenue growth from this year onwards. The management team is accomplished and savvy, and is executing with a clear direction. The decision to move to the Stellar blockchain platform, away from  bitcoin, is an example in this regard. Early contract wins with publishers, especially the larger names, will create step changes in financials and valuation.
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