On the night of Tuesday June 26th, 2018 at the spectacular Manhattan Penthouse on Fifth Avenue in NYC, members of the Tradebits’ team presented “The Next 100 Million.” It was a special evening that helped raise awareness for the technological and financial revolution available through cryptocurrency.
A Warm Welcome from Tradebits’ Tom Tiedemann
The event was kicked off with an introduction by Tradebits’ Strategic Advisor Tom Tiedemann. Tom comes from a traditional capital markets background like many of the attendees in the audience. He is currently a Vice President on the Global Equity Team of the private equity and real estate juggernaut Blackstone.
Tom Tiedemann
Tom started by noting the diverse background of the room which was full of innovators, enthusiasts, investors, professionals and curious minds of the blockchain & crypto space. It was later confirmed that 250 professionals from over 180 companies were in attendance that evening. Tom asked that everyone stop for a moment and take a good look around the room. He keenly pointed out that there was a convergence of professionals in the room who were all linked by the promise of this exciting new industry.
Tom then began to thank everyone who made this event possible. Tom discussed the roadmap for the next several hours that was put together by the hardworking teams of Tradebits and Fintech Connector. First Waseem Sadiq would present his company Tradebits’ vision, a professional panel would follow discussing the current state of cryptocurrency in the United States, and the evening would conclude with a meet & greet for all members in attendance. Tom concluded his introduction by thanking the most important people in the room, who were the audience members themselves. The room quickly exploded with a round of applause for everyone in attendance.
Waseem Sadiq Discusses Tradebits’ Vision
Introduction
Waseem Sadiq starts off by asking the audience three questions. He first asks how many members in the audience own crypto? Waseem notes that it is about half of the audience that raises their hand. He then asks how many of the audience members that don’t own crypto are looking to get into crypto? He observes that there are a few members in the crowd that fit into this category. Waseem finally asks of the people in the audience that own crypto, how many of them have participated in an ICO (Initial Coin Offering) before? He approximates that about 20% of the people of those that own crypto have participated in an ICO. By asking three simple questions, Waseem is quickly able to read the room and determine that the audience has a moderate to advanced knowledge of cryptocurrency.
Waseem Sadiq
Waseem first discusses his background as a software developer and successful entrepreneur. His first venture was co-founding Inbox2 in 2008, which was later acquired in 2012 by MyLife inc. (USA). The product had grown to 90 million users with an impressive 2.5 million monthly actives. Waseem demonstrates his experience with a business that was able to successfully scale, which will prove to be extremely valuable as the head of a cryptocurrency exchange.
In 2013, Waseem co-founded a Silicon Valley based company called Fileboard. Fileboard is was very successful and is still running strong to this day. Notable customers include Reddit, AJG, Salesforce, and Palo Alto Networks. Waseem attributes Fileboard’s success to perfecting the “art of customer service.” He then begins to discuss how poor customer service is all too common with the crypto currency exchanges currently operating in the marketplace.
The Current State of the Cryptocurrency Market
Waseem begins his presentation with reviewing the current state of the cryptocurrency market. Waseem presents snap shots that paint a picture for the audience of the problems that exchanges ran into over the past year. Some of these problems include degraded service, upgrades, hacks, customers missing funds. Waseem attributes this to the current exchanges rushing to capture market share and not being designed to cope with the current number of users.
Waseem talks about regulation, which is a highly discussed topic in the cryptocurrency space. Regulators around the globe are beginning to “wake up” to the fact that they need to protect consumers. Waseem highlights that just the week before the SEC made a statement that Bitcoin and Ethereum are not securities, but a lot of the coins that are based off these platforms are. He believes that it is a good thing that the SEC has an opinion because it gives developers a framework to build upon.
Next the backdrop asks a simple question to the audience, will the average consumer understand this? A screen shot of Binance, the largest cryptocurrency exchange is then presented. Waseem notes that Binance has a complicated user interface with order books and charts that the average consumer would struggle to understand. He brings up a screen of a smart watch, which has a user-friendly interface for all. Tradebits is aiming to provide a very simplified user experience model, while also giving the customer with the same capabilities as the more complex user interfaces.
The product adoption curve is then presented to the audience. It is a universally agreed upon hard ware and software timeline for new technology adoption. Waseem believes that all users up to 2018 fall into the “Innovators” (10M users) & the beginning of “Early adopters” (15M users) phases of cryptocurrency. At the end of 2017, a whole new group of users came into the cryptocurrency market. The current products on the market were built for the “Innovator” & “Early adopter” phases of cryptocurrency. Waseem believes for the cryptocurrency market to reach the “Mass Market” (100M users) phase of the adoption curve, the products need for the increased demand.
Tradebits’ Three-Step Plan
Tradebits believes that attaining the “Next 100 Million Users” will require a change of mindset. Waseem presents a three-step plan to make his vision become a reality. The first step involves providing stable infrastructure to the user, which has 8 underlying characteristics. The eight characteristics include scalability, reliability, geo distribution, security, order matching, liquidity, performance, and being well tested. A solid exchange infrastructure cannot be built upon without these core principles.
Waseem explains how thoroughly testing the infrastructure core principles resulted in the Tradebits Exchange. A screen shot of the exchange is presented to the audience, which looks like a more refined version of the traditional cryptocurrency exchanges. Waseem then discloses that the Tradebits Exchange pilot will go live in two weeks on July 17th, 2018. Members of the audience seem impressed that the exchange test pilot will launch so soon. Most cryptocurrency projects are based off white papers full of concepts and ideas. They focus on raising money first, then developing the product later (if ever). Tradebits stands out because it has a functioning product that is market ready.
Waseem begins to discuss “user experience,” which is step two of Tradebits’ plan. There is an increased excitement in his body language and tone. In a Steve Jobs type moment, Waseem passionately states “This is what its really about.” He unveils Tradebits’ mobile app “Get Milly,” which has a beautiful user interface that is extremely simple to use. Waseem becomes animated and swipes his finger through the air to demonstrate how easy it will be for the user to buy crypto. He explains that end users “would never know that there is an actual crypto exchange underneath the app.” Tradebits believes that a simplified user experience is necessary for the mass market to adopt cryptocurrency.
The next slide is titled “This is a bitcoin private key” and is followed by a string of 34 characters consisting of a random mix of letters and numbers. Waseem explains for those unfamiliar with the term private key that it is a “bitcoin password.” A private key is necessary to unlock the user’s funds on the current crypto exchange platforms. Tradebits developed a simple card that can be tapped on the user’s smart phone to unlock both the app and the user’s funds. Consumers have already been exposed to this type of concept through Apple Pay or banking apps. These types of simplified user experiences will help accelerate cryptocurrency mass adoption.
The final step of the Tradebits plan is revealed to be “global compliance.” Tradebits believes it is important to have geographical knowledge about what is necessary for compliance in each jurisdiction. Waseem explains that compliance is U.S. is “A very different beast” when compared to compliance in Europe or Asia. Tradebits wants to work with local partners for compliance to provide local liquidity that will be hooked up to a global order book. He states that “this is the end game for us.”
Dissecting the Current Exchange Marketplace
Waseem then dives into the competition in the exchange market place. Tradebits divides the current market landscape into four categories, unregulated, innovative, regulated, and traditional. There is a lot of activity happening in the unregulated & innovative exchanges (Omega One, Ether Delta, and Radar Relay), specifically with decentralized exchanges. Mr. Sadiq asks the audience how many of them have heard of the term “decentralized exchange?” Most of the audience raises their hand, revealing that they are a quite popular. Waseem believes that this is a good thing because the notion of security gets a lot of attention in that space. Unfortunately, the user experience with decentralized exchanges is not up to par.
Waseem begins to discuss the exchanges that are in the bottom left corner of the graph that fall into the unregulated & traditional exchanges (Bitfinex, Kraken, Bittrex, and Binance). He personally believes that these exchanges will have a lot of challenges when it comes to regulation. These exchanges have been around for a while and have been trading securities on their platform. They have traded these securities to U.S. investors and it will be hard for them to become regulatory compliant.
We now go over the regulated & innovative exchanges, which is the category that Tradebits falls under. The other exchanges shown are Circle, Uphold, and Robinhood. Waseem asks the audience how many are familiar with Robinhood? Most of the audience raises their hand again. Waseem explains how Robinhood is an interesting company that developed a solution to a very hard problem. They developed an easy to use product that was also scalable. He compliments Robinhood for having a background that understands scaling, compliance, and user experience. Waseem believes that companies like Robinhood will be direct competitors to Tradebits in the future. (Note: Waseem does not go over the traditional & regulated exchanges (Coinbase & Gemini). Tradebits believes that audience members are already aware of these exchanges).
What makes Tradebits better than the competition? (1) Tradebits is secure and reliable by design. The engineering team spent about a year investing in the platform to ensure scalability and security for all users. (2) Tradebits has the best user experience in the market. A lot of time and thought was put into an “easy to use” and “friendly” interface. (3) Tradebits has solid customer support. Users will be able to pick up the phone and call someone with any questions (something that is rare these days). (4) Tradebits is designed with regulation in mind. It of the utmost importance for Tradebits to be compliance with local regulation and laws. Waseem summarizes that Tradebits has a strong vision for the “Next 100 Million” users.
Crypto’s Tremendous Potential
Mr. Sadiq begins to dive into the cryptocurrency exchange market potential. The potential investors in the audience begin to become wide-eyed. The words “During a gold rush, sell shovels” are presented on the screen. Waseem paints an analogy between those that sold shovels during the California gold rush and cryptocurrency exchanges. Regardless if the cryptocurrency market goes up or down, the exchanges will always make money. This is a simple example that everyone in the audience can understand regardless of their level of experience.
Next a slide is presented putting the worlds money into perspective. At one time the combined value of all cryptocurrencies was about $400 Billion. The total cryptocurrency market cap is compared to the global figures for all money outstanding ($83.6T), combined stock markets value ($66.8T), all physical money ($31T), USD in circulation ($1.5T), and Apple’s market cap ($730B). Waseem explains how there was an influx of funds from these traditional markets into the cryptocurrency market. He believes that building trust worthy cryptocurrency platforms is vital for this trend to continue in the future.
The Tradebits Ecosystem
Waseem reveals Tradebits’ strategy for targeting “The Next 100 Million” cryptocurrency users. He starts by discussing the Tradebits ecosystem, which is broken down into four platforms. The first two platforms are the Tradebits Exchange and the mobile app “Get Milly,” which the audience is already familiar with. Waseem unveils the third platform which is called “ICOBELLO.” ICOBELLO is an ICO review that provides both expert and user provided reviews. Tradebits launched the review site a few months earlier, which now gathers data to gain a better understanding of crypto market trends.
The last platform within the Tradebits’ ecosystem GETMIO. Before he discusses GETMIO, Waseem first makes an exciting announcement. Just last week, Tradebits secured a bank account in the Netherlands. Waseem explains that the Netherlands is AAA rated. As a result, GETMIO will launch as a crypto broker within the next month. This is a game changer that will provide crypto-to-fiat services to Tradebits users.
An Offer the Investor Can’t Refuse
Waseem then walks the crowd through the Tradebits timeline. Tradebits Reg-D was passed a few weeks earlier, which allows it to publicly discuss the offering. He reiterates that both the pilot exchange and the exchange broker are planned to launch next month. Waseem also unveils plans to launch a decentralized version of the Tradebits exchange in 2019. Tradebits is heavily investing to build a decentralized exchange that will focus on user experience. At the end of the timeline there is plan for an eventual IPO in 2020.
What is Tradebits offering? Tradebits is currently in the middle of a $50M fundraising round. The round is broken down into ($37.5M of tokens) and ($12.5M of equity). Tradebits already has approximately $5M of the Equity round committed, which leaves potential investors with the option to participate in $7.M of the remaining equity. Please note that there is a minimum buy in of $500k for the equity round.
To put things into perspective, Waseem begins to discuss equity valuations for other cryptocurrency exchanges. In Feb 2018, Goldman Sachs — through Circle — acquired the crypto exchange Poloniex for USD 400 million, which at the time was the 16th largest exchange. Coinbase has an estimated value of around $8B and is currently implementing its securities dealer license.
Waseem concludes his presentation by playing a short video that explains Tradebits planned buyback program. The buyback program will mimic dividend payments, while also supporting the price development of the XBITS token. The buyback program put a continuous upward pressure of the Tradebits token price. The tokens that are bought back through the buyback program will be burned, resulting in a reduction of Tradebits tokens in circulation. Whereas most coins have an inflationary component, the Tradebits token has a deflationary component. Tradebits will continuously allocate 40% of the generated trading fees to market orders to support the price development of the XBITS token.
The “United States of Crypto” Panel
The Panelists
Discussion
Mike Rogers
- What is the biggest hurdle the market will overcome to reach “The Next 100M Users”?
A. David
- Compliance and custody.
- Better form of cyber wallet.
B. Neelam
- Easy to set up accounts.
- Infrastructure.
- Access to reliable information.
C. Mike
- Trust
- User experience
- Humanize the space.
(2) What do you make of the recent shift from IPO’s to ICO’s?
A. David
- Comparing apples and oranges. Most ICO’s aren’t public (Reg D). “ICO’s as public offerings will eventually displace traditional IPO’s because there’s the potential for the trading of the securities.”
B. Neelam
- Social media provided new form of marketing ICO’s.
- Cryptocurrency taps global markets vs. localized markets.
C. Mike
- Product of post Global Financial Crisis environment. TARP, bank bailouts, rates near zero, QE, globally coordinated stimulus.
- IPO’s aren’t cool anymore. (layman terms). Cool in 1997 when “I was 6 years old.”
- More money raised last year through ICO’s than traditional venture capital.
- On the verge of another paradigm. Millennial generation interested in cryptocurrency. HF’s, Investment Banks, Big 4, etc. all interested
(3) Did the crypto bubble pop or are we in the process of early adoption? How to you value?
A. David
- Early Innings
- Delusional activity at first but regulators on way.
- SEC & Others will allow healing process.
- Will help ensure confidence in market.
B. Neelam
- Early
- Crypto brings new multiples
- Determine value of something that has limited supply and tremendous demand.
C. Mike
- Very Early
- 100% agree with other panelists.
- Compare to social media companies. They required own metrics.
- Metrics for cryptocurrency probably don’t exist yet.
- Network effect most important. More people that use, the more valuable.
- In 2014 with huge drawdown the most important innovation occurred.
(4) Currently, Crypto AUM represents 1 basis point of Hedge Fund AUM. When do you think Crypto AUM will reach 1% of Hedge Fund AUM? What is the biggest hurdle?
A. David
- Institutional capital requires sound foundation.
- Big money requires sound custody. The solution being worked on.
- Those currently in had loose restrictions in bylaws. Ex: Family Office
B. Neelam
- Bad actors slowing down innovation.
- Innovators need to self-regulate.
C. Mike
- Going to take time. Innovators & Regulators need to balance.
- Traditional markets (stock, bond, RE) all extremely overvalued. New money needs to go somewhere.
- Asset Managers all see the opportunity in this new landscape. HF’s need to be able to justify “2–20 fee” somehow.
D. Elliot
- Bold prediction. Will see by end of 2018. Happening on retail side. Institutions quickly
Closing Remarks
A. Mike
- We are extremely early.
- Passion and Curiosity drive this innovative industry.
- The relationships being built now are “priceless.”
- Everyone in the room has potential to be an expert by the time we reach “The next 100 Million.”
B. Neelam
- Cryptocurrency here to stay.
- Need proper avenues to learn and grow.
- Diversity and Inclusion necessary.
C. David
- Early Innings.
- Ideas for consolidation.
- Will see amazing companies come out of this.
- Tokenized assets will ultimately replace traditional securities as preferred form of assets.
About Tradebits
Tradebits is the first high-performance, flexible and reliable digital currency exchange platform designed for the next 100 million crypto traders. It consists of the Tradebits Exchange, a robust, scalable and decentralized digital currency exchange; the integrated GetMilly wallet, which delivers a safe, reliable and user-friendly trading experience; and GetMIO, an easy-to-use crypto asset purchasing platform. Founded in 2014, Tradebits launched its digital exchange to the Dutch market in July 2018, and will follow with its own public coin sale and global launch in Q4 2018.
Tradebits is headquartered in The Netherlands with offices in the UK and United States. Connect with us on Telegram, follow us on Twitter or LinkedIn, catch up on our blog, or for more information go to www.tradebits.co.
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More info: tradebits.co
Author: This article was written by Mike Rogers, VP of Crypto Education & Research at Tradebits