In 2009, Andrew founded and bootstrapped Bizness Apps into a global enterprise all while he was a senior in college. Since then, he has gone on to help more than 500,000 small businesses engage with their customers on mobile devices. Bizness Apps was acquired by a $1 billion private equity firm in 2018.
Gazdecki has been featured in The New York Times, Forbes Wall Street Journal, Inc.com, and Entrepreneur Magazine, as well as prominent industry blogs such as Mashable, TechCrunch and VentureBeat.
We are pleased that Andrew Gazdecki took time off from his busy schedule to discuss his latest project.
AT: To begin with can you tell us a little bit about your project altcoin.io?
AG: Altcoin.io is a decentralized cryptocurrency exchange designed to give the speed and useability of a centralized exchange (like Coinbase, for example), but none of the custodial security risk.
When I started trading altcoins, I quickly realized the most popular exchanges were centralized, taking ownership of their traders’ tokens. This is a huge security risk. By holding traders’ tokens, these exchanges unwittingly invite theft. Since 2011, billions of dollars have been stolen, and I believe people deserve better.
So, Altcoin.io will be the trading exchange of the future – a crypto exchange 2.0 if you like – that is both fast and easy to use, while ensuring traders stay in control of their tokens at all times. With that peace of mind, we hope to see cryptos skyrocket to a trillion dollar market cap in the future.
AT: You recently were successful in raising funds in exchange for equity on wefunder.com. What inspired you to crowdfund on wefunder versus the traditional ICO model?
AG: We didn’t need a token, so why create one to raise funding? Some ICOs have a legitimate purpose, but our exchange doesn’t rely on a token to function. Creating one would simply pull our focus away from building the best crypto exchange in the world to finding a use for a token we don’t really need.
There’s a lot of confusion around the purpose of ICOs. I think they might have fallen from grace for the simple reason that they’re not always appropriate or indeed necessary for a blockchain project to get off the ground. We think our successful WeFunder campaign proves that pretty well.
AT: You decided on the Ethereum blockchain. What made you choose this platform versus EOS, NEO, or another platform?
AG: Ethereum has been around for longer, has one of the largest developer networks, and is actively working on the scalability “trilemma” through sharding, Plasma, and state channels. Other blockchains are doing some cool things, but it’s just too early to assume they’ll outshine Ethereum – or even fulfill their promises.
Importantly, Ethereum appears to be working harder at creating a scalable blockchain that doesn’t sacrifice decentralization. It would be easy to reach scale by simply reducing the number of nodes responsible for creating new blocks, but in our opinion, that’s just centralization in disguise. Once we start eroding decentralization, we lose its benefits.
We therefore believe Ethereum is the right choice for us, and in the future, we hope to support cross-chain token exchange.
AT: What differentiates your exchange from other decentralized exchanges such as Etherdelta?
AG: There are plenty of decentralized exchanges out there and they’ve yet to handle anywhere near the trading volumes of centralized exchanges.
We believe the problem with existing decentralized exchanges is three-fold: one, they’re hard to use; two, the technology is slow; and three, there’s not enough focus on increasing liquidity.
Altcoin.io isn’t just a decentralized exchange, but an entirely new trading engine designed from the ground up to be safe, fast, and attractive to seasoned and novice traders alike. We’re releasing an SDK to help other exchanges and dApps learn from our experience, and even share liquidity between us.
AT: As we all know security is of paramount importance when it comes to exchanges. What steps are you taking to ensure the security and integrity of the altcoin.io exchange?
AG: Altcoin.io is based on a Plasma-like sidechain architecture, first outlined in Vitalik Buterin and Joseph Poon’s white paper, Plasma: Scalable Autonomous Smart Contracts. Plasma allows for side chains that run parallel to the blockchain, and which are controlled using smart contracts on the Ethereum network. Most importantly, they’re secure.
When traders exchange tokens, nodes verify and sign each transaction using a proof-of-authority consensus mechanism, managed by our partner, Tendermint. When traders withdraw funds, they have to wait a preset period of time to allow nodes to challenge any fraudulent behaviour. If someone is doing something unsavoury, nodes will trigger a mass-exit mechanism that returns tokens to the last legitimate state of the blockchain.
This, combined with usual blockchain defences such as cryptography, decentralization, and private keys, will ensure our exchange is the most secure on the market. And as we never take ownership of traders’ tokens, there’s no custodial risk – no hacker “honeypot” tempting attack.
AT: How are users tokens stored?
AG: All our users’ tokens are securely stored in smart contracts on the Ethereum network. We don’t ever take control of them, and traders are protected by the security measures I outlined earlier. The tokens stay secure in traders’ wallets until they want to trade, and then the smart contract and sidechain collaborate to connect traders and execute trades without any third party getting involved.
AT: Most exchanges are strategically located offshore in jurisdictions such as Malta, Singapore, Switzerland, etc. What made you decide to operate out of the United States?
AG: We see operating within the USA as a competitive advantage. I also have a fondness for the area of San Diego, and the many talented minds here that can help make our decentralized exchange a reality.
While the USA is ironing out a few regulatory kinks at the moment, we believe the blockchain space has incredible potential, and being at the heart of things when they kick off will give us the edge over other projects based elsewhere.
AT: You’ve discussed security tokens before on your blog and other platforms. Can you let us how you personally feel about the growth potential of this space?
AG: Security tokens are the simplest way of fractionalizing real-world assets, the value of which is in the trillions of dollars. The question is whether we should fractionalize and I think the answer is a resounding yes – it boosts liquidity, democratizes the market, and simplifies a lot of the complex bureaucracy involved in trading securities.
In my opinion, the opportunity presented by security tokens far exceeds that of even cryptocurrencies. They could represent everything in the world that has value, and that is currently traded on global security markets – literally a multi-trillion dollar opportunity.
AT: Are there plans in place for altcoin.io to enter the securities market in the future?
AG: We believe security tokens have a great future ahead, and we’d love to help traders exchange them in a fast, easy, and safe manner. Digitizing and fractionalizing value makes a lot of sense, providing transparency, efficiency, and helping a greater number of people share in the wealth of their economies. If we can help support such change, that can only be a good thing.
AT: What else would you like to mention about altcoin.io?
AG: We’ve spent a long time building the right technology for our decentralized exchange, and we’re just as passionate about creating an amazing user experience for our traders, including 24/7 customer support. So I’d like to make a promise to all potential traders reading this interview: If you think we could improve our exchange in any way, let us know and we’ll try to make it happen. We might not always be successful, but we’ll work hard to make Altcoin.io the best exchange ever, built for traders, by traders.
AT: Thank you for your time, I personally look forward to using the altcoin.io platform in the future.
Ed Tuohy, CEO of MERJ Exchange Limited – Interview Series
Edmond Tuohy is the CEO of MERJ Exchange. MERJ Exchange is an innovative end to end, multi-market global financial exchange for equities, debt and derivatives.
MERJ is soon to launch its Digital Assets and Security Token markets along with the opportunity to invest in MERJ Exchange.
Antoine: MERJ Exchange is a securities exchange that currently offers an Equities, a Derivatives, and a Debt Market. What’s the inspiration with expanding to digital securities?
ED: We strongly believe in the potential of digitization to transform the capital markets. Quite simply we think it is the future. There are 3 headline reasons why we are moving in this direction:
1) This technology can streamline everything we do in the securities markets, from issuance, to shareholder registers, compliance, distributions, voting etc. The opportunity to streamline big chunks of this workstream is very attractive and would benefit everyone involved.
2) We can dramatically reduce frictions for people who may not have participated in the capital markets in the past. By frictions I mean you won’t need a computer, or a stock broking account, or even a bank account. Many emerging markets have been empowered by the “mobile first” revolution. We want to build an access point to the capital markets that integrates seamlessly with that ecosystem.
3) We are perfectly set up for it. We operate a Regulated Market with integrated post trade infrastructure, which is quite unusual If you look at other Regulated Markets around the world, they are tied into a central clearing / central depositary model. This means lots of disparate organisations are going to have to agree on exactly how to process digital assets. We have the infrastructure and regulatory approval to bring both institutional and retail investors into the world of digital assets in a way that is compliant from end to end.
Antoine: What does the name MERJ symbolize?
Ed: I’m glad you asked that. I love the name MERJ. As much as we strongly believe in tokenization, we also strongly believe in the principles of securities laws, investor protections and regulation. MERJ is a reference to the idea of combining the best of the old world and the new. The best of traditional market protections with all the potential benefits of this digital technology. It is also a reference to the idea of merging all the layers of the settlement and custody chain. Instead of multiple reconciliations taking a few days we can look forward to one almost instantaneous transaction.
Antoine: MERJ Exchange Limited is currently the only licensed securities exchange in the Republic of Seychelles. What made you choose this domicile versus other popular offshore jurisdictions?
Ed: We are a Regulated Market – in that we provide the same function in the Seychelles as the LSE in the UK and the NYSE in the US. It’s not so much that we chose the Seychelles, more that the Seychelles needed a stock exchange and we were the right people to do it. This story began post GFC, when the IMF and the World Bank sat down with the Seychelles government and encouraged them to develop the financial services sector here. Part of that was to establish a stock exchange. We put ourselves forward to do it and have been working hand in hand with regulators here since 2011 to build an international exchange. Our listings now account for more than 20% of the national GDP, which is a key metric in evaluating the maturity of an economy. The FSA Seychelles is now an associate member of IOSCO and MERJ is an affiliate member of the World Federation of Exchanges. These are not trivial achievements and are very important when it comes to institutional investment mandates, so we are able to open this market up to widest possible pool of global capital.
Antoine: How many securities are currently listed on the exchange?
Ed: 29 equity and 2 debt. We have issuers from 5 continents and investors from 7.
It takes time to build the kind of infrastructure and regulatory standing we have here – and there are no shortcuts. We now have a great foundation for a very exciting phase of growth.
Antoine: Most of the companies listed on the MERJ exchange are African, which makes complete sense since Seychelles is often portrayed as the Cayman Islands of the African continent. Most investors in Europe will be familiar with Seychelles, but the same cannot probably be said for North American and Asian investors. Do you believe that you will need to educate STOs on the benefits of being listed on an exchange in this jurisdiction?
Ed: We adhere to the standards of IOSCO and the WFE, international investors don’t mind whether we are in London or Seychelles. We already have issuers from North America, Asia, Australia, Europe and Africa. We are going to be providing something that isn’t available elsewhere and Issuers will go where the liquidity is.
Having said that the Seychelles is actually a great story of international cooperation. There are so many reasons why Seychelles is a good jurisdiction and any STO issuer that is serious will do their research and quickly realise that. In the last 10 years the Government and regulators have worked with international agencies like the OECD and FATF to bring the Seychelles up to the highest international standards. The OECD now ranks it with the UK, Japan, Germany, USA and Australia. Since the IMF and World Bank stepped in the country has gone from a B- rating to BB. That really underlines the trajectory of the economy. Our view is that the STO market is likely to be quite borderless, but issuers are not going to want to go to a jurisdiction that doesn’t meet these high international standards, because it will attract greater scrutiny from other regulators. In the securities markets there is no regulatory arbitrage, people want clarity and simplicity, not added hassle. The Seychelles offers that in abundance, as well as an advantageous tax regime, many double tax agreements, a thriving corporate services sector, competitive pricing. If all of that isn’t enough for you it’s not the worst place to have to visit for business.
Antoine: What will be the onboarding and listing requirements for new STOs?
Ed: Our onboarding procedure follows the same KYC/ AML process as for clients wishing to trade any listed securities. As for the listing requirements, the chosen token standard has to be to be compatible with our regulations but otherwise they are exactly the same as for our traditional securities. We have 3 equity boards, a main board, an SME board and a venture board. An STO would have to choose which board was most appropriate and then meet the listing requirements. We work on a sponsor advisor model, so STO’s will work with one of our global network of sponsors to prepare them for listing. The sponsor undertakes responsibility for due diligence and making all the relevant disclosures. This is the same process that an issuer would go through to list on AIM in the UK or the Toronto venture exchange in Canada. We think it’s a great model and will work well for STO issuers.
Antoine: You recently announced that you will be launching your own security token, which will then be traded on your own exchange. What’s the expected date of this STO launch? Also do we know the hardcap yet?
Ed: First we have to list our equity by introduction on the exchange. This is imminent, and when done it will be the first equity to be listed on a national stock exchange in tokenized form. It’s really quite a major watershed point for the digital asset community. The subsequent STO will be a public offering of ~15% of that tokenized stock. We don’t want to launch the STO into peak summer so we will probably wait a couple of months now. The funds are for growth capital, largely to bring more people on board. We are very confident of our pipeline and we need additional people in operational and compliance roles to service the demand.
Antoine: What benefits will investors receive from this investment?
Ed: The benefit is a stake in an exchange which we think is one of a kind. We have the flexibility to trade, clear, settle and register securities ourselves, or plug into any other global infrastructure if it makes better sense. This in itself is unusual, and a deliberate piece of Seychelles law, which was designed to be outward looking. Consider our regulatory status, licenses, permissions, the structure of our business, the combination of regulated exchange/clearing/depositary entities, the clarity provided by our regulator and the fact Seychelles is a well respected jurisdiction with a modern financial services industry. When you look at all these factors in combination, you realise it is a very compelling, and entirely unique proposition. We have an opportunity here to build a truly world class piece of infrastructure for the next generation of capital markets. Our competitors around the world are the likes of LSE and NYSE and they are not in a position to move so quickly and decisively. There are big fish and there are little fish, but we like to think we are a fast fish! Our investors will own an equity stake in a very exciting company that is spearheading the next generation of financial markets infrastructure.
Antoine: When do you expect your first security token offering to go live?
Ed: We have a number of issuers that are keen to push the button as soon as possible. I am quietly confident that we will have done a handful before the end of the year and a couple of dozen within the next twelve months.
Antoine: Is there anything else that you would like to share about MERJ Exchange?
Ed: We have a tremendous team based in the Seychelles, Cape Town, Johannesburg and London. We are looking for experienced market professionals to join us and help deliver on our vision. If anyone would like to work in the Seychelles or Cape Town, or represent us in another region then drop us a CV at firstname.lastname@example.org.
Antoine: Thank you for the great interview. Anyone who wishes to learn more should visit Merj Exchange.
Mikko Ohtamaa, CTO at TokenMarket – Interview Series
Mikko is the cofounder and CTO of TokenMarket Ltd, one of the leading token sale and blockchain crowdfunding platform at Gibraltar. Mikko has advised dozens of blockchain startups. He is also the former co-founder and CTO of LocalBitcoins, a peer-to-peer cryptocurrency exchange. Mikko holds MSc. in industrial engineering and management from University of Oulu. Mikko actively engages in open source communities and speaks in conferences. He is a cofounder of Pycon Finland, a Python programming conference. Mikko is also a member of Plone Foundation, the oldest of open source non-profit foundations.
AT: You’ve been in the crypto space since 2011. Could you share with us how you first became involved with cryptocurrency and blockchain?
Mikko: Back in my mobile software development days, I was asked to develop the first and original Bitcoin mobile wallet back in 2011 compensated by $10,000 worth of Bitcoin. I rejected it as I thought fiat would suffice at that point in my life. In hindsight, taking this offer might have been the last project I needed to do. Later I got involved in building out LocalBitcoins and from there I moved to establish TokenMarket.
AT: You’re listed as one of the original co-Founders of TokenMarket. What inspired you to launch this marketplace?
Mikko: The original goal of TokenMarket was to tokenise company shares. However, back in 2016, it was way too early for that. The term “token” had just been invented, many referred to tokens as ‘coloured coins’ looking at new digital assets as bitcoin with different ‘flavours’ and ‘colours representing different token attributes and purposes’.
We saw the ICO boom coming a little bit earlier than others in late 2016 when FirstBlood, Gnosis and other Ethereum based ICOs started to roll out. The catalyst was that the Ethereum technology had matured to the point that it was realistic to launch custom tokens with it. And oh boy, a lot of tokens were launched.
TokenMarket had the first tokenisation platform in the world and suddenly there was a spike in customer demand.
AT: When inspired TokenMarket to pivot from ICOs to STOs?
Mikko: I would not use a word pivot here. Security tokens are a natural continuum for unregulated token offerings. It is always better for investors themselves to get something with stronger investor rights. Securities offerings give investors rights which utility tokens never legally could, such as receiving dividends, yields and voting rights in the company you purchase a security from. For the investors, receiving passive income with security tokens becomes so much easier rather than moving toward a largely unstable and volatile utility token dragged up and down by bitcoin price.
Since 2016, it took some time for the global audience to learn about the benefits of tokenisation, including financial regulators. Now we are seeing interest from regulators worldwide on how to apply DLT and blockchain technology to regulated securities markets.
AT: TokenMarket recently announced a partnership with Loopring which is a protocol for decentralised token exchanges. Could you tell us more about this and what we should expect from this partnership?
Mikko: Loopring is one of the industry leading projects developing layer two scalability for decentralised exchanges and we will use Loopring’s technology to scale our own DEX.
As you might know, at the moment, decentralised exchanges have scalability issues and cannot match the volumes of exchange giants such as your Bitmexe’s and Binance’s. But from other aspects, decentralised exchanges are more secure and fair. Bitcoin exchanges get hacked every two weeks. Some exchanges are accused to trade with insider information and against their own users. Regulators like the decentralised aspects, as they guarantee that all the investors and traders can access the post trade data in equal manner, there cannot be irregularities with accounting and trading with something that is merely fabricated.
The good news is that the security tokens will have low liquidity, like Bitcoin back in 2012, when they start to roll out for trading. But for the future exchange technology, we want to build it better and more bulletproof what both traditional trading and crypto trading has today. We see the academic research and theory that allows us to get there, now it is just engineering over the next few years to fulfill this promise.
AT: Can you tell us what the listing requirements are for companies who wish to crowdfund via the TokenMarket platform?
Mikko: There are many crowdfunding platforms out there which operate on a ‘cater for all’ thesis, TokenMarket operates on an industry specific focus. We mainly look for global growth companies in sectors such as fintech, gaming and software services as this is what our investor audience has looked for in the last two years.
We mainly look for companies which are close to, or already have, some substantial revenue generated with a key commercial focus on B2C businesses.
AT:TokenMarket is current raising their own STO. Are you happy so far with the progress of this raise?
Mikko: This is a pilot raise under the UK’s regulator, FCA, sandbox. We need to demonstrate them that tokenised equity crowdfunding works: payments goes in, people get their tokens and are properly registered in Companies House as shareholders.
We do not expect huge intake of money for our pilot project due to the UK’s FCA’s Sandbox test limitations. Awaiting regulatory approval we will be able to raise up to €8M from self-accredited investors for all our STOs with no private funding cap restrictions.
AT: Are there any STOs that are launching on TokenMarket that have you personally excited?
Mikko: Yes there are! But at the risk of publicly endorsing or soliciting a securities investment go check out our pipeline of projects here.
AT: Where do you see the marketplace in 10 years?
Mikko: The change and transformation is not just about the technology or blockchain. There is an ongoing process of how new investors, millennials behave. There is an ongoing process to dial down the regulation for SME listings since the last financial bubble, especially in Europe. Then there is a change in globalisation as the future powerhouse economies of the world may come from countries like Brazil, Indonesia and Nigeria.
The future investing is going to be more “marketplace driven” and less about relationships and network centric models. We are going to replace Silicon Valley and their venture capital networks with a website like Amazon did for retail commerce. Ironic, is it?
AT: Is there anything else that you would like to share about TokenMarket?
Mikko: If you are a high tech company looking for funding, contact us. If you are a fund, a family office or similar looking for alternative investments, contact us. We do not care which part of the world you come from. We want to create an equal playing field for opportunities and investors all around the world.
Srdjan Mahmutovich, Founder of Kriptomat – Interview Series
Srdjan Mahmutovich is a tech enthusiast and the founder of Kriptomat an exchange that is fundraising by offering a security token. Previously, he has built a successful B2B digital marketing agency with 40 employees and coworkers. He also worked as the head of web development at Telemach.
Antoine: When did Kriptomat first launch and why did you decide to launch a cryptocurrency exchange?
Srdjan: Kriptomat opened to the public on 15 July 2018. We identified the need for a service anyone could use (like our friends and family members). We are on a mission to bring crypto into every household and to do that we needed to create a simple yet powerful service anyone can use. This will enable complete beginners to enter the world of cryptocurrencies in an extremely simple, safe and quick manner.
Antoine: Which countries do you currently accept customers from?
Srdjan: We currently accept customers from 82 countries around the world. They are listed here: https://kriptomat.io/global/
Antoine: How many active customers do you currently have? Where do most of these users originate from?
Srdjan: We currently have more than 10k registered users and steady growth of 20%-25% month on month. The majority of the users come from Europe, but with the recent addition of more payment methods, we are seeing a gradual increase in customers from all over the world. Our next goal is the 100k registered user mark and we are hoping to achieve this by the end of 2019.
Antoine: Are there plans on accepting Non-European customers any time soon?
Srdjan: We already accept Non-European customers, but we are working on adding more payment options in order to provide true worldwide support. Currently, we support Skrill which is really global, but we will be adding new locally popular payment methods.
Antoine: What currencies can be purchased on the Kriptomat exchange?
Srdjan: You can buy 29 cryptocurrencies; they are listed here: https://kriptomat.io/price-of-cryptocurrencies/
Antoine: Can you tell us about your upcoming security token sale? What’s the soft-cap, the hard-cap, and what will be the benefits offered to investors?
Srdjan: We have come to a stage where we need capital to speed up our growth and take us to the next level. We have decided to do an STO because it’s an innovative way to raise capital that allows our existing users and community members who already believe in us to invest in our project. We’re not only looking to get an investment but also loyal users that will evangelize and use our service as well. It’s a win-win situation. If we’re successful, our investors will be successful and we feel we’re in a much better position to build something big if our investors are our users who actually use the service.
We are looking for an investment of 1.8 million euros. We offer our investors an 8% share of our revenue and 4% of our audited profit.
The soft cap is 1 million euros and we reserve the right to cancel the issuing of the token if we don’t reach that. Detailed information can be found in our Security Offering document which you can get in the crowdfunding platform Desico which is going to issue our security. To get there go to https://kriptomat.io/sto
Antoine: What will these funds be used for?
Srdjan: So far, we have been focused on building a product, relationships and proving the business model. With the new funds, we will focus on creating user acquisition mechanisms and improving the platform.
The orientation of spending of the funds raised during the STO:
– 60% Growth – Marketing, customer base growth
– 18% Product development
– 12% Security, compliance
– 10% Operations, support
One important thing to note here is that crypto market is in its early stage and things are moving fast. We have been maneuvering quite successfully so far and adapting to the sudden market changes and that’s what we plan to do in the future as well. If the market situation changes significantly, we will pivot and change direction if necessary.
Antoine: The market is beginning to become saturated with exchanges, how will you differentiate yourselves?
Srdjan: Because we are creating some awesome new products. We are integrating the next-generation Ethereum-based ERC-1155 tokens into our Kriptomat exchange. This adoption of blockchain-based virtual items is the first of its kind and it is being made with the purpose of gamifying user experience. In other words, it is a blockchain-based reward program that will boost loyalty, increase the customer lifetime value and speed up user acquisition.
We have recently launched a revolutionary ERC1155 Token Mint Portal, giving everyone in the world an opportunity to create their own customized tokens. The use cases are countless and we haven’t even scratched the surface of what can be done with such a powerful tool.
So it seems we are going more in the direction of supporting gamers and game developers. This means we as an exchange will appeal more to the gaming community and they might just be the first customer segment to completely adopt crypto.
Antoine: What are long-term plans for Kriptomat?
Srdjan: Our mission is to bring cryptocurrencies into every household. This can be in terms of giving people the best way to exchange digital currencies, or in terms of giving them a valuable product or use-case that utilizes blockchain and crypto. Whatever the case, we truly believe that this technology will be integrated into every pore of our lives, and just like the internet protocols, people won’t have to know exactly how it works in order to use it.
Antoine: Is there anything else that you would like to share about Kriptomat?
Srdjan: We are very transparent with our community and we welcome an open discussion on our social media channels. I invite everyone reading this to join our Telegram channel where you can talk directly with our team members. We know that it is often hard to maintain a personal relationship with the community when the number of users starts to grow exponentially, but we make a concerted effort to reply to every single message.
To learn more visit the Kriptomat website.
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