- Crypto exchanges are becoming more commonplace in 2018, but statistics show that there are very few safe, secure, and trustworthy places to trade ICO tokens.
- “If there are going to be many new ICO projects and a need for tokens to change hands, then all existing – and future holders would need a platform where they can interact with each other.” Damian Merlak – Founder of Bitstamp and Tokens – said to BitStarz News in an exclusive interview.
- Tokens.net gives users the ability to trade ICO tokens in a secure and comfortable way through a sleek and intuitive platform
At BitStarz News, we love all things crypto and strive to get you the latest crypto scoop. Today, one of our writers – Alex Meears – spoke with Bitstamp and Tokens founder Damian Merlak. Damian is a serial crypto entrepreneur and is the mind behind one of the world’s biggest cryptocurrency exchanges. It’s safe to say that he has bags of experience when it comes to building a top-class crypto exchange. Taking time out his busy schedule, he’s given us a sneak peek behind the scenes and explain his latest crypto venture.
Crypto exchanges are portals into the cryptocurrency world, allowing users to exchange their fiat currency into cryptocurrencies of their choosing. There are many different styles of crypto exchanges, ranging from simplistic user-friendly mobile wallet exchanges such as Skrill and Change, to more complex and advanced platforms such as Bitstamp and Coinbase. Tokens seeks to revolutionize the crypto trading experience by giving ICOs a reliable, trustworthy, and secure place to be listed and traded.
AM: What gave you the idea to create Tokens?
DM: I have always had this drive inside of me to be an entrepreneur and create new businesses. I started Bitstamp when crypto was a marginal economy back in 2011. Eventually, I decided to take a step back from day-to-day operations and took some time off to rest and relax a bit. After a short period of time, I felt the urge to get back to work, so I started looking for something new.
In 2016, I had a feeling that an ICO era was coming to crypto economy so I started working on the Quantum Project. Its ICO raised more than 2,400 BTC – worth around USD 4.12 million at that time – and the project delivered 100% returns to its investors within the first year. When you are a token owner – or you want to become one – you need somewhere to trade.
Then it struck me, this was a totally undeveloped market and I said to myself, if there are going to be many new ICO projects and a need for tokens to change hands, then all existing – and future holders would need a platform where they can interact with each other. Not some dodgy place on the dark web, but a reliable, trustworthy, transparent and secure marketplace. The exchange would need to be somewhere I would not be reluctant to deposit, trade and store my funds, and there were none at that time.
That gave me the idea to create a crypto only trading platform called Tokens.net and so I started working on the project. We did a $15 million ICO, gathered a team of top experts and released beta platform in late April. On July 31 we officially released the platform to the world.
AM: How does the platform’s DTR token work? Could you tell us a little bit about the DTR token?
DM: For our customers, the platform works just like any other. It collects fees from any trade executed and there is no extra cost because of the DTR token. The DTR comes into play with the fee settlement system.
I will give you an example. Let’s say someone traded BTC/ETH pair and his fee liability for that trade was BTC 0.01 and this fee got settled by using that BTC 0.01 to purchase DTR on the market. This will be done behind the scenes and you don’t see it as the system does it for you. Now, the best part is for DTR holders. When you hold DTR tokens the system will deduct the trade fees in DTR from your balance. Here comes the great part.
Let’s say the price of DTR token is one Satoshi, you would be paying 1 million DTR tokens for that trade. Imagine you bought your DTR at a value of one Satoshi each and the value of that token then increases and is now worth two Satoshis. This would make your fees effectively half the price. As the DTR token price increases, you as a holder effectively pay less and less DTR in fees over time.
These DTR tokens collected from the fee revenue stream are then cryptographically destroyed by burning them on the Ethereum network, which prevents them from re-entering the market and provides transparency for the exchange – this is a win-win situation for all stakeholders.
AM: What happens when all the DTR tokens have been burnt through transaction fees? Will the token cease to exist, or will more be created?
DM: Can all DTR be bought out? Theoretically yes, but this is the same thing as having a national bank collect all issued coins. It is almost impossible, as you have collectors, many tokens get lost, some put in vaults, etc. For example, you still find coins from the Roman era, [like] gold coins sunk in the oceans.
In reality, it is highly unlikely all DTR tokens will be collected and destroyed. The exchange will use all collected fees and seek remaining DTR, until it finds an investor ready to sell their stockpile – no matter the price. The very last DTR will be extremely expensive and the exchange will go out and buy it.
DTR tokens cannot be generated, as the DTR smart contract prevents that from occurring. This guarantees the integrity of the business model and investors.
AM: Are you planning to add any more trading pairs in the next few months?
DM: We will continue to add new trading pairs as time passes. We have been narrowing down a pipeline of tokens we want to list. We also accept listing proposals from those who want be listed on Tokens.net. Prior to listing any token on the exchange, we take a look into the project and do our due diligence on it. In fact, we are amongst the first exchanges to add Stasis EUR token (EURS), which works the same as Tether USD, but is more transparent and regulated by Maltese authorities.
AM: Just how decentralized is the Tokens exchange? How much control do you actually have over it?
DM: Tokens.net is not a decentralized exchange, although we have an idea in our pipeline to launch a decentralized market place inside our current platform. Our overarching goal is to provide total transparency, which is created by burning DTR tokens. There are so many exchanges out there that make up their trade volumes every day. We have a simple equation that solves this – DTR burned equals fees paid times volume. Everybody will be able to look it up and see that the trade volumes on Tokens is accurate and true.
AM: What does the Tokens exchange offer the crypto community that Bitstamp or Bitfinex for example doesn’t?
DM: I would say in the future will have more trading pairs and we definitely have a more innovative approach. We listen to the community and stakeholders and deliver upon the requests which are in line with our vision for the platform. If I am not mistaken Bitfinex, has made a shift in its target user base and is trying to approach predominantly larger clients. We see Tokens.net as a platform where everybody is welcome. We understand sometimes smaller clients by wealth create more noise and the overhead is more expensive, but this is why we are optimizing internal processes to address mass so we are ready to scale-up at minimal cost.
AM: Are you actively applying for licenses and regulation, such as the BitLicense?
DM: We are monitoring the political agendas throughout EU/EEA and globally. We are seeing large shifts in the perception of crypto; also, a handful jurisdictions are starting to welcome crypto with open arms – even ones that were diametrically opposed to the crypto world before. We will wait and see what will benefit our users the most.
AM: Where do you see Tokens in the next 5 years?
DM: When I entered the crypto world there were only a handful of crypto exchanges. We built Bitstamp and it was a huge success. People say there are too many crypto exchanges nowadays, but I know Tokens.net will be a success story once again for me. I am 100% confident Tokens.net will be battling with the major crypto exchanges within the next five years.
I have full trust and faith in DTR and Tokens.net. I have not sold a single DTR which I bought during the ICO despite the price rising from one cent to over twenty. It is hovering around three cents now. Still, a healthy pick-up one may say, but, as there are ups and downs, I am only looking at the horizon and the end result is what counts for me.
AM: What made you pick London as the HQ for your operations?
DM: I have launched a couple of projects and business based in of London and it always worked well for me. London has been globally recognized as a business hub – and compared to other countries – company incorporation and related services are very well orchestrated what gives an entrepreneur a helping hand.
AM: What is your take on Malta’s crypto friendly bills?
DM: I have been living in Malta for over a year now and I am closely monitoring what is going on here. We have already established a business entity in Malta and when Malta Digital Innovation Authority (MDIA) issues the framework for DLT (digital ledger technology) we will take action. If the benefits are worth it, then we will apply for the license.
AM: Do you think the recent slump in the stock markets will help or hurt the prices of cryptos?
DM: I am afraid the stock market crash will take crypto markets down with it. Since crypto is becoming more and more connected to traditional markets – we are speaking about crypto hedge funds, futures, ETFs – the crypto market cannot be immune to drastic changes on the stock or bond market. Fund managers are aligning risk appetites and diversify portfolios. Once markets fall, margins are called in and accounts get wiped out.
AM: Previously you mentioned your belief that Bitcoin would bottom out at $5,000, do you think it’s still on the way down?
DM: Over on Twitter I said BTC would stabilize at $5,000 levels, but the capitulation might be much lower, in the region of $3,000. From the last time we spoke, markets have played as I had expected. Notwithstanding bearishness, I would not risk entering into a short position, since some positive news could shoot BTC very high very quickly – for example if the SEC approves a Bitcoin ETF or some regulatory decision. Nevertheless, I took some profits off the table at levels of BTC above $10,000 and I am waiting to re-enter at set targets.
AM: What do you think the price of BTC will be at the end of 2018?
DM: Magic ball says $6,500. But do not take it seriously, it fails from time to time.
From the risk-return perspective in crypto, some tokens carry enormous potential, that may outweigh short-lived risks, such as DTR. 🙂
The demand for simplistic and user-friendly crypto exchanges is booming, and so is the world of ICOs. Tokens seeks to bridge the gap between ICOs and crypto exchanges by giving carefully selected ICOs a place to be traded and call home. Tokens.net has a very bright future ahead of it and will soon be filled with exciting ICO tokens ready for trading.
BitStarz News is the destination for exclusive interviews with leading experts in the crypto industry – so stay tuned for more of the same!