Antoni Trenchev, managing partner and co-founder of Nexo, discusses the future of blockchain and cryptocurrencies, and explains why 2019 will be a pivotal year.
How do you see Blockchain technology and cryptocurrencies developing in 2019? Will it be a critical year?
2019 is going to be an absolutely crucial year for cryptocurrencies and the technology that underpins it – blockchain. We had the huge bull run and exuberance of 2017, the inevitable correction of 2018, and I think it is safe to say that the future of blockchain technology and crypto assets will largely be shaped in 2019 out of sheer necessity to put order into the space.
The coming years will be the “make-it-or-break-it” for blockchain companies as they will have to deliver on the promises with which they raised funds and that will ultimately have a bearing on the whole ecosystem, especially with the SEC and other agencies cracking down on fraudsters.
Unfortunately, a recent study by Ernst&Young shows that only 13% of ICOs (Initial Coin Offerings) have a live product and even less are providing useful solutions for the community.
In a way, 2018’s crash in crypto has been similar to pets.com and the unfolding of the dot-com bubble burst. In that sense, history is yet again repeating itself and we have to study the lessons of the past. This is what we are doing at Nexo.
And the conclusion has been that there is no need for pessimism – out of the ashes of the dot-com crash, we have seen the Amazons, Googles, and Paypals of this world.
Transposing that concept now in the blockchain space and Nexo aims to become a household name. In this environment, where most blockchain companies are capitulating, Nexo is paying out the first dividend ever on a token on December 15, 2018. This has, in turn, catapulted us in the top 70 companies in the world, as we are among the very few profitable companies with 130,000 registered users and growing.
What barriers remain in the way of more widespread adoption of cryptocurrencies?
There are a few still. Regulatory uncertain in many jurisdictions remains and that is always a huge barrier for any business. What serious financial institutions like Nexo need is a clear regulatory framework of concise and business-friendly rules within which we can structure our commercial activities.
Some countries like Switzerland, Malta, Estonia, and some others are doing good work and it is our wish that more jurisdictions would adopt a forward-looking approach to blockchain technologies and digital assets. Those are not going anywhere, so better set the stage for a proper development of this industry.
Another obstacle to the wider adoption of cryptocurrencies is the still inherent volatility in this asset class. When crypto assets gain in value, people do not want to use them as means of payment, as the would miss out on the price increase. That is precisely the reason we came up with Nexo in the first space – to provide instant access to cash and a solution for crypto asset holders to keep their assets at the same time.
In the second scenario, where cryptocurrencies lose value, people again do not want to utilize them as a means of payment, as they do not want their purchasing power to potentially get halved overnight. With Nexo’s deleveraging product we can again be of help here.
What major plans does Nexo have for 2019?
As the world’s largest, most advanced and trusted crypto lender, Nexo is in a unique position and all eyes in the space are on Nexo as to how we are going to continue to innovate and foster the well being of the industry.
We have two very essential milestones coming up – the Nexo Credit Card and the acquisition of a bank.
Today we are active in more than 200 jurisdictions and serve our loans in 40+ different currencies – anything from Dollars and Euros to the Dirham and the Nepalese Rupee, the whole nine yards. Clients receive their funds same/next day via our extremely well-branched banking network, so waiting times are extremely low. But the Nexo Credit Card will redefine the very essence of the word instant, as the client will be able to spend their funds the second the crypto assets they deposit are confirmed on the network. No comparable service has even begun to phantom such a service for its clients.
As your readers can perhaps image, offering such an edge-cutting, efficient and fully automated product has generated a lot of demand. So Nexo has now to solve the scaling predicament. One of the obvious ways is the acquisition of a bank and we are progressing well here. Currently, we are doing due diligence on two banks, one in the EU and one in the US. A bank acquisition would allow Nexo to tap into the deposit-taking system, available only to banking institutions, which even with interest rates going up across the board, still is the most cost-efficient way of financing business activities.
How is the usage of crypto loans at the moment and what kind of growth do you see? Who are typical customers?
Nexo’s instant crypto loans have a wide arrange of use cases. We have seen retail investors borrow against their digital assets to buy the new Tesla or go on a vacation on the Carribean.
We have even recently had a curious client, of a celebrity in the blockchain space, who took out a $1.5 million loan from Nexo to buy a second home in Amsterdam – a marvelous piece of property. The Nexo team is very proud to have facilitated the first ever crypto mortgage and I believe that this trend in real-estate will be an important one in 2019.
We also have quite a few institutional types of client. Crypto-miners are a substantial part of our customer base, as they generally do not like to sell their mined currencies, especially with the decline in prices of the past months. But you cannot just yet pay electricity bills with crypto, so getting a fiat loan from Nexo solves that problem for them. On top of that, they can leverage their enterprise by accessing cash and retaining their crypto. It is a win-win. We have seen funds and family offices, cryptocurrency exchange and ICO company make use of our instant loans as well.
What are the major benefits of crypto loads over mainstream fiat currency loans?
I think the moment you make a transfer with Bitcoin for instance and see it go to the other end of the world in less than 10 min and for less than a dollar, you get instantly hooked. Then it is really hard for you to understand why SWIFT payments cost $60-$70 and take up to a week to settle.
Cost-efficiency and speed are what attracts people to distributed ledger technologies. The downside is the still prevailing volatility so that is why at Nexo we think that stable coins (cryptocurrencies that are 1-to-1 backed by fiat currencies, usually the US dollar) have a very bright future and are going to be a very important trend in 2019
Anticipating this development, Nexo started offering interest, up to 6.5% per year, on stable coins placed with Nexo. And we have seen significant interest from the community. As this concept gains even more popularity, it is even better for Nexo as it offers yet another way for us to scale the operation.
For more details on Nexo, visit https://nexo.io