Fintech Camp:What is the short, 2-liner description of crypto payments, from your perspective?
Felix Crișan: Trustless, global value transfer with almost-instant settlement.
Why would anyone want to pay with crypto when there are cash and cards?
From the user’s point of view, it’s a push-based system (user sends), unlike the pull-based systems like card (merchant takes). This makes it much safer (there’s a downside here – story for another time). Compared to cash, it’s much easier to transport. $1 in crypto takes as much (virtual) space as $100M. Thus, sending any amount to any corner of the world takes a second and costs a nickel.
In the last 2 years or more, almost everyone talks about cryptocurrency. Do we fully understand the concept and how to use it?
I would go back to the overused comparison with the Internet – cryptocurrencies (and the underlying blockchain technology) now are like the Internet in the 90’s. In this parallel, the Internet enabled and enhanced the transfer of information, while cryptocurrencies enable and enhance the transfer of value.
The Internet massively changed the business landscape, creating verticals that would not exist otherwise. Similarly, the land of crypto (currencies and blockchains) will also massively change the business landscape and will create new verticals. For instance, the inherent programmability of cryptocurrencies can eliminate some of the roles existent in an organization. And the move to trustless interactions in business, will influence and affect the society in the future as well. It’s not too far fetched to imagine in 30-40 years from now people will not need parliaments. Some will move to a more direct democracy – everyone can directly vote on each initiative.
What is your advice for those who want to start a startup in crypto payments?
At first sight things seem straightforward, because most of the aspects of crypto payments are easier than their electronic counterparts done through other methods. Basically anyone can process crypto transfers and payments using just open source. There is no need for anyone’s permission (that’s one other important aspect of most blockchains – the fact that they are public & permissionless). But there are aspects (e.g. related to legal/compliance and accounting) which are the same or tougher. These mostly stem from the touchpoints with the traditional systems and governments.
At the same time, any project crypto-related is immediately tied into an ICO. As we know, during the past 2 years, ICOs have been a method to ‘democratize’ investments, but not for the right reasons. Conventional wisdom says that 9 out of 10 startups fail. What is not understood is that changing the funding method (ICO vs, say, Venture Capital), changes this ratio, but for the worse (i.e. it’s maybe 2-3 out of a 100). This is because the barriers to entry are lowered. This is not to say that only VCs can do it, but rather that we need ‘filtering’ tools – like Token Curated Registries.
To conclude – a crypto payment startup is no different than any kind of startup. Thus the same criteria applies: do your research, know your customer, iterate fast.