How does creating a cryptocurrency exchange look like? What are crucial moments in running a business? And how does the current situation of Bitcoin presents on the market? Grzem – founder of Cryptox exchange – gives as all the answers.
Cryptox was launched in November 2016. Was the decision about launching it consequence of your previous activity on the market? Have you been a trader or have you dealt with cryptocurrencies in any different way?
I started to think about creating my own exchange 4 years before launching Cryptox. More precisely, I came up with an idea when US exchange Cryptsy was expanding on the market. It wasn’t a big inspiration for me or anything like that, but its beginning coincided with my plans about creating similar service. Only one thing held me back from realizing my plans: I wasn’t a developer. Although at that time I have been working as an IT analyst in some Warsaw corporations, I didn’t have enough programming knowledge. On the other hand, I couldn’t afford to hire programmers from the outside. Especially, that it would mean for a team of several people one year of work, which I would have to finance from my own pocket.
However, there were ready-made solutions on the market but they were incomplete and couldn’t satisfy me. What is important, even back then I was clearly aware of fact, that I’m not interested in creating a service, which would provide exchange of cryptocurrencies for the traditional ones. For me, the only model that made sense, was the one which would exchange Bitcoin for another cryptocurrency.
This is an interesting thread, so let’s pause for a moment. What was the reason for this approach? Observing the market and discovering attractive niche on it?
No. Crypto-crypto exchange simply gives you an opportunity for reliable arbitration. If we are transferring our resources for traditional financial market it means, firstly – paying a provision, secondly it means a lot of tax trouble alongside with stability of existing financial institutions. Personally, I give more trust to cryptocurrencies than bank accounts. And I’m in that group of people who claim that scattering of the traditional system is just a matter of time.
What was the breakthrough moment in pursuit of your idea?
Definitely purchase of code and software from the owner of Bitmaszyna, with whom I have been negotiating for two years. Software we are using now is a twin to the Bitmaszyna`s. At the beginning I even had an idea to just take responsibility for already existing on Bitmaszyna crypto-crypto markets, but the owner wasn’t interested in this solution. Final agreement between us, concerning business transaction, took place couple of months before launching Cryptox, that is around May 2016.
How many people have been working on preparing Cryptox for a market debut?
Me, programmer from Bitmaszyna and a person who had contacts with great polish server room, on which I had put my service anyway. In this team I was somewhere in the middle, i.e. I had been a tester and at the same time I have been using my experience in writing specifications. Besides, even nowadays I’m a tester and I’m acting as a helpdesk. Single-person management seems to be working out.
Before buying a software, you were probably wanting to somehow assess potential profitability of exchange. Did you have a business plan?
No. I have decided to take a risk and invest a lot of my own money. I had been aware of the fact, that at the beginning, revenues wouldn’t be impressing. But I was able to afford taking such risk due to approach that I have developed, which was guiding me from the start. Namely, I didn’t have an ambition to create big and serious business. Very basic assessment of profitability was made only for the need of possible cooperation with partner, who hadn’t decided for cooperation anyway. I was investing my own sources, which I derived from my activity as a trader. This is why I have allowed thoughts about loss, but loss without regret. Such attitude – without making serious plans and serious analysis – is still precious to me. I have no idea what Cryptox will look like in five years, I don’t have any high expectations about it. I had and still have enough work to be done according to strictly defined plans, because I had experienced it during my several years of working in a corporation. Cryptox was meant to give me a freedom. If something happened and business stopped to be profitable, I would not have to carry it on.
But today you can probably tell whether the business is profitable or not?
Yes. And I’m surprised with the fact that web can nowadays successfully pay for itself. It’s even more surprising when we consider very low commissions. Web is charging almost negative commissions for the ones putting order market makers and positive for takers. From the takers we are charging 0.2% and 0.1% for market makers, while standard on the market is 0.2% for both. I have expected for the business to bob up after two years, and with so designed commissions, it’s great even today.
And what about the trades?
In the last two months the average volume was about 20,000 dollars per day. But I remember a moment, when it was about 250,000 dollars. It was a special period, because lots of cryptocurrencies had its debut on the exchange. Interestingly, when on the exchange there were only traditional Litecoin and Dash, not much was going on with trades. They are unsatisfactory even today. When I introduced to exchange a very interesting currency, Byteball, which developer is a Russian, it was a moment of breakthrough for us. This coin is interesting for the fact that it’s breaking up with traditional basis such as blockchain and proof of work. Along with its debut a large society appeared on Cryptox – hundreds of people registered here their accounts. Komodo was the second currency, which gathered a lot of enthusiast on Cryptox and made not so small traffic. It recently hit the big, global exchanges anyway.
You can therefore conclude that new cryptocurrencies have their 5 minutes on the global market?
New cryptocurrencies are getting more and more professional. The battle for leadership in graphics and IT continues. But at the same time I have a feeling that a kind of superficiality wins on the market of cryptocurrency news. A lot of new products appear, which are building its position by marketing, or nice appearance and not „the inside”. It’s not like I have something against that, but I won’t put my work into something that is technologically secondary.
Among which users Cryptox is popular? Where do they come to you from?
Distribution is very proportional: China, Japan, there are a number of customers from the United States and of course, Europe. I was surprised by the lack of response from the polish community, which is not present on the exchange. As a member of our forums, focusing on people interested in cryptocurrencies, I was counting on at least a dozen or so people to open accounts, for example, to diversify they funds. But it’s not happening.
What is the branding of your exchange? Does any kind of promotional activity has the effect on it?
I’m not trying to control my customers` attention in any way. People find me because they are interested in a particular cryptocurrency and by that, naturally, they get on Cryptox. Every new currency attracts a new group of customers. I don’t even know if they are staying longer or not, because I don’t register them. What I do know is that today I have registered about 1500 users, but you have to take the correction that on Cryptox you can own several accounts at the same time.
As a person involved in this business, with the knowledge you have today, would you now invest in something else?
I’m not really interested in other things. I don’t need extra capital, I’m not looking for investors. I’m not missing anything, because I’m quite satisfied with what I am doing right now. I have a lot of freedom, I’m independent and working without stress. If in the future some government regulators have ordered me to liquidate the exchange, then I would close it with the same peace.
Finally, I’m going to ask you about Bitcoin. Do you expect any interesting scenarios about this currency?
Bitcoin is the king and it’s not the right time to dethrone him. He was the very first one on the market and will be on its position for a long time. Unfortunately, a lot of bad things are happening within the community around him. We are witnessing how the classic currency changes its status, it’s even appropriated by groups that have some business in it. A lot of is said about this: Bitcoin is gradually becoming the property of Core developers who have been bribed by the big bankers world. It is clear, that they are striving to take over Bitcoin traffic, even „after his death”. This situation is favourable for investors interested in alternative currencies.
Interview by Krzysztof Żurek