Starting with cryptocurrency has always been a problem for new entrants interested in investing. Now is a critical and exciting time, when more new entrants are entering the space than ever before, and the community is working hard to stop fraudsters and other criminals who took advantage of the previous bull run.
The reasons for investing in cryptocurrencies can vary from person to person but the same rules apply to us all, and anyone can make mistakes, especially early on. Many exchanges work proactively to enable simple custody for their customers, reducing the impact of malicious actors through safer, intuitive processes.
To understand the challenge of making cryptocurrency more accessible, we spoke with Roman Valihrach, CEO of Confirmo Limited, whose projects include the exchange Coinmate and the payment portal Confirmo. In the following sections, it expands on central issues that will determine the course to be taken by this next wave of popular interest, from education to security, and what new investors should do to protect themselves in the digital economy. As we announced just last week, you can now buy and exchange crypto directly from Trezor Suite in a secure environment, thanks to the collaborative efforts of partners like Coinmate.
There are many exchanges on the market and it is difficult to know where to go and who to trust. Here, Roman covers some of the joining questions and answers and looks at how to build good asset handling practices.
Q: What are the biggest obstacles for newcomers to the crypto space?
“There are not that many obstacles standing in the way anymore; pretty much anyone can open an account with an exchange, go through a quick video identification process and get everything ready to take deposits in fifteen minutes. A lot of attention goes to mistakes that people have made, but in reality these have been studied and built upon. We’ve been here since 2014 trying to reduce these risks to consumers and make it simple.
Support for things like fast euro deposits, usually done in an hour or two, means you’re ready to trade within two hours. It is much faster than traditional finance, which involves a lot of paperwork, trust and time. I think crypto has evolved over the conventional big-time financial space and is still moving forward because that’s where the innovation is.
Starting back in the early days was more difficult, but if your exchange has been selected and you want to start trading it’s easy. Psychologically, it’s hard to invest and get caught watching the price go up and down, but that’s a different story. Every individual has to answer for himself whether he treats it as a long-term investment or something more speculative. “
Q: What about all the new financial mechanics that many exchanges now offer, which were not so widely available during the last bull run, if a newcomer paid attention to these?
“This trend of offering things like leverage is fine but it’s not something a beginner should be exposed to. I would not recommend anyone trading with leverage unless they have some experience, lots of time to devote to it, and great emotional discipline. I don’t see a good reason to invest in crypto with leverage, because cryptos are very volatile anyway, so it’s not like stock trading on a few percentage changes; in crypto you can get a ten percentage change in a day so it’s volatile enough to be traded with your own funds only.
Exchanges add these features because it creates more liquidity but I’m not sure it’s good for the customer, frankly. That is why we are not moving that way because we want to keep our service as simple and peaceful as possible because it is poignant enough to trade crypto. Seeing sharp moves against you as your entire account balance is wiped out on a margin call is scary. I am not against it, if someone can devote many hours a day to trading, that’s fine, but I would never invest much. First, I would start trading my own funds and then try to leverage with a small amount if I felt the need. “
Q: There are many exchanges on the market and it can be difficult to tell who to trust, what are the most important things to look for when choosing an exchange or payment service?
“Reputation is a big part of it, so I think it’s really good to look at how the exchange is communicating with its customers. We use TrustPilot to track satisfaction and have one of the highest ratings for an exchange; if you go through reviews and find that no one is talking about significant problems, you’re probably right. We have gained a lot of trust and engagement since we launched quite early, back in 2014.
In crypto we do not need leverage, futures or options other than to create liquidity and we have plenty of liquidity. To add to that, offering hundreds of tickets does not mean an exchange is safe and trusted, but people like to trade these small coins because the moves are even more volatile than the top 10, so some people will see that as important. Exchanges other than KYC are also something to be wary of as those swaps will be a target for regulators at some point. ”
Crypto-anarchists famously profess one dear truth: regulation is bad, and it counteracts the principles of Bitcoin. Whatever the truth about the social implications, the reality is that governments will do their best to take whatever control they can take, and some semblance of government oversight is inevitable.
Q: KYC is now a requirement for almost all exchanges, what are the pros and cons
“The benefits are that having these checks in place helps prevent things like scams, black markets, fraud, tax evasion, and it’s all a good thing. The disadvantages are that the government delegates these requirements to the private sector. Coinmate, for example, spent nearly 20% of its costs on development for KYC and AML affiliation. Enforcement of these regulations is not supported, and you pay a lot of money for services to meet the requirements.
Everyone does the same thing and creates their own equipment to handle it, because there is no central service to check requirements, and it is very ineffective. Pushing the cost to the private sector is a huge burden. If done centrally, the costs would be so much lower. This sees me as a barrier to entry for innovators and newcomers. Our to-do list is huge, so we’re being forced to leave things out. ”
Q: What should governments try to avoid when implementing regulation in this space and do you feel they have enough information about cryptocurrencies to pass regulation that is effective and could still benefit the industry age?
“Dark markets are not a good thing for crypto, and the freedom of trade has been abused in the past. So AML and other regulations have a place, but governments should not just impose more regulation. They need to provide the private sector with tools to help make them more effective in applying legislation. There are services we use that monitor blockchain for illegal transactions, but regulate what crypto should be allowed to do and how it should be traded? I’m against that.
It is a very complex subject, and I do not know whether regulators have someone who is sufficiently educated to provide them with the information they need to create effective regulation, but I may be wrong. In my opinion, the world is already over-regulated and regulation is killing innovation and I’m glad we established ourselves in this business a long time ago, today it would be far more difficult to do so. Switzerland is a good example, they seem to be in talks and want to support crypto, which is a big difference from many places. This approach is much more positive because, if you can fulfill the requirements, they support you. “
No valid exchange can exist without making security a priority. The industry is slowing down in the face of regulation, with far fewer exchanges being set up now than in 2017-2018. With more responsive and responsible efforts through exchanges, more effort is back for fraudsters and thieves, but what can a consumer do to make sure their funds are safe?
Q: What steps should people take to look after their coins after they buy them from an exchange?
“How safe you often have to be depends on the amount you invest. For a thousand euros, you might be happy to trust the exchange; many people trust him with more. We’ve never had a problem in six years but of course it’s a threat facing the business, one that never disappears. If you start investing regularly or find that the price has grown a little more than expected, just move it to Trezor for peace of mind. Most exchanges will provide some form of guarantee these days, but it is cheap and easy to take ownership of your crypto so it is almost always the best option.
Security is a major concern for exchanges, and we must be prepared for constant attacks and fraud attempts. Users should follow the same approach and equip themselves with the tools and information they need to eliminate the risk of stealing their funds. We do see attacks a few times a month but we are very safe, a regular user may not find out that their seed has been compromised until long after the incident occurs. ”
Q: What’s missing from crypto exchanges?
“Of course, by running an exchange I have a vested interest, but I think most of the people who come to crypto will now be looking for simplicity and peace of mind. Custody is not necessarily on people’s minds, but there is definitely a gap where things like paypal start to cater to the masses with non-custody products, or “Bitcoin IOU’s”, as many people call them . Coinmate has a pretty good track record of adhering to Bitcoin principles, so we tend to be a little isolated from the latest drama.
Trading can be stressful, and it’s hard to watch the price move constantly. There are people who succeed in daytime trading, but it’s hard to say how many consumers actually turn a profit when they take that route. We added price warnings, which can be set to trigger if, for example, a couple reaches two weeks high or low or their portfolio grows a certain percentage. Users can receive email instead of spending daily viewing charts. We try to help people disconnect. Most people should sit still, invest and be hodler, trading is not really for everyone and something like 90% of short-term speculators lose money. Our mission is to bring crypto to everyone, to make it easy and accessible, providing peace of mind.
Crypto should be used more for payments, which still doesn’t happen. Most traffic is rooted in speculation. Adding features for invoicing in crypto, as we do, should help make it more commonplace. For Litecoin, for example, we have fast processing when users withdraw funds, to ensure that crypto invoices are paid within the normally set timeframe, or paid regardless of the fee. We have features that fix this.
Secure crypto storage was a big issue, because when you hold coins on an exchange you trust the governing entity. There should be an option to hold part of the portfolio that is not traded, which is why we started integrating Trezor in the past and want to integrate it more, by being able to show the money stored on Trezor and the those in it trade, and make transfers even faster or instantly. ”