Cryptocurrencies: more than a token effort
Cryptocurrencies are set to take the world by storm and what was once written off as a novelty is finally finding a foothold. Eastern Europe has emerged as the surprise hub of this fledgling industry, and Vladimir Smerkis of The Token Fund has found himself firmly at its centre.
Smerkis is the former vice president of international development at Mail.Ru, one of Europe’s largest Internet holdings. Heavyset with a trim dark beard, he sits deep in thought behind his desk in Moscow and would cut a rather imposing figure if it weren’t for his jovial demeanour.
“I really did enjoy my time at Mail.Ru,” Smerkis says warmly. “Somehow they do still manage to innovate, which is extremely rare for a company of that size. But after we launched My.com, its global subsidiary offering games and Internet-related services and products, I felt like the best part of my work was over. I needed something new, so I decided to strike out on my own.”
It was about this time that the mainstream media began swarming around Ethereum and its founder, Vitalik Buterin, he says, adding that “society had finally started to accept blockchain.”
Attracted to the technology due to the market’s trillion-dollar potential and his years working in IT and technology, Smerkis started investing his personal funds in cryptocurrencies.
Before long, in March 2017, he and a team of likeminded blockchain enthusiasts developed a cryptocurrency exchange system, The Token Fund, one of the first coin-traded funds on the market. It acts as a managed investment fund for cryptocurrency and blockchain projects and provides the service that many investors are seeking: a painless entry into the crypto-world that comes with a diversified portfolio and doesn’t require constant manoeuvring on exchanges. The model proved successful, fast. Hedge funds and investors worldwide, “from Switzerland to Kazakhstan,” Smerkis says, began reaching out, asking to white-label the system for use on their local markets.
The feedback got him thinking. As opposed to licensing the software out to foreign investors and institutions, he asked himself, why not just build a turnkey platform for international users? That is exactly what he plans to do. The global platform, Tokenbox.io, will launch after a funding event scheduled for next month that Vladimir has dubbed a “Token Generation Event”.
The turnkey solution will be built on the Ethereum platform and provide portfolio managers and traders with a simple way to adopt a token-based trading system. It will also offer a comprehensive system designed to supply all the requisite trading and compliance infrastructure to easily create new investment funds specialising in the fast-evolving cryptocurrency asset class.
“It will also perform KYC/AML on investors on the trader’s behalf and manage mutual settlements with smart contracts,” Smerkis says. “Increased security, reduced transaction costs, built-in analytics and algorithmic trading are added bonuses. We have a fantastic group of guys from Zerion Software working on the technical side of the platform.”
Could tokens simplify cryptocurrency?
Smerkis and his team have developed the bare bones of a blockchain system that can unite disparate cryptocurrencies that have confused savvy investors for years. This new system could provide a stable trading platform that can be copied around the world to create a series of crypto-asset funds that will bring trust, and big investment.
“What we have is the embryo of disruptive, decentralised technologies that will take cryptocurrency from society’s fringes into the mainstream,” he says. “The Tokenbox platform is the first viable solution to bring investors and cryptocurrency funds together.”
With interest in cryptocurrencies hitting fever-pitch, consumers need an instrument that can ensure the effective management of private and institutional investors’ assets and enable the wider audience to enter the market. So far, no one has come up with a secure and stable platform.
“And that’s exactly what we intend to do,” Smerkis says.
Are national cryptocurrencies the next step?
At some point sooner or later, the hundreds of cryptocurrencies in circulation today will undergo consolidation. Bitcoin has become a benchmark currency and is unlikely to fall by the wayside. But some smaller coins will probably be replaced by sovereign coinage — cryptocurrencies issued by central banks. Russia, Japan, Iceland and other countries are already contemplating their own sovereign coins.
“The cryptocurrency trading system is still in its nascent stages,” Smerkis says. “We will see considerable developments in the next couple of years.”
As the system evolves, tokens will start playing new roles, too, he adds. They could be offered publicly and used to represent shares and even voting rights. But regulation is needed first, and Smerkis is the first to admit that the industry has a long way to go.
Cryptocurrency traders need to be convinced to embrace regulations that will bring the big money, and turn the likes of Bitcoin into a self-fulfilling prophesy, he says. But solid trust management ecosystem software is a huge step in the right direction, and the Tokenbox platform could help drive forward industry needs.
Ukraine and Estonia aim to be leaders
Although Russia is really working hard to be a leader in blockchain, Smerkis says, it’s not alone. All of Eastern Europe is emerging as a powerhouse in the cryptocurrency market, to mirror its recent explosion in tech startups. Ukraine, alongside the UK, is arguably at the head of the pack right now and its largest private bank, PrivatBank, has provided Bitcoin services since late 2015.
The Bitfury Group is also now working with Ukraine to put a vast amount of government data and services on blockchain systems. Ukraine also saw the first official cryptocurrency real estate transaction, when TechCrunch founder Michael Arrington purchased an apartment in Kyiv.
Meanwhile, Estonia, Europe’s longstanding e-government services leader, introduced digital residency back in 2014 and has pursued the tech line ever since. With limited legacy systems, it has adopted blockchain and a digital economy with relative ease. Estonia has a Blockchain-based voting system and the government was working with Buterin to create the “Estcoin”.
Buterin, Smerkis says grinning, is something like a young cryptocurrency prophet, embraced by governments as he travels the world to create a freer, securer global economic system. “But all kidding aside, he really has a tremendous mind,” he says. “If it were not for Ethereum, the future that we see today for blockchain and cryptocurrencies wouldn’t be so bright.”
What is Ethereum?
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