How did the Czech startup develop its own banking platform and what’s happening on the market of blockchain apps
To most people, purchasing and storing of digital assets seems rather complicated. Many have problems making blockchain transactions on a day-to-day basis.
Deal with it
The conversations about financial regulation of digital assets began two or three years ago, while regulators are constantly changing what is recognized as digital assets. Today, there is a number of countries with a positive approach to the regulation of digital assets. In Europe, Luxembourg made the first step towards digital assets – they became recognized as a means of payment.
However, now the Luxembourg tax service has issued a circulaire recognizing a digital currency as a digital asset. It is now considered to be a digital asset in the UK, Germany and some other European countries. But nevertheless, when the conversations were at governments’ level we got the impression that this instrument was getting some attention, which meant that there are some plans for digital assets so it will not be banned.
“We decided that in order to work with the digital assets, we need to come up with a tool that is understandable for everyday users. At that time we, ourselves, experienced some difficulties.”
It’s a hot mess: you need to register on an exchange, understand how the exchange works (which most people do not understand), you need different orders, lists need to be somehow stored, you can not lose your password and recovery phrase, and if it is stolen – these are big risks. You have to understand and learn all of that, but people who want to invest their money in the digital asset but at the same time their busy doing their own business do not have time to study these processes. What is convenient for them is to use a mobile banking application, where everything is native.
That’s why we have created an online banking platform with an official banking license, which makes it possible to use digital assets along with fiat, that has regular accounts and accounts for digital assets. You can easily buy digital currency as regular currency and send it just as easily: you choose how much you want to buy, the app tells the rate, and that’s it – your digital assets are on your account.
We have developed our own solution for the protection of blockchain transactions using Thales’ technology – the world’s leader in banking security. You don’t need to learn anything, there is no risk that the funds will be stolen, and if you lose your phone that had the application installed, a simple account recovery is done and you log in again and all your funds remain with you.
Blockchain apps market
Today, simpler and more understandable wallets are being developed. But what is a wallet? You can only store and send currency, you cannot buy it, and in order to buy you need to go to the exchange again. There are services that are a wallet where you can buy a voucher for payment from this wallet, for example, to pay for Skype or pay for your phone bill, this application is very limited in its functionality. There are services that are a card tied to a wallet, you can store your funds there and you can spend it, but most of these services work in a test mode, it is either very difficult to get a card or you have to wait a very long time.
There are online banks that are not strongly against bills from exchanges. For example, a user on an exchange bought some currency, transferred it to the bank and started using the money for which he sold the currency. That means this is also an additional application, in total – THREE. This means that you need to have an online banking application, a wallet and an account on the exchange – you will have to register everywhere three times, provide documents three times, etc. By this time, you probably won’t even want to do anything with your funds at all.
Will regular banks adopt digital assets?
The problem for banks is that once a digital currency is a digital asset, it is a risk. The bank is obliged to create reserves for risky operations and assets, but since the risk is not determined, the bank simply cannot legally keep digital currency on its balance sheet.
This means that there must be at least some kind of reporting. For this, the balance must contain some digital assets and the balance sheet should be in accordance with IFRS, which are very long processes – that means legally banks cannot carry it out yet.
Although some banks declare that they can hold digital assets and even give an extract, this is not a bank statement anyway. They provide the technology where both the user and the bank hold the keys, in this case, the bank doesn’t put anything on its balance sheet, although they can give you an extract (and this doesn’t seem to be a hoax), but the bank is not responsible for anything and the entire risk is on the client – once the key is lost that’s it.
European audience and their approach
As in Russia, Europeans are afraid of the difficulties, but we just removed them at Saifu. It is obvious that digital assets will exist and the interest in it is growing, while some market participants inspire fear. A lot of technical nuances: the presence of different currencies, fraudsters who want to take advantage of the technical and economic illiteracy of people – this is the reason for the reputation of digital currency.
GfK and ING-bank research say that the turnover is lower due to a rather low rate, but at the same time awareness is still growing.
The number of people who know what digital assets are and the number of people who think that this is not a financial bubble and not a fraud is growing. Despite the smaller capitalization, there are more and more interested people. And once there ’s growth again, people will sell, because market participants are mostly not professional investors, so when the price falls, they keep it. Here, people act differently, when the price is growing they’re buying, when the price is falling they’re selling.
What to do to those who want to try digital assets?
It is realistic to work with digital assets with minimal risks, you definitely need to choose a reliable partner who will help you buy and sell without risks, it is better to be in some way regulated organization. In this situation, risks must be avoided, for example, the exchange was closed or hacked, and all the money’s gone, there were many such precedents, and with a regulated organization it is not likely that this will happen.