Brief interview with Chief Operating Officer of Calidris Fintech AG, Frank Kallmeyer:

Mr. Kallmeyer, you have worked internationally at banks and asset management companies, what made you join a startup in 2018?

Due to the fact that it was foreseeable in 2018 that cryptocurrencies and their benefits would establish themselves as an asset class and regulators such as the FMA Liechtenstein were already working on a draft law for cryptocurrencies, I decided to become active in this area. When I came across Calidris Fintech AG, I realized that the company’s philosophy and its intention coincided with my ideas. That was the reason why I joined Calidris Fintech AG.

You also worked as an exchange futures trader, where do you see the similarities as well as differences between the crypto market and the established markets?

Since the crypto market is still in its development, the trading volume is accordingly small compared to established markets. Furthermore, it should be noted that extremely high volatilities prevail due to the lower trading volumes. Also from the legal side, it should be noted that from a global perspective, only a few countries have regulation and since crypto exchanges store the coins themselves, they are often the target of hackers. Basically, the price formation mechanism is the same as in established markets and the distortions that can currently be observed in the crypto market are similar in nature to those that occurred in the early 2000s with Internet companies, i.e. the .com bubble. Securitization brought up a revolution in the 1980s and is now being replaced by even more far reaching tokenization.

What were your company’s motivations for having your token regulated? You could have done a token issuance in a simpler and cheaper way.

In 2016-2018, one could observe many unregulated ICO coin initial offerings, which turned out to be scams. As a result, government regulators had to intervene and enforce appropriate measures. Calidris Fintech AG has relied on a regulated security token offering from the very beginning to satisfy its investors and the government authorities. It is a considerable additional effort to set up a STO, but this decision will pay off in the long run from our point of view.

There are already hundreds of different trading platforms on the market, why are you launching another one now?

Certainly there are already many trading platforms on the market, but Calidris is taking a completely new approach. Thanks to our platform’s own regulated token, we can reward token holders who act through our trading platform with a daily cashback on their volume. Furthermore, the token holder will benefit from future expected dividend payments from Calidris. With this approach Calidris goes a unique way and we are convinced that in the long run we can win a large trading community with this system.

Regulated exchanges and security tokens, like the one your company is issuing, are almost non-existent and accordingly there is a lack of liquidity and demand. Do you see this as a big risk?

Currently, many large established exchanges such as the SIX Digital Exchange are in the process of launching coin trading venues. We expect the first ones to start operations by the end of this year. Calidris is aiming to realize a listing at exactly such trading venues. It can be expected that there will be sufficient volume on such exchanges, as they are also used by institutional investors.

How do you think the target market will develop in the next 3-5 years?

In the coming years, I believe the trend of digitalization will accelerate and companies that will operate in this environment will generally show high growth figures.
Furthermore, blockchain technology has established itself in many application fields and is thus gaining increasing acceptance from broad segments of the population. In the financial sector, government regulators have started to create a legal framework that will significantly increase the confidence of market participants and provide a real boost to growth.

Thank you very much for these exciting comments. Stay tuned!

 

How dangerous is a Bitcoin investment really?

How dangerous is a Bitcoin investment really?

We as a fintech company, who are very closely linked to the crypto market, see this market almost exclusively in a good light.

Nevertheless, one should always look at situations as objectively and holistically as possible. Therefore, we will now take a look at the risks that can occur when investing in the largest cryptocurrency, Bitcoin.

Volatility

Bitcoin has historically averaged a return of 210% per year since its inception in 2009, which is incredibly good. However, this return has not come about nice and consistently year after year, but rather in large upswings and associated with sharp corrections. A good asset manager is not only measured by the pure return, but above all by how much risk he has accepted for the return, or how much his positions were in negative territory in the meantime. In the case of Bitcoin, this can easily be -60 to -80%, which is risky depending on the entry point.

Liquidity

Bitcoin’s total market capitalization is still tiny compared to other asset classes (although rising rapidly). Therefore, there are real costs associated with putting capital into Bitcoin. What is meant is that when buying, you have to be careful that your investment does not drive up the price of the cryptocurrency. However, recent high-profile Bitcoin investments by MicroStrategy, Square, and others show that it is slowly becoming possible to allocate on a larger scale.

Transaction costs

The cost of buying and selling on an exchange is far too high compared to other asset classes. This fact eats away some of the performance achieved and makes active trading difficult. It can be expected that the costs will converge with the other asset classes over time.

Operational risks

Key question: where does one keep the precious Bitcoin safe?

One can use a private wallet (hard or software), which is not technically straightforward. The responsibility and risk of loss is now in one’s own hands. Custody solutions allow the risk of keeping the private key to be transferred from one’s own person to the custodian organization, which must then be trusted. The risk is thereby transferred, but not reduced.

One can also leave Bitcoin on the exchange, these have developed well in recent years; however, there is still the hacker risk. There is currently still a lack of both secure and simple solution to give Bitcoin even more credibility.

Transaction Risk

One of the greatest strengths of Bitcoin, the ability to transfer value independently of any third party, around the clock and in any volume at minimum cost, comes with risks.

Transactions are irreversible, sending to a wrong address currently still leads to total loss, which is quite daunting. Solutions are needed to reverse erroneously sent transactions or to prevent this from happening in the first place.

Regulation

Bitcoin was ridiculed by governments for years and not taken seriously. Now with increasing size, user base and market capitalization, Bitcoin should be on every government’s radar. At the latest, when recently the Central American country El Salvador put Bitcoin on the same level as the US dollar. This is unlikely to please the U.S. in particular. Bitcoin is likely to become more and more a thorn in the side of the world’s national banks, which like to have sole control when it comes to the monetary system. This threatens stricter and stronger regulation with an uncertain outcome.

51% attack or coding error

Because the Bitcoin system is digital, autonomous, and distributed across thousands of computers worldwide, there is a risk that bad actors (hackers) may want to attack the network to gain a majority and then manipulate it. A sudden error in the code is another risk factor, which would probably have a significant negative impact on the price.

Market manipulation

Currently, a Twitter post by the world-renowned entrepreneur Elon Musk (Tesla) is enough to control the Bitcoin price to his liking. This indicates a lack of market size, as well as low confidence in investors’ own position. This is an additional external and hardly calculable risk regarding a Bitcoin investment.

Further, there may be currently unknown risks, as the global covid pandemic can serve as an example. Being aware of all these factors can help to make decisions and be optimally prepared; both mentally and technically.

Stay tuned!

Historic – Bitcoin becomes money – what are the consequences of this?

El Salvador, a poor country with about 6 million inhabitants in South America, characterized by corruption and violence, seizes the opportunity and becomes the first country to officially accept Bitcoin as legal tender alongside the US dollar.
In the future, the law provides that every merchant must accept Bitcoin as a means of payment who is technically capable of doing so. Accordingly, taxes can also be paid in the cryptocurrency.

What are the advantages and benefits of this step?
The advantage of being the first. This “first mover advantage” can have the effect that El Salvador will gain popularity and attractiveness. This is because it will go down in history and many millions of Bitcoin supporters could boost tourism and bring more innovation to the country.
The central bank could hold Bitcoin as a reserve currency, storing value. This could make the country wealthier in the long run and also hedge existing assets.

Millions of El Salvador citizens work in nearby foreign countries and regularly send money to their families back home. Until now, this has been done through providers such as Western Union, which charge very high fees for this service. This outrage is now also history. Because with apps like “Strike” it is now possible to transfer money or bitcoin in real time via the blockchain network; free of charge and without needing a bank account. Which is a very important point, because about 70% of people living in El Salvador do not have a bank account; however, practically everyone has a smartphone.

This step can serve as an inspiration for other countries that want to increase and promote fairness, democracy and justice in their state and especially the monetary system. It can be expected that step by step more countries (in South America, Asia and Africa) will follow. And the “Bitcoin Standard” as the new reserve currency of the world could become reality.
While the mainstream media, when publishing the El Salvador News, once again could not spare a side blow regarding the high energy consumption due to mining, Bitcoin, supported by over 75% renewable electricity sources, produces a block every 10 minutes like a Swiss clockwork and improves the lives of millions of people.

Stay tuned!

Exchange Tokens- Why are they so popular?

In the still young asset class cryptocurrencies, there are thousands of new startups and companies that issue their own tokens/coins. By far the most profitable companies in the crypto space are the exchanges themselves, where these tokens/coins of the individual companies can be traded.

Since 2017, when the trading exchange Binance was the first to start doing so, many exchanges have issued their own token/coin, practically all of which have performed excellently across the board and achieved a significant increase in value.
Three theses for the popularity of exchange tokens:

1. The benefits of tokens are easy to understand and comprehend. Most often, “exchange tokens” offer owners discounts on trading fees. Every trader understands this immediately and sees the result of it directly when he makes a trade.

2. Exchanges specifically advertise their own token on their platform and promote it constantly. Hardly a purchase goes by without mentioning the advantage of owning and using their own exchange token. Statistically, a person will buy a product if it is presented to him more than 7 times, or at least this increases its probability enormously.

3. Practically every user and trader is aware that trading exchanges are very profitable. This gives him confidence in his investment and minimizes a total loss.
Everyone would like to be a part of an exchange.

The trading platform Binance, operational just since 2017, made a profit of over $800 million dollars in 2020. Crypto broker Coinbase recently announced results for its best quarter ever, generating $1.8 billion in revenue in the first quarter of 2021 alone. But as an exchange token owner, you don’t directly benefit when such huge profits are made, because these exchange tokens are not regulated and there is no right to a participation. The big profit therefore only benefits the shareholders and owners.

Now, an upcoming Liechtenstein company wants to change this by offering their isoon regulated token a tiered fee payback based on how much tokens a trader owns and holds. In addition, the company’s profit will be distributed to token holders in the form of a dividend. Thus, it will finally be possible to benefit directly from the profit of a trading exchange without being a shareholder.

Stay tuned!

 

When will the time of Security Token come?

Security tokens are crypto coins that represent a real asset, such as a share or a bond.
The only difference is that ownership is not settled and confirmed via paper, but via a blockchain, a “digital ledger”.
Security tokens offer the investor various financial rights such as profit dividends or equity. At the same time, Security Tokens always have a clear financial incentive and are regulated by a financial market supervisory authority.
What becomes possible thanks to Security Token? Example:
While owning real estate tends to be exclusive for the wealthy, fractional ownership with tokens can allow those with less financial resources to buy into an apartment.
If someone wants to get out, he can simply sell his share in the form of a token on a marketplace. The same model can be applied to other illiquid assets, such as art, classic cars and racehorses.
Currently, the volume and demand for security tokens is very low. There are two main reasons for this. First, there are only about two dozen such token projects and second, there is currently a lack of available exchanges on which to trade these securities.
However, both of these things could quickly change for the better, as several exchanges and also new interesting security token projects are in the starting blocks.
For example, the Swiss exchange SIX is launching such a Security Token compatible exchange called SIX Digital Exchange (SDX) this year (Q2-3 2021).
The Swiss exchange SIX expects its traditional trading platform to be overtaken by blockchain technology within a decade. Although stock and bond trading on SIX and most other exchanges is now fully electronic, the underlying processing steps are often based on old paper and postal protocols. “The existing system could be completely replaced by the digital exchange in about 10 years,” said Thomas Zeeb, head of securities and exchanges at SIX.
The SIX Digital Exchange (SDX) will initially run in parallel with the existing SIX platform, where a purchase or sale of securities is processed in three steps and often over several days. Two of these steps can disappear thanks to the use of blockchain technology, meaning a transaction can be completed in a fraction of a second.
Other exchanges, such as Stuttgart, Singapore and Nasdaq (New York), have also recognized the potential for greater efficiency and are launching digital versions of their official exchanges. This could eventually provide the necessary boost to bring volume, demand and confidence to the trading of regulated digital securities.
Stay tuned!

Wich cryptocurrency will be the winner?

In a market where there are over 6000 different cryptocurrencies, there are actually individuals who believe that all but one cryptocurrency will disappear over time. These individuals are called Bitcoin maximalists.
The belief of this group is that all other crypto assets are inferior to bitcoin and that bitcoin is the only winner in a winner-takes-all world. The end state is “hyperbitcoinization,” where the entire global system of money, value transfer, and trusted property will take place on the Bitcoin blockchain.
In this, Bitcoin is like the Gallic Village, the only stronghold that will remain in place in the financial chaos of money printing and government intervention.
Bitcoin offers a world where inflation is not driven by central banks, but only by cyclical demand and supply. Every citizen is their own bank and the entire financial industry disappears as everything is done decentrally with Bitcoin and the Bitcoin blockchain, with no third parties required at all.

This is a compelling future for many. It is a chance to start a revolution. It offers people the opportunity to control their own lives.

However, there are other extremely exciting crypto networks and blockchains outside of Bitcoin. Bitcoin is enormously secure and trustworthy, but this comes at the cost of speed and functionality.
However, almost all alternative blockchain solutions are also suboptimal for various reasons: speed, trust level, cost, flexibility, etc., and therefore there will likely be multiple winners (and even more losers).
Moreover, different blockchain and crypto protocols serve different needs. Not every decentralized network needs to be as trustworthy as Bitcoin, for example.

Therefore, the many different projects are not really in competition with each other, they rather complement each other. They all aim to solve different problems.
And together they form the digital asset ecosystem, which is many times larger than any one of these ecosystems taken on its own.
In the future, we probably won’t see or know which protocol is executing what. The new decentralized internet based on blockchain technology will simply work. How is this possible?
There will be an interoperability layer built on top of it that connects everything together. Any kind of network can be connected.

That’s interoperability – seamlessly connecting everything into something user-friendly. And this missing piece of the puzzle, the project that enables interoperability of networks already exists and is continuously gaining popularity.
Stay tuned!