The comprehensive exchange on the block
Having been involved in the cryptocurrency sector for many years, ZBX.COM CEO David Pulis is no stranger to cryptocurrencies. In an exclusive interview, he sits down with Christopher Attard to give insight into the inner workings of ZBX and the broader blockchain universe.
In our last discussion, we spoke about legitimacy in the blockchain space. Given that ZBX has opted for the full Maltese regulatory route, how do you see the legal space panning out on a European scale in 2019?
Malta has enacted three bills that comprehensively regulated the space which include the Malta Digital Innovation Authority (MDIA) bill that will support the development of Malta as a centre of excellence for innovative technology arrangements. The Innovative Technology Arrangements and Service (ITAS) bill, which provides for the regulatory framework of designated innovative technology arrangements and services and also caters for the exercise by the MDIA of regulatory functions and the Virtual Financial Assets (VFA) bill regulates the offering of virtual financial assets (ICOs) as well as service providers in the VFA space, such as ZBX exchange. These bills pertain to the Maltese jurisdiction and there has not been an effort, as yet, to regulate the space on a European level.
ZBX CEO David Pulis, ZBX CSO, Jimmy Zhao, Minister Silvio Schembri, ZB CEO, Dawei Li
Malta has been a trailblazer in the space and we look forward to be regulated in other jurisdictions too. Only time will tell which other European jurisdictions will step up to the plate, and we will be eagerly eyeing this possibility.
ZBX is primarily a cryptocurrency exchange. Is there any interplay between traditional fiat-based exchanges and ZBX?
ZBX will start out as a Crypto to Crypto trading platform, going live at the end of October. It is expected that by the middle of 2019 we will apply to list security tokens as well.
I have worked in the traditional brokerage business for about 6 years and within that period I have seen some areas of operations get so burdened by regulation that it forced many players out of the market. This is where blockchain can come to the rescue of traditional finance. For example, the technology can be used to transfer stock more efficiently and cheaply through a trustless, immutable and decentralised database. In reality, blockchain and traditional finance are not at odds with one another. On the contrary, blockchain will add efficiency and reduce “middlemen” human elements in a highly regulated financial environment.
ZBX.COM is listed as one of the biggest exchanges on coinmarketcap, with over $21 billion in transaction volume over the last 30 days. Where do you see this figure going in 2019 and beyond?
Acquiring a Crypto exchange licence is doable. However, running a crypto exchange as intended is very difficult. In fact, there are many sides of the business that are not immediately visible to the end user. Without a doubt, the most important aspect is the safety and security of assets. To this end, ZBX, ZB and EXX run on ZillionBits technology, headed by a leading figure in the space, Jimmy Zhao.
We’re very proud to say that ZB.COM, formerly known as CHBTC, has not been hacked since starting operations over 5 years ago. There are of course many other parts of the equation involved in running a crypto exchange that never get mentioned and the people who work hard protecting your assets are the ones sitting in the dark rooms, far away from the spotlight.
To wrap up the answer to your question, we should expect to see volumes growing even as new exchanges set up shop. The mergers and acquisitions space in this industry will also start to take shape where companies try to consolidate in what is considered the world’s most competitive industry.
Some analysts have compared cryptocurrency to the stock market back when it first started. How does price volatility relate to your exchange’s performance?
Volatility is good for the ecosystem. It has brought Bitcoin and consecutively other cryptocurrencies to the spotlight due their meteoric rise in the past few years. We are expecting the volatility to settle down close to stock market levels in about one to two years. This will occur when some degree of maturity starts settling in.
Despite the fact that digital asset exchanges are cropping up everywhere, transaction volumes in the cryptomarket have undergone a slight down-tick this year. How does your product deal with the problem of insufficient liquidity for big market movers?
Although the ZB family’s traded volume is one of the largest, we are striving to cater for institutional traders – also known as market whales – who come in with very large orders that can sweep the entire order book. By sharing liquidity those issues are alleviated and this is only possible when internationally established players work together for the interests of the end users. This is exactly what ZBX, ZB and EXX have in store, and it will catapult the group to new heights in the exchange business.
One of the major contributing factors for platform success stories is the focus on accessibility and user experience. How does ZBX deliver on this front?
Unfortunately, it’s not the first-time crypto exchanges have been hacked. Decentralised exchanges claim to have solved this problem as funds are never stored in one location. Does ZBX have any intention to go down this route in the future?
There is a lot of talk about centralised VS decentralised exchanges. Actually, decentralised exchanges also got hacked, so the expectation did not quite live up to reality. Presently, the biggest exchanges that offer the best liquidity are all centralised. Users want to trade on exchanges that offer good liquidity, so you can say that liquidity attracts more liquidity. The fact is that present technology doesn’t allow for decentralised exchanges to be as quick as a centralised order books, which is an important factor to reach a critical mass. ZBX is concentrating its efforts to get up and running by the end of this month, however, there were already internal talks about laying the groundwork for decentralisation. Come mid-2019, I’m certain more information will be available on the matter.
Warren Buffet recently called Bitcoin rat poison squared. What are your thoughts on that?
Bitcoin is the leading concurrency by traded volume, however, the bigger picture is blockchain technology. There are many great cases of cryptocurrencies that fulfil useful task, but unfortunately, there are also many scams which take advantage of the current hype and lack of clarity, especially for retail investors.
In one to two years’ time, it’s expected that around 90% of existing cryptocurrencies will no longer be around. Anyone deciding to invest in crypto should do their due diligence. The new Maltese regulatory framework is expected to help protect investors and filter out illicit players.
Are there any sneak-peaks of upcoming developments you could share with us?
The exchange will have a lot of cool features, e.g. social trading and copy trading. Another feature is to move the settlement data on the blockchain so it becomes transparent. This is essential to attract institutional investors who require transparency in their trading. Beside the exchange itself, we are also looking at the ecosystem around ICOs, for example, helping good project to raise money using a standalone ICO platform and providing market making strategies which are normally very prohibitive for projects entering the trading stage.
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