Do Bitcoin and Crypto Have Purpose Beyond Investment? (w/ Maxine Ryan)


MAXINE RYAN: My name is Maxine.
And I’m the co-founder of Spark.
And we are here at World Crypto Con to talk
about Spark and what we’ve been doing in this
cryptocurrency industry.
Now, Spark is a ecosystem for money transfers.
And essentially, we use stablecoins to facilitate
bank list transactions across borders, mostly
in Asia and Africa.
I first heard about it in 2014.
And essentially, my housemate at that time,
who is now my business partner and co-founder,
was mining Bitcoin.
So it started this conversation about what
is Bitcoin and all this type of stuff.
And I thought that it was really interesting
in terms of the application for payments.
And then basically, that’s kind of where it
all started.
So essentially, it’s like any other kind of
startup story that you hear.
Two people come together.
They have an idea.
And we were thinking, were we going to start
this company in Australia?
And when we’re talking about payments, you
really have to kind of think about what type
of payments that you want to be servicing.
So for us, we really saw that the unique proposition
of cryptocurrency or Bitcoin at that time
was for people who don’t have bank accounts.
And essentially, coming from Hong Kong myself,
I knew that there was a market for remittances
there, especially for the Filipino and Indonesian
market, which is predominantly what we target
now.
People have to understand when it comes to
money transfers– and you’re dealing with
microtransactions that are pretty much in
the $200 frame USD– these people tend to
be paid in cash.
And they’re using something like Western Union.
Now, when they’re using Western Union– and
the reason why they’re using Western Union
is because they can pay cash and get it cashed
out on the other end.
And why aren’t they using bank accounts?
Well, first of all, they don’t have bank accounts.
And second of all, you know when you’re paying
a SWIFT payment, you have to pay $20 for a
transaction fee.
So it’s not very viable if you’re paying a
$200 transaction.
So when we saw this, we were going, OK.
Let’s compare the rates of Western Union and
what this kind of demographic has to pay.
And it’s still a lot of money.
It’s not $20, but it’s enough for it to make
a difference, I think, if it wasn’t that expensive.
So that made us think, OK, well, sending with
cryptocurrency is really fascinating.
But how do we make it tangible for our actual
customers?
We know that cash is extremely important to
them.
They don’t know how to use crypto.
A lot of the time they’re not going to have
a wallet for that either.
So we thought, OK, cash in and cash out.
That’s extremely important.
So when I say that we have an ecosystem now,
what that means is that we facilitate cash
going into cryptocurrency and then cash also
going out in the most traditional sense, where
the customer really does not have to understand
anything about the technology whatsoever.
So essentially, how it started was we needed
to find real users to understand how they
would be doing a transaction.
Now, in Hong Kong, there is a place called
Worldwide House.
And that’s the first place that we ever started
to do our first test run of using Bitcoin
to send money overseas.
Now, what people have to understand about
Worldwide House is that it’s the epicenter
of places for people to send money using cash.
And what we realized was that they only cared
about two things.
And that was the rate and also the cash out
locations that they have.
Now, what we then did was we reflected the
rate that they understood, which was the FX
rate instead of the Bitcoin rate.
And then from there, we just start taking
their orders for remittances.
And we were cashing it out on the other end.
Basically, what we wanted to focus on is creating
the on-ramp for customers.
And at that time, we actually found a company
to partner with that would essentially buy
and sell our cryptocurrency.
So essentially, we would send Bitcoin.
They would then be able to pay peso for that
and then also be able to cash it out as well.
So essentially, we decided that we really
need to have an end-to-end service for customers.
And basically, that’s how we started to build
the company.
We absolutely need cryptocurrency for the
type of business that we’re building because
what we’re doing is that we’re building a
completely alternative financial service that
is outside of banks.
What’s happening with the banking industry
at the moment is that they are de-risking
customers.
So they’re taking bank accounts away from
people.
And if you don’t have a bank account in this
day and age, then it’s very hard for you to
transact.
So what that means is that you have businesses
and you also have individuals who are in the
spectrum that they deal predominantly in cash.
And they don’t have bank accounts.
And cryptocurrency is an incredible solution
for them as long as it’s packaged as an actual
viable service rather than, hey, you need
to learn all this stuff about crypto to be
able to get involved.
So that’s kind of where Spark comes along.
So when we first started in 2014, we were
actually the world’s first cash-in, cash-out
blockchain remittance platform.
And essentially, it was a differentiator for
us, right?
Everybody is saying, OK, we’re tackling money
transfers.
But how do you make yourself unique in this
entire ecosystem?
So when it was in 2014, it was a stage where
you’re trying to find investment.
You’re trying to get new customers on board.
And it’s really interesting because you think
that people want to know about the technology
just because you’re personally very excited
about it.
So our name when we first started was Bitspark.
And it was very popular to put “bit” in front
of anything that was crypto related.
And I think taking away “bit” from the name
is really a evolution of the company to show
that we care more about the services.
And we’re going to be taking the Bitcoin and
the cryptocurrency to the back end and the
background, where it should belong.
Because when people are using mobile phones
or anything like this, they’re not actually
considering the technology that’s behind it.
That’s really how I think cryptocurrency and
us as a company positions ourselves.
It’s really obvious.
For us, we can be 2% to 15% better than mid-market
rates depending on what corridor it is.
So that is really attractive for a customer
who a lot of the time is getting 2% to 5%
below mid-market rates if they’re using a
third-party provider.
So I think that the ability for us to have
these huge percentages above the mid-market
rate already shows that the technology itself
works.
But the thing is, it’s just that we pair that
with our network.
We pair that with our inclusion points that
can cash this in and cash it out and make
it more tangible for our users.
The way that I know that this technology works
is in what we can offer.
So when our customer is sending money with
us, they can save 5% to 15% on their transfers
depending on what corridor that they’re using.
Now, if they’re using anything with other
competitors, they’re usually paying below
that and a lot more.
So I think that the reason why we’re able
to have all these cost savings for our customers
is because we use cryptocurrency.
It’s not affected at all.
So we’re not in the space of speculation.
We’re in the space of the technology.
So when the price goes up and down, it actually
doesn’t affect us because we use it as a means
of transfer only.
And there’s no point in the transaction that
funds are being held in crypto.
So we’re completely safe from the volatility.
I think cryptocurrency currently is seen more
as an investment.
A lot more people are putting money into Bitcoin
as a long-term investment, of course, like
the top 50 that we will hear about today.
Do I think that they are going to be the currency
that everybody is going to be using?
I think that it takes infrastructure to be
able to do that.
A lot of the time, people aren’t comfortable
with volatility.
Whenever we have a dollar bill in our pocket,
we know that that’s the value that it’s going
to maintain and hold.
Whereas if you’re holding Bitcoin, you never
really know what the price is.
So I think this is a really interesting concept
to think about.
And it’s something that our company is doing–
is that we’re looking more and more into stablecoins.
And in the next year and a half, we want to
create a 180-plus stablecoins to service all
the different markets.
Now, we made this transition at the end of
last year, where we were focusing mostly on
Bitcoin transaction.
But because of the scalability issues that
Bitcoin was experiencing, it became more difficult
for us as a business to be able to promise
those wonderful, unique value propositions
that we originally had, which made us think
more and more about alternatives.
So the alternative blockchain that we’re using
right now is BitShares.
And BitShares is an entire financial stack
that allows us to not only create stable coins,
but different types of stable coins.
And that’s really what we’re focusing on at
the moment.
So to kind of explain a customer journey through
our system or our ecosystem, let’s just say
an individual– they’ll download our app.
And then on our app, they have an entire list
of currencies of stablecoin.
So let’s just say it’s Sparkdex.HKD, PHP,
USD.
And the thing is, it’s like, how do they actually
get their money into the system itself?
Well, that’s when our inclusion points come
in.
So when we have inclusion points, these individuals
are actually walking up to sari-sari stores
or a convenience store.
They’re putting money into the shop there.
And that shop then gives them a balance of
Sparkdex HKD, let’s say.
Now they have Sparkdex HKD, which they can
then send over to the other end.
And from there, that person that’s the receiver–
they can then cash it out at a sari-sari store
or a bank account or whoever our third-party
providers that are there that they’re used
to.
So we’re not using Bitcoin anymore.
And the reason why we’re transferring from
Bitcoin to BitShares is because of Bitcoin’s
scalability issues.
Essentially, there was a bottleneck happening.
The more transactions we tried to put through
the system itself, the more was getting clogged
up, the more expensive it got.
So we knew that if we wanted to be a scalable
company servicing the customers that we already
had on board, we really had to look for an
alternative, which is where BitShares came
in.
Now, when we’re talking about stablecoins,
you’re really removing Bitcoin out of the
equation.
And you’re starting to use stablecoins where
you have a exchange, which we have ourselves,
where you can buy and sell these stablecoins
on its own on a floating market.
So this becomes extremely interesting.
Because not only do you have stablecoins,
which is a reflection of a pegged cryptocurrency–
or pegged to a fiat currency, I should say–
but you also have the actual fiat currency
being traded on the open market.
So I think that’s going to be a very interesting
proposition in the future to see where that
will bring us.
Stablecoins are essentially digital assets
which are pegged to a stable asset.
So that could be fiat currency.
It could be gold.
It could be any sort of commodity.
But the point is that it is a reflection one
on one to something that is stable.
So we create our own.
And there is actually two types.
The first types are trusted stablecoins.
So people are very familiar with this already–
something like Tether, right?
So Tether is a USD stablecoin.
And essentially, you have to trust that that
company has that amount of money in the bank.
Now, there’s two counterparty risks there.
There is the company promising you that they
have the money that’s backing this stablecoin
that’s being exchanged.
But also you have banks, right?
And banks are not very crypto friendly.
So they may be shutting that bank account
down.
Now, you have to rely on that company itself
to audit themselves, which a lot of them don’t.
So what I’m saying is that trusted stablecoins
are definitely important.
But what I find more interesting is trustless
stablecoins, which is what Spark is focusing
on.
Now, trustless stablecoins completely removes
the counterparty risk.
And the way that it does that is through a
smart contract.
This smart contract is collateralized.
So essentially, what happens is that if I
create a Sparkdex HKD, I have to back that
with some collateral– that might be BitShares.
It might be Bitcoin, anything– so that I
know that it’s real.
But it means that everybody else in that network
doesn’t have to be involved with counterparty
risk.
You can literally see in a smart contract
what gets executed automatically.
And I think that just comes with something
in a new space.
And I’m very happy that the speculation is
kind of dying down.
We’re in a bear market.
And I think in bear markets, they’re definitely
necessary to wash away all the speculation
and hype that I really don’t think should
have a place in this industry.
Our customers– they’re not crypto people.
They never will be crypto people.
So the thing is, they don’t really care about
the price.
They don’t care about all the stuff that we
hear about these overnight millionaires, all
this type of stuff.
They care about something that can improve
their lives.
And I think that’s kind of where if we don’t
show what crypto can do now in a real manner,
then it’s just going to be a bit of a joke,
right?
So I think that it’s important to be focusing
on companies that are actually doing something
real in this space and not just some vaporware,
which we see a lot of.
And I hope that these projects do come through,
definitely because I can see a lot of value
added.
But at the same time, infrastructure takes
a lot of time.
So I predict that basically in the next 5
to 10 years– well, probably five years–
you’re going to see a lot more infrastructure
being built for centralized companies to be
utilizing this technology itself.
I can’t speak on the behalf of other companies.
However, I don’t foresee a future where we
see crypto or blockchain in its original sense
being integrated in financial systems that
we see today.
I do see that it will be completely divorced.
And maybe that’s OK.
Now, that’s not to say that blockchain can’t
be used.
But the thing is that there are certain aspects
that if you take away from a blockchain it
just becomes a database.
And what’s the point of just improving your
database?
You can already do that with Amazon, all this
type of stuff.
I think it’s interesting.
There’s a lot of the times when I’ve been
hearing about all these different ideas, I
really do wonder if cryptocurrency is even
necessary.
But I think one of the first use cases of
crypto is definitely in payments.
Now, Bitcoin was one of the first– well,
I always say it’s the best proof of concept
that we’ve ever seen.
And it’s the best proof of concept for payments.
So I think it’s completely logical to be able
to take that idea, build it over a couple
of times, and actually be using it for payments
without reliance on banks.
Now, maybe five years from now, we’re going
to see it in auditing, all this type of stuff,
because there is security and transparency
that’s particularly interesting.
And I think that depending on what the company
is, they’ll be capitalizing on these kind
of unique characteristics that the blockchain
does provide.
But I think really where we’re going to be
seeing it is in payments.
And we should be seeing it in payments.
We can never predict what’s going to happen
in the future.
I think that people who are very idealistic
will be like, well, everybody will be using
Bitcoin.
You can go to Starbucks, and you can pay with
Bitcoin and all this type of stuff.
But there is a learning curve to Bitcoin at
the moment.
We’re waiting for those difficulties to diminish.
We’ve just had the 10-year birthday of Bitcoin,
right?
And that’s really amazing.
But how far have we actually seen it be adopted
in everyday life outside of long-term investment?
It’s practically zero.
And if you actually look at the price of Bitcoin
right now, it’s completely flatlined.
There is no new money coming in, which is
why I’m saying that this is literally the
years of infrastructure.
Everything that is new, everything that’s
technology– you need infrastructure so that
people can be on-boarded.
And that’s really what needs to be happening
right now.
We only focus on emerging markets.
People are saying, well, do you have a stablecoin
for USD?
Why would I create that if there is already
hundreds available?
I’m more interested in emerging markets like
Philippines, Indonesia, Ghana, Nigeria, Pakistan.
All these countries fall under three things,
right?
First thing is that predominantly, they don’t
have bank accounts.
That means that they deal with cash.
They’re also looking for options to be able
to send money and have more financial freedom.
So I think that it’s really in emerging markets
where it’s most interesting.
And whenever we’re talking about cryptocurrency,
we’re always talking about it in terms of
adoption.
So why would we create USD, which has already
been widely adopted?
You come to a conference like this, everybody’s
talking about it.
But I really see emerging markets being kind
of like leapfrog nations that are going to
be the next onboarding or should be the ones
being onboarded if we’re going to be talking
about adoption in itself.
I want to come to conferences like this because
I think that companies like mine give hope
to the industry.
And I think we give hope to the industry because
we’ve got real users who are actively using
this technology.
Right now there’s a lot of noise in the industry.
And it is an exciting industry to be in.
But I think that it’s good to also share what’s
happening in Asia.
A lot of the time, what we find in crypto
is not only are we small communities, but
we’re also very closed-off communities from
what’s happening elsewhere.
So I’m here basically to tell people what’s
happening in Asia, what we’re doing in Asia,
especially about the payment space, which
I think is particularly interesting.
Because we always hear the spiel about unbanking
the banks.
And we’re doing that every single day.
And we have been for the last four years.
So I think it’s important to talk about these
things that we’re doing and really showcasing
what this technology can do.
Yeah.
It’s really different.
I think that in Hong Kong, people are very
fascinated by it.
But they’re a lot more reserved in how it
can be used.
I find that in the US, there is a bit more
entrepreneurism.
There’s a lot more entrepreneurs in the US
that are always trying to find a way to apply
this in one way or another, whereas in Asia,
it’s actually a lot more payment and fintech
focused, which I thought was really, really
an interesting difference between the US and
Asia.

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