This article is the second in a series of two. To read the first article, click here.
Throughout the crypto boom, exchanges have been inundated from every end–by some accounts, certain exchanges have received hundreds of thousands of new applicants each day; crypto firms hoping to list their tokens have also rushed at exchanges en masse.
The result? Customers and clients wait weeks or months for a response to their applications and inquiries; requests for customer service and help can also take days or weeks to receive a response.
The Gibraltar Blockchain Exchange is holding an ICO that will commence on February 7 for Rock Tokens, the cryptocurrency that will power the GBX ecosystem. We spoke to GBX CEO and Founder Nick Cowan about how the GBX ecosystem will function, and how the GBX plans to set itself apart in the crypto exchange space.
The Gibraltar blockchain exchange ICO is scheduled to start this February on the 7th and end a week later on the 14th. You have a goal of $6 million, and an additional $21 million was already raised during the ICO presale that took place in December. How will the $27 million that will be collectively raised through the ICO be used?
In our white paper we list out how we’ll use the funding, and we really try and prioritize a number of things. Obviously, the main thing is the tech. Technology is vital for us, and then also, looking forward to what our roadmap has outlined on our whitepaper: to move from utility tokens at the Gibraltar Blockchain Exchange level to also developing our technology for the Gibraltar Stock Exchange as well, and that’s really vital for tokenized securities.
The second thing, which I think is really important, is liquidity. We want to make sure the liquidity is there for the Rock Token.
I think thirdly, and most important, is making sure that our security, and our customer service, and our people in customer support, and our AML and KYC requirements–the challenge that I think exchanges have at the moment–and we’re seeing this daily–is when you look at something like Binance talking about having 200,000 applicants every day coming into their exchange.
You can imagine the demands that are on exchanges in terms of trying to process those new onboarding clients, but also to serve them once they’re in, because, you know, customers need to have support.
We’ve mapped out how we’ve intended to spend [the money] in the white paper, but primarily, those are the requirements which will basically take us through from now to the end of 2018 and beyond. We’ve reserved about $10 million going into 2019 and 2020, so we are extremely careful about how we spend our money anyway. The priority for us is to make sure we have a highly developed ecosystem that’s secure, but also 24/7 customer support. We want to make sure our user experience is absolutely world class.
That’s a very serious issue across the industry [customer service on crypto exchanges]. So, you’ll have 24/7 customer support–will it be a hotline, or a chat, or how is that going to work?
Basically, we’ll provide both. We want to be able to generally use chat lines, but we’ll have–you see most exchanges are offering 24/5 customer support and 24/7 trading, and we wanna be able to offer 24/7 trading and also 24/7 customer support.
This is because often what happens is that a client will sell a position; sometimes it takes time for the cash to transfer to their wallet, so of course you’ve got this window where the client is concerned and they wanna know their money is coming and it’s safe. They wanna be able to ring somebody and say, ”is everything okay?”–let alone just technical support. That’s absolutely vital.
— Nick Cowan (@NickCowanGSX) January 29, 2018
We’ll have a 24/7 team that will be English-speaking, and they’ll be available literally around the clock. We feel that’ll be vital to differentiate us from the other exchanges.
Can you tell us about how the blockchain platform on the exchange itself will function?
There are two parts to our planning process. The first part is the blockchain exchange itself–GBX’s utility tokens. We are developing a technology currently with a licensed and regulated exchange in Japan called ‘Quoine.’ Quoine is one of the world leaders and they have fantastic technology. They’ve been going now for a number of years, and they’re also licensed and regulated. That’s really important for us, and they share the same core values as us.
In terms of the tech, It will be a matching agent that will be extremely familiar to any wallet holder on any exchange. It will allow you to trade your traditional pairs (for example, bitcoin and the dollar) and also trade any token that comes through our platform–we will have a market trading every single token.
So, for example, you could trade Ripple for IOTA?
Exactly. What we will do is kick off with probably five or six main pairs, because if you think about our timing, sponsors are going to go through the approval process in the next one to two months. The technology will be rolled out probably in March, and by the time the sponsors have been approved and gone through their process with ICO issuers, it’ll probably be April.
So, we’ll be open. Rather than sit there with nothing to trade (which we find really boring) we’ll be able to provide a whole range of services to our clients–that includes trading the main pairs. The main pairs will kick off in advance of tokens coming through the system, which we expect to come through in April.
What kind of fees will traders on the GBX platform be charged for trading?
We try to keep it really simple because we did an analysis of 25 exchanges, and there seem to be so many formulas out there, in terms of trading. So we’ve tried to keep it pretty simple. We will have a flat fee of 15 basis points for trading.
You can pay for those fees with any currency–fiat, crypto, anything. But if you pay in Rock Token or Qash, which is Quoine’s token (a sign of the depth of our strategic relationship) you’ll get a 33% discount. So, you’ll get it discounted down to 10 basis points. Hopefully, there’s really an incentive there to own Rock Token, and to pay in Rock Token–you’ll get a 33% discount on fees.
The other fees that we charge are listing fees, and again, they are in our whitepaper. That’s part of the transparency we have with issuers who come through our exchange. There’s a slide in the scale, 1% down to 10 basis points depending on the size of your deal, which goes up from $10 million to $100 million, so they are actually conversely correlated to each other.
A $10 million deal will pay $100,000 listing fee, and if you get a $100 million it actually works out as $550,000, which is a 55 basis point fee. It’s actually an aggregate issue as the deal size climbs–so it’s 1% of the first $10 million, and 90 basis points of the 2nd $10 million, et cetera. They are payable in Rock Tokens.
The third kind of fees is the annual sponsor fee, which is also payable in Rock Token.
ICOs can be conducted through the GBX. Other than regulation, what incentive do cryptocurrency firms have to use the GBX platform to host their ICOs?
First of all, you know that you’re coming to a trusted network, and the sponsor you appoint is qualified to take you through the process. The second thing is, you’re going to get access to a cleared pool of investors. The investors have been approved by our exchange to have their wallets there, and that’s also really important. The third thing is, you’ve got access to that broader ecosystem.
You’re essentially joining a stock exchange ecosystem, and we think that has enormous benefits as we move forward in terms of providing solutions to issuers. I think there’s really a number of key factors there, that if you’re an issuer and you’re wondering, ‘okay, I wanna do a token sale, how do I do it? Where do I go? Who can I trust? How do I know that the investors are gonna be cleared and eligible?’
‘I know what I can do– I can go to GBX, because they’ve got a token sale platform, and they’re going to admit my token to trading’, whereas currently, you do your ICO, and then often what you’ve gotta do is try to find an exchange that will actually take your tokens. That can be hugely expensive, and it can be time-consuming.
I met someone this week in London on Monday evening, and they had had to choose an exchange that they weren’t happy with because all of the other exchanges said,”Unfortunately we need 3 months to actually get you into our exchange.”
The exchanges are so busy because obviously, this market is growing exponentially. What we’re saying to our issuers is: you don’t have to worry about any of that; you’re guaranteed trading and admission on our cryptocurrency exchange. It removes this huge headache for the issuers when they’ve got that certainty.