New Internet Money : Interview with Bobby Ong from CoinGecko (All Interviews)

Bobby Ong(Co-Founder at CoinGecko)

Interview Date :25th February 2020    

Bobby Ong from CoinGecko (All Interviews)

CoinGecko’s Co-founder

I am Bobby Ong, and I am the co-founder of CoinGecko. CoinGecko is a cryptocurrency data aggregator. We track over 6500 tokens from over 400 foreign exchanges. We are one of the largest leading crypto data aggregators in the world. Besides tracking prices, market cap, and trading volume, we also track the social media and development stats for all coins. We also track cryptocurrency derivatives in the crypto space. We have already 250 contracts tracked from 20 derivative exchanges. 

Every quarter we publish a report, and we share insight into the crypto market. For the latest report, it’s around 70 ~ 80 pages. We also have a crypto API that we provide for free and which is used by top crypto companies like Metamask, Etherscan, Mycrypto, MyEtherWallet and many more. We also do try to get real volumes for crypto exchanges. We have a lot of exchanges that we look at various additional data points besides volume data such as order book data, Similarweb traffic estimates etc., and this is what we call the Trust Score.

So we have a research team and liaise. Due to our search about things in the crypto industry, so we collect that data, and create presentations based on what we have found about market consumption. Some of the data information that we are already tracking from various sources like price, market cap data, so it is getting data information and put them into charts and visualize it so that it is easier for people to understand them. For the last quarter report, we did a section in DeFi and crypto derivatives. We looked at some of the projects in space, to crypto derivatives, some of the project, we looked at, so it is a matter of what the team thinks will be relevant.

New Internet Money of 2013

I graduated with a degree in economics from University College London. In my final year of university, I was teaching myself how to code, so I was naturally spending a lot of time on programming websites. Soon after, I stumbled upon a group of people who were talking about crypto. They were calling it the “new Internet Money”. I got really curious because I had spent 3 years of my life in the UK learning about money from one of the best universities in the world, however my lecturers never mention Bitcoin at all. So this got me thinking “Why are these tech geeks talking about a new form of money but I did not learn about it in university?”

Bobby Ong

Either way, I started reading about Bitcoin, and the more I read about it, I realized that there is actually quite a lot of potential, and the logic sounds pretty sound. I decided to get my first Bitcoin back in 2013. I remember getting it from a peer to peer marketplace. When I saw the Bitcoin going out from the exchange wallet to a wallet that I could control myself, I really saw the potential of Bitcoin in a sense that, for the first time one can be your own bank, because you actually control your own keys, and no one can freeze or take money from you if you don’t allow them to. This to me was an advantage compared to the traditional financial system, and I also like the fact that there is a finite number of 21 million coins. These backdrop of quantitative easing, massive easing back in those days and those years, that to me does not sound sustainable, so the more I look and read about it, the more I was convinced that this has very strong potential for the future.

Market Corrections and Huge Drop in Price was expected

I don’t think Bitcoin is a good use for money laundering. If you look at the whole picture, I don’t think that there was a lot money laundering involved in 2017. If you want to do money laundering in crypto, there is a lot of on-chain analytics to that as well. The police are actually actively using it, so does the FBI, and they have caught a lot of people guilty of money laundering.  However I wouldn’t want to link this to the huge drop in 2017. At that time, Bitcoin was trading at ~1000 USD, and this went up to ~20,000 USD at the end of that year. Obviously this was not a sustainable run, the price raised way to fast and quickly, and the drop that happened in 2018, and continued dropping in 2019 was an expected correction in the market. When prices went up to fast, it was not sustainable. 

I don’t think the Bitcoin market has high liquidity, and it might also have been manipulated as well. In Japan, and also in Malaysia, we have regulations that monitor the market. So, if you are a whale, you probably do not want to manipulate the market as you risk getting caught or charged later on by the regulation of certain country. So manipulation may only happen in those countries that do not have regulation at this point of time yet. When I got in the market in 2013, the price hit a peak in 2014 at 1000 dollar or so, and it got corrected all the way back to 300 USD in 2015. So there was a huge drop in price. The same pattern happened, and this huge drop in price in 2018 was sort of expected. I was not surprised at all.

Malaysia is very proactive regarding Crypto

Malaysia has taken a quite a proactive role in drafting crypto regulation. The government has given out 3 licenses to 3 exchanges so far. One of them called Luno Malaysia Sdn Bhd has started operating, while the 2 other exchanges, SINEGY Technologies (M) Sdn Bhd and Tokenize Technology (M) Sdn Bhd, are still pending final approval. I think that in terms of associations, there are multiple association, but they are not the kind of self-regulatory bodies like it is in Japan.

Nevertheless, I think the Malaysian government is very progressive, they look at cryptocurrency as another capital market. They have now started regulating not only crypto, but will also be regulating ICO fundraising as well. I don’t know if it’s going to take another 1 year or 2, but when the regulations are put in place, then exchanges will also be able to have ICOs on their platforms. The Securities Commission in Malaysia are looking at it as another funding for start-up companies.

Not be able attract Japanese Users

Every country has its own nuance, and its own market. I don’t think you can try to compare American users to Japanese users because of the difference in the market and of the market scale. In Japan, people can only trade with a few crypto coins that are approved by the JVCEA. They of course can go to Binance and buy other platforms to buy coins from there, but that is not very popular in Japan as of yet. For American users are excluded from a lot of crypto places and platforms due to regulation, but they always find some sort of a loophole. 

Then, when you consider the European users, they like to trade everywhere and try every kind of tokens, and it does not seem to matter whether it is an Asian platform or a western platform. So there are many factors of nationality traits to consider as well. One problem that is hindering many people is the language barrier; a lot of these platforms and apps are in English. ln Japan, you will not be able attract Japanese users right from the start. Unless the Japanese people have a strong English knowledge or have a preference for using English, I imagine it will be hard.

The movement towards a cashless society is inevitable

The movement towards a cashless society is inevitable, and it’s quite akin to us carrying cash around, and the methods of going around with money is versatile. If you go to countries like China and Sweden, you will notice that people hardly use cash these days. The central banks has a couple of methods of issuing central bank digital currencies. Whichever model a country chooses will impact a role of a commercial bank in the ecosystem of that country, because commercial banks are used to grow the money supply through the loans that they handle based on the ratio that they have in the central banks. So I think it is inevitable the movement towards cashless society, and it is attractive to governments because it is cheape, as it is not cheap to print money and to maintain the money. 

Money gets destroyed and coins disappear all the time, and so governments would want e-money. Cash is also used a lot for money laundering, and all sorts of illegal purposes like drug trafficking etc., whereas with digital money its really hard to do money laundering. Everything has a paper trail and you can audit and track back to where the money trail comes from. I think in general digital money is definitely coming, but I also think that e-money is still a concept central banks are still uncertain about. It’s is very interesting to see what these countries have put out. We will see a couple more models being launched by these countries in the near future, and see how they will work out.

Check if people’s claim are True or not

I think back in 2014, things were quite different. A lot of websites were not well designed. Information that you see today can be acquire by just going to a single website to get price market caps etc. All this information that is easily available now was not readily available then. When you would go to the website it wouldn’t create any trust, because it was so badly designed. So we thought that we had a better chance to bring something better to the industry. That was one thing we felt like we could do; data aggregation better than many other platforms.

The second reason for starting CoinGecko was that when we started CoinGecko, nobody was tracking social media and developer stats. People were only tracking price, volume and market cap to some certain extent. Thus, we wanted to know what coins stand a good chance of surviving in the long term. Coins that survive in the long term generally have a good community and a good development team. We spent a lot of time in forums and realized that people were claiming statements like “ you should look at this because this coin has the best development” or “you should look at this because this coin has the best community”, and so we thought that there has to a better way to measure this in finding out what is right and not.

If someone claims that their coin has the biggest community, they can easily back it up by saying ”look we have xx number of people liking us on Facebook, on twitter” or “ we have so many posts and comments, communities and activities on Reddit”. If a coin is dead, there will be none of any of these activities, and you will know that their claims are fake. The same applies for developers; developers can say that they have the best coin, and they can actually back this up due to everything is done in an open source manner. However, you can verify their statements by looking at number of communities that they have and are produced on Github, you can see number of developers contributing to the repository, and you can see the number of people liking it and so on. So we did that, and we thought that all these things can be put together, and sure enough, in our research we saw that some coins did actually have the most development activity and community in social media while others were totally quiet and probably dead.

We now have a Money Market Creator!

To me, it’s very interesting that we now have a money market creator in the sense that you can earn through interest on your Ether, DAI or USDC etc. Before these, you basically had the “buy and hold” strategy. However, now you can earn interest of your investment, the rate depends on the coin and platform. USDC, especially for stable coins, the interest rates offered by many of these smart contract platforms is significantly higher than what is being offered by the banks. So that in itself is a good use-case.

There are a lot of things happening, for example there are a lot of decentralized insurance products that have been built and released. There are risks involved, such as smart contract hacks etc, so I am very glad that the DeFi insurance space is growing. If you look closely, there are native DeFi products that cannot be built before any of this had happened.　There is a product, PoolTogether which allows investment lottery with no loss. What happens is that, everybody buys a share. The shares will be put together and send to compound in an interest on the funds collected for one week. Of all the purchases who purchased the shares, one person will be chosen as one winner and get the profit interest, while everybody else is gets their capital back, and so no loss. This is something which cannot be done in a traditional way. It’s a very crypto native project, and I am looking forward to seeing more of these projects being presented to the users in the DeFi space.

Earning with Interest in Crypto

Smart contracts can be pretty complex, so if a hacker finds an exploit they can use it to drain money from a smart contract. This year in February, we saw bZx getting exploited with two hacks happening within a couple of days, and they lost over a million dollar of Ether with the smart contracts. So if you put money in a DeFi smart contract, and the DeFi contract is drained completely, you essentially lose your money. This is a pretty risky proposition if you put money in a contract thinking that you can get an interest rate of 8% or 9% on your USDC. But if that contract gets hacked, not only do you lose your interest but you also lose your capital.

I think there are insurance providers that have come out these days , and two of those are Nexus Mutual and OPYN. These two companies have come out with an insurance policy where you can buy coins with ex. 2.5 % interest rate, and you can buy a cover in case if something would happen. If something would happen to the compound contract, the insurance will pay out the amount of how much you purchased it for. This means that you get your capital back. With the bZx hack, some people had purchased insurance on Nexus Mutual, thus Nexus Mutual paid out because bZx had been hacked.

2019 The Year of Bitcoin

In 2019, we saw the market had increased by 40% and it was a year that was mainly lead by Bitcoin. Bitcoin had nearly a 95% increase, and everyone else did not do too well-meaning that dominance for Bitcoin increased. If we look at exchange tokens, they did pretty well as well. If we look at some of the key events for 2020, Ethereum launching ETH 2.0 is a big one, we have seen that China is now launching their central bank digital currency, etc. Looking at all this, we can for sure say that money is constantly being redefined, and it’s very fluid; it’s defined not only by crypto but by central banks, banks, tech companies, etc. Everyone wants to have a say on how the money will look like in the future, and everyone has got their own perspective on it as well as their own levels of decentralization. So, we don’t know how it will turn out in the end, but it is really interesting to see that all these experiments are being tried out in all levels of society.

I think that the number of tokens that will be around in the crypto space will increase over time. If you think about a future where anything and everything that can be tokenized will be tokenized, it’s not far fetched from reality to say that we are just at the starting off at a multi-decade revolution in how we reorganize finance. I think that what we are seeing now, are a lot of experiments being tried out, and a lot of projects that are getting started. Some of these get funded and sometimes funded with too much money maybe, but obviously a lot of these projects will die off just like any other startups. The only difference from the conventional market is that these tokens are traded in a public manner, and some people will earn a lot of money and some people will lose a lot of money. Nevertheless, as we grow as an industry, I think that more tokens will be created and more things will come out from the market.

Younger generation prefers Bitcoin over Stocks

The banks did not understand it in the beginning. They don’t want to be involved because Bitcoin started out with some pretty bad press in the sense that the early users of Bitcoin were almost all drug traffickers and money launderers. Every article that you find in the early days was a silk road for criminals to buy drugs on the dark web. So bankers read the headlines and they had and still have the perception that crypto is bad, so they just cut it off, and that stigma stayed on for a few years. I think lately their perception has changed as bankers have come to understand the potential of blockchain technology and Bitcoin’s potential. I think that it is just a matter of time in the future when the banks will collaborate with Bitcoin and blockchain technology and be its custody provider.

If you already are storing your fiat currency with a bank, why not also store your cryptocurrencies with a bank? Banks are said to be the most trusted entity that can store everything safely, and I think banks just started looking for a new form of revenue models, for example how all the crypto exchanges are making a lot of revenue by fees that they earn from all the trade. Looking at young people in general, they don’t trade with stocks that much, and for many young people, trading Bitcoin is so much easier compared to setting up and trading stock. So, banks will have no choice in the future but to buy exchange or to get into the crypto space. We already are starting to see the early movements of this movement as well. If you look at Germany, the central banks have already given a green light to provide custody solutions for cryptocurrency and start selling Bitcoin directly to the customers. So, I think it is a matter of time when it becomes a more globalized function at banks. At the end of the day, if banks are offering their users gold for sale, I don’t see why they cannot sell Bitcoin as well. Also, if the consumers want to trade Bitcoin, it would only make sense for the banks to accept it because it is just another form of revenue for them.

If hacked, there is no one to go crying to

Like with any new technology, of course, there are risks involved with Bitcoin. If you don’t implement your wallets safely, you will get hacked and that’s the biggest risk of it. So you will need to find the right windows to ensure security because of the difference between Bitcoin transactions to traditional ones are that transactions are non reversible. If someone hacks your wallet and takes your coins from you, there is no one to go crying to or no one to go complains to. You will lose your coins and capital completely, and that’s obviously the biggest risk that also the banks are afraid of.

They need to know what they are dealing with, and have the right providers to secure the safety of their system. All transactions are recorded on the blockchain. And you may not get caught now, but the transactions conducted will be a permanent record of your transaction and you’ll never know that sometime in the future, maybe in 5 or 10 years, technology will catch up and you will be caught. It’s not a good case for money laundering. Neither is it a good idea to buy in drugs in the dark web – I would be worried for those guys.

Transparency is very important and many exchanges have created their own foundations in order to be the most transparent; Ethereum has the Ethereum foundation for example and many more are out there. How decisions shall be internally, and how transparent things shall be conducted, everything should be made transparent for the benefit of the community. You cannot just create something without discussing it with the community, because that wouldn’t build trust and the ecosystem will die out.

Clogged systems decrease Scalability

I think that side chains for sure are a great invention. Because if your system, let’ say Ethereum, is fully clogged, it will only be able to process a certain number of TPS at a time. So, they need to increase the number of TPS that can be processed of Ethereum otherwise the network cannot scale it. Ethereum is stating claiming that they want to be world computer to process everyone’s transactions at a very fast rate, so we will need to scale that in one way or another. You need to use side chains to scale that, and it is one of the many ways of scaling Ethereum system to handle a lot of transactions per second at a very speedy rate.

If you look at coins like Ethereum or Bitcoin, Bitcoin can only process around 7 transactions per second, and Ethereum around 15 transactions. If one decentralized application becomes really popular, users will increase and your whole network gets congested. For instance, if you to make one transaction on the Ethereum blockchain, you will have to wait 5 min or more and is you are waiting for confirmations on Bitcoin, you might have to wait up to 1 hour or more. Basically, you would want to have as fast of a clearance possible one a chain for payment or transaction. Scalability aims to increase the number of transactions that a blockchain can handle per second, and there are several methods to do that.

Everyday is a day full of drama

It’s very hard to predict what will happen in the next coming years in the crypto industry, because it moves really quickly, and I think from what we have found in is that; every 6 month the narrative shifts completely in crypto, and something new comes out that creates some kind of change. 1.5 years ago it was NFT that was in the focus, now it has taken off and will probably stay low for the next couple of years. Maybe in a few years of time, it will get hot again. At another incident, everybody was talking about the lightning network on Bitcoin.

As it is growing, not a lot of people are talking about it at the moment. That may change, making lightning network popular again, and once again become the coolest thing in town. So I would say that things do shift and change very rapidly. It’s really hard to say what’s going to happen. Things in crypto change every 6 months, and we at CoinGecko have to just go along with it and aggregate the coming data. However, the two things that we are paying extra attention to are DeFi and derivatives. we spend a lot of time in 2019 on these topics.

We are looking into the DeFi space, and we are looking actively to see how we can implant it in our system. We believe it will grow quite rapidly as it did in 2019, and I think will continue in 2020 as well. I think that things will get more complex so it’s better to look at them before it gets too complex. It’s sort of like Bitcoin, back in those days you just had to learn about Bitcoin, but now you have to learn about Bitcoin, Ethereum, and many other coins. It’s crazy trying to catch up on all the things that are happening.

Everyday is a day full of drama in the crypto ecosystem. There always are too many different things going on, everyone is so convinced that their insight, thought and ideas are the best, so they start fighting among each other. Nothing really shocks me anymore, and it’s kind of become normal to me now. On the contrary, if there is no fighting and no drama, it gets very boring.

A cute Gecko lizard as our Logo

Gecko is a small and adorable lizard, so we just chose the head of the gecko as our logo. We wanted something cute, in contrast to the industry being full of serious names and platforms. Finance doesn’t always have to be very serious filled with serious-sounding names. It can be fun as well so that was our aim. Having a cute mascot doesn’t mean the data is not credible. I think that it appeals to Japanese culture as well in the sense that all Japanese companies have their own cute mascot. And our motto was and still is; to be the most accurate data provider, and to give a 360-degree overview of the cryptocurrency market.

Message to the reader from Bobby

Hi, everyone. Please go and check out CoinGecko. If there is something that we are not doing at CoinGecko, send us an email and we will make sure to look at it.

Interviewer , Editor : Lina Kamada

【Disclaimer】

The Article published on this our Homepage are only for the purpose of providing information. This is not intended as a solicitation for cryptocurrency trading. Also, this article is the author’s personal opinions, and this does not represent opinion for the Company BTCBOX co.,Ltd.