Cryptix AG is taking a holistic approach to building the “peoples’ financial marketplace,” one which benefits all equally and is based on blockchain and distributed ledger technology.
Its motto is “Marsadoption,” a term coined to remind the Cryptix team while also showing the world how significant such a comprehensive blockchain-enabled ecosystem could be.
How Cryptix envisions blockchain benefiting SMEs
Founder and CEO Bernhard Koch has built companies for a quarter-century, beginning in IT, hardware and software during the early-’90s boom. After a couple of years away from the sector, he returned to develop cash, loyalty, and business intelligence systems for former clients. That soon branched out into financial and marketing services, and Koch worked across Europe, Asia, the Middle East, and Hong Kong.
During a break in 2015, Koch immersed himself in blockchain technology. He invested in projects and considered starting some of his own.
Over time he saw many people fall victim to ICO scams. Such incidents distracted people from blockchain’s potential, he said.
Koch decided to build a better mousetrap.
Given his experience founding and working with SMEs, he knew they could benefit from blockchain. Still, they needed help getting on the ground floor of what he could see as the next revolutionary technology. More prominent companies had the people, knowledge, and money to devote to the blockchain. They would then get in first and benefit the most.
That is unfair, Koch thought. He wants to build an Amazon for blockchain-based financial products, one that would benefit the SMEs that provide jobs, growth, and benefits to communities.
Such an ecosystem would employ blockchain, smart contracts, and DeFi ubiquitously, with society benefiting from these technologies without knowing what was happening under the hood.
Blockchain’s unique talent shortage and how Cryptix beat it
Koch’s first challenge was finding skilled workers. He was fortunate in quickly finding a strong IT and mathematics professional, but with the field being so new, you have to take chances.
“We knew we had to finance this; we had to start it alone,” Koch said. “And we had to learn by trial and error, more or less. I went to consulting companies. I was also doing workshops with the big four, which was the biggest mistake. Never go to someone for advice when you are pitching a technology that potentially threatens their business model.”
The pandemic has also increased the talent competition, Koch said. With people being able to work for anyone anywhere in the world from their home, he’s seeing many European developers being hired by well-funded American companies.
To combat this, Cryptix has opened several offices across the EU in areas known for their tech talent while also hiring their share of remote workers.
So how do you develop talent? Make it enjoyable, Koch said. Develop use cases that draw people in and challenge them Cryptix partners with the Austrian Blockchain Center, which is affiliated with several Austrian universities and research groups. They develop use cases that attract bright minds through testing and related research.
Benefits of building blockchain services platform
Koch said several blockchain-related streams were developing independently of each other, citing payment tokens, cryptocurrencies, and cash apps. Together they would be more potent than they were apart.
“We knew if we bring it together on one platform, all these different pillars which are usually different companies, we could mash together these services differently from a usability perspective.”
Imagine shopping and getting instant cash back at the point of sale from a merchant whose system is integrated with your network. That comes in a token that gets saved in the same wallet you just used to make your purchases, the same one where your investments are organized. Perhaps those funds are used for the next grocery run or invested in real estate.
“You touched only one app,” Koch said. “You never used something else and didn’t know how to deal with blockchain.”
While Koch can easily see a time when blockchain-based systems are ubiquitous, similar to Grandma’s ability to use the Internet, we’re not there yet. People need to be educated and shown there’s a better way. Trial results are encouraging, but with convenience comes responsibilities, and users need to understand theirs.
Koch’s goals are lofty ones, and he’s taking his time reaching them. Before fully jumping into the market, they have to develop education strategies. How much does a young company spend on such promotion? Cryptix did not conduct an ICO because they wanted a proven product before considering such funding avenues.
Privacy vs. transparency: What’s the ideal blend for a blockchain-based system?
During the pandemic, many people used digital commerce for the first time because they were left with no choice. Advertising campaigns or trials did not convert them. Could there be a similar trigger point for crypto and tokenization?
It could have been Libra, but well-publicized privacy issues scuttled that chance, Koch said (he is a supporter of lawsuits against Facebook in the European Union). It could also be central bank digital currencies (CBDC), but regulators must act carefully or risk hurting the possible impact.
“I hope those people involved in making the decisions are cautious in a way that they know they’re dealing with the final part of the freedom people still have,” Koch said. “You know, if the cashless society is coming and every transaction is always transparent, it’s just one button away to stop a person from being able to do anything. I’m not sure if our politicians everywhere are on that level to be able to make (such) considered decisions.”
What’s the ideal blend between the privacy some early adopters crave and having enough oversight built in to placate regulators?
Koch decided early to develop Cryptix in a way that assumed regulation would be coming to the space while building in user protections.
Cryptix has developed smart contracts that protect the customer’s anonymity while assuring regulators that everything is by the book. Some tools can identify if funds are coming from grey or black sources and stop them from entering your ecosystem. Conveniences such as crypto-to-fiat exchanges and AML checks are also available.
How Cryptix became a venture builder
Cryptix has always been envisioned as a service to help SMEs, but the venture building component came long organically, Koch said.
They began to work on Layer 1 blockchain projects and, during that process, obtained brokerage licenses. They acquired knowledge of business planning, marketing, product and project management, quality assurance, and legal and capital markets. As that range of capability grew, clients began approaching them for help.
But Cryptix does not take just any clients, Koch explained.
“What makes us different from the usual venture building house or venture capitalist is that we don’t go into a project to collect as many projects and create a portfolio there. We don’t do it for the money or the exits; we (work with) internal and external clients only when we know they will fit into this good financial marketplace version.
“So we are more selective, and then we also invest into it and make sure that you have these different pillars with specific services that are included in the bigger version of the financial marketplace at the end.”
The industry needs regulatory clarity, Koch said. It is especially required around tokenization, which will be a hot demand area over the next two years.
“You want to build a stable basis, and we are still building the stable basis phase.”
A different way of viewing crypto’s energy problem?
The European Union recently voted against banning proof-of-work crypto mining models such as the one employed by Bitcoin. While criticized by many for ignoring the amount of energy such methods gobble. Koch reasons that it makes something bulletproof; it is worth the investment.
“It’s super easy to polarize this,” Koch said. “I don’t feel that this is always discussed in a scientifically fair way.”
How many businesses drive deposits to a bank every day, Koch asked. How much energy is consumed in activities like that which would no longer be required?
How Cryptix’s Equito connects SMEs with investors
Last August, Cryptix unveiled Equito at Crypto Valley’s CV Summit. Equito connects SMEs with potential investors through fully digital and EEA-compliant offerings. It begins with more than 7,500 prospective investors, €146 million in project funding in the pipeline, and a fintech partners roster.
“Equito is a great addition to the Cryptix portfolio and takes our vision of creating the People’s Financial Marketplace, a network of modern financial service providers, a step further,” Koch said. “We are thrilled to see that more opportunities are being built for SMEs when transformation and growth are vital.”
Thinking bigger and further into the future: Origins of a motto
Cryptix’s slogan. “Marsadoption” has several meanings, Koch said. As crypto began to explode in 2017, there were discussions about what it would take to produce mass adoption. Many preached HODL, which would create a wealth generator that would produce killer apps and then mass adoption. People likened it to rocketing to the moon.
There is a more extended play, Koch said. The moon orbits around the earth. Why not venture to a new planet with its orbit?
“If you want to invent something, take the longer way,” Koch said. “Make the higher effort, take the higher risk and go down the more exciting way where we have to be more creative. That’s why we mashed up those words. We’re not going to the moon but to the next planet. We want to bring our first node to Mars and run it from solar energy one day.
“But building something where you have to be patient sometimes hurts. If you had to leave the planet and this wonderful life for something you can be proud of, that’s something.”
Tony Zerucha is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.