Cointelegraph spoke to William Thomas, the founder of the UK’s recently launched CryptoMate exchange, who explained why decentralized, peer-to-peer (P2P) exchanges could be the future.
CryptoMate is a recently launched cryptocurrency exchange that sells coins directly to customers via instant bank transfer within the UK. Moving forward, however, the company believes that switching to a peer-to-peer model will allow them to offer a much faster and pleasant buying experience to customers.
Due to banks taking an “unfriendly” approach to doing business with crypto companies in the UK, CryptoMate believes that switching to a P2P system will allow it to have a bit more control over their future and ensure that it does not have a single point of failure, as is currently the case with many exchanges.
“Using our network of trusted bitcoin and altcoin vendors and having them compete to fulfill customer orders, we allow for smoother and most importantly faster transactions,” said CryptoMate founder William Thomas to Cointelegraph. “Customers in the UK with access to online banking can have their coins in their wallets in just a few minutes.”
The company will not hold any fiat or private keys to crypto coins on its servers, as customers will be able to buy directly from its vendors instead of from CryptoMate the company.
“Unless the banks change their approach soon, British [bitcoin] buyers and sellers will move towards peer-to-peer platforms.”
— CryptoMate Founder William Thomas
Cointelegraph: With so many crypto startups and exchanges, in particular, why did you decide to launch CryptoMate in the UK?
William Thomas: Historically, the British have always been on the forefront of new technologies, and thanks to the “wait and see” attitude the current government has shown to our industry, we believe that the UK is currently one of the best startup environments in the world today.
We have not reinvented the wheel with our new exchange platform. We make buying cryptocurrencies available via bank transfer — as do a number of other services. Where we differ from our competition is our ease of use and order fulfillment speed. Customers can buy some bitcoin (or seven other cryptocurrencies) and have the coins in their wallet within five minutes, without the normal headaches that they would typically experience with other British exchanges.
We believe that the UK is one of the best countries to do business in the cryptocurrency space right now — in the Western world that is. What we do could not be directly exported to North America or Europe due to their banking systems, so we’re thankful that British banks have helped us out in that regard, no matter how unintentional.
“Punishing the majority over a small minority of bad apples will stunt the growth of digital currency in the UK.”
CT: What is the maximum that customers can buy without proof of identity?
WT: We allow customers to buy up to £250 without proof of identity, with verification for those who wish to purchase more than £250. Our aim is to bring cryptocurrency to the masses, and forcing our customers to jump through hoops is not going achieve that. We use as much fraud-protection software and best practices as possible, which of course is imperfect, but is there any industry that doesn’t suffer from fraud? Punishing the majority over a small minority of bad apples will stunt the growth of digital currency in the UK.
CT: You are planning to shift toward a P2P exchange system, effectively decentralizing the buying and selling of crypto. How will this platform be different from your current offering?
WT: Currently CryptoMate sells coins directly to customers, which works fine, but much like the coins we sell, our aim is to become as “decentralized” as possible as a platform. We want to make buying bitcoin and other coins as easy as possible for customers — and selling them as easy as possible for vendors.
We will go public with version 2.0 of CryptoMate on June 15. This will be the upgraded and peer-to-peer enabled system. Customers make their payments directly to our trusted vendors; this means we do not accept or hold any bitcoin or GBP during or after the transaction.
CT: So CryptoMate will be essentially a matchmaking service for buyers and sellers?
WT: Yes, simply put, we are a matchmaking service for buyers and sellers of bitcoin and other cryptocurrencies. We will connect buyers with online banking access to live vendors who have coins they wish to sell.
CT: And how do you verify which vendors are trusted?
WT: We do this by having an invite system where we will only accept new vendors that we either know personally or who have proven their trust to us in the past. We also ask new vendors to provide us with their proof of ID and address, as well as paying a safety deposit (in BTC) before they can accept orders, which gets returned on closure of the account, depending on account standing.
In matters of dispute, we ask to live-screenshare with the vendor to verify that the funds have or have not been received. There are a few more practices we use to ensure our vendors are trusted, but we are unable to share these publicly at this point.
“Since we, as an exchange, hold no funds in cryptocurrency or GBP, we feel that we have had a huge weight taken off our shoulders.”
CT: Do you think this decentralized model will become standard for crypto exchanges?
WT: The decision for CryptoMate to switch from a direct seller of coins to a peer-2-peer system came as a result of British banks unwillingness to work with us. We have seen many British exchanges rise and fall in the past couple of years, and one thing is clear, the banks in the UK don't want to play ball.
So unless the banks change their approach soon (we don't think they will), British buyers and sellers will move towards peer-to-peer platforms like CryptoMate. Who knows what the future holds for the sector as a whole, but our long-term plans are to be as decentralized as possible and provide a valuable service for the crypto ecosystem within the UK.
CT: Are you planning to create a decentralized application (Dapp)?
WT: We have spoken about the concept, but nothing solid is planned (during the next 12 months anyway). Our main goal right now is to attract new users, gain funding, and work on expanding into the rest of Europe.
CT: With the recent hack of BitFinex’s hot wallet, among others, custodial accounts are quickly becoming a major security concern. Do you think decentralized exchanges (that do not hold customer funds) will instill greater confidence in Bitcoin for current and future users?
WT: I was as surprised as anyone to hear about BitFinex, having always thought their security would be rock solid for such a large company. Since we, as an exchange, hold no funds in cryptocurrency or GBP, we feel that we have had a huge weight taken off our shoulders. We know that security is still imperative, as customer details (emails, etc.) need to be kept safe, which is why we employ experienced security experts to meticulously pen test before public deployment.
CT: What kind of altcoins do you expect to support in the future?
WT: We plan on adding more alt coins to our selection in the next three months. Which coins has not yet been decided. I think we have to review each coin and see if there’s enough public demand and an active team behind it.
CT: Are you planning to hold a funding round?
WT: We are currently seeking round 1 seed investment from within UK or possibly EU. We have a lot of big future plans for CryptoMate and only funding will help us achieve them, so anyone reading who wants to get involved, please reach out to us via email.
CT: What do you think is the biggest challenge for Bitcoin and crypto startups right now?
WT: Banks and fraudsters, sometimes the same people.