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Follow the Leader: Marcus Swanepoel, co-founder, BitX

Follow the Leader: Marcus Swanepoel, co-founder, BitX Marcus Swanepoel is the co-founder and CEO of BitX, a company focused on making money frictionless and universally accessible.
 
We caught up with Marcus to talk about the open global financial platform he is building and to hear his thoughts on all things bitcoin and blockchain.
 
Naspers’ Follow the Leader series profiles entrepreneurs making waves in high growth tech markets.
 
Q: Which geographies are showing the most enthusiasm for bitcoin? Why do you think this is?
A: At BitX, we see enthusiasm for bitcoin driven by two broad trends: need and greed.
 
On one end of the spectrum bitcoin is used for very specific use cases that serve a genuine need. Some people use it to remit money cheaper or faster. Others use it to purchase things where they don’t have or cannot pay with a credit card, some where they value privacy or prefer a better mobile user experience for buying online.
 
The greed side is driven by people trading bitcoin for profit, or buying it on a speculative basis because they believe the price will go up.
 
Somewhere in between all of this are an increasing number of people investing in or hedging bitcoin as a means of portfolio diversification, especially given its strong performance against other currencies and commodities and how uncorrelated the risks and returns are.
 
Currently we’re seeing more ‘greed’ than ‘need’ users, but this is changing, and in the long run we expect the ‘need’ to be the dominant use case.
 
Q: The price of bitcoin has gone up sharply during the last few months. What factors are driving that increase?
A: In our experience a combination of factors are coming together to drive the price up.
On the supply side there was a block halving in the Summer, which saw the subsidy the bitcoin network uses to compensate miners drop and likely pushed prices up.
 
On the demand side there are a number of factors affecting price:
  1. Favourable media coverage around the benefits rather than risks
  2. Better consumer understanding and increasing interest
  3. More regulatory certainty (such as Japan, New York, EU)
  4. Increased institutional interest (long term/ uncorrelated investment)
  5. Broad economic uncertainty around the world
 
Q: You have been outspoken in your views on blockchain. What are the major issues in your view?
A: I realised that most of the problems large financial institutions try to solve using blockchain are not technical issues but human ones. No matter how hard they try, large institutions just cannot co-ordinate and agree on standards and implementation. There are also many players who are highly incentivised not to change the system, making it even harder.
 
This is only the tip of the iceberg; there are also issues around the cost, time and risk of implementation for blockchain. There’s nothing wrong with wanting to do things ‘on a blockchain’, but it’s often not the optimal solution.
 
Q: What are the existing barriers to broader consumer adoption of so-called 'frictionless currency'?
A: People don’t understand this new technology well, so they are scared to buy it. If they finally decide to buy in, it’s generally not that easy, both from an accessibility and user experience perspective. There are also many places to buy bitcoin that rightly shouldn’t be trusted.
 
It’s also quite difficult to store it securely and use it – another barrier for non-technical users.
 
That’s why companies like BitX exist: to bring these barriers down. We help people understand and trust this new world, and make it very safe and easy for customers to buy, use and store their bitcoin. 
 
Q: Is fintech a fad? Will we still be using the phrase in five years’ time or will the world have sufficiently moved on and truly integrated financial technology?
A: Fintech is a very broad and slightly generic term, and it’s been around for decades in one way or another, so in that sense it’s not a fad.
 
If we specifically talk about the current batch of consumer wallets, remittance, lending and investing apps, in the long run their impact will be marginal at best. To make money truly frictionless and universally accessible requires much more than a couple of fintech companies. It requires a complete paradigm shift. In my view, this will likely involve a global protocol for value transfer, or some form of global currency.
 
Q: How will we be banking in 10 years’ time?
A: We believe that in 10 years, banking will be very different than it is today, and that a lot of this change will be underpinned by the introduction and evolution of digital currencies.
 
‘Banks of the future’ will deliver: 
  • Open and equal access
  • Global, fast and free services
  • Money that becomes invisible, built into an app or service
  • Total interoperability across platforms and services
Of course these changes won’t all happen overnight. But we believe digital currencies, in particular bitcoin, will be the catalyst for unlocking these banks of the future.
 
If you’re interested in reading more views from the BitX team you can follow its blog here: https://www.bitx.co/blog/   

Read more interviews from our Follow the Leader series: 

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