Despite garnering so much attention from the media, politicians and financial institutions, the cryptocurrency market is still a young and green industry. It has always been an interest of mine to know what drives new projects to join the crypto sphere. Last week, I spoke with Alex Althausen, CEO of the cryptocurrency exchange Stormgain, about his company’s achievements, future plans and why the current financial crisis may have a positive impact on the industry. Moreover, Alex shared with us an exciting announcement about his company's new partnership, which you can find at the end of this article. This conversation went so deep that I decided to divide the interview into two parts. Let’s start with the first one!
U.Today: What brought you to the blockchain technology industry, and why did you decide to establish a cryptocurrency exchange?
Alex Althausen: That’s a good question. I’ve been in finance for a long time, and my previous job was at a financial company—working with investments, stocks and so on.
When the crypto hype started, I was already deep into crypto but as an enthusiast, not as a businessman. It was impossible to wait and, sometime in mid-2017, even before the main crypto hype, I was chief operations officer at a European crypto exchange. It was my previous project, called XCOEX. We launched it, successfully survived the crypto hype, and after that I was asked to be chief executive officer for a new project—StormGain. To put it simply, my personal interest pulled me into the blockchain sphere, and later it became a business.
Alex Althausen. Photo by stormgain.com
U.Today: So you are not the founder of the project?
Alex Althausen: No, no, I’m not the founder of the project. We have major shareholders. I’m engaged exclusively in management. I am deep into the subject, so I lead as a manager.
U.Today: How do you think the new financial crisis will affect the work of cryptocurrency exchanges? Have you already seen it influence your team?
Alex Althausen: I think it will have a great impact. In general, right now the industry is experiencing growth. I basically see this in both our project and in neighboring exchanges. The thing is that in a period of great uncertainty, people are looking for various ways to invest or increase—or at least preserve—their money. And it seems that modern, conventional ways of investing are not very stable. For example, shares of an airline cost 50% more a year ago than they do now, so it was not the best investment. Many of the largest car companies are laying off employees, cutting hours and so on. In short, standard investment methods have become quite risky. In this regard, people usually behave along two vectors: first, protective assets like gold.
You see, gold is worth $2,000 an ounce right now for the first time in its history. It is a defensive asset. Or, on the contrary, people go into more risky assets that can grow much faster; for example, Bitcoin or any cryptocurrency. Again, we saw Bitcoin earlier this year at $3,800, and now it is close to $12,000. I think that’s threefold growth. In what other area can you see this kind of growth?
U.Today: So the financial downtown prompted by the pandemic is more likely to have a positive impact on the exchanges?
Alex Althausen: We see a positive impact, yes. In terms of customer inflow and in terms of interest in cryptocurrency, there is certainly more now than last year when we didn’t know this pandemic was going to hit us.
U.Today: What do you think are the pros and cons of well-known cryptocurrency exchanges like Binance, Bitfinex and others compared to StormGain?
Alex Althausen: It is rather difficult to draw parallels from a business point of view. You can dig deeper into the number of features that the product offers. Unlike Binance, we have much more flexible development. That always happens. We’re a small company, just a little over a year old, we started quite recently, but we have been at the top of Coinmarketcap for a long time, and we feel good.
What does this mobility and a small team give us? As a startup, we develop features faster than large companies do, simply because large companies have a really large number of clients, so they are slower to implement some features.
StormGain Team. Photo by stormgain.com
In terms of recent examples, we have a crypto margin, we have an opportunity for a client to invest with leverage. People are really actively using this feature already. Even spot trading is less popular than margin trading because there is an opportunity to make such a fortune—you see rapid growth and can make 10-100 times more money. People take advantage of this despite the increased risk.
Let me give you some examples from real life. Binance—let’s take big exchanges—will offer you investment in cryptocurrency in USDT, which are equal in value to $1. Many clients, as I know, do not really want to change their Bitcoins, which they may have purchased earlier in USDT, because the value of Bitcoin itself is growing. And this is a bit silly if you changed Bitcoin for $9,000, and now it costs $12,000 already. And it turns out, I did it in vain.
With us, you can invest any cryptocurrency in general in margin trading. Nobody on the market offers this at all. If the client has Bitcoin, Ether, Ripple, Bitcoin Cash or Litecoin, he/she can invest any of these cryptocurrencies on margin in any of the instruments that are on the exchange.
That is to say that you can, for example, invest in Ether with a margin leverage of 100 in a BTC/USD pair. There is no such thing anywhere on the market. And we developed this feature quite quickly and implemented it. Now I know that some companies are also trying to copy something like it. But that’s the power. If the question is “What are the pluses?” then I would say that mobility is a plus, as well as the fact that we listen to the client and quickly develop what the client needs.
U.Today: Which cryptocurrencies do you support?
Alex Althausen: In fact, we have a special focus on only those cryptocurrencies that we consider to be major, have proven themselves and which will not disappear tomorrow. We are very careful about listing all sorts of different coins there; in fact, we even avoid the, let’s say, hype. And we bet only on the most popular and already proven cryptocurrencies.
At the moment, six wallets are all majors: Bitcoin, Ether, Bitcoin Cash, Ripple, Litecoin and USDT.
Rimma TrukhinaU.Today: Personally, which cryptocurrencies would you highlight on the market other than Bitcoin?
Alex Althausen: I would probably single out the same ones I just named. Honestly, it’s a balance. Everyone remembers 2017 in crypto, because Bitcoin has grown so much. At the same time, everyone remembers how many scams were on the market, how many ICOs there were. People who wanted to ride this trend fostered a rather negative reputation for the crypto industry, especially because one-day companies were created, people collected millions of dollars and disappeared. Together with their tokens, which no one needs now.
The listing of any token must pass the test of time and prove that people—customers—need it. Only in this case will we consider such coins as candidates for our trusted list. That is, not a lot of resources are needed to add a wallet, generate addresses for clients and accept payments in this cryptocurrency or store at home. But there are reputational risks…Look at Binance. They add one coin and delist 10. It’s just that nobody talks about it. They don’t really like to talk about the disappearance of coins from the exchange.
They always talk about how cool it is to add a coin, but they rarely say that in one day they can just clean ten coins out of the exchange. Why? Either because it is not interesting to people, or it is frankly some kind of manipulative, fraudulent project.
You know about this pump and dump tactic. It’s when, initially, the price is deliberately inflated by the players, and then it drops sharply, and three people, the founders, make out like bandits, while hundreds—thousands—of customers lose. This is really awful and dishonorable.
StormGain Team. Photo by stormgain.com
U.Today: Tell us about your partnership with Newcastle United Football Club. At first glance, there is no direct connection between the soccer team and the cryptocurrency exchange. Why did you choose the club? I mean, what did this partnership give you? As far as I know, it has already come to an end.
Alex Althausen: Yes, that’s right. The English Premier League soccer championship is now over and our partnership with Newcastle is ending.
First, let me answer the first part of the question: “Why is this necessary?” Despite the apparent difference between the industries—soccer and cryptocurrency—they have a common audience. As it turns out, according to research in Europe, there is a very significant intersection between people who are interested in sports and in crypto. This doesn’t mean just soccer, but also electronic sports (various games) and basketball to a lesser extent. But the most popular sport in the world is soccer. And it just so happened that the field of investment in cryptocurrency is more of a male sport. It just so happens that the audience…We, for example, have very unusual statistics compared to other exchanges.
I know that, on average, no more than 15% of crypto exchange activity is done by women, and 85% by men. We have a slight bias: we have 30% women. I don’t know why this is so. Maybe they like the colors. Maybe the price tag looks good.
There is a confirmed hypothesis that people who are interested in cryptocurrencies, among other things, pay a lot of attention to such outdoor activities as going to soccer games. This is the first reason, purely selfish.
The second reason is the trust element. But you understand that any soccer team that respects itself—I mean a club from the English Premier League, the Spanish league, the Italian league, the French, the large and popular European powers—they don’t sponsor companies for one day. This is very important. And I wanted to transmit this message to clients. That there is confidence in StormGain, that there is confidence in it continuing to exist tomorrow, the day after tomorrow and into the future. We are serious and are going to be here for a long time. As a result, the team is ready to invest a lot of money in sponsorship relations, because sponsorship contacts with such clubs and such countries are not cheap pleasures, and not all companies can afford it. With such a gesture and such a broadcasting of trust, we want to show clients that we would not spend hundreds of thousands of dollars to simply collect money from clients and run away somewhere. Why else would you do this? Here we have the element of trust.
SS Lazio. Photo by stormgain.com
The third reason is that our market is now largely European. That is, our exchange is more in demand in Europe and England. We still refer to England as the European Union, despite Brexit. We have a large market in England and in other European countries too. There is a history.
This year, you’re right, we’re continuing this trend. We ended our contract with Newcastle but we decided to move on. And England is a very competitive championship. Not all the teams that play there, unfortunately, can claim that they play in European cups. This time we are delighted to partner with a team that is guaranteed to make it to the UEFA Champions League. This is SS Lazio, a world-famous team with a rich history and values that echo our own perfectly.
Through this sponsorship, we’re thrilled to join the worlds of crypto trading and football together and offer many exciting benefits for our clients, who can win exclusive access to the Roman superstars and unique prizes thanks to StormGain.
We look forward to the start of a new season, which, no doubt, will be exciting and different from any other! We already know that next year the team will play in the Champions League, and this is a different level of match viewing, a different level of visibility for the company, we expect.
Yuri Molchan
Godfrey Benjamin
Dan Burgin
Alex Dovbnya
Vladislav Sopov