Centralized exchanges are vulnerable: news of multi-million hacking of trading floors in various parts of the world is published with alarming regularity. This harms not only thousands of users, but also the reputation of the industry, and also serves as a pretext for the continuous tightening of its regulation. Restrictive measures by the authorities of different countries constrain business activity of crypto-entrepreneurs, which leads to stagnation in the market.
The issue of cryptocurrency savings security is perhaps the most important for users. Decentralized cryptobirds, which by their nature are not castodial, can provide a high level of security of funds. However, it is difficult to call solutions on the market mature: such sites are usually low-liquid, and their user interface leaves much to be desired. As a result, ordinary users are faced with the need to choose – either liquidity and high speed, or security.
General ideas Hodl Hodl and organizer of the Riga conference Baltic Honeybadger Max Caidun will share their thoughts on the pros and cons of p2p platforms and decentralized sites, the importance of security and the purpose of bitcoin.
BlockchainJournal: What are the advantages and disadvantages of p2p platforms compared to decentralized and traditional centralized exchanges?
Max Keydun: It’s probably better to compare all the same with the centralized exchanges. The latter are primarily adapted for day trading. That is, the frequency of trades on them can be higher, because there is a powerful matching engine, an exchange engine that matches the applications of sellers and buyers.
We strive to at some point catch up with commission costs with centralized exchanges. But for the time being we are, conditionally speaking, halfway to this.
I believe that there is only one truly decentralized solution on the market – Bisq . Perhaps the main advantage is that it can not be closed. That is, it is a kind of last frontier – the last opportunity, if everything closes, this exchange will remain.
But this solution is quite complicated. This is the software that you need to download to your computer. In all this, you must first understand to use.
BlockchainJournal: So user experience is the weak point of decentralized sites?
Max Caydun: Yes, I believe that it is. As for us, Hodl Hodl is actually a semi-centralized exchange. We call ourselves peer-to-peer noncustodial exchange. That is, we do not store user funds. But we have a site in which, as you know, you can try to enter a register, block it. Of course, we will respond in such cases accordingly.
We always strive for the best user experience, so that everything is much more convenient. But, probably, the advantage of p2p-exchanges is that some of them do not request any user data. Such exchanges are safer with the right approach.
We do not store any funds at our place. If we break, then the means to steal is very difficult. We have only one key of two. The second is stored by the user. We do not have access to it, it is generated in the client part of the user interface. I think this is a safe approach.
BlockchainJournal: Do all users understand how important the security of the exchange?
Max Caidun: Many more experienced users understand what security is. However, a significant part of the participants of the cryptoindustry does not attach due importance to security issues and quietly keeps funds on centralized exchanges.
BlockchainJournal: There are only two cryptocurrencies on your platform now.
Max Caidun: Yes, this is Bitcoin and Litecoin. And, in fact, this is done primarily for security reasons. Because every time you add new currencies, new entry points for detractors appear.
BlockchainJournal: So you are supporters of the most conservative approach to security?
Max Kaydun: Yes, we are very sharpened for security, and this is one of the cornerstones of our product. In addition, we see that Bitcoin is probably the most successful cryptocurrency at the moment in terms of mass adoption, security, lack of downtime, also the fact that open source, and much more. We added Litecoin because its codebase is actually the same as that of Bitcoin.
BlockchainJournal: What can you say about Ethereum? Are you skeptical about this project and its future?
Max Caidun: We don’t treat this project at all, to be honest. They will develop – all of this will be better. They will not develop – this will not affect us in particular. We don’t have much desire to add Ethereum, since it’s not clear that they have security there.
BlockchainJournal: So in the future, are you considering any additional digital currencies yet?
Max Kaydun: At the moment we are not considering. But in the future, of course, everything is possible.
BlockchainJournal: In one of the past interviews you said that the Lightning Network (LN) technology is still not mature enough and you are not yet considering the implementation of this solution. Do you deploy LN to the platform when the technology reaches a more mature stage?
Max Caidun: Yes, absolutely. Our support for SegWit paves the way for other add-ons. And when there will be technologies that will simplify and improve the lives of our users, whether they are fast and cheap transactions, or more confidential or sensitive, we will work on it and add.
We hold to the position that Lightning is awesome. We see that the mass acceptance of this all is growing. This is a very cool solution, we support it in every way, communicate with the creators and are considering the possibility of its integration.
But, at the moment, we are not ready to do it yet. We have a lot of other things to do. As I said, we are not such a big team. We do not have many resources to spray. Therefore, we focus on the development of the current product and our new platform called HouseHodl , in order to implement and integrate some new gadgets that would be interesting and useful to users as soon as possible.
BlockchainJournal: Tell us in a few words about HouseHodl.
Max Kaydun: This platform is a kind of bulletin board for real estate and in the future for other expensive assets that cost a lot of money: yachts, airplanes, expensive cars. It will allow to leaf through these assets, to sign remotely purchase and sale agreements.
But the most important advantage is that we will use our escrow for the sale and purchase inside this platform. Relatively speaking, we will meet the buyer and the seller. One will have some kind of asset, the other will have bitcoins. Between them will be the transaction of sale. Everything can be done remotely. You can be, for example, in Ukraine and buy your property somewhere in Thailand, USA or Dubai.
BlockchainJournal: And what about the OTC-service for large cryptoinvestors?
Max Caidoun: Of the three Myllestone, two have already been achieved. We have registered our company Tenbagger – this is our brokerage area, relatively speaking. Received under her official license in the EU. Now we are rolling out a prototype of our new three-key multisiga in testnet. That is, one key will be available to the seller, the other – to the buyer, and the third – to us.
This will give us more flexibility, especially when it comes to large trades. We have already established contacts with a sufficient number of large brokers who are waiting for us to open this service. And, most likely, within a month we will launch the OTC-trading platform in full force. Everything moves according to our plans. In the near future, we are “noisy” announce the official launch.
BlockchainJournal: And, finally, a few philosophical questions. What is the true purpose of Bitcoin, what is its mission?
Max Kaydun: First of all – to give us all the understanding that we do not need any intermediary to interact financially with each other. We had an information revolution. Thanks to the Internet, people gained access to a huge pool of information that has become free, publicly available. Then the communication revolution took place and we now have the opportunity to communicate freely using instant messengers. That is, regardless of where you are, you can contact a person at the other end of the world and don’t pay a penny using free instant messengers like Telegram, Signal, etc.
Now the purpose of Bitcoin, it seems to me, is to allow people to make a financial revolution. When you do not need a mediator, an observer or, conditionally speaking, a guard who will tell you what to do with your money, where to send it and with whom to interact. We have freedom of communication, but financial freedom, as such, is still not present in society. This is the task of Bitcoin and its purpose.
BlockchainJournal: But what is Bitcoin now in reality – “digital gold” or a means of payment? And which of these functions should prevail in the future?
Max Caidun: I think you should not go into this question. Because for every person and user code, Bitcoin is something different. This is his charm. For some, it is a means of payment. That is why we are launching the HouseHodl platform. We believe that for large onchain transactions, equivalent to say $ 200-300k or $ 1 million, Bitcoin is ideal at the moment. For some transactions, Bitcoin may not be very well suited, since the average commission size jumps up periodically. But for the purchase of large assets, it fits very well.
For some, it is a means of saving value. At the same time it is possible to keep it confidential. It is also an opportunity to protect your assets from certain confiscation or expropriation.
BlockchainJournal: And the last question: how the world economy, the banking system and the lives of most people will change if bitcoin is used everywhere.
Max Caidun: I think the widespread use of Bitcoin will only benefit most people. Yes, we are discussing and saying that the technology is still not user friendly. However, downloading the wallet to the phone, installing it within five minutes and sending the address to someone who immediately sends you a financial asset is much easier than going to the bank and even remotely opening accounts, providing personal information that is unclear to be stored.
For most people, I think things will change for the better. For banks … I can not say anything in this case. Honestly, when I realized the advantages and power of this technology, I decided for myself that I had to leave the banks. Before that, I worked in financial institutions for ten years and saw from the inside how it all happens.
For banks, in my opinion, the main task is to adapt. And instead of resisting in every possible way in a public and non-public space “to put a stick in the wheels”, it is necessary to accept as given that the world does not stand still, financial technologies are developing and that there is a certain inevitability that must be accepted. And you either adapt or die. No matter how awful it sounds.
For the world as a whole … Let's just say, the ability of people to interact with each other freely financially. I think it will be better, more convenient and much easier. If our celestials really advocate globalization, then we must take the tools that will clearly accelerate it. Currency control, different monetary units – all this stops our development. And bitcoin is the only way, at the moment, for all of us to come to some common denominator.
Interviewed by Alexander Kondratyuk
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