Heidi worked in international client portfolio management in Spanish commercial banks for over the ten years. In 2019, she became the CEO at Coinmotion. Heidi loves studying how crypto and tech are disrupting the financial sector and being part of the revolution.
Historically, finance is a field dominated by men, but it is fantastic to see that gap of inequality becoming smaller. You went from commercial baking in “traditional finance” to CEO of a crypto broker. Tell us a bit about yourself.
First, I agree with you about the fact that the number of women in the crypto scene is smaller than that of men. I would say that, from all the investors approximately 20% are women. So, the percentage is lower. I think it may be because of the risks, volatility and the fact that this sector is sometimes seen as very technical. As investors, women sometimes might be more cautious than men in entering into new types of investments.
I studied international business in Finland and ended up working in the banking sector in Spain. I lived there for 15 years but I worked in the financial industry for about 10. During my time there, I have witnessed the 2008 financial crisis from the inside and I have seen how the banking sector has evolved in time.
During my last years in the bank, I started to study Fintech related issues. I began to read more about different kinds of financial technologies, and I found out about cryptocurrencies and blockchain. As I got more interested, I started to collaborate with a FinTech platform in Spain and quite fast, in 2016, I ended up working in Coinmotion. I started as a Commercial Director and then I progressed inside the company. From 2018 I have been part of the Board of Directors and since the beginning of 2019 I have been the CEO of the company.
You have been in Spain during the biggest financial turmoil of the modern times, the 2008 real estate market crash. What challenges did this pose in your career?
Those years were very tough for the banking industry. I was a key account manager then, and the good thing that I take from it, was the mentality change towards the risks of certain investments.
I realized that my perception of what a secure investment is might change in time as the world around me changes. For example, before the financial crisis, bank bonds and certain shares were considered safe. Similarly, housing was considered super secure, “if you bought a house, your money was safe, and you would always win with the increase of prices”. That was the mentality in Spain back then. But later, the crisis hit.
The banking sector saw the same change of mentality. At that stage I was working as a key account manager for high-net-worth customers. I saw how these wealthy clients started to cancel their fixed deposit only to put their money into funds that invested into German bonds and that offered basically zero interest. They just wanted to secure their wealth and they were afraid of having funds in local banks.
Similarly, if you looked at the housing sector, the prices of the houses in different places crashed. So, basically, the conclusion was that the perception of secure investment does not exist. It depends on the time and the global financial situation in which we are living at that moment. In Finland, people lived the financial crisis in a totally different way than we did in Spain. That is why it is easy for me to see this problem.
Bitcoin is extremely volatile, constantly breaking all-time highs. What can you say about our perception of it? Is it a safe investment?
First, it is important to understand how the cryptocurrency market has functioned up to date. If you look at the 12 years of history of Bitcoin, the price has always evolved cyclically. Normally there is a phase of slow growth, followed by a faster growth stage, which precedes a hype market period of fast price growth that ends with a correction. After that we have a stable phase, and the whole cycle starts again. This normally has been linked to the halving of Bitcoin that takes place, approximately, every four years. There were periods of high growth in 2011, 2014, 2017, and now we are seeing another bullish market cycle happening.
The technology and Bitcoin’s ecosystem continues to develop in the background, taking steps forward constantly. For example, during the last years, the Bitcoin network and its scalability have evolved considerably. Also the trust towards the sector and perception of Bitcoin as an asset to diversify risks has clearly evolved during the last year. We have seen a substantial inflow of institutional money into crypto, which of course, reflects the trust that institutions have towards Bitcoin.
Nevertheless the volatility of Bitcoin is still quite high if we compare it to more traditional safe havens and of course the risks are high. But as I said earlier, the perception of “secure investment” changes over time for which the key here is to be able to diversify one’s portfolio to have sufficient hedge for problems that might arise in the traditional market.
Is there a limit? Can Bitcoin grow infinitely?
I do not think that Bitcoin can grow indefinitely because the amount of money is also limited. If we look at the Gold market, its market capitalization is currently 10,6 trillion USD and Bitcoin’s market capitalization is 688 billion USD. If Bitcoin becomes “the new gold” and it would reach the same market cap as gold, bitcoin’s unit price would be approximately 500t USD. It is possible? Potentially, but I am quite sure it would take at least ten years to reach that point. Everything also depends on how you look at this issue and the question should not be what the EUR or USD value of Bitcoin will be but what can you buy with your Bitcoins in 10 years and what is the purchase power of the FIAT currencies at that point.
Nevertheless I think more important than just the price, the investors should get a bit deeper inside the technology, the possibilities that it gives and understand the ideology behind the cryptocurrencies. Especially after the COVID break out I think that people have started to see the problems that the continuous printing of traditional money will bring globally. People start to understand that the traditional model cannot continue in the long term.
Many people think of Bitcoin as if it were gold. Others criticize that view because of its volatility. Do you think Bitcoin is a good form for storing value?
I totally understand the concerns. I do not see Bitcoin quite yet as an asset where you should put all your savings and take loans to acquire it. Well you can, but it is very risky.
Regarding the volatility, it has decreased during the years but on a daily and weekly basis the volatility is still high. The investment in Bitcoin should be seen as a long term game and the returns should not be analyzed in one or two year period, but five to eight instead.
We must also think carefully about what is actually the best way to store value. This takes me back to the discoveries I made while working in Spain: The perception of security.
For example, is gold secure? Are the bonds of my country secure? Is my money secure when having it in euros? This kind of perception may change in time because the world changes around you. The key is diversification.
Knowing what we know now about Bitcoin, should we include it in our investment portfolios?
It is not a simple question because it depends on many aspects. There are different things investors need to consider before investing in anything.
Firstly, one needs to determine what is the risk level that one is personally willing to accept. Can one accept a 50% decrease in the portfolio without losing sleep at night? The price movements can be so large that if you are not mentally prepared, you might end up doing panic sales at the worst moment. If you can’t stand the volatility the invested amount is too large or the asset is not for you.
The second thing an investor should consider is time frame. How long can the invested amount be locked. For example, if I want to buy a car in half a year, I should not invest that money into an asset that has risks.
The third thing to consider is of course diversification of the portfolio. Do cryptocurrencies fit your portfolio and with what weight?
Put simply, if you have money that you do not need in several years, you are prepared to see a high volatility in part of your portfolio and you want to hedge the current market risks somehow, you could investigate investing in cryptocurrencies.
What comes to the weight cryptos should have in a portfolio, I think it is personal. I have seen 70-year-old people having 80% of their portfolios in shares and then youngsters that do not want to even touch stocks. It always depends on the type of investor you are, your risk adversity and, of course, the time scale that you have for the investment.
The Finnish customs office will sell confiscated coins for value of 60m. In the news it was mentioned that they will try to get an exchange to trade them on their behalf. Will Coinmotion bid to sell them?
Yes, of course.
Considering the amount, the whole sales process will be up for tender. Different exchange services will probably bid to gain the right to sell, and, of course, we will participate in the process as well. From a regulatory perspective, there are not many companies in Finland that can offer the exchange services for these operations.
I don’t know the criteria that the Customs Office will have for the selection process. Nevertheless, I think that our company is one of the most solid ones in the market considering that we operate under the FIN FSA as a Payment Institution and are registered as a Virtual Asset Service Provider under the same authority.
Pioneers have been in the crypto long time, why the early majority is not yet in?
I think it simply takes time and the number of users is growing constantly. Especially on the growth stages of the price cycle, the inflow of new customers grows exponentially.
Each cycle has also its own characteristics. During the 2017’s high growth stage we saw an ICO hype and a lot of private customers appeared in the scene searching for interesting new projects to invest in. If we look at the ongoing high growth period, we can see a lot of institutional money coming in especially in bitcoin. The sector is already 12 years old and the attitude towards cryptocurrencies has evolved during the past years as the general knowledge has increased. At the same time the cryptocurrency related regulation has developed which is important for the mainstream adoption of cryptocurrencies. However, there are still a lot of misconceptions to be cleared.
What advice can you give to somebody who wants to start trading crypto?
The best advice is to start learning about the market, how it functions and about the different cryptocurrencies. You do not need to understand how the protocol works, but you should know at least the basics. It will help you to understand the movements in the market and detect good purchase or sales opportunities. Following the market is the only way for you to understand how different things might affect your investments.
ICOs are the game changer when it comes to raising capital. How do they work?
As I told before, in 2017 there was a boom of ICOs. If you want to fund your project with an ICO today is more complicated than before. It no longer is a Wild Wild West as it was at some point.
The most important thing to understand when doing an ICO is whether that is the best way of raising capital for the company. Does the company require its own token? If so, what is the utility of it compared to those in the existing market? If we look at the existing market, there are thousands of cryptocurrencies. You would need to add value to the end customer to be able to have users.
Coinmotion has done 2 crowdfunding rounds (at least that we know of) how would you describe the difference between the two? What were the key differences for their success?
Both rounds were done through the Invesdor platform and they were pretty successful. The first one was in Q1 2016 for an amount of 70K €. The second one took place at the end of 2017 for an initial minimum target amount of 750K €. However, we ended up reaching the maximum amount of 2,5 million before the official closing date! At that point it was the largest non-IPO investment round in the history of Invesdor platform.
I think the timing was good. The market cycle was optimal, and our business was already operating with a good revenue at that stage. All these factors affected positively for the success of our capital raising campaigns.
There is not an individual reason to pinpoint. I would say it was about finding the correct timing, building a credible story, having good numbers about the current business model, and a bit of luck.
What advice would you give to a startup wanting to raise capital in non-traditional methods?
I think that the most important thing is the case and the story. Be prepared and do your homework. Do the calculations and be realistic. And at the same time, be optimistic.
Secondly, analyze the sector in which you work and see if the finance method that you are using is in accordance with the business model you have. For instance, if you work in a more traditional sector, it does not make any sense to tokenize your company share through an ICO. It is key to understand to whom you are targeting your investment round and then start to analyze it from there. Tokenization needs to make sense.
Is (or will be) regulation a problem when crowdfunding using ICO’s?
It can be.
It is crucial to study how the token is built and clear out the legal perspective. Similarly, the company’s location is very important as right now the local legislation affects on the possibility to even launch the project. You might face quite big problems if you do not take these issues into consideration.
Which one is your favorite coin?
Bitcoin, of course.
Where do you think you would be if it were not for blockchain and crypto?
I must say that at least right now I cannot imagine working in anything else than cryptocurrencies. It gives me the opportunity to be part of something revolutionary. The sector breaks boundaries and I have the possibility to learn new things every single day. This is what I love.
Thank you, Heidi, for taking the time for this interview and for sharing your story and expertise. We wish you all the best of luck for all your current and future projects.
For more info visit Coinmotion