Fyggex: Welcome to Fyggex VIP Industry insider series Christian! You were starting the very first and the earliest exchanges in Sweden so we and the readers are for sure extremely interested about your company journey, but before going into it, how about yourself? How did you get into this crypto industry?
Christian Ander: It was by accident. I come from a bioinformatics background. I was developing software to do quantum biology at Uppsala University and I’ve always been a big fan of open source technology. I was building open source tools for that kind of work.
Since childhood, I had a dream of starting my own company. I got a business idea while doing my PhD, and one of my biggest issues was how to solve payments with technology. Then the banks in Sweden said to me that there was no way to do that between two private persons other than traditional bank transfer or transmit the transactions through Visa card. The cost was around 5% per transaction.
From that, I started to explore what are the options and the day after that meeting with the bank, I went to a free open source software meetup. I shared my frustration with the banking solution and one person sitting there said, “Oh, but have you checked out Bitcoin?” I answered, “no, what’s that?” “Oh, it’s a Peer-to-Peer payment network that you can download to your computer and use.” He replied. One hour after that I had downloaded my first Bitcoin. This was in
early 2011. I downloaded the blockchain on my laptop and started mining Bitcoin the same night. I was amazed that I could use an open source to do financial transactions.
Fyggex: Wow. That was a great start. So many people must be envious of you. Did you ever do crazy stuff like buying pizza with Bitcoin, as some did at early stages of the Crypto movement?
Christian Ander: I bought a Calvin Klein underwear for one Bitcoin.
Fyggex: Oh, wow. If they have it still today, they get like 60,000 USD or more!
Christian Ander: It was an expensive Calvin Klein underwear. But that’s part of the process. You must spend your Bitcoin and use it in order to get the network effect to happen. All those early transactions were very important for the network to grow.
Fyggex: There are two different voices in the market. Some of them speak about scarcity. Meaning that when you have very little amount of something, it becomes valuable. The opposite way of thinking is with certain decentralized finance players, such as Uniswap, are doing so called “airdrops” giving it out for free, just to get more and more users. Logic there is that the more you have the users, the more you have the power. What do you think about that?
Christian Ander: You need both the network effect, and you need the scarcity, to have the value for grow. I mean, with Bitcoin, it has taken many years to achieve the network effect it has today. If you do a token launch today, you have to hack the growth in a way. Giving out airdrops is a really efficient way. After the airdrop the value goes down, because people get free money while they want to earn that.
It’s a balance, especially if you launch something new today, you need to have both a growth hacking and a wealth preservation strategy. If your network is growing fast, then it’s okay to have a big supply, because as long as the growth is faster than your speed of printing tokens. As soon as you print more than the system around it grows, then the value of the token goes down.
Fyggex: You had a great start. But how about the difficult times?
Christian Ander: Basically after finding Bitcoin 10 years ago, I ended up launching BT.CX, in January, 2012. The biggest challenges were, and has always been, with the banking sector. During the year 2014 we were forced to change banks six times. That was extremely frustrating and really painful. We suddenly received a letter from the bank saying that they were closing down our account within 30 days. We were still so small that we couldn’t take any legal actions. We couldn’t pay salaries, taxes, or anything. Sweden, which seems like a pretty good country to do business in, there’s very little legal protection, in the relationship between a company and a bank.
Fyggex: That sounds unfair. Do you think it also impacts why the early majority of people are still not in the cryptocurrencies? Despite that the institutional investors and corporates showing appetite, such as MicroStrategy, Tesla in USA and Aker from Norway?
Christian Ander: With the early majority, do you mean why is Bitcoin not more mainstream than it is? The short answer is that it is difficult to understand Bitcoin. As it is something completely new that has never been around before. Nothing even remotely similar has been around before Bitcoin. So, it’s such an immensely new innovation. Before the internet it was extremely hard to imagine how the Internet would evolve and it’s similar to Bitcoin. For the internet, it took 50 years for the mainstream to adopt it after it was launched in the 1970’s. Around the year 2000 or latest 2010 maybe masses started to adopt it properly. Of course, some people were much earlier, but so it’s a similar challenge for Bitcoin.
it’s a challenge to understand it, conceptually, and then it revolves around money and money is something that people have issues with. Either they’re spending it like crazy, or they’re saving it like crazy, or just ignoring it. People always have something to say about money.
So firstly, Bitcoin is a new concept and secondly it’s an issue around money, which makes it even harder for people to adopt it. The third aspect is the technology itself. I mean, it’s crypto math, with, social economical model and the mining aspect. It’s very hard to understand from a technology perspective, especially if you’re not in technology. Some people say “Oh, it’s a cryptocurrency”. But crypto itself is hard to understand as traditional currency is also hard to understand for many people. Maybe people think they understand the concept of money, but in reality, they don’t. They just have some relationship to money. Bitcoin is a groundbreaking new concept which makes it hard for people to adopt.
Fyggex: How do you see the price impact on adoption rate? Altcoins that are less expensive. Bitcoin price going over USD 60,000, makes it hard for the majority to acquire it, as you can have a car with a price of single Bitcoin. Everybody was excited when it broke over the 18,000 USD during the 2017 hype curve. But now, is Bitcoin high price making it inaccessible?
Christian Ander: Yes. I don’t want to say that people are stupid, but we all are. I mean, we are stupid in a way that we are very narrow minded whenever we don’t understand something. If you look at the stock market, if you buy a stock that costs 5 Kronas or 1 Euro, people think that’s cheap. If it cost more, for example, 100 Euros or a thousand Euros people think that’s an expensive stock. It’s the same thing. It’s a simple way of determining if something is cheap or expensive.
If one Bitcoin would cost just 1 Euro, for sure more people would buy more of it definitely. That’s just the simple logic with people. They don’t understand the value.
Fyggex: What kind of risks and trends that are challenging the evolving emerging crypto industry now?
Christian Ander: I don’t think there is actually a threat. This is innovation that works well. It just tends to replace the old one. It’s just basic evolution. I mean, of course you can say that the Governments can try to ban it, but they can’t. It’s like the invention of burning fire. You can ban fire, but as an innovation we have now learned it’s impossible to ban it.
What is a threat is lack of privacy. It’s kind of ironic that Bitcoin was launched to be anonymous. We have learned that it’s far from anonymous. It’s actually the opposite. Now the USA courts, Department of Justice says that it is much easier to catch criminals using Bitcoin than Euros or US Dollars. Because the ledger is public and open. Every transaction I do is signed by my secret key and transmitted freely on the internet, so anyone can see it. While my name is not on the private key, it’s easy to do data mining and track. You have all the IP addresses and financial trails all around it. If you’ve tried to obscure the transaction, it’s very obvious that they find you even easier.
Fyggex: It’s such a paradox. The idea of the blockchain is everything is transparent, so it’s trackable. Maybe there has been criminal effect, since Governments and law enforcement officials were not that tech savvy? Now as the authorities are catching up, will the criminals move away?
Christian Ander: Yeah, definitely. I think that most of the criminals were not actually never in crypto. I think maybe during 2013 with the Silk road, there was a peak of certain kinds of criminals. You must define what kind of criminals you’re talking about. Silk road had several percent of all the Bitcoin transactions. That was like the peak selling. They were selling illegal stuff in some jurisdictions, some of it was illegal. Some of it wasn’t. It depends on where you were, what was illegal. It was a limited kind of illegal activity, and it was just a small percent of all the transactions.
The narrative that Bitcoin is used by criminals is just wrong. The Silk road was the first big online merchant adopting Bitcoin and proved that it was working. So that’s actually what they did. They validated it.
Fyggex: As a pioneer even before the early adopters, the traditionalists might see you as a moron. How do you think the normal people, not the experts, could protect themselves against risks that are still happening in the crypto industry?
Christian Ander: I think the risk for scammers is decreasing every day that goes. The reason is that more and more countries are regulating cryptos. Everyone knows to buy Bitcoin at BT CX in Sweden. For example, when Bitcoin is integrated into the banking system, then there’s no point of a Bitcoin scam.
The thing is, if you don’t want to be scammed in cryptocurrency, don’t be stupid. Before there were those famous Nigerian letters, you could get an email saying: “You have got 1 million from a relative, far away in Nigeria. Send us 1000 Euro, and we will send you 1 million Euro back.” Now, it’s the exact same scheme, but with Bitcoin. Only way for people to realize that it’s a scam is by not being stupid and believing in such letters.
You don’t buy euros from a guy emailing about it, do you? Like “Oh, I have some really good deals for you”. No, you buy yours from your bank or from a forex currency trading exchange. I think it will be the same with Bitcoin. Find the banks that embrace Bitcoin. It’s very clear where you go to get your Bitcoin safely.
Fyggex: How does your firm BT CX help people today?
Christian Ander: We have focused a lot on having a simple approach. In the Swedish market, we have integrated a digital ID, a digital payment scheme. So basically you can buy Bitcoin in a minute. It takes one to three minutes, and then you have your first Bitcoin, just a very simple process.
We’re not a full fledged exchange, and we’re not a broker. We’re something in between. I’m actually not sure what to call our service. Maybe as a Bitcoin provider with one of the most important aspects of the service is service itself, making everything so easy as possible.
One of the things we have noticed is that when people want to buy their first Bitcoin, they have many questions with a lot of uncertainty around their purchase. We built up a very strong support around until almost midnight everyday. That’s our strongest approach. Our service is very easy with a very good support around it.
Fyggex: After the past ICO mania, there are tens of thousands small tokens out there that most of those just vanish as they fail to gain traction. Why do you think people keep creating new cryptos?
Christin Ander: I think it is a sign that Bitcoin is working very well. People want to copy that. That’s the beauty of the open source. Bitcoin is not a product, it’s a protocol, and it’s not just any protocol. It’s an open source protocol. Anyone can copy paste, modify, verify, then do anything with the Bitcoin protocol. This fosters innovation or evolution. You can use the code and innovate yourself to build something new. And it’s quite natural. I think we will continue to have thousands of new coins in variants of blockchains and everything around it. That’s how evolution works. If something works good, it grows.
The sad part, which we have to live with is that 99% will fail. That’s just how it is with evolution. You can see the same in countries where you have a good innovation climate. Where it’s easy to incorporate and easy to find Co-workers. Countries where it’s easy to apply for regulatory guidance. As a result, you have a lot of companies popping up and then you also have a lot of companies shutting down.
Fyggex: Speaking about that, which do you think are the best countries for cryptos?
Christian Ander: That’s a really hard question, because there are so many parameters to consider. If you want to have regulators that understand technology, that removes 95% of all countries in the world. One of the few regulators that understand technology are Estonia and Singapore. I would love to say Sweden, but its not. Sweden still not great for cryptos.
Fyggex: What is the reason many experts have said Sweden is not good for Crypto Industry?
Christian Ander: There are very few banks and agreements. If you want to start a crypto company, then you only have five banks to choose from. All the five banks have taken a negative stance on Bitcoin, which is extremely unfortunate, but that’s just the way it is.
Then You have the final financial authority (inspection) which is supervising banks. They have taken a very neutral approach. They don’t give any kind of support for the crypto industry, and they don’t do anything negative either. When you have the financial markets, like the banks who are negative and the supervisor that does not act, then it’s toxic.
Fyggex: Estonia and Singapore do not have their own digital currency projects. Was not Sweden famous for the e-Krona digital currency initiative?
Christian Ander: The reason for that is that the Swedish Riksbank (Central Bank of Sweden, Editor note) came to visit us many years ago. 2013 or 2014. They were curious, they had an open mindset. They were asking us a lot of questions. Basically, they did their homework to understand whether Bitcoin was a threat to the monetary system and they concluded it is not.
From that day, we have had a really good relationship with the Riksbank. The actual e-Krona project was initiated by our company, together with one of the major banks in Sweden. We worked with one of the bigger banks and went to the Swedish Riksbank and pitched them to place the Swedish Krona on the blockchain and make it public. And they took the idea in 2014/2015. It then evolved to what it is today.
We’re not engaged in any way today, but they had an open mind. So, I think that’s a strength with Sweden that each Government entity has their own agenda. Even if one unit is neutral or somehow negative, another branch under the Government can be positive
You have the Swedish tax authority, which is both negative and positive at the same time, which is really strange. They went out during the early days of Bitcoin to say that Bitcoin is legal, and this is how we will tax you, which in a way, is a very efficient way of saying that, you can use Bitcoin because we have authorized it. That was good, but then they taxed it extremely hard. We have tons of cases where private individuals who did Bitcoin trading are now bankrupt, because they were taxed several thousand percent of their gains.
Fyggex: How is that possible?
Christin Adler: They tax trading profit; you have to pay the profit. If you do a loss, you cannot fully deduct the loss. If you have 100 trades one day of which 51% are profit and 49 is loss. You still have to pay all the profits. Effectively you end up paying more than 100% in tax.
It makes it dangerous to trade Bitcoin. If you buy and hold Bitcoin, then you are safe, in a way Sweden is perfect for a hold mentality. If you trade Bitcoin, you might go bankrupt really fast.
Fyggex: How do you see near future investment trends?
Christian Ander: The decentralized finance (DEFI) space is proving the point in blockchain technology. That you can put trust in a smart contract, that trusts several million dollars in. That is being explored and improved.
We have also proven that some smart contracts are broken, and people could lose money. That’s something we have to learn from. The DEFI space is a starting point of a fully anonymous, new world economy. Today there is so much manual labor around everything with traditional finance. This is a big thing. If mankind manages to remove the friction from the world economy, that will be good for business, by removing friction with blockchain and DEFI. But it will take a long time.
Fyggex: Any other trends you think we all should pay attention to?
Christin Ander: I am a Bitcoin maximalist. I do own other assets and I believe in other aspects, but my main focus is on Bitcoin. So, my answer is that, within five years, Central banks will own Bitcoin. They will add it on, into their treasury. That is the next big trend. What is happening now is preparation of it with technology and insurance companies. Big private players are putting Bitcoin on their balance sheet. That’s the big trend that is hyping right now.
Fyggex: How about the NFT space?
Christian Ander: It is extremely good, because it’s marketing. People love memes, marketing tweets, I mean, Art. It’s really attracting an entirely new market, which is starting to use crypto. The bad thing with this, is that when people are starting to pay money for Art or even tweet, which are just put into a smart contract, then a lot of people will lose their money. I think a lot of these NFT projects are just hype, similar to the ICO hype 2017. I would say 95% of all the NFT projects out there will fail miserably.
One aspect that I believe strongly in that is merely beginning now. It’s gaming and computer games. I believe, in the not-so-distant future, we will have a move from gaming. Some of these gaming platforms will become hangout places, like the Fortnight game, where they had a music concert with 60 million people. We had never had a musical concert with 60 million people before inside a game itself. That’s kind of part of evolution. Someone must open the door. This is something, and it’s quite novel. I mean, the market is dominated by nerds and men. The common denominator for many of them is that they have played games.
Fyggex: Do you have any favorite cryptocurrencies?
Christian Ander: I’m extremely careful with this. It’s bitcoin.
Fyggex: What do you think are the biggest missing pieces in the crypto industry still today?
Christian Ander: It’s still too difficult for most people. The absolute biggest missing piece is a fully integrated, safe wallet where you can have all your Coins, your NFTs, where you can have all your needed artefacts and functionalities. We need decentralized finance in a centralized way. That’s the missing piece.
Fyggex: Is that not a contradiction?
Christian Ander: It is. I love to use Spotify as the analogy. For example, when BitTorrent came around, somewhere around year 2000, it was excellent de-centralized to protocol for file sharing. It wasn’t until Spotify came along when it really took off. Spotify uses this, decentralized technology to build a rock solid, centralized music streaming app.
I don’t know if we can have one Bitcoin company like that. Which could do all the DEFI. What is needed is an interface. We need something like a smartphone that everyone is kind of holding in their hand and can use in a secure way.
Fyggex: That sounds like a multi-billion business idea. How about now closer, year 2021? If last year’s spring it was the halving that everybody was expecting.
Christian Ander: I’ve been talking about this since 2019, when I was making a plan on how Bitcoin will break the all-time high in the beginning of 2021. We broke it a bit earlier, but then I said, we will also reach for the $400,000 price per Bitcoin by the end of 2021. That goal is still in my calendar. After the Covid19 pandemic happened and the Americans printed 30% more of their US Dollar money supply. That’s what I call the Black Swan event. That’s one of the reasons why Bitcoin is doing so good, because there’s so much money in the system. I think I have to adjust my goals with maybe 30% at least.
The thing is that people are greedy. After Bitcoin hits $100,000, of course we will have a dip, as some will be cashing home profits, but after that people will go mad. From $100,000 to $200,000, it will happen quickly. And from 200, the FOMO will make people go bananas. From 200k to 400k, that will happen in a flash.
Fyggex: Let’s see. It went in a flash from 30,000 to 60,000. You mentioned earlier about Ethereum and evolution. You prefer Bitcoin, but what do you think in general about Ethereum? Bitcoin and Ethrereum are not the same thing. They are quite different concepts.
I agree, they are different, I think we will have hundreds of thousands of different blockchains. Each legal jurisdiction will have their own blockchain. And I’m pretty sure of that. It’s just stupid to say that there can only be one.
Bitcoin will be the world currency, or you will hold Bitcoin as an asset that is not diluted because everything else we have in our economies is becoming diluted. Stocks are getting diluted. Of course they grow well. Bitcoin will be this strange digital asset, that will not be diluted. Playing that part is super important in the global economy.
Ethereum on the other hand, is this smart contract platform where you bet basically. You execute your smart contracts and it could be anything, DEFI or whatever. It has the network effect. There will be Bitcoin and there will be Ethereum and then I’m not sure what else will come next. I guess some kind of intermittent protocol, like Polkadot to bind all these blockchains together. But that’s just me guessing. I’m not sure.
Fyggex: Is there anything else that would be worth mentioning?
Christian Ander: Well, Yes. The banking industry is adding crypto. That’s the next big thing, because that will bring cryptocurrencies to the mainstream. When you go to your Bank and you open your Bitcoin account. That is the day when we break through.
Christian, thank you very much of sharing your experiences, learnings and insight with our audience here at Fyggex.com We wish you and your company continued success