Ishan Pandey: Hi Rossen, welcome to our series “Behind the BigTech.” Please tell us about yourself and the story behind Skrill?
Rossen Yordanov: Skrill has been around for 20 years now, providing millions of users with a digital wallet service. We are truly global, with a very rich feature set helping users pay online, send and receive money, store and spend their cash, and get exposure to digital assets.
I joined Skrill in 2010, when we were called Moneybookers, and have been part of the team responsible for driving the adoption of our services ever since. Then, around 2017 I got very interested in crypto, and this interest has only increased over the years.
Ishan Pandey: Elon Musk’s recent U-turn on Bitcoin is causing a lot of controversy in the cryptocurrency community. What are your views on Bitcoin mining and the amount of electricity it consumes?
Rossen Yordanov: Obviously, there are issues with having an asset tied to massive amounts of carbon-intensive computing. However, there are different ways to look at energy consumption. One is the amount of energy, another is the type of energy used.
I think with regards to Bitcoin – there is a lot that can improve and will improve, particularly in regards to the type of energy used.
There are strong opinions in the space that Bitcoin mining can act as an economic battery and support the transition to more renewable energy sources, by way of making them more commercially viable.
I find this very interesting. Also – not all cryptocurrencies will require much power. There are developments coming on Ethereum, for example, which will reduce energy consumption dramatically over there.
Ishan Pandey: Skrill is a leading digital wallet provider and a giant in the e-payments market. Please tell us about why Skrill is entering the cryptocurrency industry and the company’s purpose?
Rossen Yordanov: We started out in the crypto space in 2018, by offering users a very easy way to engage with crypto. Users can download the app, fund their account and choose which crypto assets they’d like to buy.
Skrill users can convert 40 different traditional currencies into Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, 0x, Stellar Lumens, EOS, Tezos, OMG Network, Cardano, Chainlink and we are adding many more very soon.
Unlike many wallets, users can take advantage of over 100 different convenient deposit methods which include credit cards, bank transfers and local payment options. Also – there are nice features like conditional orders and crypto-to-crypto trading which other wallets lack.
For crypto, we see a real opportunity to make investing more accessible for consumers. Plus, even more importantly – to improve the utility that cryptocurrencies have, by providing a bridge between crypto and traditional finance. Giving people who have crypto the opportunity to easily use it in our environment will be very big.
Ishan Pandey: Ethereum and Bitcoin transaction fees are touching $39 to 18$, respectively, which is a considerable barrier for micro-payments and transactions. What are your views on the rising transaction fees and possible solutions?
Rossen Yordanov: Firstly, there’s scaling solutions coming to Ethereum, and I believe things there will change a lot, for the better over time. With Bitcoin, similarly, there are applications built around lightning network which are very fast and cheaper.
That said – I still do not believe that Bitcoin & Ethereum will be used for micropayments, or generally anything similar to what Visa or Mastercard do anytime soon.
There’s a difference between a transactional layer and a settlement layer, and I believe cryptos, for now, are more suitable for the settlement layer. And for other things, which are not necessarily related to payments, too, of course.
Ishan Pandey: Skrill recently added Cardano to its platform. According to you, what is going to propel the widespread adoption of cryptocurrencies? Further, what are the risks that merchants should be aware of when they accept cryptocurrencies?
Rossen Yordanov: Indeed, and Cardano is a very interesting project, with a massive global community and an amazing team of academics. It still remains to be seen, however, what solutions they will bring over to the space, in my opinion.
That said – with regards to adoption, I think that the main ingredients needed are utility and simplicity of user experience. Crypto has been very useful for people to speculate, invest, and generally earn money in the past years.
But also, as of recently - we are seeing some very cool use-cases beyond that purely speculative aspect like super quick decentralized borrowing and lending for example, or NFTs for sports moments, and art. I believe that when these use cases are also delivered with a UX that people are broadly comfortable with, adoption will totally take off.
Then, about merchants accepting cryptocurrency, I believe most merchants do take the route which is to not take the cryptocurrency themselves, but rely on a payment provider. In this way, the risks around safety, custody, price fluctuations are very much mitigated for the merchant, which is a great solution for them.
Another important aspect is KYC and generally – being compliant, as a cryptocurrency address doesn’t have the attributes of, for example, a bank account like name and country but on the positive side the traceability of past transactions is amazing and there are great tools for reducing associated risks.
That can also be done by the payment provider, and we are looking forward to helping merchants with that in the future.
Ishan Pandey: With the public’s rising interest in the crypto world, many users and now moving towards crypto trading give rise to frauds and instances of money laundering. How is Skrill tackling the issue of illicit transactions and money laundering associated with digital assets?
Rossen Yordanov: We operate a zero-tolerance policy towards illegal transactions or unlawful practices, so security, fraud and the prevention of abusive use of our products are a top priority. As a regulated financial institution, Skrill is governed by strict due diligence procedures.
We have a comprehensive compliance framework in place to prevent the abuse of our services and we work hard to make that framework as strong as possible. We also have monitoring systems to identify suspicious activity and if we detect anything suspicious we take appropriate action which includes reporting it to and co-operating with the relevant authorities
Ishan Pandey: Recently, there has been a massive uproar in the crypto market wherein people have purchased digital art using non-fungible tokens (NFTs). What is the future of NFTs in the cryptocurrency market and is it the next big thing? According to you, what is driving crypto’s value in 2021? Further, what are your views on NFT art and its valuation?
Rossen Yordanov: Everybody's talking about NFTs. You have your fans, and your haters. But really, you have to look somewhere in the middle.
NFTs today are mostly digital collectibles. We know what happened with beanie babies. We understand that a G.I. Joe vintage doll might be worth thousands of dollars to somebody, and maybe five dollars to somebody else. So we can apply all of that ambiguity to NFTs as well.
We don't have to argue that NFTs are inherently worthless, and that they’re a scam, or that the whole concept is ridiculous. We don't do this with other kinds of collectibles. We have divergent communities that see things in terms of their own value consensus. That's okay with NFTs, too.
The great thing though about NFTs is there is provability of the provenance and the scarcity of the item in question. So that’s a great upgrade for the world of art and collectibles, and I think that more and more assets will be digitalized that way in the future. More – NFTs make it possible for creators to collect commission on future sales of their work, which is outstanding for the creator economy.
So – I do think that NFTs are one of the things which are driving things forward in 2021, together with Decentralized Finance (lending, borrowing, yield-generating and other smart-contract protocols).
Ishan Pandey: The number of Bitcoin addresses is increasing, which is a standard measure of adoption. Transactions on some of the extensive networks, such as Ethereum, are witnessing the same trend. Do you think we will see more and more fintech companies expanding to the cryptocurrency market? Further, what are your views on companies holding digital assets on their balance sheet?
Rossen Yordanov: We absolutely will see more fintech companies expanding cryptocurrency operations, especially because they're doing that according to the demand and interest of consumers.
I support companies holding cryptocurrencies, with one very important disclaimer – again, you have to plan and be very prepared for volatility. As long as a company has a very high tolerance towards volatility (which can come with a smaller allocation, or a generally longer-term view and plan), I do believe that this is a route that can be taken and can be long-term lucrative.
Ishan Pandey: The DOGE coin memes floating around the internet and Elon Musk’s Twitter jokes about it and the current price rally surrounding it is currently one of the most talked-about topics in crypto space. Do you think that these types of social trends can lead to mass adoption of cryptocurrencies?
Rossen Yordanov: So this is an excellent example of what you were touching on in your last question. There is entirely too much subjective value in Dogecoin. If everybody's looking at its value to change based on what someone somewhere says on Twitter or on TV, that's not a solid foundation. Hardly any investor would argue for that. It's just not sustainable. Having said that, the market, and frankly many markets have been crazy, and if people want to buy a digital coin with a dog’s face on it, they can totally, and will probably do that. I personally watch from the sidelines on this one, and do not think it’s great for cryptocurrencies’ image in general.
Ishan Pandey: Due to highly volatile prices and attempts by large companies to join the market, cryptocurrency has continued to make headlines this year. What new trends can we expect to see in the future moving forward?
Rossen Yordanov: We also already saw the first country to approve Bitcoin as legal tender – in El Salvador. Maybe that’s another trend? People are already speaking of Paraguay, Mexico as possible next ones. At the same time, the situation in the US doesn’t seem to be as positive as some thought it would be by now, and a Bitcoin ETF still doesn’t seem to be imminent. If this happens though, that’s big too. I know from conversations with people in the space that institutional inflows to Bitcoin have decreased, but there are more waves to come – there’s much of it in the pipeline, it just takes time.
Also, I expect that fintech will continue to open up to crypto in a big way, and we will see a general convergence and integration between fintech and crypto companies. The spree of acquisitions/mergers has already started. We at Skrill have a lot of exciting things on our roadmap both in terms of making exposure to more crypto assets ever easier and in terms of increasing the real-world utility of crypto for people.
And, generally, use-cases built on blockchain will continue to emerge. The future is sunny, with occasional storms, as is customary for the crypto space.
Disclaimer: The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence by asking the right questions and equipping readers with better opinions to make informed decisions. The material does not constitute any investment, financial, or legal advice. Please do your research before investing in any digital assets or tokens, etc. The writer does not have any vested interest in the company. Ishan Pandey.