Ishan Pandey: Hi Jack, welcome to our series “Behind the Startup.” Would you mind telling us about yourself and the story behind Phemex?
Jack Tao: For me, Phemex is more than just another cryptocurrency derivatives exchange. I spent over a decade on Wall Street as a VP at Morgan Stanley, and if that taught me anything, it’s that the world of financial services as it stands today isn’t designed for retail investors.
I encountered blockchain technology in its early days and even earned some Bitcoin from mining.
However, despite the community’s philosophy of decentralization, transparency, and distributed control, I found few of these ideals implemented on mainstream exchanges. This is what led to Phemex’s inception.
Ishan Pandey: Could you tell us about crypto derivatives and how they work? Furthermore, could you enlighten us about the regulations surrounding these products?
Jack Tao: Cryptocurrency derivative products are precisely what they sound like: products that derive their value from an underlying crypto-asset.
They come in the form of traditional products like futures and options, but unlike what’s available in conventional offerings, Phemex also provides perpetual swaps, which allows traders to maintain their positions indefinitely using a funding mechanism.
Digital asset regulation is complicated, but with governments slowly learning the value of blockchain technology, we’re seeing more and more regulators looking into how they can control the asset class.
We don’t see DLT as a replacement for the current infrastructure but rather an evolution of the financial system. Phemex adheres to a variety of regulations, but as lawmakers realize how blockchain is paving the way forward for finance, it should become much easier for platforms to start adhering to legal standards globally.
For interested traders who want to learn more about cryptocurrency derivatives, please read our blogs.
Ishan Pandey: Many cryptocurrency platforms are operating without a license from the regulator where they are registered. What are your views on such unregulated platforms, and what are the risks attached to them?
Jack Tao: Blockchain has only survived so long because of its philosophy of decentralization.
Many believe the 2008 financial crisis sparked the need for distributed control, and with how carelessly centralized entities have handled our economies throughout history, this seems like the only way forward. However, money as a concept has always been centralized, and hundreds of years of regulation designed for centralized money can’t suddenly be applied to a decentralized ecosystem.
We believe that regulating the blockchain space is the only way to push these ideas into the mainstream, but we also understand that it’s not as simple as slapping the same old rules on a new form of money.
Regulation will take time, and until we can develop sound laws that respect both the traditional and futuristic aspects of money, there will always be unregulated platforms.
A decrease in these platforms could signal the industry starting to mature, but I think they will always exist. In the meantime, whether a law dictates it or not, upholding a commitment to protect all users and their assets is a must.
Ishan Pandey: What advice would you give to traders on how to trade financial instruments?
Jack Tao: Start small, and don’t buy into the FUD or the FOMO.
Especially in an industry like crypto, with absurd profit margins, it’s easy to buy into the get-rich-quick mentality. However, it’s important to remember that a successful portfolio has more to do with avoiding bad decisions than making good ones.
Education is critical here: there will be all kinds of people and projects trying to convince you to invest in a particular token, and without understanding why or how a project creates value for the community, it’s impossible to weed out the genuinely worthwhile investments from the scams.
Speaking of community -- get involved! The cryptocurrency community is quite welcoming. Take part in events and get to know other people in the space. For example, we conduct trading competitions, giveaways, and other events all the time.
In fact, Phemex is celebrating its 2nd anniversary this month! We’re also conducting a ‘Dream With Phemex’ event as part of our 2nd anniversary, where we’ll be selecting a few special winners and making their dreams come true.
Ishan Pandey: What are your views on Web3, and how can it be leveraged in different industries?
Jack Tao: Just like Web2 made it simpler for end-users to interact with the Internet of Information, Web3 will revolutionize how the world interacts with the Internet of Value.
Already we’re seeing applications that have no parallel in the realm of traditional financial services, and as Web3 applications continue to be built for more mainstream audiences, decentralized value transfer should become the norm for most modern web-based applications.
Web3 will also change how things are monetized. One of the biggest challenges with today’s Internet is how information is gathered and utilized. With how blockchain networks make data monetizable, we should see a significant shift in modelling businesses.
Fields like supply chain and identity security are entering a new paradigm, and with DAOs, entire organizations can take on and contract work without a central entity calling the shots.
Ishan Pandey: How do you see the Web3 revolution impacting the development of dApps and the DeFi space?
Jack Tao: Decentralized Finance is a relatively new facet of the Web3 revolution, but arguably one of the most important. Only around 60% of the world’s population has access to the Internet, with approximately 80% of that demographic representing people between the ages of 18-54.
DeFi enables anyone with a smartphone to access the blockchain and its associated services, which is an enormous step towards global financial inclusion.
Ishan Pandey: What role has the pandemic played in allowing traders to profit from cryptocurrency investments? Also, what do you think the post-Covid-19 scenario would look like for the blockchain ecosystem?
Jack Tao: The current narrative has hinged on the idea that Bitcoin is a hedge against inflation, and with the U.S. dollar’s wholesale price index rising, it’s a great time to be invested in digital assets.
Bitcoin’s deflationary model is an excellent avenue for long-term store of value, and this has caught the attention of investors across the globe as inflation continues to ramp up.
However, as the world begins to recover from the COVID-19 pandemic, economies too will start to stabilize, and the fear surrounding inflation will start to wane once more.
After all, inflation isn’t entirely a bad thing. The benefits of cryptocurrencies will continue to become apparent, and this should keep bringing people into space. I believe that while the pandemic may have encouraged many to diversify into the asset class, its absence will not pull them back out.
Ishan Pandey: According to you, what new trends will we see in the blockchain industry?
Jack Tao: Facebook’s recent foray into the metaverse narrative has investors everywhere looking for the next new trend, but we’ve seen this coming for quite some time now for those in the blockchain industry. As a concept, the metaverse has existed for decades, portraying a world where the lines between our online and physical personas are blurred.
This year we’ve seen the NFT sector explode with activity, and with the metaverse slowly creeping upon us, the concept of digital ownership is only going to become more critical.
As I said during my speech at the recent World Blockchain Summit in Dubai, no one really knows what the metaverse will look like, but that’s because no one person, entity, or conglomerate will design it -- instead, it will be constructed by billions of distributed, disparate individuals across the planet.
Disclaimer: The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence, 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.