The Cryptonomist had the opportunity to interview Eric Demuth, CEO of Bitpanda, to discuss the company’s recent developments following the recent announcement of a partnership with the Raiffeisen Bank and a $52 million A-series financing for further expansion in Europe.
Eric Demuth is an entrepreneur with a background in eSports. While working in the financial sector in London and Vienna since 2009, he also founded his first company. Frustrated by how difficult it was to buy and sell cryptocurrency like Bitcoin, he co-founded Bitpanda.
In addition to crypto you also deal with metals, such as gold, silver and palladium, did their demand increase or decrease during the pandemic?
This pandemic has already been the cause of a major change in behaviour – the infamous European citizens who love cash have started to use cards more. People have really started using digital payments on a large scale. For the first time in the history of credit cards, according to one report, plastic has surpassed cash as a payment method.
This is already a huge indicator of a change in culture and mentality, however small. We have also seen an increase in demand for our services: with everyone staying at home, and many companies being asked to stay closed to limit the spread of the virus, investment has taken on a whole new importance for people.
In particular, interest in gold has skyrocketed, proving to be a safe haven as it has always proved historically.
Thanks to the possibility of buying cryptos in cash through your partners in Austria (Bitpanda To Go), purchases of cryptos have increased, how much?
Bitpanda is all about ease of use. Our users can create a Bitpanda account in minutes via desktop and iOS and Android application completely in English and start investing 24/7 with a minimum of one euro.
Bitpanda To Go is the result of a partnership between Bitpanda GmbH and Austrian Post AG – and this is a very good thing, because we firmly believe that this new option will make people more comfortable buying cryptos.
With over 400 postal branches and more than 1300 partners throughout Austria, Bitpanda To Go is available everywhere. A light or full verified account on Bitpanda is sufficient to redeem the codes. The coins are deposited directly into the user’s wallet, which can dispose of them freely and instantly. Bitpanda To Go is a nice additional product and is well received among Austrians.
Have you seen an influx of institutional users on your platform?
In the last six months, we have noticed that more and more institutional investors are using our platform to open direct positions in the cryptocurrency market. This is true for many crypto fund managers who are now gaining more support from institutional investors who see this market as an alternative investment strategy.
The increased visibility of reputable investors approaching digital assets also helps to fuel growing trust within the community. Considering how young Bitcoin is as a new asset class, it is absolutely incredible to see how much the market has already matured over a decade or so.
The longer Bitcoin can prove its worth as a reservoir of value and digital gold, the harder it will be for institutional investors to justify why they are not adding it to their portfolios.
Are decentralised exchanges (DEX) an enemy for your business? To what extent?
Decentralised exchanges have existed for some time and are receiving a lot of attention again. In our opinion, the technology is interesting, which is why we have our own interoperability project called Pantos to actively participate in the development of a useful open source protocol.
Obviously we are keeping an eye on space, but most novice users are opting for easy-to-use services like Bitpanda, and for good reasons. They are not willing or not able to use decentralised services, because to use most of these platforms some technical knowledge is needed. There are also risks, because even on a DEX there is a person who has access to the keys and who is writing the code.
The recent attack on KuCoin has seen the loss of almost 300 million dollars, do you have protection measures and even insurance to cover clients?
Bitpanda works every day to offer maximum security to users. An easy verification process allows you to access an intuitive, fast and secure trading experience.
Bitpanda is a fully compliant company and offers state-of-the-art security that includes a PSD2 payment service provider license. This, together with the strict regulations and supervision of the Austrian financial authorities, makes us a secure investment environment.
Are you planning to launch your own debit card in the future?
In Western European countries strongly affected by the pandemic, according to one analysis, offline transactions have decreased by 60% per year since the blockade. The current reaction from the fintech industry with debit and credit cards has been influenced by the needs and priorities of the millennia, which expect more than a free credit card account.
What is the most frequent question you receive?
In recent months, the world of cryptocurrency has experienced a considerable increase in temperature: Therefore, „When moon“ is the most frequent question. But I have no answer – it is the market that has the power to determine prices.
Are there any updates for the launch of your Launchpad?
The year 2020 has been all about development from a crypto-player based in Austria to a leading neobroker in Europe. This year we had a lot of exciting updates, with some just around the corner. From the announcement of expansion in Spain, France, Turkey and Italy to many product advances. We have launched an innovative product: the Bitpanda Crypto Index, a simple and automated way for anyone interested in investing in the crypto currency market. We have also worked with Raiffeisen Bank International to implement their technology on RBI Coin, a pilot e-money solution. In addition, we have just closed one of the largest rounds of A Series financing in 2020. This is an important achievement for Bitpanda and especially for our vision. This investment will play a huge role in promoting our growth strategy and our mission to become the leading investment and trading platform in Europe.
Based on what do you list a token on your platform?
In general we focus a lot on due diligence when it comes to listing new assets. What we absolutely do not want is to offer a token that is no longer in circulation or has completely lost traction in, say, 5 years, as we do not know the time horizon of our users and want to give them secure access to investments in every asset we offer in the medium and long term on our platform.
That said, it is vital for us as a company to ensure that the digital assets we offer on our platform remain relevant over time. This is particularly important for users who want to invest with a longer time horizon, as we want to make sure that there is still demand for a certain digital asset in, say, two or three years.
That’s why we spend a lot of time identifying and deciding on the most promising candidates for inclusion on the list. Here are our methods: A thorough search and listen to the Bitpanda community.
Which is the country with the most activity per crypto and which is the most used asset?
Spain is the EU market with relatively higher crypto adoption by around 10% – this is reflected in a high level of activity in our Spanish user base.
Overall, according to our data, Bitcoin is the most traded asset. Ethereum is the second most traded digital currency after BTC, followed by our Bitpanda Ecosystem Token (BEST), which is essential to get the most out of Bitpanda. It offers the growing community of approximately 1.3 million Bitpanda users a wide range of rewards and benefits when using Bitpanda products and services.
It is a fact that our goal is to educate our users about the potential risks and benefits of digital assets. The importance of a diversified portfolio is something that is communicated on a regular basis, as is the fact that a less volatile asset such as gold is a good element to put in the mix.
Read Bitpanda’s answers on DeFi on DeFi Today.