People driven by greed and vanity are the tumor of cryptocurrencies, believes Justas Pikelis, co-founder of payments and trust platform Monetha.
“There are many of those who have no care or interest in the blockchain technology. They simply want to make some money,” he remarked in the interview with DELFI. The 27-year-old Vilnius resident currently owns no automobile, not to speak of the so-called dream car of all cryptocurrency traders—mind you, not without a sense of mockery—a Lamborghini.
Mr. Pikelis also shed some light on the lead-up to probably the most successful Initial Coin Offering (ICO) by Lithuanians, reasons for its success, and the benefits Monetha brings to its users.
“The way I explain it my grandmother is that Monetha exists to make online trading safe,” he remarked.
Yes, I am one of the three founders (along with Laurynas Jokūbaitis and Andrej Ruckij). It all started at the beginning of 2017. We were all unoccupied and searching for new opportunities. I had just returned from Asia, where I had been working for an angel investor fund, and I was looking for a new project.
At the same time Laurynas also finished his project, and we decided to do something together. We were working in one of the collaboration spaces at the International School of Management (a university in Vilnius); we would always be the first to arrive and last to leave. Sometimes we would play FIFA at the end of the day, and that is how our friendship blossomed. We both saw that we were hardworking and loved startups. Very soon we were joined by Andrej; he had just left his job at Adform, where he managed 350 programmers.
We wanted to do something with payments because we found the industry fascinating. We were especially interested in the blockchain technology and we were racking our brains trying to come up with ways to harness it. I myself discovered blockchain on January 28, 2014, when I heard of it on Joe Rogan’s podcast. It featured now well-known and one of the most influential people in the industry Andreas Antonopoulos. I found his insights captivating.
Thus, I had had my sights on the blockchain technology for quite a while, and when the opportunity and right people presented themselves, we decided to give it a go. Our initial idea gradually evolved into a trust platform based on payments—essentially a reputation platform on the Internet.
We decided to go the way of ICO rather than venture capital. The reasoning was simple: unless you are located in places like Silicon Valley or London, it is very hard to attract large amounts of money. The ICO does not have this limitation, especially when our business is based on the blockchain technology. We pooled all our money and decided that we had to act quickly because the market was very volatile. Our advertising campaign lasted roughly four months, and on August 31, 2017 the ICO took place.
The experience was surreal. Naturally, we expected to succeed and motivated the team accordingly, but we thought it would take a few weeks or so. However, when the floodgates opened, we reached our set amount in 18 minutes. Even when the 95 thousand ether threshold was passed, people continued sending transactions. In the end, the capital we raised was three times over the hard cap. We had to return the surplus.
It was partly because of the product itself—people loved it. Then there was the team: at the time we had people from Paypal, Braintree, and very good technology specialists. Our innovative marketing campaign was also a factor. For example, we made a very smart use of video. We did things that many found controversial because we knew that it was the only way to succeed on a small budget. Of course, it also helped that the cryptocurrency market was (and still is) on a rise.
Let me tell you an anecdote. At the Forbes 30 under 30 event we met an ICO founder who had raised around 400 thousand ethers. Their worth then was roughly $2 million. We asked him when he had converted the currency and how much he still had left. He told us he had nothing and that he had converted everything at once. The risk is truly huge because today those ethers would have been worth around $240 million, while he only got $2 million.
As for us, the information is for the large part public: everyone can access Monetha’s wallet and see how many ethers it holds. Currently we have converted less than 30% of them, so our capital is significantly larger than $37 million.
Alternative cryptocurrencies and cryptocurrencies as a whole are highly manipulated. Sometimes we take certain actions which in theory should raise the price, such as releasing a new product, but that does not necessarily produce the intended effect.
Speculations and cryptocurrency trading have a bigger impact on the market than creating value, but that will change, similarly to what happened with the Y2K bubble at the turn of the century. Then all evaluations were also speculative, but companies which applied the millennia-old principles of logic and philosophy became huge. Some examples could be Paypal, Google, eBay, or Amazon.
By the way, Google and Amazon are currently worth more than all the technology companies in the US established after year 2000. I believe that something similar will happen in this case. We are working with scientists to link the use of the MTH with the creation of value for our company.
Naturally, that is important because we have only sold 50% of the cryptocurrency and are keeping the other half. For instance, 10% of it will be used for future financing, which will unlock on September 30. Then we will be able to sell our cryptocurrency and finance ourselves even more.
It would be silly to say that we do not care about the worth of the MTH, but it is not our primary aim. The most important thing right now is to grow the company from the ground up and expand the use of our product. That should automatically increase the use of our cryptocurrency and due to its fixed supply, the price should go up.
Our product is very simple. Its purpose is to ensure that both the buyer and the seller are safe. Until now a big problem of e-commerce has been fraud. When you order something, the goods might arrive different than expected or fail to arrive at all. According to statistics, up to 70% people choose not to buy over the Internet because of fear. We want to evoke the feeling you have when you visit an Apple store: that you will get proper service and the right goods.
We have several means to achieve this. First, we establish the reputation of the seller. It can be transferred between different platforms. Second, we protect the buyer. If the buyer gets something different than what was agreed on, or is tricked, we are there to help. In a way, we insure the transaction. As I say to my grandmother, “Monetha exists to make buying online safe.”
Right now, we are focusing on portals where people buy from one another because there is absolutely no trust there. You cannot be sure if the phone you are buying is real, what kind of person is selling it. Also, you have to meet that person, see how he talks, how he looks, and only then decide. We want to give people a kind of passport which would show their reputation online.
We first want to expand, have as many users as we can, and only then think about a business model. That said, it is based on transaction fees. We are thinking of taking 1.5% of the transaction amount from the seller, but the model might change in the future.
When you meet lawyers and marketing specialists in the city of Zug, they already know about the blockchain. There is no need to teach them, unlike in Lithuania a year ago when we started Monetha.
The second argument is that Switzerland is very lenient towards ICOs. The Swiss make money from businesses, and many of the ICO companies are established in Switzerland. There were other options to consider, such as Gibraltar or Malta; however, these are not places with which we would like to be associated.
Currently we have fewer than 25 full-time and freelance employees. We plan on having around 50 people in the coming 10-12 months.
Some of them work for the Swiss company, some for Lithuanian company Accurro (according to Lithuania’s State Social Security Insurance Board, on 21 May the company employed 14 people who were paid the average of €5705.60 before taxes).
They focus on the product. The majority of them are engineers, people who understand how to create a system, mobile applications, who know what users need and how to generate the most value.
My job in Monetha is to establish as many relationships with partners and potential users as I can. Thus, it is partly business development.
The other part is representation of the company. You could say that we are a publicly listed company: we have 11 thousand MTH token holders who want to see us being active.
We need to show that we can create a product that will be used, which is why we attend various conferences. For example, I spent the last three weeks in the US where I gave speeches in conferences like Collision that took place in Illinois Institute of Technology; we also went to New York to attend the biggest blockchain conference Consensus. I am always on the move, flying to places and living in small hotels.
I do not have one. I use apps for that.
It was people driven by greed and vanity, they are the biggest tumor of the industry. Probably no one would deny that one of the principles of greed is to make money by doing nothing. Many believe that is exactly what cryptocurrencies offer. They think they will buy some cryptocurrencies and become multimillionaires. However, nothing could be further from the truth.
Sure, there are ICO companies that make money hand over fist, buy cars, and so on. It might even be legally feasible, but we do not want to be that kind of company. In technology conferences we are the flag-bearers of the proper kind of ICO.
The memes indicate a big problem. After all, satire always has some truth in it. There are many of those who do not care about the blockchain technology; they do not understand it and do not want to understand. They only want to make some money.
I believe that no one knows what will happen, and those who do are charlatans. For example, in America I met famous investor and millionaire Tim Draper. He claims that next year a bitcoin will be worth $220 thousand and walks around wearing a necktie with bitcoin symbols on it.
But that is what people with bitcoins say. Those who do not have any believe it is all a bubble. The truth is somewhere in-between. It is hard for me to predict where the market will be in two months’ time, not to mention five years. However, I do believe that the blockchain technology will revolutionize certain sectors. The question is if cryptocurrencies will play a part in it.
Originally published in the news portal — DELFI on May 26th.