The Cryptonomist had the opportunity to interview Eric Demuth, CEO at Bitpanda, to talk about the recent developments in the company after the recent announcement of a collaboration with Bank Raiffeisen and a $52 million series A funding for a further expansion in Europe.
Eric Demuth is an entrepreneur with an eSports background. Whilst being active in the financial industry in London and Vienna since 2009, he also founded his first company. Frustrated by how hard it was to buy and sell cryptocurrencies like Bitcoin, he co-founded Bitpanda.
Besides crypto you also trade metals, such as gold, silver and palladium. Did their demand increase or decrease during the pandemic?
The latest pandemic has already caused a major shift in behavior – the infamous cash-loving European citizens have started to use cards more. People have really started to switch to using digital payments in a massive way. For the first time in the history of credit and debit cards, plastic has overtaken cash as a method of payment, according to a report.
This is already what I feel to be a huge indicator of a culture and mentality shift, albeit a small one. We’ve seen an increase in demand for our services as well: With everyone staying indoors, and many businesses being asked to remain closed to contain outbreaks, investing got a whole new relevance for people.
Especially the interest in gold has soared; it has proven to be the safe haven asset it is historically known to be.
Due to the possibility to buy crypto with fiat through your partners in Austria (Bitpanda to go), purchases of cryptocurrencies have increased, how much?
Bitpanda is all about the ease of use. Our users can set up a Bitpanda account within minutes via desktop and iOS and Android app fully in Italian and start investing 24/7 with a minimum of one euro.
Bitpanda To Go is the result of a partnership between Bitpanda GmbH and the Austrian Post AG – a nice add on because we strongly believe that this new option will make people more comfortable with buying crypto.
With over 400 post branches and more than 1300 post partners throughout Austria, Bitpanda To Go is available everywhere. All it takes to redeem codes is a verified account with light or full verification on Bitpanda. The coins are deposited directly in the user’s wallet and they can dispose of them freely and instantly. Bitpanda To Go is a nice add-on and is well received among Austrians.
Have you seen an increase in the number of institutional customers on your platform?
In the past six months, we recognized that more and more institutional investors are now using our platform to build direct positions in the cryptocurrency market. This applies for a lot of crypto-fund managers that are now getting more backing from institutional investors that see the crypto market as an alternative investment strategy.
The greater visibility of reputable investors warming up to digital assets also helps fuel growing confidence within the community. Given how young Bitcoin is as a new asset class, it’s absolutely incredible to see how much the market already matured within roughly a decade.
The longer Bitcoin can prove its appeal as a store of value and digital gold, the harder it will get for institutional investors to explain why they are not adding it to their portfolios.
Are decentralized exchanges (DEX) an enemy for your business? To what extent?
Decentralized exchanges have been around for a while and are now receiving a lot of attention again. In our opinion, the technology is interesting; that’s why we have our own interoperability project called Pantos to actively participate in the development of a useful open source protocol.
We are of course watching the space, but most newbie users are opting for easy-to-use services like Bitpanda for good reasons. They are simply not willing or not able to use decentralized services, because you need quite some technical knowledge for most of those platforms. There are also risks involved, because even on a DEX someone has access to the keys and is writing the code.
The recent attack on KuCoin saw the loss of almost $300 million, do you have protection measures and even insurance to cover customers?
At Bitpanda, we work every day to offer the highest security to our users. An easy verification process gives you access to an intuitive, fast and secure trading experience.
Bitpanda is a fully compliant company and offers state-of-the-art security that includes the mentioned PSD2 payment service provider licence. This in combination with strict regulations and oversight from the Austrian Financial Authorities, makes us a safe place to invest.
Are you planning to launch your own debit card in the future?
In Western European countries heavily affected by the pandemic, offline transactions decreased by 60% YoY after the lockdown, according to an analysis. The current fintech response with debit and credit cards has been influenced by the needs and priorities of millennials, who look to fintech for something beyond a free account with a card.
What is the most common error and the most frequently asked questions you receive?
Over the last few months, the world of cryptocurrency has heated up significantly: Therefore, “When moon” is the most frequently asked question. But I have no answer – the market holds the power in determining prices.
Are there any updates for the introduction of your Launchpad?
2020 was all about development from an Austrian based crypto-player into Europe’s leading neobroker. We had a lot of exciting updates this year with some being just around the corner. From announcing expansion in Spain, France, Turkey and Italy to a lot of progress on the product side. We launched a game-changing product: the Bitpanda Crypto Index, an easy, automated way for anyone interested in cryptocurrencies to invest in slices of the crypto market. We also partnered up with Raiffeisen Bank International to implement their technology on RBI Coin, an e-money pilot solution. In addition, we just closed one of the largest Series A funding rounds of 2020. It’s a major vote of confidence in Bitpanda and especially in our vision. This investment will play a huge part in supporting 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?
Overall we focus heavily on due diligence when it comes to listing new assets. What we definitely don’t want is to offer a cryptocurrency that is not around anymore or completely lost traction in, let’s say, 5 years, as we don’t know the time horizon of our users and want to give them safe access to investing in every asset we offer mid- to long-term on our platform.
That said, it’s key for us as a company to ensure that the digital assets we offer on our platform maintain a certain relevancy over time. This is especially 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, let’s say, two or three years.
That’s why we put in a lot of time into identifying and deciding on the most promising candidates to list. Our tools here: Careful research and by listening to the Bitpanda community.
Which is the country with the most crypto activity and what is the most traded asset?
Spain is the EU market with the relatively highest crypto adoption of approximately 10% – this is reflected by a high activity level of our Spanish user base.
Overall, Bitcoin is the most traded asset, according to our data. Ethereum makes the second most traded digital currency after Bitcoin, followed by our own Bitpanda Ecosystem Token (BEST), the key to getting the most out of Bitpanda. It offers the growing community of around 1,3 million Bitpanda users a wide range of rewards and benefits for use on Bitpanda products and services.
It’s a matter of fact, that we aim to educate our users about the potential risks and rewards of digital assets. The importance of a diversified portfolio is something that is communicated regularly, also the fact that a less volatile asset like gold is a good fit to throw into the mix.
Read the Bitpanda’s CEO replies about DeFi on DeFi Today here for free.