So many of Bilal Hammoud’s friends came to him for cryptocurrency advice that he started NDAX.io, a Canadian cryptocurrency exchange.
Trained as a chemical engineer, Mr. Hammoud grew a career in Alberta’s oil and gas industry. His minor was in business and that would be put to use, first in 2009 when considered developing a fintech focused on equities and stocks but stopped the project due to most banking infrastructure not being able to handle the technology.
Fast forward to 2017 and the growing attention being paid to cryptocurrencies. Mr. Hammoud had been following the sector for six years, and was often approached by friends asking for advice on how best to invest. Their options in Canada were limited, Mr. Hammoud said.
“Banks viewed cryptocurrency as a threat and they didn’t want to bank anyone who had anything to do with cryptocurrency,” he said.
Seeing a clear opportunity, Mr. Hammoud began to develop NDAX. He met with banks, showed them the technology and described its compliance measures. He had a successful seed round and has been growing the business ever since.
“We’re growing,” Mr. Hammoud observed. “I believe we’ve earned the trust of both retail and institutional investors.”
NDAX’s advantages include an easy-to-use platform and the ability to quickly deposit money from bank accounts. It offers 10 different trading pairs and also caters to institutional investors by facilitating custody, banking and settlement services within an hour, Mr. Hammoud said.
“It’s more personalized service.”
The development of cryptocurrency caught regulators off guard and they have been catching up ever since. Add in some early high-profile failures like the Quadriga debacle and Canadian regulators were especially focused on investor protection.
Bitcoin remains the top cryptocurrency due to a consistent reputation built over 11 years, Mr. Hammoud said. It’s stable with no issues and is doing exactly what it was designed to do.
He believes it’s too early to use Bitcoin as a store of value, however. With each four-year halving comes volatility and price changes which repeatedly happen. Predictably we see panic, fears of a crash and liquidations before things return to normal.
The COVID-19 pandemic has produced behaviour which could assist the mainstreaming of cryptocurrencies, Mr. Hammoud suggested. Large government stimulus packages highlight the ability of governments to produce unlimited amounts of money and to generate larger and larger deficits. Look to Venezuela and Turkey and the lack of trust people have in their governments.
“It’s better than gold and easier to move,” Mr. Hammoud said of cryptocurrencies. “There’s no SWIFT. People are starting to recognize that and we’ve seen a lot more growth.”
Mr. Hammoud estimates it will be five or 10 years before we have to deal with national cryptocurrencies in top democracies, though efforts are accelerating behind the scenes in many countries. The advantages of saving printing costs, quick distribution, and anti-money laundering and anti-terrorist financing protection are some of the reasons countries will consider the move to digital. China aside, look for the concept to be tested in third-world countries while more developed economies watch and their banks (in countries like Canada) consider the effect on their business models.
Remember we are still in the beginning phase of cryptocurrency development which, like any sector in this phase, means trial and plenty of error, Mr. Hammoud cautioned. Bitcoin has been a success as it fulfills the purposes it was designed to accomplish. Stablecoins, while newer, are growing to serve many important purposes. Those built on Ethereum can tokenize assets and allow people to lend and borrow through decentralized protocols controlled by audited smart contracts, all while eliminating costly intermediaries.
The industry has come a long way so far, he reminded us. When Bitcoin was created there were no exchanges and you had to mine your own. Now simply create an account on an exchange and buy it.
The next key step is to facilitate the ability to pay with crypto by tapping your credit card or using an app, with all the transferring and conversion done on the back end.
“That goes to show how early we are in the game,” Mr. Hammound said.