EKMH Innovators Interview Series
An interview series spotlighting global tech influencers, disruptors, visionaries, and of course, innovators.
CoinDCX Co-Founder/CEO Sumit Gupta helms India’s largest cryptocurrency trading platform and liquidity aggregator. When Bitcoin began gaining traction in 2014, Gupta saw the potential of leveraging blockchain technology to enable financial inclusion, and consequently founded CoinDCX. Prior to establishing Singapore-based CoinDCX with fellow Co-Founder/ CTO Neeraj Khandelwal, the ITT Bombay graduate worked as a software engineer in Tokyo for tech giant Sony. Gupta also founded ListUp, one of the first e-retailer companies with a location-based app. Under his leadership, ListUp had grown into a multimillion dollar business within one year. Currently CoinDCX touts more than 27,000 active month traders and a $10M daily trading volume. The trading platform seeks to build an all-inclusive ecosystem by “bringing trust between the trustless.” DCX is also focused on developing more borderless financial services which ensure faster, simpler, and uninterrupted flow of capital.
I had the pleasure of catching up with Gupta via email to learn more about his perspective on a variety of topics including his views on all things crypto, DeFi, global trends and scalability. Our interview follows.
EKMH: What’s driving crypto? What led to and possible caused these trends? What’s in store for 2020?
Sumit Gupta: As the crypto sector matures, we move further and further away from the once volatile nature of the industry—highlighted by the boom and bust of the Initial Coin Offering (ICO) market, when in 2017, following a massive rally, cryptocurrency markets experienced a sudden downturn. Increased pressure on ICOs and regulatory crackdowns brought on general anxiety within the market, which in turn drove trading volumes and token valuations down. What followed was a year of uncertainty and dashed expectations of both investors and builders in the crypto space. Faced with heavy losses, hundreds of crypto startups were forced to cease operations. Despite the harsh market climate, several prominent projects weathered the storm and emerged with better funding, technical excellence, and expert connections.
Last year, in 2019, we saw the industry rebound dramatically, and institutional interest in crypto reach new heights with the launch of Intercontinental Exchange-based crypto trading platform Bakkt in September, as well as the introduction of Libra by Facebook. As we embark on a new decade, I believe the following trends will be the driving forces that shape the growth of the crypto space in 2020, having profound effects on every aspect of the industry, from decentralised applications (dApps) and decentralised finance (DeFi) to gaming, institutional grade products and more.
EKMH: What’s holding back DEX?
Sumit Gupta: Despite having been around for several years, decentralised exchanges have yet to gain traction among a critical number of users. From a technological and product standpoint, there are several barriers that will need to be addressed in 2020 before we can see wider adoption, such as aggregating liquidity, offering high latency with zero compromises on security, as well as well-packaged products for the mainstream audience. Regardless, I believe we will see further developments for the DEX sector in the year ahead—the future looks bright and I am excited to see how a truly decentralised exchange can impact the world.
EKMH: Will there ever be a DeFi revolution?
Sumit Gupta: Considerable progress has been made in prominent decentralised finance (DeFi) applications such as Maker, Uniswap, and Synthetix on the Ethereum blockchain. Overall, there is an estimated total of more than $400 million worth of Ethereum invested into the development of DeFi applications.
In the earliest days of DeFi when the idea of a decentralised financial system was just a vision, the question was whether this was even a possibility and whether there was a need for this kind of open market—today, it is a question of whether or not we have the technology to build a product that has the ability to scale and process millions or even billions of transactions per second. This year, I believe we will see steady developments in decentralised financial products, bringing us closer to realising our vision of a more inclusive and equitable global financial system.
EMKM: What products should be considered more closely in order to promote blockchain and crypto adoption?
Sumit Gupta: Products of the blockchain sector, such as dApps and decentralised exchanges (DEXs), are technological breakthroughs which are tackling real-world problems and providing novel solutions to industries and businesses traditionally impeded by centralised structures. However, blockchain applications are notorious for having poor usability and unnavigable user interfaces. This is changing—but slowly. For instance, storing bitcoin in the early days involved inputting a command line, but we later got introduced to products such as paper and hardware wallets, which offer greater usability while still providing an equal level of security.
With less than 1% of the global population integrated into the crypto market, it is imperative that we work towards creating a more human-centric UI/UX for cryptocurrency services and blockchain applications to improve user experience and customer satisfaction. I believe that this year, with regards to the decentralised wallet, we can expect to see a product with the potential to onboard at least a million users, with the help of an easy and intuitive UI/UX.
EKMH: When will CBDCs be recognized and accepted?
Sumit Gupta: Central Bank Digital Currencies (CBDCs) have received an increased level of acceptance and recognition from a number of countries over the course of 2019. China was one of the first major countries to step onto the playing field when they unveiled their plans to launch their own CBDC in 2020. Following closely, Russia has announced plans to begin sandbox trials of its own CBDC and France is looking to launch trial runs of its own iteration of a national cryptocurrency. Even smaller jurisdictions like the Bahamas are actively looking in this direction. In 2020, it is likely that more and more countries will jump on the bandwagon and we will probably see the active launch of CBDCs by at least a few countries, as well as how these currencies would function with respect to their national policies, and how they will impact their countries’ overall economy.
EKMH: What are your thoughts on the institutional end of the blockchain and cryptocurrency investment spectrum? Where do you see institutional adoption faltering?
Sumit Gupta: In recent years we have seen steady progress being made at the institutional end of the blockchain and cryptocurrency investment spectrum with the entry of institutional graded products such as Bakkt, Fidelity, and Grayscale to market—but organic demand from institutions is still scarce. For the majority of traditional financial actors, crypto is still regarded with skepticism—largely as a result of technical intricacies and lack of regulatory clarity. As the crypto space is still very much catered towards retail in terms of product and service offerings, for institutions to come onboard, they’ll need to see custodial solutions, risk management, and insurance for services such as asset management. Creating a product-market fit is the first step towards bridging the gap between crypto and traditional institutions, and it is certainly achievable this year.
Team CoinDCX at work.
EKMH: Please discuss global trends.
Sumit Gupta: Across the globe, countries have adopted various approaches when it comes to regulating crypto assets. Some have adopted a favourable approach in terms of adopting crypto-assets and regulating crypto-related businesses, while others have shown themselves to be more hostile. As the crypto market matures, we are likely to see the emergence of far greater regulatory clarity in the classification of crypto assets and the regulation applied to them on a global scale. This year, we can expect to see more countries proactively regulating crypto assets than before, as failure to do so will result in missed economic opportunities and potential a brain drain of qualified individuals who may be enticed to move to countries with more open regulations in search of better job opportunities and career prospects within the cryptocurrency realm. This year, policymakers will quickly realise that only by actively embracing the cryptocurrency industry can they avoid technological stagnation which has the potential to negatively impact the overall health of their respective economies.
EKMH: What is meant by Bitcoin’s “halving effect”?
Sumit Gupta: Since its creation, bitcoin has undergone two halvings, and each one was followed by an exponential rise in its valuation. Similarly, the next halving is expected to make a substantial impact on the crypto market in the upcoming years. I expect the next halving will trigger a rise in crypto market price which, coupled with significant developments in the crypto space, will lead to positive effects on the health and valuation of the overall market in the long run.
EKMH: What are your thoughts on scalability? How will Bitcoin and Ethereum continue to grow?
Sumit Gupta: Bitcoin and Ethereum have both achieved almost absolute dominance in the cryptocurrency market. This can be attributed to factors such as their overall development, community strength, and network effects within the space. But in order to scale their protocols to eventually support billions of users, they’ll need to succeed in their scalability solutions to enable high-speed transactions to be performed at a larger capacity. In this, Bitcoin’s Lightning Network for micropayment is currently the frontrunner, reaching a record high of over 10,000 nodes, while micropayment solutions like Breez are working towards building an effective and easy-to-use product for the masses. Meanwhile, Ethereum’s sharding is still being tested and is likely to be rolled out in several phases throughout this coming year.
EKMH: It’s hard not to pay attention to the DeFi Revolution.
Sumit Gupta: Considerable progress has been made in prominent decentralised finance (DeFi) applications such as Maker, Uniswap, and Synthetix on the Ethereum blockchain. Overall, there is an estimated total of more than $400 million worth of Ethereum invested into the development of DeFi applications.
In the earliest days of DeFi when the idea of a decentralised financial system was just a vision, the question was whether this was even a possibility and whether there was a need for this kind of open market—today, it is a question of whether or not we have the technology to build a product that has the ability to scale and process millions or even billions of transactions per second. I believe we will see steady developments in decentralised financial products, bringing us closer to realising our vision of a more inclusive and equitable global financial system.
*Disclaimer: The views and opinions expressed in this series are those of the speakers and do not necessarily reflect the views or positions of any entities they represent.
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