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Nash CTO talks the benefits of trading on a self-custody DEX and challenges of building a user experience for crypto

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CryptoSlate recently had the opportunity to chat with Ethan Fast, the CTO and co-founder of Nash Exchange, a self-custody DEX that has been gaining solid traction and attention over the past few months. In our interview, Ethan shares how he got started in crypto, what led him to start Nash, the challenges of building a quality user experience for crypto users and where he sees the blockchain industry going in the next few years.

What is your professional background and how/when did you get into crypto?

Ethan Fast (EF): I’m a serial startup founder who has also spent a lot of time in academia. I started a web analytics platform in 2011 after I finished my undergrad, which was funded by Y Combinator, and that experience taught me a lot about myself and the sort of mindset you need to be successful with startups. I then went on to do a Ph.D. in Computer Science and Human-Computer Interaction (HCI) at Stanford, where I worked on a number of things, but most notably some applied research in Programming Languages (PL) and (NLP) Natural Language Processing.

I bought my first Bitcoin in 2011 but didn’t dive deeply into the technology until 2017. At that time I was most excited by the applications of smart contracts on Ethereum and wanted to understand better what sort of design space the technology made possible. Working in HCI, much like with startups, when you see a new technology, you tend to think immediately about how you might use it to change the way people interact with the world.

Tell us about why you decided to start Nash?

EF: During the final years of my PhD I began working with a group of amazingly talented people who more or less bootstrapped the NEO blockchain open-source community. We all worked really well together and shared an excitement about the future of digital assets, so the idea of starting a company felt like a logical next step.

In terms of “why Nash?” specifically, the most compact form of our mission is “distributing finance for everyone” and that still does a good job of summing up why we are working on this company. Cryptocurrencies are unique among other assets in the level of control and empowerment they give the people who own them. We want to make these assets and their properties accessible to everyone. Another motto we have is “trust yourselves”, which perhaps gets even more quickly to the point: we want to give people the power to do that! We all love working with the tech, but these are the bigger things we also care about.

Where is your team located and why did you choose that jurisdiction?

EF: We are located all over the world. Our parent company is located in Vaduz, Lichtenstein, and this has been useful from a regulatory standpoint, but we have team members in more than fourteen different countries. The US and Europe are most strongly represented.

Among the co-founders, Tom and I live in the US, Fabio in Austria, Fabian in Switzerland and Luciano in Brazil. So we had a global team literally from day one.

What are some of Nash’s notable achievements or milestones?

It’s always possible to break things down in different ways, but I’d say our first milestone was the public sale of our Nash Exchange security token (NEX) in 2018. This was an extremely big deal for us and, really, the whole ecosystem, as no one had ever publicly sold and issued a token that also had legal standing as a European security. Getting this done took more than a year of communication and back-and-forth with regulators at the FMA in Lichtenstein. The reason we went through so much pain was to provide investors with legal protections and explicitly pay dividends from the services we are building, which is only possible with a proper security. In the end, more than 15,000 people invested and we raised around twenty million in the public sale.

Our second major milestone was the release of our exchange in early September of this year. We are the first exchange to demonstrate non-custodial, cross-chain trading of assets and tokens that live on different blockchains (for example, Ethereum and NEO) with performance on par with centralized exchanges. I can’t emphasize enough how difficult this was to accomplish and how proud we are of the team for pulling it off. All three of these ideas—lack of custody, cross-chain trading and high performance—are critical for our users. I also want to note that our work on this product is far from done. We’re still optimizing and increasing user retention before opening the product fully to the public and are working to add many more assets, including Bitcoin. Having Bitcoin on a non-custodial exchange will have a huge impact on the industry.

What is self-custody so important but such a hard concept for new users to understand?

EF: I’m not sure it is hard for people to understand if explained properly. In its simplest form, custody is control. So self-custody means you control the asset. In almost every exchange that people use today, if you want to trade a cryptocurrency, you must give custody (and control) of that asset to an exchange. But this is terrifying because you have very little recourse if an exchange is incompetent or untrustworthy. If an exchange is hacked or steals your money, there is little the legal system (or anyone else) can do for you. Self-custody makes it impossible for an attacker or exchange operator to seize all your funds and vanish.

What are the benefits of using Nash as opposed to other exchanges?

EF: Self-custody, combined with similar performance and liquidity to centralized exchanges, is the biggest reason you should use Nash right now. So you should use Nash if you want to control your assets and trade on an exchange that has a good user experience.

What can you tell us about the Nash product roadmap? What upcoming features are you most excited about rolling out?

EF: Support for non-custodial Bitcoin trading is very exciting. Personally, I’ve also been spending a lot of time working with something called threshold signatures, which we are going to leverage to make user accounts even more secure. The basic idea with threshold signatures is that you can give us the power to enforce arbitrary security policies on your account without giving us control of the assets. For example, you could have us impose a daily withdrawal limit of your choosing, or lock withdrawals outside a certain time window. There are too many details to explain the system here fully, but this is a very exciting technology.

What are the biggest challenges of building a product and functional user experience for crypto users?

EF: This is a really big question, but I’m happy to go into two of the bigger ones. The first and probably most problematic issue is the general lack of guardrails that comes with self-custody. Self-custody is powerful because you are in complete control. But complete control also makes it very easy for you to shoot yourself in the foot or walk off a cliff. And even worse, it is very difficult for a third party to come on the scene and save you. We saw a lot of this with Neon Wallet, where users would lose tens of thousands of dollars (or in a few horrifying cases, even more) because they did not back up their private keys properly. Creating self-custodial applications where it is much harder for users to get into these terrible situations, no matter what they do, is a fundamental design goal for Nash across everything we build.

A second big problem, which I think gets talked about a lot, are the basic affordances of blockchains. Across most of the ways you interact with them, blockchains are really slow. If you look at Nielsen’s famous book Usability Engineering, he talks about the scales of time at which a user will remain engaged with an interaction. You need to be faster than 0.1 seconds for a user to feel that something is instantaneous, after 1 second a user’s thoughts begin to be interrupted and after 10 seconds it is quite difficult for a user to remain focused on a task. Typical interactions with blockchains blow past this scale. Even in a relatively fast interaction, it is rare for that to complete in under ten seconds. This speed issue, and the related issue of bandwidth make “second-layer” scaling solutions really important. These are protocols that work on top of a blockchain and provide useful security guarantees, but minimize interaction with the blockchain itself. We use a variant of this sort of technology to make the speed of Nash’s APIs possible.

What other projects and/or blockchain developments are you most excited about?

EF: I’d be excited to see regulators clarify some of their positions on digital assets, and governments enter the space with something like a USD token or CNY token. Even if these assets are not as decentralized, the right sort of platform would allow users to engage with other third parties without trust, and I suspect such national efforts would drive broader adoption. I’m also excited to see the Elrond blockchain grow in adoption. Elrond is solving some really hard scalability problems, though I need the caveat here that I am an advisor to the company.

Do you have any blockchain and/or crypto predictions for 2020 and beyond?

EF: I’m optimistic that the space will go through another boom cycle, hopefully this time driven by new companies and technologies solving real problems.

What are the biggest obstacles for mainstream adoption of crypto?

EF: The most important thing is that some cryptocurrency or token needs to solve a real problem that many people have besides store or value or speculation. When that happens, adoption will be fast and inevitable. The second issue is that self-custody of these assets needs to be accessible to everyone: easy to use and low risk to manage. Nash is working on both of these problems, and they each are really hard, but the second is definitely easier than the first!

What is your most controversial opinion relating to blockchain and/or cryptocurrency?

EF: Many and perhaps most tokens traded on US exchanges violate the Howey test.

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Posted In: Crypto Exchanges, Interview, People of Blockchain

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Crypto exchange BTCNEXT seeking Japan license

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BTCNEXT, an Asian based cryptocurrency exchange, earlier this month announced it received notification from the Japan Financial Services Agency (FSA) that it must suspend services for Japanese residents.

As part of Noah Ark Technologies Ltd., BTCNEXT operates with a Virtual Currency Exchange license issued by the Cagayan special economic zone and Freeport Philippines.

The BTCNEXT team says that its legal department is currently working with the FSA in regards to getting a Japanese license and will take necessary steps to ensure full compliance with all FSA requests.

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NEO Price Prediction: Long-term (NEO) Value Forecast – June 2

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  • The long-term outlook is in a bullish trend.
  • The 1.618 in the fibs at $19.17 is the bulls target in the long-term.

NEO/USD Long-term Trend: Bullish

Supply zone: $20.00, $30.00, $40.00
Demand zone: $2.00, $1.00, $0.50

NEO continues in the uptrend in its long-term outlook. The strong pressure on the cryptocurrency by the bulls’ comeback at the 61.8 on 18th May has kept price up with new high each week. $12.59 and $15.04 in the supply area were the highs on 20th and 30th May respectively.

The new week is started on a bullish note with today’s opening candle at $13.72 higher than last week opening price at $11.45, an indication that the bulls are more in the market.

Price is above the two EMAs that are fanned apart which suggest strength in the trend and in this case the uptrend.

The journey to 1.618 of the fib extension with price at $19.17 in the supply area is the bulls target in the long-term as the bullish momentum increase and more bullish candle open and closed above the two EMAS.

The views and opinion as expressed here do not reflect that of BitcoinExchangeGuide.com and do not constitute financial advice. Always do your own research.

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Why Bitcoin’s ‘Culture War’ Matters

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Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.


Let’s talk about bitcoin, toxicity and inclusiveness.

(Boy, my Twitter feed is going to have fun over the next few days.)

To start with, let me take a position: I stand with those people, especially women, who’ve lately been calling out maltreatment from members of the bitcoin community and citing rude and abusive behavior as proof of that community’s lack of inclusiveness. These are people who believe in cryptocurrency technology’s potential but feel discouraged to believe that they belong to the community’s dominant white-male subculture. If this technology is to fulfill its global potential, the community associated with it must confront this problem.

But the real point of this column is not to just defend these critics. It’s to debunk one of the more common positions adopted by those who take issue with their complaints, particularly on Twitter. In doing so, I hope to emphasize just how important the concepts of “community” and “culture” are to the healthy development of crypto technology and the ecosystem growing around it.

Hammer culture?

The line that’s most often thrown back at those calling out incivility is that bitcoin is nothing more than a technology, a tool, and that it’s meaningless to attach to it value judgments relating to human behavior. Bitcoin is amoral, apolitical and a-cultural, the argument goes, and like any technology it is used by good and bad people alike.

These pundits, warning of a political correctness-based threat to free speech, will then advise the injured party to take issue directly with the bad actors but refrain from agitating for community-wide change.

A perfect example of the genre came from outspoken lawyer Preston Byrne.

Clever, yes. But it’s extremely unhelpful, because the examples given do not share equivalent terms of reference.

Byrne’s “hammer” refers solely to the steel implement that tradesmen use. By contrast, people complaining about “bitcoin” are clearly using the word in a much wider context than in merely a reference to the code, to the ones and zeros that comprise the bitcoin protocol. They are inherently talking about the wider ecosystem and community gathered around the idea of bitcoin.

So, let’s equalize the terms, shall we? We can turn each of these nouns into a modifier of the word “community.”

While it might sound silly to talk about a “hammer community,” there may well be groups of hammer-obsessed souls who debate questions of design and ease of use at meetups and in chat rooms. If so, I’m going to guess that that community would probably also be predominantly male.

But the real issue is that such a hammer community is going to be far less important to the future design and evolution of hammer technology than bitcoin’s community is to its. I’m no expert, but I don’t see a great deal of change in hammer technology having occurred over the centuries and I’m not sure people expect much in the future. As such, we don’t see much jockeying among users to ensure that proposals for hammer upgrades are implemented and standardized to their preferred design.

By contrast, the open-source technology behind bitcoin is in a constant state of evolution. It is, by definition, under development, which is why we talk about the engineers who work on it as “developers,” not “custodians.” As such, there is a constant battle of interests over who gets to modify the code. Exhibit A: the block-size debate.

Counter-arguing that those who don’t like the process can just fork the code, as the large-blockers did, and set up their own new community, doesn’t cut it for me. Bitcoin is the brand that matters. Any newcomer will struggle to achieve the same network effects. Secession just isn’t viable for anyone who likes its current design but doesn’t like how its future is being defined.

Also, is there a “hammer ecosystem?” Maybe. But beyond producers of nails, and perhaps steel and rubber or wood suppliers, you can hardly call it a complex ecosystem.

Bitcoin, by contrast, which purports to reinvent the global system of money, has attracted an inherently vast array of different technology providers, all of whom have competing interests in how it is designed, managed and marketed to the world. I’m not just talking about businesses applications built on top of it, but also the developers of related encryption, payment channel, smart contract and other vitally important technologies, all of which are themselves in a constant state of flux.

(I’m guessing that the exhibition halls at hammer conventions don’t have quite the same spread of offerings as cryptocurrency events such as Consensus.)

Saying that bitcoin is nothing but a tool, is like saying that music is nothing but a system for ordering different audible tones.

Money = community

When Paul Vigna and I wrote The Age of Cryptocurrency, we spent a lot of time chronicling the emergence of the community that had formed around bitcoin, which we saw as fundamental to its success. It struck us that the notion of a bitcoin community was so prominent — the “c” word was always being bandied about — because bitcoin embodied a profound and sweeping social idea. It offered nothing less than a reinvention of money, a revolution in the entire system for coordinating human value exchange.

Money only works to the extent that there is widespread belief in it, that people buy into its core myth. Money, Felix Martin says, is a social technology, by which he means that its functionality and usability depend far less on the physical qualities of the token that represents it than on the collective agreement among large communities of people that their token captures, represents and communicates transferable value. This is true whether we’re talking about gold, dollar bills, entries in a bank account, or cryptocurrency.

By extension, then, for any form of money to succeed, it must sustain a vibrant, growing community.

Communities = culture

The thing about communities is that they inevitably develop cultures. In self-defining their boundaries of belonging, they develop shared ways of seeing and language — akin to a kind of social protocol – that regulate (in a very unofficial, and quite subconscious way) their members’ behavior.

As they evolve, cultures can become more or less open, more or less inclusive, more or less abrasive in their treatment of outsiders. And inevitably, these cultural features will either encourage or impede the growth of the community.

All this should hardly be a revelation. Anthropology, the study of culture, is a globally widespread and influential field (one that is now appropriately turning its attention to cryptocurrency communities.)

Studies of U.S. culture, from Alexis de Tocqueville down, have rightly pointed to the inclusiveness of the founding fathers’ ideas as a key driver of its economic expansion. In fact, American culture is arguably its most important ingredient for success, a social manifestation of Joseph Nye’s notion of the United States’ “soft power.”

So, yes, bitcoin culture really, really matters. If the compelling ideas behind permissionless, peer-to-peer exchange and censorship-resistant money that attract people of all stripes to it are to retain those people’s interest and grow in influence, the bitcoin community needs to evolve a more inclusive culture.

The only way to do that is to spur the kind of open debates that have always driven the progress of human culture — those which shifted norms and mores to the point that it became unacceptable to own slaves, to spit in public, or to jump a queue.

So, listen up, bitcoin. It’s time to confront your toxicity.

Hazard drums image via Shutterstock

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Holiday Spending up 14.6% as E-Commerce Beats Brick-and-Mortar

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E-commerce sales hit record highs this year as Americans continue to move their holiday shopping online.

According to Mastercard’s SpendingPulse report, online retail grew 18.8% over last year’s holiday season. That’s enough to make online sales a record 14.6% of holiday shoppers total spend, the report says.

Online consumers this year spent 17% more on apparel, 8.8% more on jewelry, 10.7% more on electronics, and 6.9% more at department stores. 

Overall, holiday spending jumped 3.4% compared to 2018.

The strong numbers came in spite of 2019’s unusually short holiday season, commonly defined as the period between Thanksgiving and Christmas. Shoppers had six days fewer than they had in 2018.

Steve Sadove, an advisor for MasterCard, said in a press release that retailers adapted to the shortened season. 

“Due to a later than usual Thanksgiving holiday, we saw retailers offering omnichannel sales earlier in the season, meeting consumers’ demand for the best deals across all channels and devices.”

Interestingly – or ominously – retailers who accepted crypto or managed crypto payments were slow to respond when we asked them how their holiday shopping season went. eGifter, a gift card trading service, noted that it had not yet “crunched the numbers” on holiday sales but that “We saw growth in overall crypto sales,” said Bill Egan, the site’s VP of Marketing.

“We saw more gifting with crypto in 2019, compared to buy-for-self use cases in prior years,” he said.

Payment processor BitPay found the holidays quite inspiring as well.

“We saw twice our daily averages of processed volume leading up to the holiday,” said BitPay’s CMO, Bill Zielke.

It will be interesting to see what kind of statistics surface over the next few seasons as e-commerce becomes king and crypto payments come to the fore.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Crypto Custodians Grapple With Germany’s New Rules

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Crypto firms in Germany are getting ready to exist under a new regime. 

Under a law going into effect Jan. 1 requiring digital asset custodians to be licensed, each company that currently custodies crypto and targets German clients must announce to Germany’s Financial Supervisory Authority (BaFin) its intention to get a license before April 1 and submit an application before Nov. 1.  

A clause allows current crypto custodians to keep serving German customers without being penalized if they declare their intent to apply, but those same companies are waiting on BaFin to release final regulations around the law.

“As long as the legislation is not in place, BaFin is not going to think about how to cope or how to deal with the legislation,” said BaFin press officer Norbert Pieper. The regulator declined further comment and Germany’s Federal Ministry of Finance did not respond to request for comment by press time.

Pieper added: “There is no date foreseeable [yet] by which we’ll be able to communicate the results of our assessment. We will certainly communicate that on our website.” 

While the final regulations haven’t been set yet, the new license requirement may not produce the same kind of exodus of crypto firms that New York saw after the BitLicense requirement, said Miha Grčar, head of business development at Bitstamp.

London-based Bitstamp, one of Europe’s largest crypto exchanges, plans to continue operating in Germany but declined to say whether it would apply for a license, said Grčar. Crypto firms could also use a white-labeled custody service to operate in Germany. 

Because the law is an “updated version of the existing banking regulation,” banks will likely have the most to gain from it, Grčar added. Companies that get the license will be German financial institutions, but not classified as banks.

The law also means that German regulators now see crypto as a “legitimate” industry, he said. 

Ulli Spankowski, chief digital officer and managing director of the crypto custody subsidiary of German stock exchange Boerse Stuttgart, called Blocknox, sees the license as a step forward for “the professionalism of the industry.” The subsidiary has already advised BaFin that it plans to apply.  

“There are other countries that won’t go for a full-fledged license,” he said. “If you want to get traditional, established players from the banking side, you need to give them this environment to feel safe.” 

DLC group is taking advantage of the new regulatory framework by offering consulting services for firms interested in applying, and its own white-labeled crypto custody service. 

Sven Hildebrandt, head of Distributed Ledger Consulting Group, is concerned some exchanges won’t understand the nuances of the new law.

“The law is only in German and no English translation of the law is out there,” he said. “What’s going to happen to exchanges? [Operating without a licence] is actually a felony and not a misdemeanor so that’s jail time.”

Hildebrandt predicts the costs of licensing will be similar to other German financial services licenses where firms will need two managing directors, an established German entity and 125,000 euros of starting capital. He also estimates installation will cost 250,000 to 350,000 euros and recurring yearly costs will be 350,000 euros. 

Switzerland-based Crypto Storage AG, a subsidiary of Crypto Finance AG, is opening a branch in Germany to offer crypto custody to banks and then financial technology startups. 

“Large banking houses will do custody business in the future,” Stijn Vander Straeten, CEO of Crypto Storage AG, said. “They are moving slowly, though. We’ll build it up now for a premium.” 

Berlin-based solarisBank this month opened a subsidiary called solaris Digital Assets to offer crypto custody as a service. So far, the bank has a handful of customers testing the service with more than 40 companies in the pipeline, said Alexis Hamel, managing director of solaris Digital Assets.

In addition to waiting for details from BaFin, crypto firms are also waiting to see if the law can be passported to other European Union states. 

“Germany is definitely at the forefront with the clearer regulation,” Hamel said. “We still need to see how other European countries level up.”

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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