Yasin Sebastian Qureshi is Executive Director, The NAGA Group AG – financial technology ventures with innovative business models
He is the youngest person in Europe to have ever obtained a banking license – at the age of 29. He founded and ran his own investment bank, which went public in 2007. We recently caught up with him for a quick Q&A about his journey and to get his take on the future of cryptocurrencies.
Qureshi, after the cryptocurrency market has recently lost $532 billion in value, what is the future of digital currencies?
Bitcoin and Ethereum can be compared to an icebreaker that clears the way and brings the previously unknown to light. The result was an enormous gold rush. Many went on a journey and promised their passengers a pie in the sky without ever having steered a ship. The $532 billion that have now been sunk are a consequence of this adventure. This has resulted into a lost of trust – and a lack of trust is poison for any currency.
What many people forget in the current hysteria, however, is that crypto currencies have experienced a great increase in value over the past few years! The economy is already recognizing the future potential of cryptocurrencies and, above all, the associated blockchain technology. In Asia, digital currencies are becoming increasingly popular as a means of payment and for investment. I don’t ring any bells. The introduction of paper money was not only painstaking but also viewed with tremendous skepticism. We know the end of the story.
Why do you consider cryptocurrencies to be the currency of the future?
Cryptocurrencies have a number of unbeatable features the current monetary system does not offer: There is independent developers, processes that run across the blockchain are transparent and all transactions are being stored. As cross-border payments are made faster and more cost-effectively on a peer-to-peer basis via cryptocurrencies, they reflect the character of our globalised and digitalised world like no other currency. Above all, however, cryptocurrencies will establish themselves as the main means of payment in the long term because the system through which they run is organised decentrally. Thus, they have a high degree of security against counterfeiting. This makes cryptocurrencies particularly attractive.
Furthermore, Blockchain can be used to establish great digital control mechanisms that will make old economic and political processes obsolete. The technology allows cryptocurrencies to be developed for specific areas of application. And so, cryptocurrencies can be exchanged between individual areas of application as required. In this flexibility I see a highly attractive model for the future.
What homework do crypto companies have to do in order for cryptocurrencies to gain credibility?
Despite all the pioneering work cryptocurrencies are still in their fledgling stage. It’s like the Internet in the early 90s without the browser. The user experience is still bad for most applications. Added to this is a lack of regulation. For the latter I see a tedious task ahead. Because of the lack of rules – which by the way someone needs enforce – we currently have wild-west conditions. Many behave seriously, but by no means all of them – and to some might be difficult to identify the black sheep.
This in turn can only be initiated by the community, i.e. the developers and companies that are active in this field together with other relevant stakeholders. They must be open to regulation. I would like to emphasise at this point that our company is in favour of international regulation. At the same time, regulation is always a balancing act between too much and too little. Nonetheless, from an entrepreneurial point of view I argue for a broad discussion on this matter. As with other financial products, crypto currencies must gain transparency, companies must provide regular and obligatory reports and undergo audits. Buyers need to understand who is behind the cryptocurrencies. This is not always the case, as you would think.
There are currently about 1,500 crypto currencies on the market, including the NAGA Coin your company has developed. What does it take for a cryptocurrency to survive?
Providers must enjoy the trust of customers. The service must be catchy, easily accessible and comprehensible. A cryptocurrency must offer added value to customers beyond pure payment. In the case of the NAGA Group, we wanted to provide owners of our token with a particular benefit. You can take tangible advantage of it, i.e. a bonus or fee savings. It is the heart of our ecosystem and the advantage is that the NAGA coin is accepted as a means of payment in our ecosystem. This means users can trade and exchange shares, CFDs or various official currencies as well as cryptocurrencies with this coin. Thus, no one has to wait for acceptance because it already exists.
Furthermore, the technological aspects are of crucial importance for the survival of a crypto currency. In particular, the speed and effectiveness of a blockchain will determine the success of a cryptocurrency. Ripple is successful, for example, because it recently transferred 80 million euros for 14 cents within a second.
In which areas do you see particular potential for blockchain and crypto currencies outside the financial market?
In addition to the positive effects for all possible economic policy areas mentioned above, we see a high potential for blockchain and cryptocurrencies in the gaming industry. The global gaming market has seen constant growth in recent years. This is particular true for the trade with virtual goods, so-called in-game items. However, the enormous market volume has also attracted many fraudsters. As a result, an enormous black market for virtual good has been created that is running without rules. Blockchain offers a great opportunity to create a regulated and safe environment for both players and manufacturers. With NAGA Virtual, we have developed the world’s first legal and blockchain-based market for virtual goods.