CoinMkt exchange to ease alt-currency transfer woes
CoinMKT wants to make it easier to transfer USD into multiple altcurrencies, without leaving its site. Danny Bradbury talks to the exchange's founder.
If Travis Skweres gets his way, buying bitcoins will be as easy and simple as trading fiat currencies on your bank's website. His exchange, CoinMKT, will be launching in a month, and will offer easier transactions between fiat dollars and alternative currencies.
Skweres, who founded CoinMKT, has worked for the past year as a front-end developer specializing in user interfaces. Before that, he co-founded the now-defunct job-matching site Werkadoo, and the freelance job placement site Adjungo.
With CoinMKT, Skweres hopes to simplify the process of exchanging US dollars for bitcoin and other cryptocurrencies.
"It's obvious that getting US dollars into the bitcoin market is really hard," he says. "Is an institutional investor going to take $50,000 to Moneygram at the liquor store to send overseas to Mt. Gox?"
"I remember last year when I first got into this market that it took about five steps to get my money into bitcoin," he recalls. He took cash to Moneygram, sent it to a company called ZipZap, through which he had registered a receipt with BitInstant. Finally, he got his money into the incumbent exchange.
He wants to simplify the process by introducing a range of money transfer options that will enable people to get US dollars into his exchange and get access to their bitcoins instantly, he says. He plans to use transfer mechanisms including automated clearinghouse (ACH) services, eCheque, Dwolla and BitInstant.
“If I'm a US customer, I have to do a wire transfer or BitInstant to get USD in there,” he says. “What we really want to do is provide a more seamless experience where the user never has to leave our site, similar to Coinbase. Think: Coinbase's easy bank linking process, but not just bitcoins ... six different cryptocurrencies.”
CoinMKT isn't putting all its eggs in the bitcoin basket. It will be offering a variety of other alt-currencies, namely Litecoin, PPCoin, TerraCoin, NovaCoin and NameCoin. No sign of FeatherCoin, the widely regarded second runner to Litecoin, or the demurrage-based, SHA-256-based Friecoin, as yet.
"No one really knows what the final cryptocurrency is that will go mainstream," concludes Skweres. "When we started CoinMKT, what we basically said was that we don't want to take a particular one. We want to support them all and allow customers to choose the ones that they do business in."
Having watched Mt. Gox get burned by the Department of Homeland Security, he is taking extra care with compliance. He aims to be a fully registered money transmitter business by the time he launches (on July 1, he hopes). He may make some "play trading" accounts available in late June.
"We are striking deals with money transmitter businesses and companies that have licenses so that we can use their licenses and do money flows through them as well as applying for our own licenses," he says. He wants to be ready before the regulators come knocking. "Internally we are calling it ‘pre-compliance’."
Other companies, such as California-based Tradehill, identify banks as partners who can help new exchanges by providing money transmitting business licenses to do business in a particular region. Skweres is looking at other types of partners to help him achieve compliance across the US.
"A lot of the money transmitter laws were aimed at prepaid card services in the '90s," he says. "I was talking to a potential partner who said that all of the Bitcoin companies are complaining about this regulation. He was saying 'I have been dealing with this for 10 years'."
Still, Skweres faces some challenges with CoinMKT. The exchange is bootstrapped as of today, with no external funding. And yet he aims to have enough liquidity to eventually satisfy trades on his own without having to trade via other exchanges. "This will give us the advantage of instant settlement," he explains.
"We want to be the Mt. Gox for the US," he says. "A lot of our competitors that accept US dollars for bitcoin will accept your dollars, trade them on another exchange, buy your coins, and pull them in."
The danger here is that an exchange can hit a threshold with another exchange, making it difficult for them to trade any more with that exchange for the rest of the day and limiting their ability to deliver fast trades to customers. "We want to build a local market here in the US that has the coins, so that when you click 'buy', you get them straight away."
However, that means having enough bitcoins to satisfy all of the trades on its order book.
"We are in talks with investors and partners," he says. "It will be a tough one but we think we can pull it off."
In the meantime, he adds, he will be able to resort to trading on other exchanges if necessary.
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