Transparency In The Cryptocurrency Ecosystem with James Giancotti
As the CEO of Oddup, James Giancotti looks at everything with a rating in mind. So, how does the man who rates startups for a living view the current state of cryptocurrency? It should come as no surprise that he looks at cryptocurrency like startups.
“Ninety percent will fail and maybe 10% will get your money back, and then 2 or 3% will just be superstars,” Giancotti said. “Most of those cryptocurrencies that launched in the last 12 to 18 months, most of them are crap. I say this because, if I put my startup rating hat on, I go, ‘Wow, I’ve never seen any major startups come out of Slovakia or Slovenia, but they’ve raised $40 million—why?’ That said, the technology is a game-changer.”
Despite the negative press, cryptocurrency is still an attractive asset class. Giancotti says many investors are putting 0.5 to 1% of their net worth in cryptocurrency, typically the top three: Bitcoin, Ether, and XRP. He doesn’t see that trend changing.
“If you can put $50,000 in a startup or buy 10 BTC, you’ve probably got a better chance of getting some liquidity from BTC than you have with the startup,” Giancotti said.
Giancotti also sees the market becoming more serious. Some of the brightest people he worked with at JP Morgan and Goldman Sachs have gone into blockchain funds. Giancotti lays out a simple reason why: the future will be shaped by blockchain. These trends—and their customers’ demands—motivated the Oddup team to launch Alluva, a blockchain product that quantitatively and qualitatively rates cryptocurrencies, ICOs, and STOs by using a contributor-model that rewards users for correct calls.
“Crypto is much different than the startup environment,” Giancotti explained. “Startups usually have 50 or fewer shareholders. There’s limited information. With Oddup, we have multiple analysts and data scientists solve that problem for startup investors, whereas with crypto, there are tens of thousands of investors in that space.”
Rewarding contributors for correct calls
With Alluva, contributors will have the ability to look at every available cryptocurrency and offer their best calls on where prices will be in a day, week, six months, and 12 months. To compensate contributors for that work, they’ll receive a small reward fee. The rewards don’t stop there, though. Contributors who consistently get calls right will have more people pay to access their predictions.
“What we’re doing is looking at something that works in the public markets, and since we see cryptocurrency as a public market, we want to push that mechanism out to everyone,” Giancotti said. “Anybody can join for free and start contributing. If you want to see ratings from people, you need to pay via your cryptocurrency of choice.”
Not only has Alluva gamified cryptocurrency—it’s given contributors choice in how they spend their rewards. They can exchange the cryptocurrency used on the platform (also called Alluva) for their cryptocurrency of choice, such as Bitcoin (BTC). They can use Alluva to advertise on Oddup’s media platform, UnicornHunt, buy an Oddup subscription, or upgrade to the premium package on Alluva and see everyone’s scores. In the coming months, contributors will have even more ways to use Alluva.
“We’re working with multiple big partners to make it possible to use the token for other things, such as airline tickets, hotel rooms, or gadgets like iPads,” Giancotti said. “A lot of the projects that have built tokens built them with a singular method of reward and a singular method of how to use it. We want to make sure that the token has value for the people who want to use it outside our product ecosystem.”
Looking to the future of the crypto market
When it comes to the future of cryptocurrency, Giancotti is looking to the experts for insight: the OTC providers that have been there, done that, and gone through the long, hard slog to get where they are. What he’s seeing is that institutions are buying Bitcoin, but they’re buying it from OTC providers, so you’re not seeing that volume being captured on exchanges such as Coinbase.
“People are buying, and they’re buying big,” Giancotti shared. “In Hong Kong, I’ve seen some incredible transactions happening on OTC. People are buying, holding and not worrying about it. Most people see it as a property. Despite panic in the streets, they’ll just sit and hold, then they’ll sell it and have a zero-cost portfolio soon enough.”
Giancotti believes 2019 will be a year of slow growth for cryptocurrency. He doesn’t think we’ll hit a high this year, but rather in 2020. He also sees changes coming for Bitcoin.
“I think Bitcoin is like Yahoo in the 1990s,” Giancotti explained. “It may get to 100,000, it may get to 250,000, but if another thing comes along that’s better, people will jump on that. For now, we’re in 1995 and Bitcoin is king, just like Yahoo was before it.”
For any entrepreneurs looking to start crypto or blockchain projects, Giancotti gives his advice which is to focus on solving a problem and building something people want, not making money. Blockchain project should be built with the startup mentality: build a great product, form a company around it and then build a great team who buys into the vision. Over the long term, it won’t be easy, but it’ll be worth the effort.