Why is HyperLinq simplifying digital asset trading?
The story of HyperLinq is the story of a programmer, a trader and a complex workflow.
My co-founder and I have been associated with cryptocurrencies and digital assets for a long time now — one way or another. I, being an engineer, was always curious about the technology behind it — Blockchain. Moreover, how it could change the way we transact not only money but other asset classes. It wouldn’t be an overreach to say that Blockchain is the new Internet.
My co-founder, on the other hand, was mining crypto in the early days and jumped into the world of crypto-trading about six years ago. We have known each other for more than five years now and every time we met, we always somehow ended up talking about the future of digital asset markets.
As we got deeper into trading cryptocurrencies and other digital assets together, it wasn’t long before we discovered the inefficiencies and complexities of navigating through the existing workflows. The biggest problem was fragmented markets and how hard it was for us to track our market positions. There was always a new exchange coming up, and market consolidation was still an early talk. It didn’t stop there. It was incredibly inefficient and time-consuming to transfer funds from one exchange to another and back to the source of original fiat-to-crypto conversion. We could see the spreads across multiple exchanges and discussed opportunities to arbitrage. So we decided to solve this problem for ourselves.
The first possible solution for us was to start looking for existing tools that would do it for us. We did find some, but none of them was 100% at catering our needs. The biggest problem, of course, was security and privacy.
Most of them asked for our exchange API Keys to execute orders on our behalf and almost all of them would store them on their web servers. Handing over our API keys to a third party gave us an uneasy feeling. What happens in case of a server breach for worst — what happens if the company decides to close the doors and run away with those keys. Of course, we could set the authorization levels of those keys at the exchange level to not be able to withdraw the funds. However, it was a partial solution to our problems. We wanted to be able to manage our funds and portfolio on all these exchanges from a single screen.
When it comes to privacy, again almost all of them would route our messages to and from the exchanges via their servers. Mostly they were acting as the man-in-the-middle. It was not a good situation for us. Even for funds management, the messages would route through their servers. These aggregators if not brokers shouldn’t know what we at the exchanges without accounts.
Tracking all our positions in one place and getting an overview of all our assets was still not available. Inability to know what fund for each asset we owned on each of these exchanges would result in not able to make right arbitrage decision. We had to rely on multiple apps yet again.
Being a trader and also a computer science engineer, I decided to solve this problem for us. I quickly created a prototype, and we were able to bring all the prices from multiple exchanges on one screen. We were able to compare prices across exchanges, and we were able to place orders in various venues with one click quickly. Although this wasn’t the complete solution, we were hoping for, but it was a start. We quickly realized this has enormous market potential. There are thousands of traders like us with similar problems.
We started talking to others in the community, and they were willing to give it a try. We ended up with 69 people testing our app and using our charts to analyze the markets. That is when we finally decided to turn it into a business.
We are simplifying the digital asset trading workflows for ourselves, and along the way, we want to help others in similar situations.
In my future posts, I will talk about how we are dealing with each of these problems and what is our approach to solve those. At HyperLinq we are building a tool for ourselves, and at the same time, we believe that this could help others in a similar situation.