ARYZE CEO Jack Nikogosian did an AMA — read the best answers here
On February 1st, 2019, Jack Nikogosian participated in an AMA with cryptocurrency community ethx.co. Read the best answers below.
Jack Nikogosian is the CEO of ARYZE and on February 1st, he took part of an AMA with cryptocurrency community ethx.co. Below we have gathered the best replies.
If you ever have any questions about ARYZE feel free to go straight to https://t.me/ARYZE and ask.
1. What is ARYZE? Is it another stablecoin? What is it backed by? Do you allow external auditing?
ARYZE is a financial e-money institution. This means that we will be regulated as a financial institution however we are more a technology company than anything else.
ARYZE is a company, but one of our products is called Digital Cash, more commonly known as stablecoins. ARYZE Digital Cash is fiat backed — and by that we mean backed by real cash.
The main difference here is however that we do not keep the underlying funds in the range of banks but replace the vast majority of the underlying liquidity in short-term government bills and bonds in the central bank which issued the money in the first place.
This means that we place the liquidity where it was initially created, central banks, the only place that cannot default in its own currency.
2. How did you career impact ARYZE? Moving from Coinify to ARYZE?
I was very fortunate to enter the space of cryptocurrencies at a very early stage. When I started working at Coinify the entire space was still brand-new and nobody really had an idea of how this would evolve.
My involvement in the Coinify innovation lab was really interesting because this gave me a clear understanding of the possibilities that lie ahead. Also, it gave me a much clearer understanding of what actually needs a blockchain and where it makes sense to look at other systems instead. During my time in the innovation department, I had the pleasure of working with everything from micropayments, location-based payments, digital contract management, robotic payments and much more.
3. Can you share your experience during the Bitcoin Jack period?
That whole journey started while I was employed at Coinify, in 2015. I was in charge of sales and marketing, and I thought that it would be a fun idea to try and live only on bitcoin for one whole month. This is back in the days where you didn’t have crypto payment cards, and also the whole space was still very new.
It was the Danish media that dubbed me "Bitcoin Jack" after I started the whole project, and the deal was essentially that I could spend money with any merchant that I was able to onboard into the Coinify platform.
Looking back at that month, when bitcoin was at its peak, that month was likely one of the most expensive months of my life. Among other things, I had to eat at restaurants, pay my friends to drive me places because I couldn’t take public transportation and also I paid for a tattoo using cryptocurrency.
I believe today that my tattoo would be among one of the most expensive tattoos in the world. This is of course due to the price volatility that we see in bitcoin, and one of the reasons that we think that stablecoins/Digital Cash is really important.
4. If given a choice, would you advocate for bitcoin or stablecoins?
I don’t think it’s one or the other, but rather both. Today we use cash money for when we shop and we use digital money to pay with our cards — but that doesn’t mean that gold, silver, artwork or other valuables should not exist. I don’t believe that bitcoin should be the new global currency that everybody will use. I think that bitcoin is a form of digital gold that others can build upon and its existence does not directly mean that other assets or valuables cannot exist.
Regarding the importance of stablecoins, I think they are necessary to gain mass adoption. The masses are not going to use the core technology that is blockchain and bitcoin, but they will, however, use the application layers that will be built on top of these systems. Just like you wouldn’t use an Amazon voucher to pay for groceries in the store, you shouldn’t use Ethereum or Bitcoin for day-to-day transactions.
These cryptocurrencies can be used to transact with the underlying blockchain and do not necessarily have to be looked at as a transactional currency. This is where stablecoins/Digital Cash comes into play as real businesses, real people and real enterprises are not looking to speculate in something new but rather to transfer what they already transfer today, in a new way.
5. Don’t stablecoins defeat Satoshi’s vision of a decentralized currency as their supply is not limited?
I don’t think that this is a competition between bitcoins and stablecoin/Digital Cash. In my view, these are two separate things.
The invention of Satoshi was, as you say, a decentralized and limited currency. I still believe that this currency (BTC) should exist and I think that it will for many years to come. This doesn’t however mean that every single enterprise, government, business or individual is going to transact using this new invention.
The fact is that people are using money and ARYZE is building the infrastructure to transfer that real money in a much smarter way. We are not reinventing the actual minting process of money, but rather, we are optimizing the infrastructure where value is being transferred.
6. How is the acceptance of bitcoin in Europe as compared to US?
I think the acceptance has declined the last few years. A few years ago I had the opportunity of trying to survive only on bitcoin. Back then I remembered that we had more than 40 shops in Copenhagen accepting crypto payments. Today that number is much much less…
I think the reasons for this are:
- people have realized that bitcoin is quite volatile and using it as a day-to-day currency can be quite expensive.
- many companies today offer payment cards, so the ones who want to use coins or other cryptocurrencies can do it using the Visa or MasterCard network.
Denmark, where I live, is not the frontrunner when it comes to accepting cryptocurrencies. However, looking at Europe overall, there are specific districts that are much faster; areas in Switzerland, the Netherlands and places in Germany have areas that are very popular for bitcoin enthusiasts, and I am quite sure that the US will likely have the same.
7. Is ARYZE an ERC-20 token? How would you prevent it from being misused by extremists, considering they can use it without KYC?
The RYZE token will be an ERC-20 token. However, it is vital that we differentiate between our stablecoins/Digital Cash and the token that we have issued during our coin offerings.
The RYZE token is a hybrid utility/security token that is used to pay the fees in our ecosystem and pay out dividends to the shareholders. This token is not the one used in our Digital Cash platform. Digital Cash itself is not by nature an ERC20 token, and only merchants and individuals that have signed up through ARYZE will be able to transact using digital cash. All AML and KYC protocols are followed for each currency that we support.
With that being said, there is nothing preventing us from creating a link to ethereum so that our digital cash can be moved on the ethereum network as well. This is currently something that we are discussing, but it is not something that will be as a part of the initial launch.
8. On your website I read a quote — “We are not far from a future where we can pay rent in Netflix coins or pay for gasoline with flight miles.” Don’t you think if each service has their own coin, it would make the entire ecosystem a tad less user-friendly? Right now I can use my AMEX almost anywhere without having to worry about first purchasing any coins?
Great question! Today we see a lot of businesses, and even governments looking into creating their own cryptocurrencies. Some kind of digital assets representing some kind of value or utility… The problem with all the systems are that they are not directly interconnected to one another. So, for example, a Netflix token and a SAS token would not directly be connected.
We believe that many businesses will have their own tokens and reward systems in place and the importance is to create an interface and user experience that scrapes away all of the hardcore technicalities and ultimately give the users a seamless experience.
To give you an idea, if I want to sell my SAS flight rewards token and use them in H&M, I should be able to do so without any significant hurdles. The user application we are creating, codename MAMA, is a multi-asset application with built-in modularity.
So for example if H&M wishes to create a reward system as a module for MAMA, and if SAS does the same, then the same assets would fundamentally be interoperable with each other as they both exist in the same format within our system.
9. What is your take on government regulation in the space, across the world?
In my experience, when it comes to regulation, most central banks and financial authorities are quite fast at giving out initial statements. However, what is also true is that these institutions are very slow in moving forward as they are operating in a very bureaucratic system. ARYZE does not want to replace central banks, and we do not believe that we will replace monetary value itself.
We still think that governments and central banks should, for now, be the ones that create actual money. We simply want to use smart open-source technologies and distributed systems to transfer ownership of money instead of transferring money itself.
Today, transferring money requires many payment intermediaries. However, utilizing a system that doesn’t always move money around would result in much lower transaction fees as well as a much secure ecosystem.
10. Where do you see ARYZE a decade from now?
We believe that the infrastructure we are creating, based on Digital Cash, can be utilized by other financial businesses to create new solutions and products for their customers. ARYZE does not want to be the ‘New Visa’ where everyone is forced to have an ARYZE card or similar.
We are creating an infrastructure that others can build upon to create even more value for themselves and their users. So to answer your question, where I see us a decade from now is in a situation where we offer payment solutions for other ISPs, Telcos, payment providers, and even governments.
11. Why did you choose to setup your own coin instead of a service like Wirex, which allows users to spend their crypto using cards?
There are plenty of solutions out there that lets users spend any cryptocurrency using either Visa or MasterCard network — and that is perfectly fine!
However, our vision is fundamentally different. With our Digital Cash, we will make analog money fully digital and enable others to build their own solutions on top of the ARYZE network.
The goal here is not necessary to allow users to spend all kind of cryptocurrencies in different shops but rather to empower businesses, industries, individuals and even governments to build new payment solutions for their own payment needs on top of what they already know and understand. Real money!
One example could be looking at the company Sodexo. They are one of the largest importers of CocaCola from the US to Europe — every day, they are sending vast amounts of money back and forth using traditional payment networks. Initially we will target large-scale businesses like the one mentioned, and in the end, these businesses will be the ones incentivizing users to enter the same ecosystem as they do themselves.
12. How did you get the idea to start ARYZE? What is your outlook for the crypto market after the 2018 bearish run in 2019?
The idea to start ARYZE actually came after having worked in the cryptocurrency space for more than five years I used to be the head of innovation of a company called Coinify where I had the opportunity of working with a range of different technologies & partners to create new innovative payment solutions.
However, the common issue with all these projects were that they could only be built on top of cryptocurrencies. To give you an example, we had the pleasure of working together with the Ministry of Foreign Affairs of Denmark on a project aiming to turn IOT devices into payment wallets. We installed a crypto wallet into a solar panel, and afterwards, anyone could send small amounts of bitcoin to this solar panel which would then, in return, turn on if it was funded.
We did many projects like the one I just mentioned, but they all shared the fact that you needed some kind of coin or cryptocurrency to make it work.
We want to make dumb money smarter so that innovation can be made on top of what we already use today: real money. We don’t believe it’s about forcing people to get a new kind of cryptocurrency to use it in a smart way, but rather to make what these people already use smarter.
This idea was shared with my first co-founder, Carl Jenster, whom I knew from back in school, but we had the pleasure of working together on many many different projects and instantly agreed to drop whatever he had, joined forces with me and the rest is history.
13. What or who do you dedicate your success to?
I like to say that ARYZE is like a sculpture, in which every single idea shared or individual hired is a part of turning this sculpture into a piece of art. There is not one single activity to which we can dedicate our success. The one thing that can be mentioned is having realized the importance of being compliant and regulated.
To make a difference in this world you need to look at the ground you stand on, and if you want to make a change, you need to play by the rules. We believe that we have done something fundamentally different than many other companies in our space have, and that is to look at the challenges we face with respect for the traditional world.
The third co-founder of ARYZE, Morten Nielsen, is a highly experienced financial banker with decades of experience from J.P. Morgan, UBS, and other conventional banks. The fact that we have spent a lot of energy and understanding precisely how this space works has opened a lot of doors for us. The businesses we speak with actually understand what we are doing and working towards.
14. If you weren’t working with Blockchain, what would you be doing?
Working on combining artificial intelligence and biology to create a ‘living’ computer…
15. We have seen certain state-backed coins fail miserably, why do you think that happened?
This is also an interesting question, and it is a question that is being discussed quite a lot in Scandinavia. The Danish central bank has issued a report stating that they cannot and will not issue digital currencies themselves. However, our neighbors in Sweden have a different view on central-bank digital cash, and they think that it could happen from the top down. Now, we don’t believe that this solution can and should happen the top down, but rather from the ground up.
Rather than going into a in-depth explanation about the consequences of Central Bank-issued Digital Cash, I would encourage you to read this article written by our co-founder and Chief Financial Officer, Morten Nielsen.
16. To my understanding, you’re planning on setting up a financial ecosystem with ARYZE. What are the biggest challenges that you have faced so far and how have you dealt with them?
We have just completed our first investment round conducting a private token sale from Denmark. This has probably been one of the most challenging activities that we have ever done and that we will ever have to do again, as when we started our crowd sale, the price of bitcoin was close to USD $20,000 and as soon as our sale launched, the entire market plummeted. This meant that most of the contributions that were committed could not be completed as the contributors had lost more than 80 or 90% of their total value from other coins.
We quickly reacted to this change in the marketplace and realized that we needed to find strategic investments from angel and crypto investors rather than hoping for community investors only.
Also, our private token sale has been completed from Denmark following rules and regulations set forth by the Danish financial authorities. This means that we made a private token sale (and not a public sale), and we did not send out our white paper, or any other documentation to more than the amount allowed by the FSA.
This was of course also a huge challenge as raising USD $1.6 million without telling anybody is quite difficult.