“Regulations Will Help In Achieving Mass Adoption Of Digital Currencies” with Csaba Csabai Founder Inlock

I had the pleasure of interviewing Csaba Csabai, a crypto and blockchain evangelist, an independent cryptocurrency blogger, and a well-respected member of the crypto-community. He spent the last decade working with KBC, the second largest bank group in the world, implementing and developing core banking solutions, and building lending systems, including a brand new fully digitalized onboarding and lending platform. His exceptional knowledge in the traditional banking world combined with his understanding of the blockchain enabled him to deliver real solutions to valid use-cases of collateral-based lending in the crypto world.

Thank you so much for doing this with us! Can you tell us the story of how you got involved with the Regtech or Crypto markets?

I have a background in information security — I started researching cryptographic solutions before the emergence of cryptocurrency. Although I don’t consider myself an early adopter, I’ve been involved in the cryptocurrency industry since its heyday.

Can you share 5 ways that Regulation and Regtech can help stabilize the Crypto Economy?

To achieve mass adoption of digital currencies, many things must fall into place. The foundational qualifications are regulations — an area that emerging technology companies will need to address in order to achieve success. Regulatory technology (Regtech) aims to do just that. Regulations that apply to the crypto sphere are “quite loose” in some countries, while in others they’re pretty much non-existent. Since most cryptocurrencies are meant to be used globally, providing an international regulatory framework for institutional investments would increase market capitalization of cryptocurrencies. The following may result from the introduction of Regulation and Regtech:

1. Regulation will usher an influx of new capital and increased market capitalization which will lead to less volatile prices.
2. Regulation will increase people’s trust in cryptocurrency, allowing cryptocurrency to reach its full potential and appeal to mass acceptance. The idea of having little or no regulation might appeal to the crypto-anarchists who dismiss checks and balances — but we believe mass acceptance requires a lot more control and supervision. In order to for mass acceptance, many will need to shift their thinking from trusting someone or a centralized institution to ensure their transactions as this line of thinking isn’t aligned with the decentralized nature of crypto.
3. Regtech companies may be able to help with initiating communication between crypto enterprises and regulators by providing valuable AML data to crypto companies and strengthening trust in alternate financial solutions. The biggest impact would be seen in a higher market cap which would require more liquidity to manipulate the exchange rate, ultimately minimizing volatility in the market.
4. With new Regtech, AML could be improved with the addition of machine learning and AI technology. Thanks to the advances in image recognition and AI, instead of a video KYC, in the future users would be able to more securely and quickly identify themselves at their convenience through the computer without the need for a human operator at the other end.
5. Some Regtech firms could provide databases of identities based on blockchain technology platforms such as the KYC Chain. The challenge is that the data doesn’t directly come from governments so it’s validity could be questioned. This is still a very new field and a lot of uncertainty prevails as young companies enter the market. It will be a few years before we see who some of the winners are.

There’s no question that putting regulations in place is necessary for crypto to gain its foothold in society. However, governments and financial institutions must first understand why people switch to using cryptocurrencies in the first place, and only then try to put them in a regulatory framework without undermining those very motivations.

What are the top concerns that crypto firms should be considering in order to have a competitive edge?

Crypto firms should never assume that current regulations (or the lack thereof) will last forever. They should always be ready for whatever changes the market will bring. Resting on one’s laurels can be detrimental in this space. Crypto firms must be ready to adapt to new regulations.

Can you share examples of measures you take to prevent internal data breach?

• We use Cloudflare, which is a web application firewall that provides threat protection, including protocol-level attack protection
• We also use AWS network protection (stateful application firewall protection)
• We have host level protection, which provides highly fine-tuned and separated security protections. We have databases running in multi-AZ cluster environments which are only accessible from the backend’s VPS. Our backend components run in separated VM and docker instances.
• Access to our servers is only available over SSH keys, and password access is disabled by default. SSH keys are at minimum 2048 bit async keys with password protection.
• All token contracts and token multi-signature addresses are generated in offline environments on newly installed macOS computers and fully synced nodes. Recovery seeds are never stored on online computers or printed on network printers. Seeds are stored on unmarked papers in two different locked wall safes and in one bank safe.
• Our key generation processes are equal to VISA grade key generation and passphrase protocols.

Can you share a story of a time when things went south for you? What kept you going and helped you to overcome those times?

When we began to form INLOCK, we faced a huge dilemma regarding whether we should create a simple platform that would grow organically, or hold an ICO, and deal with all the hardships and difficulties that can go along with it. Holding an ICO would slow down our development and prolong our launch, but in the long run, it would likely result in a more dynamic global solution. Before we dealt with this dilemma, we wanted to create a peer-to-peer lending platform for lenders and borrowers. By this time, we had developed a fully functioning platform and had outsourced many roles. However, we also found out, at around the same time, that we could face jail time if we launched the platform under current regulations. Since then, I’ve made it my personal mission to educate regulators about the p2p lending that they’re trying to eliminate. It is actually very different from the fully collateralized crypto-backed safe loan platform that we’re working on.

What are the top 3 upcoming conferences you are attending and are excited about?

Though our Q4 roadmap is under development, we are excited to be attending Consensus Singapore, B-day 2.0 Blockchain Budapest and Hackers congress Parallelní Polis.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

It can be difficult to find the middle ground between being a team leader and a team member. When I start to question my decisions and unnecessarily begin doubting my beliefs, I remind myself that these problems are only present in my head and have no real manifestations. When I recognize the lure of this trap I try to move past it quickly and lead my team to victory while marching alongside them.

How can our readers follow you on social media?

Facebook: https://www.facebook.com/incomelocker

Twitter: https://twitter.com/inlock_token

Linkedin: https://www.linkedin.com/company/income-locker

Personal Linkedin: https://www.linkedin.com/in/csaba-csabai-5487b648