The Only Way Forward for Crypto Exchanges: Information Parity With Each and Every User
By Adnan Abdel-Razzak, Co-founder, Symetria
I’m going to be straight up with you; we’ve been building a wallet and exchange for over a year now. When we started in early 2018, things were, well, crazy. In case you’ve been living under a rock, here’s a recap:
- The ICO craze was on full blast. More money was raised in ICO’s in the first three months of 2018 ($6.8 billion) than in 2017 ($6.2 billion); ICOs raised a total of $7.8 billion dollars in 2018. You could write a white paper that literally said nothing — word soup in exchange for millions… billions even.
- Many founders took said money and built nothing — yes, nothing. In fact, a study conducted last year showed that a vast majority of ICO projects were scams. And while some have been working away, there has been little to no recourse for investors left the lurch.
- Several exchanges acted with impunity: they held some people’s crypto holdings hostage, exit scammed, charged exorbitant fees for ICOs to list, delayed or froze transactions or closed accounts for no good reason (the list is extensive — the standard is low).
- Many exchanges ran on flimsy systems that led to anywhere from a few dollars, to hundreds of thousands and I’m sure in some cases, millions gone with not so much as a reason. Droves of investors have yet to get closure on many of these instances.
- The industry resembled that of the Wild West: people did whatever it took from stealing, lying, and scamming their way to millions (ETH giveaways, anyone?).
…I could go on and on, but I think you get the picture.
Crypto in 2018
The bottom line is this: for an industry that professes to want to change the way money works, many have certainly gone about it the wrong way. Things are largely worse, not better.
But here we, and countless believers are today — still at it.
At Symetria, from the beginning, we understood the promise and potential that blockchain technology and cryptocurrencies have and set out to build something of our own. Our wallet and exchange have a main distinguishing characteristic: a system of accountability built on a platform where integrity comes standard. We’ll get into what that means exactly later.
“Good things take time, and as they say, good things come to those who wait.”
We’re working hard to level the playing field in the industry by giving our customers the same level of access to their transaction information that we have. As a customer, wouldn’t you want that?
“And yet, perhaps ironically, it’s trust, or mistrust and uncertainty, in the technology that’s holding back blockchain’s mainstream adoption. A lack of trust is cited as one of the main reasons new technologies, and blockchain specifically, are failing to take off.”
- Dr. Jemma Green, Cofounder & Chairman, Powerledger
Let’s talk about exchanges for a moment. I think it’s safe to say that there is a trust issue within our industry. It’s not surprising given that millions of dollars can go missing with no accountability. People transact on exchanges that they don’t feel comfortable trading on but do so anyway. They run into countless problems like frozen accounts, incomplete transactions, and disappearing funds. How can you, as a user, trust, knowing that your crypto can go missing with no accountability whatsoever?
We all deserve a better standard than this, especially as crypto prices start to rally again.
Centralized businesses, by definition, hold all the power. They hold your assets along with your account and transaction information, essentially leaving you, the user, powerless. Equalizing the balance of power between the customer and the exchange goes a long way to addressing the issue of trust and integrity.
No exchange (or any centralized business for that matter) should continue to be empowered through an information asymmetry with a customer’s account and transaction data.
So, how will we make things better? Well, we’re building a wallet and exchange that gives you the tools to hold us accountable for our actions. We (the user and the exchange) have access to the same level of immutable information, so you have the ability to call us out if we’ve done something wrong by using the hard facts established on a blockchain — Personal Blockchain.
How does Personal Blockchain Technology do this?
We propose a game where no one can cheat. Here’s the non-techy version of how this will work:
1. Two parties — the exchange and the user — agree upon a set of published immutable rules at the onset. This is in the form of a request for service, and the service itself.
2. The service requests and service deliveries are secured by cryptographic proofs. All transactions (defined as an alteration in the state of the blockchain — either through a transaction or through a change in account details) on the wallet and exchange require a digital signature from both the exchange and the user. This means that nothing can be done without your digital signature — nothing.
3. Once a transaction request is met in accordance with the agreed upon rules, the data structure that includes the terms of engagement, stores of value and the digital signatures for the request and the delivery go onto a blockchain established between the user and the exchange. Neither party can change this.
4. There is cryptographically secured proof of every transaction and account activity. With this, you and the exchange can:
- Verify (establish the facts)
- Challenge (if we’re at fault, let us know)
- Share (hold us accountable)
All transactions — from changing your email address on your account to sending coins or trading one cryptocurrency for another — can’t happen without your consent. These details are recorded and secured by cryptographic proof. They remain private between the user and the exchange, but can be published for validation among peers, publicly, if something goes wrong.
This system establishes an incentive for a centralized business, in this case, Symetria, to act fairly because it’s in our best interest to do so. If we act in discordance with a published contract that is secured by cryptographic proof, then the offended user can publicly and immutably prove this.
Reputation is everything
In a single or series of transactions, if we do something wrong and fail to make it right for you, then we will have to face the negative impact on our reputation. In this space, a poor reputation can threaten the existence of our business entirely. The bottom line is this: it is in our best interests to do right by you and every other one of our customers, every single time.
It is important to note that this tool also works in Symetria’s advantage. If a user makes unfounded claims that are intentionally or unintentionally false, we can defend against this, as we have a record proven by digital signatures authorizing an action. The opposite is also true — the non-existence of a digital signature also indicates that a request for a service did not take place.
This also translates into an unprecedented customer service experience: both the user and the service provider have access to the same information, so little time is spent trying to establish the facts. Both parties can get on with resolving the issue instead of wasting time trying to define the problem in the first place.
Personal Blockchains, then, provides a framework where the exchange and each of its users work together with the adage in mind: “trust, but verify.”
To be clear, however, this system does not solve ongoing security problems in the space. Users (and exchanges) can still be hacked. Yet, in a worst-case scenario, users and exchanges now have a tool at their disposal where they can distinguish between an exchange stealing their money and claiming a hack was an actual hack.
Building from a place of integrity
We differ from the other exchanges: we say what we mean, do what we say, and we are building our business around an empowered user who has the tools to hold us accountable. By using Symetria, traders have a cryptocurrency wallet and exchange experience that is inclusive of and empowering to each and every one of them equally.
We’re excited to set a new, better standard for how business is done.
Check back for the next blog post where we’ll cover how trust is verified with Personal Blockchains.
For more information on Personal Blockchain Technology, read our white paper. Symetria will launch its wallet and exchange in 2019.
To stay up to date on our launch, connect with us!
Symetria is a blockchain technology company based in Vancouver, Canada. The company is developing the first cryptocurrency wallet and exchange service built using Personal Blockchains, a technology that enhances transaction integrity on centralized exchanges. Symetria’s mission is to bring a new standard for accountability and fairness to the industry, balancing the power between trader and exchange. Symetria’s MVP will launch in 2019.