Big name tokens for daring millennials

Money Glitz | Joyce Chen 21 May 2018

Tech-savvy millennials in search of an asset class that has attracted much attention are being promised a new cryptocurrency trading service by Weever Fintech, a subsidiary of CASH Financial Services Group (0510).

Set up recently, Weever Fintech, says it is the first commission-free cryptocurrency trading platform in Asia and aims to attract millennials in Hong Kong.

"Research we did showed that millennials have a great interest in cryptocurrencies, but they either could not find a decent approach for investment or are not confident on existing trade centers. We hope to fill the gap," chief executive Benson Chan Chi-ming says.

In Southeast Asia, Korea and Japan, some cryptocurrency exchanges could achieve a trading volume of US$2 billion (HK$15.70 billion) per day, while most of the participants are millennials, he adds.

To lower risk, CFSG will only trade tokens with big names and avoid initial coin offerings distribution at the beginning. Tokens available on the platform will be Bitcoin, Ethereum, Litecoin, Ripple and Bitcoin Cash.

Stock commentator David Webb once called Bitcoin "the world's first decentralized Ponzi scheme," and many analysts are wary of cryptocurrencies. But Chan remains positive.

"The majority of the public is negative because they don't have a sufficient understanding on the market," Chan says, arguing from two aspects that the value of a currency can be backed by something else other than an economic entity.

Firstly, demand and supply. Chan believes that if demand for a currency is higher than its supply, the price will be sustainable. Given that supply of liquid tokens such as Bitcoins is set limited, price should grow in long term.

Secondly, application. Chan says that in the 1970s when the US government was "technically bankrupt," people still used US dollars for trades due to its liquidity and wide application. He is thus convinced that "a currency's intrinsic value comes from the application of the currency."

As governments and regulators around the world are positive on blockchain technology, and cryptocurrency is one of the very first fields that the technology was applied to, he believes that the intrinsic values of cryptocurrencies will eventually climb.

"The reason why cryptocurrencies are extremely intra-volatile, sometimes to 5 to 8 percent, is because applications of tokens are still very limited." On top of that, Chan is not convinced that a backup economy is necessary for valuing a currency.

"As the founder of Bitcoin, Satoshi Nakamoto said, the centralized system of fiat currencies is not credible. After 2008 financial crisis, governments in the west poured money into the market using quantitative easing. That has depreciated people's wealth unconsciously. "

Meanwhile, he does admit that some new ICOs are very risky.

"It's just like the time before the technology bubble 20 years ago when many startups came out to raise capital," Chan points out. "However, when you look at what stayed to the end such as Google and Amazon, they became the world's most investable companies in the world. And those tokens I mentioned before are exactly like that."

He forecasts that the most active and liquid cryptocurrencies in the market now would be growing in the long-term.

Chan, also the director of Celestial Asia Securities Holdings (1049), says now is a great opportunity for investors to enter the market, if they are willing to take risks. He also suggests investors choosing cryptocurrencies carefully.

To reduce risks, Weever does not offer margin financing as most of the trading platforms do, Chan says.

However, it offers trading on a millesimal base, which means investors can buy or sell 0.001 of one token. For example, the minimum investment for one Bitcoin could be as low as US$8.23.

Deals on the platform can be settled in both Hong Kong dollar and US dollar.

The new setup has earmarked HK$10 million for platform development and early-stage operation. It looks forward to making profits in the future from advertising and providing investment assistance to users.

The fintech-initiated company is also in development of artificial intelligence tools which would offer users data analytics and professional consultancy.

In terms of cybersecurity, the platform aims to build four-layer protection and two-factor authentication, multisig wallets, firewall, and separate servers.

As of last Thursday, it has seen 80,000 interested in signing up in Hong Kong in just one week. Chan expects to attract 200,000 users.

CFSG will officially launch the platform in the third quarter of this year.

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