Alexey Ermakov, CEO and founder of Aximetria, is a serial entrepreneur with over a decade’s experience in leading, world-class technological roles within a large, No.1 national mobile operator and leading financial organizations.
Prior to these roles, he was the Director of Big Data at the R&D Center of JSFC AFK Sistema, a large publicly-traded diversified holding company in Russia and the CIS.
Prior to JSFC AFK, Ermakov worked for MTS (Mobile TeleSystems – the largest telecom provider in Russia with over 102.4 million subscribers) where he headed the antifraud and cybersecurity systems development – crucial factors for any organization in today’s hyper-connected world.
What do you believe are some key components that will lead to mass adoption of cryptocurrency on a global scale?
Many people talk about mass adoption of cryptocurrencies. To achieve this, regulation was created, as were stablecoins, along with other important steps that took place in making this happen – and Aximetria adopted these policies, too. However, the main factor limiting mass adoption is still the cost of the service, making cryptocurrency too expensive to compete with neobanks like Revolut or N26, in cases when it comes to daily use by people around the world.
We conducted a study among users that showed interest in crypto, but who never made a single transaction. It turned out that if they were offered to make transactions for free, the number of users who would then complete transactions would grow by almost 300%, in contrast to wealthier customers who could already afford existing commissions. Now we made this option finally available, removing a key barrier and opening up the convenience and reliability of cryptocurrency transactions to anyone. As more users board the cryptocurrency train, savings and remittances will be handled by apps and blockchains, rather than banks and clerks. Users tend to trust mathematics and code more than banks and governments. Latin America, Africa, India and other developing economies are certainly big markets for apps like Aximetria as a free and reliable substitute for banking.
Please describe the nature of your company Aximetria.
Aximetria – a crypto-centric financial service of the future, has launched an all-in-one app that is mobile-first, hosts all assets on one app, is global and can be used by anyone from anywhere and is trusted because we are based in Switzerland under Swiss regulations. With Aximetria, you can open an account remotely under Swiss regulation. You can buy/sell fiat like euros and also convert them to cryptocurrencies. All these assets are safe in your wallet in the same app. You can complete your KYC in a few clicks and access global markets – all from your smartphone. All of this is completely free and makes sure you have a transparent transfer.
You mentioned a study you conducted showing an increasing preference for crypto as a savings vehicle and remittances. Could you elaborate more on those findings?
Yes, Aximetria conducted the study and based on the findings we view Latin America, Africa and other regions with developing economies as big markets that opt for savings and remittances through crypto. The data shows a much higher preference for crypto as a savings and investment vehicle as well as remittances, compared to other geographies, like the US or Europe. While savings seem to be the biggest reason users hold crypto, remittances are turning out to be a big market too. This data may not be able to stand on its own but it is perfectly congruent with other data about usage and growth from the World Bank and other surveys that were independently conducted.
Bitcoin and crypto have always been perceived as insurance in case the traditional financial markets crash as they did in 2008. This is the most common reason why people buy and invest in cryptocurrencies. In spite of volatility, with the arrival of stablecoins, users that do not trust their banking system can store their wealth in stablecoins and thereby reduce the risk of losing their money in case banks collapse. Stablecoins are cryptocurrencies on a blockchain that is backed by fiat in the reserve. This means they are not as volatile as cryptocurrencies tend to be but they have all the benefits of a good cryptocurrency – complete custody, easy to hold and transfer and low fees of transfer across the globe. This makes them an attractive savings vehicle.
The World Bank noted the highest remittances ever in 2018. This means businesses are going global and that is just $529 billion in remittances for low to middle-income countries. The growth rate of 9.6% compared to the previous high in 2017. With that, internet businesses have gone global. Products can be made and shipped anywhere making every small business a multi-national business.
Mexico alone accounted for $36 Billion of remittances. The global average cost of sending $200 is about 7%. That is too high compared to a crypto transaction that might just take a flat fee. The World Bank report also says banks were the most expensive remittance channels charging an average of 11% fee. Latin America accounts for $88 billion worth of remittances with a growth rate of 10% every year. Colombia and Ecuador showed a 16% and 8% growth owing to the migrants in Spain.
A recent report also says that the maximum users of cryptocurrencies tend to come from Turkey and Latin America. This survey was conducted in 46 countries and it turns out Brazil, Colombia, and Argentina occupy the second, third and fourth slot. 18% percent of Brazilians said they owned or used cryptocurrencies. This number is also growing at a rapid rate.
The primary reason for users to transact in crypto for remittances is the high fees from banks. A transfer fee of 7% can mean a very high amount for someone sending $10,000 to their home, from a country where they are working in. Also, smaller amounts attract a higher fee and even a processing charge.
The second reason is the currency conversion costs. When we transfer one fiat to another country, the bank converts this to the recipient country’s fiat and that causes the bank to charge a fee because they have to hedge against any fluctuations in the international currency rates. In contrast, crypto fees tend to be much lower with a flat fee even if the amount is very high. For example, you can transfer $1000 or $1 million on Bitcoin’s network and the fee will remain the same. This is way more convenient.
Time delay is another reason. Banks take a few days for international remittances and settlement before the money shows up in the recipient’s account. Whereas in crypto, it takes only a few minutes. These inherent advantages make crypto very attractive to users.
Ease of use is another reason. Companies like Aximetria solve all of these problems and help people in the regions to be financially better off.
What first attracted you to the cryptocurrency and blockchain sector?
I came up with the idea for Aximetria when I ran into difficulties with opening an account in a foreign bank and then having to pay huge commissions for everything. The company is a response to the injustice that banks and financial companies dictate to us when ordinary people need basic financial services, such as remittances, exchange, savings, and other transactions.
You recently announced a zero-fee environment for all services within the app. Can you elaborate on how you will sustain a zero-fee system?
In order for the zero-fee system to survive and evolve, it is important that assets can be spent within the service. Aximetria is continuously working on developing functions in this direction and already launched, for example, AxiDrop – the remittance service for anyone in the world just by knowing a phone number, and the Aximetria Marketplace, where users can spend their crypto on goods and mass consumption services. In the near future, Aximetria will launch a P2P cash in/out service for regions where most people don’t have bank accounts and cards. It will provide people in these regions with an option to top-up and withdraw crypto funds by engaging with a network of Aximetria agents.
Chinese President Xi Jinping recently gave a speech embracing blockchain technology and called on China to take a leading position in the sector. In your opinion, what does this recent announcement from a world leader mean for cryptocurrency and blockchain?
While the US and Europe are resisting changes and emerging innovations in the form of prohibitive measures for Libra and Gramm, nothing can undermine our belief in the prospects for the use of cryptocurrencies and blockchain, which will increase the quality of life of people around the world. Any positive news makes people multiply their faith in cryptocurrencies and blockchain.
Now we reach a completely different geopolitical level when competition arises not between companies and state regulators, but between global leaders, as we see it with the latest announcement by China’s President Xi Jinping who wants to take the leading position in the blockchain industry. The competition between political leaders in the fintech industry will sparkle with completely new colors, benefiting all those states that contribute to development, and not resist it. Switzerland, which creates the right foundation and infrastructure for fintech startups and crypto markets, will be among the first states to benefit.
Where do you realistically see blockchain technology and cryptocurrency in 10 years?
Cryptocurrencies, blockchain, and triple-entry accounting are probably the most important inventions of the last 500 years! Remember how at the end of the last year, everyone regretted that they did not buy Bitcoin at the time when nobody needed them, and now the currency’s course sets a new record every year? Throughout 2018, Bitcoin had been falling. Bitcoin will be the main means of preserving wealth – all that could be done with cash can now be done with Bitcoin, but in a simple and convenient digital form.
With time, state cryptocurrencies will gain momentum and flourish. It won’t be liked by societies, of course, but governments will not just sit and wait till they lose control of money. Some loyal cryptocurrency fans argue that people won’t use state currencies but we know that, of course, they will. The average person does not pay much attention to such important issues as privacy and security, for example, until they are physically deprived of them in emergency situations, such as crime or war. When soldiers burst into the house and take all of your property, the need for privacy suddenly becomes very tangible.
Although the whole point of cryptocurrencies in the system of checks and balances is decentralization, and state cryptocurrencies entirely contradict this idea, state cryptocurrencies will appear anyway. In fact, instead of distributing power, they will centralize it even more, because they will try to impose control over citizens and track your every purchase at the same time automatically levy taxes on salaries and control sales of goods and services. That’s the key reason authoritarian governments seek to create official state cryptocurrencies. They want to start secretly controlling your money as soon as possible.
Governments will completely displace cash under the guise of one of these three excuses: 1) to stop money laundering; 2) to stop terrorism; 3) to stop crime.
Of course, the fact that most of your money is spent on Amazon, food and rent, has nothing to do with these excuses. Yet, they will argue again and again, citing one or all of the excuses. By doing so, they can easily manipulate the majority of the population to do what they want them to do, and people will even start believing them.
However, BTC is now the only financial instrument that can easily cross borders and without restrictions. It will undoubtedly preserve its quality of freedom and will become an alternative to gold and cash.