Binary.com’s Explosive Growth & Their Upcoming ICO
Binary.com opts for an ICO rather than an IPO to take advantage of cost saving benefits, as well as the flexibility of reaching a wider pool of investors and having their tokens traded on multiple exchanges. In this interview we dive deeper into Biniary’s growth strategies
AN ICO TO HELP FUEL EXPLOSIVE GROWTH
Coinist was recently fortunate enough to.chat with the team at Binary.com, a binary trading platform that has been around since 2000, and boasts an impressive total turnover of 3 billion dollars. Yes, that’s Billion with a “B”. They are currently in the process of prepping for their ICO, and we were lucky enough to chat with them about their recent explosive growth as well as their foray into the world of crypto. Let’s jump into the interview.
First of all, thanks for sitting down and chatting with us today. Binary options are an exciting investment tool for investors with a high appetite for risk. Can you begin by introducing our readers to what binary option trading is, and what makes it differnt from other investment vehicles?
A binary option is one of the simplest financial instruments around. The “binary” in its name comes from the fact that there are only two possible outcomes based on a yes or no proposition. Contrary to what you said, binary options are not a high-risk investment. Binary options trading –– also known as fixed-odds trading –– comes with a fixed payout so you always know how much you stand to win before you hit ‘Buy’ on that contract. Most importantly, your losses are always limited to your initial stake –– unlike spread betting where your losses can far exceed your original stake.
Now, let’s talk a little bit more about your ICO. Participants in your ICO will get two different token holder rights. The first is to receive dividend payments, the second is to convert the tokens into ordinary shares. What are the pros and cons of one option over the other? Are they not two sides of the same coin?
We’re issuing convertible tokens because ordinary shares themselves are not issuable on the blockchain, as the laws regarding share registers have yet to catch up with blockchain technologies. However, the tokens are intended to be economically equivalent to shares. The tokens can receive dividends just like shares and are convertible into shares. In practice, there would be no point in converting the tokens to shares, since the shares are unlisted.
You’re working with Lykke to list your tokens after you conclude your ICO. We’ve interviewed them before. They offer an incredibly interesting solution for issuers of digital tokens. They are a project we are personally really excited about. How did your relationship with Lykke begin? What are the big advantages of working on a platform like Lykke? What does Lykke offer you that you couldn’t do on your own?
We’ve known Richard Olsen for over 12 years since the company he co-founded, OANDA Global, launched their “box options” service and became a competitor of Binary.com in the process. After we heard about what Lykke was trying to do, we were naturally drawn to the prospect of partnering with them. Both Lykke and Templum are the main cryptoasset exchanges that intend to focus on securities tokens. We believe that securities tokens will really take off in 2018 and we want to be a part of that.
On your ICO announcement page, you have a section called “Binary.com By the Numbers” which show the site’s growth from a handful of different angles. We can see year-to-year net profit, active users, and employees to name only a few metrics. I noticed that during the time between 2010 and 2012, Binary.com saw an explosive amount of growth across all metrics. You mentioned that this growth was caused by “improving customer retention” and “targeted online marketing campaigns”. Can you talk a bit more specifically about each of these growth mechanisms? The change in growth rate is dramatic after 2010. What specific “customer retention initiatives” were used to inspire such dramatic increases in retention? What specific “targeted online marketing campaigns” were used to initiate such impressive platform growth? Why were these initiatives not implemented earlier? Was there a management change which inspired the change in direction, a change in regulation, or something else?
We are always looking at ways to improve our customer acquisition and retention efforts based on our overall website and marketing strategy. For example, we believe that an intuitive user interface and experience can increase conversion rates and the time spent on our platform so we are always trying to improve these things –– and it has paid off in terms of the total active clients on our platform.
Our “targeted online marketing campaigns” include finding new sites and affiliates to promote our services, optimising our website with new keywords to improve our site’s search engine rankings, and running targeted PPC campaigns to attract potential clients.
The fact that the European Commission categorised binary options as financial instruments in December 2011 may have also helped.
I’m sure maintaining this level of growth is no small task. On your website, you mentioned that you have several ongoing initiatives to help ensure future profitability. You also mentioned that these initiatives include penetrating new regulated markets with significant growth potential. Can you speak in more detail about what some of these newly identified growth opportunities are?
We’re looking to grow our Japanese licensed business, expand our MT5 offering, introduce new products such as lookback options, and add more cryptocurrency-related products and services. These are the growth areas we intend to focus on for the near future.
You mentioned that you’re experiencing growth in Europe and Asia. You also mentioned that the Far East is the world’s leading market for binary options. In your white paper, your charts show massive growth in Asia. Why do you think this is? What profile characteristics of the Far East user-base makes this demographic so ideal for binary trading? What specific regions in the Far East are most active for you?
We believe that our growth in Asia is largely due to robust economic development in the region and the fast-growing middle class. Our Far East user base is very active when it comes to talking about our products and services. They love to share. We believe this is partly driving the strong organic growth we’re seeing across Asia, hence why this demographic is so ideal.
Beyond the obvious use case for cryptocurrency technology to help support your fundraising efforts, you seem dramatically bullish on the technology in general. On your FAQ page, you said that you believe blockchain exchanges will gradually replace traditional stock exchanges in the coming decade, and that ICOs will gradually replace IPOs. In your opinion, what are some of the major drivers of growth for this niche, and what are some of the biggest roadblocks you see facing the crypto space in general?
There are too many advantages and benefits to be gained from an ICO that most companies will explore its possibility at the very least. Some of the most tempting reasons to opt for an “IPO on the blockchain” would be the cost saving benefits, as well as the flexibility of reaching a wider pool of investors and having your tokens traded on multiple exchanges.
One of the biggest roadblocks we’re seeing is that cryptocurrency exchanges have yet to establish detailed rulebooks and codes of conduct for companies that wish to issue securities-backed tokens. Other companies may take advantage of this situation to defraud unsuspecting investors.
In another article you said that through the ICO, you can also establish your trading services among the cryptocurrency community, which is a prime target demographic for your platform. That said, I would think an IPO puts you in front of your ideal target market as well (traders). An ICO puts you in front of crypto traders, but both markets seem ideal. What are the biggest reasons you decided on an ICO rather than an IPO?
We decided on an ICO to go beyond the limitations of an IPO, including a wider reach of potential investors, lower costs of trading, and an immutable audit trail of transactions on the blockchain. It may take years before we see stock exchanges integrate all the best features of blockchain technology. By that time, we may see more and more companies opting for an “IPO on the blockchain” instead.
You mentioned that your tokens will be tradable on different blockchains. For example, you mentioned that you’ll launch an ERC20 token on Ethereum, but your token will also be listed on other blockchains. What are the pros and cons of launching a token on one blockchain versus multiple blockchains?
It remains to be seen whether the Ethereum blockchain will remain the preferred blockchain for ICOs. There is an incredible amount of innovation going on in blockchain technologies and we want to remain flexible in our future development.
What are the biggest challenges in working with the Ethereum platform?
The biggest challenge is replicating on the blockchain the full gamut of corporate actions that are available to listed companies on traditional stock exchanges. We decided to adopt the MiniMe token that provides us with the flexibility required in that respect.
Thank you greatly for taking the time to chat with us today. To our readers, if you’re interested in learning more about Binary.com’s ICO you can visit their ICO page found here.
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