Edward W. Mandel
Oct 29, 2018

As noted here a couple weeks ago, some cryptocurrency exchanges fly a flag of convenience, like a cruise ship might imply to be home-ported in Panama or Liberia. Other exchanges, like Yobit, fly no flag at all, like some privateer brigantine freebooting across the Spanish Main.

And, if you think about it, this statelessness makes sense. If you’re swapping bitcoin and zcash without any reference to sovereignty of currency, why should you care about sovereignty of regulatory authority?

Yet, there are limits to the advantage of the pirate’s life. Living outside the law also means you have no protection under the law. Rob and pillage all you want but, if you get robbed or pillaged yourself, nobody is sailing toward your distress flare.

We on the BQT.IO team consider the Ethereum Virtual Machine to be our native soil, but we’d look pretty silly marching into the Olympics’ opening ceremonies under that banner. As stipulated in our white paper, we intend to roll out in Europe first, then Asia, then the Americas. So it would probably make sense for us to find a domicile in Europe but where precisely — Malta? Switzerland? Estonia? Elsewhere? — is something we’re still working through. Our timeline doesn’t call for any action on this until April, so it’ll be a while before this decision point crosses into our critical path.

So, as we study the situation, we plan to be informed by issues others have run into.

All politics are local — and at least some economics

As CryptoCurrency News reported, life is good at the big exchanges. The Coinbases and Binances of the world aren’t going away anytime soon, even though the crypto market has spent most of 2018 in the doldrums.

CCN notes, though, that it’s a different world for the smaller players — that is, the ones that focus on one geography. Reporter Joseph Young cites the example of the presciently named Coinfloor, Britain’s oldest crypto exchange, as it struggles to stay solvent, no less relevant.

Simultaneously, Mercado Bitcoin, the largest Brazilian exchange, is likewise downsizing. But where Coinfloor is a victim of competition from global players, Mercado Bitcoin was deal a blow from being on the wrong side of the “v” in a court case. Essentially, Brazil outlawed the concept of a “local” crypto exchange and now requires Mercado Bitcoin to process its transactions offshore, adding time and expense to every trade.

As a rule, then, it appears that the future is bleak for bourses that seek to serve a narrow population. The exception, though, might be South Korea (or just Korea — we all know that Pyongyang has got its fingers in this pie so let’s not act naïve). According to the CCN article, Upbit, Gopax and Korbit are among the local exchanges supported and endorsed by their nation’s investment banks and industrial giants.

Africa, too, is replete with blockchain-based financial services firms. To describe them as exchanges though might be overstating the case. Although Golix and NairaEx have developed in response to Zimbabwe’s economic collapse and Nigeria’s political incompetence respectively, they are rare examples of true trading platforms. Most of the rest of quote-unquote crypto exchanges on the Dark Continent are essentially just payment transfer sites that leverage distributed ledger technology.

Crypto’s Craiglist

There’s local, then there’s hyperlocal — and there could be room for this model as well.

The best legacy example of hyperlocal site is Craigslist. This low-tech wonder of Perl script, launched in 1995 and still something like the 100th most visited website in the world, is basically the 21st century’s classified ads. If you want to find a new rental unit, sell your bike or hook up with a “casual encounter,” you’re a click away.

There are other examples. The Patch is an online news organization with local reporters serving around 600 American communities, so it’s basically that free tabloid you pick up at the grocery store that has all the roofers’ and hardware stores’ coupons plus a ridiculously easy crossword. Nextdoor is a social media platform that seeks to hyperlocalize the Facebook experience. Critics say it just helps you racially profile your neighbors and increase the risk of a political argument in real life, but it’s got a ton of money behind it.

Which brings us to hyperlocal crypto exchanges. They’re already a thing. It’s not a model BQT.IO is pursuing but, as I noted a couple weeks ago, there’s room out there for anyone with a differentiating approach.

So we on the BQT.IO team tip our collective hat to such exchanges as LocalBitcoins or Liberalcoins which offer the opportunity to exchange digital assets not just P2P but actually F2F. LocalBitcoins provides you with instructions on how to settle locally using direct deposits into neighbors’ bank or brokerage accounts, and is limited to the USD-BTC pair. Liberalcoins goes so far as to offer an array of alt-coins which can be exchanged for local currency in person. It offers an animated video that shows “Jasmine and Dave” as the two counterparties who are sad until they find each other via Liberalcoins, text a while, exchange phone numbers then meet for coffee. Up until Dave hands Jasmine actual cash for her crypto, it looks like an explainer for a dating site (and, depending on the dating site, the handing over of cash might be a little too on-the-nose).

On the whole, we at BQT.IO believe that national sovereignty is experiencing the same sort of redefinition it did in 1648 when the Peace of Westphalia established the system we live under today. Despite the current nationalist backlash, one of two things is bound to happen. Either personal identity will become more local or it will become more global. That is, A Czech will start thinking of herself as a Moravian first or as a European first. She will then either consider herself an Ostravan or a citizen of the world.

We believe the latter. Rivalries will always be with us, but they won’t be about whose money is worth more than whose because of what language they speak. Even so, a generation spent online has taught us all that, for some things, there’s no substitute for a personal connection. We are unabashed in our pursuit of a worldwide, decentralized exchange for a carefully curated list of digital assets. But we welcome other platform builders who understand the value of eye contact and hand shaking between the buyer and the seller.

Edward is an Ernst and Young Entrepreneur of the Year Finalist, Blockchain Enthusiast and visionary behind many successful organizations. An avid entrepreneur, Edward has a knack for designing distinctive business models complemented with superior technology to deliver unparalleled service and profitability. Edward also has been advising and consulting for various successful Blockchain technology and ICO projects and recently launched his own BQT.IO P2P exchange helping traders connect with each other to leverage their crypto assets.

BQT.IO has been in development since March 2017 and its ICO launched September 18. The information can be found online at BQT.IO and on Twitter as @BQT.IO_ico.