The old legacy of the financial world – how does crypto fit into it?
PaySpace Magazine Global has reached out to Petr Kozyakov, co-founder and CEO of the global payments network Mercuryo.
Can you briefly tell us about your background?
I originally began my career in the field of payments in 2009. My work involved developing new products as well as actively engaging with customers and partners.
I worked on developing solutions for cross-border payments and mass payouts for the retail sector, creating IPSPs (Internet Payment Service Providers), building relations with banks and other financial institutions.
The first time I actually came into contact with cryptocurrencies was due to a payment issue that I couldn’t find a way to work around. At the time I was trying to send a payment for advertising services from Asia to the United States and no efficient options were available. After looking at various options, I decided to try and make a payment in Bitcoin – while the process wasn’t perfect, the transaction still took place quickly and successfully. I was left with a good overall impression about the experience. I think that helped me see the potential that cryptocurrencies have in payments.
In 2014 I helped to found WinPay – one of the first companies in the world that offered cross-border payments and card processing services for crypto projects. And later, in 2018, myself, Greg and Alexander started Mercuryo, with me taking the position of CBDO, and several years later, the CEO. These days my job mainly includes interacting with payment partners and banks, obtaining licenses, launching new products, and ensuring the overall strategic development of the company.
How did you come up with the idea for the company?
The answer to this question goes back to 2017, the period when the crypto boom was taking place. At the time, many businesses were attempting to enter the field of cryptocurrencies, and we received many questions from different parties about how they could buy crypto, whether there were solutions in the market to do so and whether we could provide such a solution ourselves. And it occurred to us that we could actually try and do just that. We already had a lot of expertise in online payments, so the decision was made to build a service that would help people get access to cryptocurrencies with relative ease.
After setting up the platform in its first iteration, we quickly discovered that this was a major opportunity at a global scale – to bridge fiat and crypto worlds, bring them together, and vastly improve international payments as a system. That’s how we began developing Mercuryo into the company that you see today.
Mercuryo is headquartered in London, England. How would you describe the UK crypto space?
The United Kingdom represents a very healthy environment for companies that operate in crypto and fintech in general. I would even say that globally it is one of the leading countries when it comes to the adoption and innovation within the sector. The increasing presence of crypto companies in London demonstrates as much.
The city has a long history as a progressive financial hub, which makes it a great cultivating environment for various financial service providers. London has traditionally been seen as a gateway to Europe. Financial players in this region often come here in order to conduct their business. And this deeply entrenched status is not likely to change anytime soon. Which makes it very important for financial services companies, including crypto-related ones, to have a presence in London.
There is a certain openness from consumers here to the idea of giving new entrants to the market a chance. The presence of a healthy regulatory environment and competition sets a high bar and ensures that only the truly reliable businesses that provide quality services achieve success.
What are the perspectives of a Digital Pound and what could it mean for businesses?
Many are looking at the Digital Pound as the next step in payments and banking services, and a necessary step at that. However, there is still a lot that’s unknown regarding how the currency would even function. Some time ago the UK put together a task force dedicated to exploring the possibilities that introducing a CBDC could provide, as well as what would be necessary to implement it.
One definite advantage that comes to mind is a reduction in transaction fees for businesses and rapid execution of payments, as well as their automation and programmability. There is no shortage of companies today that operate worldwide. They require the ability to execute international transactions with as much ease as possible.
The introduction of a more advanced form of currency like the Digital Pound stands to improve all aspects of today’s payment systems. Not to mention the boost it could give to financial inclusion, potentially opening up entirely new markets for businesses that operate in the payments sector.
What is your opinion on the co-existence of cryptocurrency and fiat money?
Admittedly, the question of coexistence between the two is something that has many market players scratching their heads, including the regulators around the world. At Mercuryo, we believe that cryptocurrencies hold strategic importance in revolutionizing the field of payments.
It is well-understood by now that cryptocurrencies are not going anywhere – after the pandemic gave a major boost to the digitalization of finance, crypto has become an asset class in its own right that many people have come to treat seriously.
This growing acceptance suggests that cryptocurrencies have the potential to disrupt the traditional financial system, but this is not necessarily a bad thing. It is unlikely that crypto will never fully replace fiat money – at least, not the traditional coins like Bitcoin. Due to their high volatility and price swings, such currencies are well suited to be used for day-to-day settlements.
If we do get to see crypto payments going mainstream, it is much more likely to happen via stablecoins. Pegged to the value of fiat currencies, stablecoins feature relatively low volatility, which makes them much more likely to be accepted as a means of conducting transactions by individuals and organizations alike. With the advancement in regulations, I believe that stablecoins may become just the appropriate middle ground between crypto and fiat that the market is looking for.
Will Bitcoin ever be replaced by another cryptocurrency?
Will Euro ever be replaced by USD? They both serve their purpose, and nobody talks about replacing one another. Cryptocurrencies are even more complex since they have different use cases. While Bitcoin is mainly used for profit-making, stablecoins are suitable for saving value. Some coins act as fuel for running smart contracts, others give access to borrowing and lending, and there are also technology-focused currencies focused on speeding up cross-border transactions.
When talking about replacing Bitcoin, you have to keep in mind that, above all, it is an investment tool and investments like diversity. The majority of investors are working with different assets, and these assets successfully coexist. At the same time, being the first-ever cryptocurrency, Bitcoin has a massive sentimental value; and that will never change.
What is the biggest problem with cryptocurrency?
The biggest problem with cryptocurrency is, hands down, the lack of a solid, universal regulatory framework. While some countries are doing a great job establishing cryptocurrency-related policies, others prefer to ban it completely. New regulations are being issued daily, but if you look at the global landscape, crypto laws are still chaotic.
Once we reach the point where a regulatory framework for digital currencies is more or less developed and globally accepted, other problems and technological challenges will be way easier to approach.
Elon Musk has definitely become too influential on the crypto market. How seriously should investors consider his impact on crypto?
Elon Musk is known to influence the crypto industry as it serves as a basis for extreme price fluctuations. While the man himself claims that he dabbles in crypto for fun, his actions pave the way for unhealthy market activities. As such, Musk’s influence is often a point of concern for serious traders/investors.
It has come to the point where Bitcoin investors are learning to ignore tweets from him and strive to maintain a united front by limiting how they panic sell. This is a good start. The cryptocurrency industry is moving towards greater maturity, and knowledge accumulation is gradually taking the center stage. As the market players get additional knowledge, they are learning to base their decisions on more relevant and fundamental factors, such as changes in the regulatory landscape, for example.
What will cryptocurrencies look like in 10 years?
I do not doubt that the industry will continue developing, and the demand for crypto will grow. As Cambridge Center for Alternative Finance’s report shows, in the third quarter of 2020, there were about 101 million crypto owners globally, and the volume of crypto transactions has been going up steadily. Little by little, change is happening. When the most traditional banks are ready to embrace it, we will no doubt see the global rise of crypto as a universal payment method.
In the next few years, we should see more countries issuing their own CDBCs. When it happens, and when digital currencies see full adoption, I expect that we will probably get access to CBDCs, crypto, and fiat currencies via the same banking app. In the same way that we now use digital wallets to store the data of our debit, credit, and discount cards. That will be the point when we know that the crypto revolution has been successful, – and I believe that we are to witness it soon.
What are the two worst-case scenarios for Bitcoin?
I’m sure that quite a few traders and investors, especially those who have just joined the space, consider every unexpected drastic Bitcoin price drop as the worst-case scenario. High transaction fees can also draw people away from using the coin as their money-making tool, so they might eventually switch to other currencies.
However, crypto-focused businesses and fintech projects don’t care about how much Bitcoin is worth. Whether it’s $1 or $100,000, the crypto space is broad and versatile, and Bitcoin’s underachievements won’t impact the course of industry development. People have to understand that cryptocurrency’s real value does not reside in its price. It is the technology and practical use cases that matter.