One thing that I absolutely love about this industry is meeting new people, meeting Charlie Hayter, CEO and Co-founder of CryptoCompare, was doubly great because we got to chat about crypto over tapas in sunny Barcelona.
Colin Platt (CP): Hi Charlie, good to finally meet you after months of trading emails.
Charlie Hayter (CH): Hi Colin, glad we could connect.
CP: Charlie, I’m a huge fan of data around cryptocurrencies and blockchains, so naturally am interested in your product. Can you tell me a bit about how you got into cryptocurrencies and what got you to launch CryptoCompare?
CH: I think that I originally saw it in 2012 but was dubious about the idea of a currency that wasn’t backed by anything. Truth be told, I didn’t really know much about money at the time, so did not really see the value in something like Bitcoin. It was about a year later when the price crossed $1000 that a friend got me to look back into it, and quickly thereafter I started dreaming up the idea behind CryptoCompare. A year later, along with my co-founder Vlad, we launched CryptoCompare. I come from a financial services background, so financial data was something that I saw value in having. The idea behind CryptoCompare was to set up a unified data platform, somewhat like a live research report, much like Bloomberg for crypto to give a more holistic view. I also have a background in digital marketing and knew how to get ad revenue to grow the business, and saw the long term value of the data that we would be collecting.
CP: So you launched in 2014, what’s the journey been like?
CH: This is a fast moving industry, and we as a company have been evolving as well. When we first set up in 2014 we were a very thin team, classic startup, I wasn’t taking a salary and we focussed on getting the right elements in place. Later in the year we raised our first funding round from angels and officially launched. The next year we were able to get a version two off the ground which greatly improved our offer. From the beginning I knew that we liked the name CryptoCompare but didn’t have the URL, we negotiated and finally were able to buy it in 2015. In 2016 we had grown a lot and were able to get our second round of funding, the following year we managed to be cash flow positive which was a great achievement. In 2017 we were able to grow the team to set up the business, and 2018 was about making everything work. This year we have really been concentrating on growing up as a company and becoming more efficient. We never did a token sale, so our journey may look different from some others.
CP: It seems very disciplined and more sustainable. Tell me a bit about your product offerings today.
CH: We have three main activities. First is our data business, where our APIs sit. Our APIs receive 20 million calls per hour on average, having peaked at 180 million calls from 14 million unique IP addresses, Our second line of business is our data products, this includes our cryptocurrency indices business, which provides to companies like VanEck, Reuters, Yahoo! Finance, and underpins the Nasdaq Cryptocurrency Futures. Our third line of business is media, we run the CryptoCompare Digital Asset Summit, which took place last June in London. We also do affiliate marketing, the CryptoGlobe news site and research. Within research we do our taxonomy work, as well as exchange rankings.
CP: I saw those exchange rankings, those are extremely useful. I do want to talk about indices, in crypto we don’t have closing rates or official “fixings”, how do you construct indices?
CH: Absolutely right, a lot of the design in indices is making sure that we have robust methods which reduce the risk of manipulation. This is particularly important for tracker funds and futures. We spend a lot of time on methodology and benchmarking. Our indices are based on VWAP (Volume-weighted average price) and include fade-outs, if exchanges haven’t had trades in a certain amount of time we reduce their contribution to the price. We also do a lot of work to evaluate how robust exchanges are, and if the prices are reliable. The statistics from the VanEck report to the SEC are well known for their work on this, we’ve found that when you look at other pairs things become more complex. Looking at exchanges for good management practices and generally trying to do the right thing is highly important, and helps us ascertain our weightings. Less liquid currencies can add more complication as we often need to go to the extra step of passing their prices by BTC or ETH then back into fiat.
CP: That’s great insight, surely regulators and investors must be interested in your findings.
CH: Yes, we are founding members in GDF (Global Digital Finance) and share a lot of our findings via their working groups to help inform global regulators about best practices. We’re also members of the CryptoUK self-regulatory organisation and do advocacy work in the industry on these aspects as well.
CP: You brought up a point earlier about originally not having seen the value of Bitcoin. Popular topic nowadays is Libra. Where do you see that fitting in?
CH: I look at money as coming in three forms, the first is issued by nation-states, like the Dollar or Sterling. The second is natural money and algorithms that we collectively agree to treat as money, things like gold on the one hand and bitcoin on the other. The third type is issued by companies, this is where Libra fits in. It’s money more or less because a company, or group of companies, have put it out there and will accept it. These types of money have existed for a while, and are popular in video games. Libra is a new form of that. There are pros and cons, but this is how I see it fitting in.
CP: My favourite question, but the one that interviewees always hate. If you could go back five years and give yourself advice, knowing what you know now, what advice would you give yourself?
CH: That is a tough one. I think that I would tell five year younger me to not create such a scramble in the early days, and hire and raise more earlier on. I would also have wanted to focus more on the leverage and derivatives aspects of the industry sooner, as that is clearly a large trend which we would have liked to be involved in earlier. I probably would have also started our conference in November 2017. I still don’t think that I would have done a token.
CP: Charlie, thank you very much, it has been a pleasure speaking with you.
CH: Thank you, great to meet you.
Missed one of our previous interviews? Read the interview with John Salmon of Hogan Lovells here.