December 21st, 2018

Is crypto trading made social destined to succeed?

Is crypto trading made social destined to succeed?

December 21st, 2018

Aristotle, born in back 384 B.C., shrewdly pointed out once, that “Man is by nature a social animal.”

Thousands of years later, more and more scientists begin to support this idea coming up with researches to prove the guy was right. Thus Natasha M. Kriznik, Ann Louise Kinmonth & Paul C. Fletcher from the University of Cambridge in their recent paper published in “Social Neuroscience” Journal argue that our brain uses social experiences to predict the outcomes of our future interactions and “stabilize the error response.”

Not to mention numerous researches proving that social isolation decreases one’s lifespan and leads to poorer mental and physical development in children.

Sprinkle some Gestalt psychology on top, like the “Law of Pragnanz” with the brain’s love for simplicity, and the social media phenomenon stops being a phenomenon.

To put things in perspective, as of November 2018, with 7.6 billion people living on the planet, 3.03 of them were active social media users.

As humans, we always crave the sense of belonging. Though, is there any other use case for it? Gamification comes to mind. Valued at just $1,698.7 million by P&S Market Research in 2015, this segment is forecasted to reach $22,913.0 million by 2022. Having big guys like Microsoft Corporation, SAP SE, Cisco Systems Inc., and more on board, there’s no doubt the concept has some legs.

Gabe Zicherman, one of the world’s well-known experts on gamification, ran many kinds of research on the subject. Accumulated data prompted him to suggest that gamification is not only designed for fun but also to increase productivity.  For instance, studies have shown that making learning fun increases skill’s retention rates by 40%.

Researchers from the University of Colorado agree with Zicherman. According to their experiments, gamification offered 14% higher skill-based knowledge, 11% higher factual knowledge, and 9% higher knowledge retention rate.

A combination of those two opens up a great business opportunity for a whole new range of products where users get to acquire new skills and have the satisfaction from being part of the group. That’s why social crypto trading networks are booming. It’s clear that’s a winner from the psychological perspective. But is it as easy as it sounds to build a successful product in the niche?

Future Times decided to talk to major players in the field and find out if an idea wired for success using human psychology is enough to build a sustainable business.

Let’s dive into the challenges, achievements, unexpected findings and thoughts on the current state of the market to get a clearer picture.

And the idea was born

Dmitrij Pruglo CEO Covesting

Dmitrij Pruglo, the CEO and founder of Covesting, an educational and innovative trading platform that among other things allows users to “copy the trading” strategies of the experienced cryptocurrency traders:

One of the most strategic decisions in any business is to combine the existing advantages of each link in a particular chain. When I started trading on the cryptocurrency market, I saw incredible profit opportunities, but many newbies missed them due to the lack of knowledge or time. Then I came up with the idea of creating a platform for co-investments (with a charactonym Covesting). On the one hand, we simplify the lives of investors who want to increase their income by trading on the exchange without being a professional trader. On the other hand, we give traders an opportunity to receive an even greater income from their successful transactions. All that investor needs is to click the “follow” button for the trader, who can be selected based on their profitability. Win-win. We were the first in the crypto sphere to propose the idea of copy trading. Our peculiarity is that all our previous experience was related to traditional markets. We transferred all this experience and traditions to crypto, not limiting ourselves to creating just a copy of a trading platform in crypto. We were also worried about market regulation, so we took responsibility to investors and traders. Moreover, while working on the platform development, we have globalized the original idea described in our whitepaper and created a personal crypto exchange. Now Covesting is a universal cryptocurrency trading platform.

Stan Bokov Co-Founder TradingView

Stan Bokov, the Co-Founder and Chief Strategy Officer of TradingView, an online community for investors and those who want to learn about markets:

Our project consists of two crucial parts: the charting platform and the social trading network. The core idea was to create a charting platform at the time when web technologies had just begun to take off.  The concept of a social network appeared while working at this terminal. We wanted to give an opportunity to share the analysis based on the charts. Product based on a social network works. In many regards, we are growing because of our community. It’s proven to be working from the very beginning. I recall a situation when a famous trader at the time shared his idea, and the site went offline. We just haven’t had enough servers to deal with a suddenly increased amount of traffic. At the moment, we see many areas for growth: for instance, we plan to offer more real-time data and want to give our users an opportunity to run online webinars on our platform. We have numerous ideas about video content with some of them already up and running: a recent addition was an option to post video trading ideas. We haven’t utilized all ETFs, options, and bonds trading potential yet. Working on the “create the portfolio” feature, we just began to integrate brokers’ services into the platform, giving our users the convenience of trading off the chart. We see potential in mobile traffic and will be planning to launch some features to engage more with our mobile users. Possibilities are endless. In 3 – 5 years from now we would like to see TradingView as a charting standard for the industry: the user will just have to pick the broker or the exchange to start trading. Also, we want to make it possible to be done from one terminal.

Is crypto trading still a thing?

Vladimir Smerkis, the managing partner and Founder of Tokenbox, an ecosystem that unites cryptocurrency funds, professional portfolio managers, and traders with investors:

I believe that blockchain technologies are at square one. Moreover, at this point, there aren’t many good commercial use cases utilizing distributed ledger technology. So even though the speculative dust has settled, the trading volumes on the crypto exchanges are not getting significantly lower. The market is much less volatile, and it’s a good thing. It’s maturing and getting ready for institutional investors.

Dmitrij Pruglo, the CEO and founder of Covesting:

Now when the hype is over, markets are becoming more mature and predictable, the volatility is much lower than a year ago, more regulations are coming into space, and overall crypto keeps generating interest among institutional investors causing them to seek a way to invest in crypto even before the ETF approval. A lot of ICO projects are dead and/or are soon to be, the ones who survive will lead the market.On top of that, professional traders and institutional investors are looking for a legal and reliable way to trade or own crypto. They need a service and guarantees like on traditional forex or equity markets, and retail clients are looking for an easy way to own and use crypto.

Building a social crypto trading product? Prepare for some struggle

Stan Bokov, the Co-Founder and Chief Strategy Officer of TradingView:

One of the greatest features we’ve developed so far was the play button. We will add it to the trading idea chart, and, over time, our users will be able to see price projections and evaluate whether they turned out to be accurate or not that much. Invite-only scripts, on the other hand, wasn’t such a great idea as we anticipated. This functionality allows offering indicators to a limited number of users. It turned into a separate market of buying and selling these indicators. Also, it wasn’t creating enough value for the whole community. We fixed that, though. Currently, we have limited a possibility of sharing invite-only scripts and made it available only for our premium users. Thus, more custom-made scripts and indicators are made available for all the users. However, behind the seemingly simple tweaks, easy to read and fast to load web charts are years of development and numerous lines of code. Currently, more than 120 developers are working to make TradingView possible. Building and scaling operational processes is a major challenge for the company right now.

Dmitrij Pruglo, the CEO and founder of Covesting:

Our biggest struggle right now is the licensing of the platform in the United States (not to mention some states require separate licenses). It will take time. Yes, we can accept American clients, like all other crypto exchanges all over the world, there are no visible barriers for that. However, we understand that there are no clear regulations from the U.S. Securities and Exchange Commission (SEC) yet, and if we accept clients from the USA, we will have issues with the licensing in the US later.

Vladimir Smerkis, the managing partner and Founder of Tokenbox:

All our main challenges are product related. The more we dig in, the more new problems appear.  We have a great team of more than 30 people. They are working day and night on building the platform and spreading awareness about it. That’s another challenge. High marketing costs in the cryptosphere were created back in 2016-2017. Due to tremendous competition during the ICO era, you had to have bottomless pockets just to let your audience know about your product, and it is still like that. Therefore, marketing also requires some creativity from the team.

All that said, it looks like crypto trading is here to stay, as well as its social element. We will keep following the company’s progress and report accordingly. Stay tuned.