Evgeniy Khashin: There is a suspicion that TON and Libra were created by the same people
Co-founder and CTO of the Cryptoprocessing Fintech project, Evgeny Hashin, in an exclusive interview told LetKnow.News what challenges the Facebook and Telegram cryptocurrency projects are facing, whether Fintech needs blockchain and what future there is for the crypto industry.
- Tell us about yourself, what are you doing and at what point you became interested in cryptocurrencies?
- I am a co-founder and CTO of the Cryptoprocessing project. We create application services around the
blockchain. For those who would like to enter the world of cryptocurrencies, we offer a full-fledged merchant oriented services, working on the principle of financial marketplace solutions for business.
We are familiar with cryptocurrency since 2013. We started by participating in the development of some
crypto exchanges. During that time, we have accumulated a code base. When the hype came up, it was adapted for ICO and applied infrastructure projects where automation around cryptocurrencies was needed.
It should be clear that the blockchain itself is nothing more than non-indexable storage. It does not imply readiness to be used in any applications and products of the banking sector, because it lacks such a concept as the Service Level Agreement (SLA) - an agreement to provide a level of service. The service is decentralised, and therefore responsibility in such systems is blurred. This does not allow the use of the blockchain in major software products that are integrated into automated banking systems and payment terminals. Since in the event of a force majeure it will be unclear on whom the responsibility is to be imposed.
We are the very link that covers this area of responsibility and allows you to create an entry point for businesses, investment companies and hedge funds to start working with cryptocurrencies while providing the satisfactory level of the security, the issue they put in the first place. Our main expertise in working with cryptocurrencies is ensuring the security of the infrastructure and business processes at the level of the whole organisation, for example, for storing cryptocurrencies and making transactions.
- Your company has already tested the TON blockchain. What can you say about the technical side of this cryptocurrency?
- As part of our work on TON, we have created a working group that is now represented by three teams, namely: Cryptoprocessing, our friends - TON Labs and the team from America - Cooper Beats. In the framework of the collaboration, we focus on the creation of application services and application use of the blockchain. With the first beta release of TON, we created Block Explorer and a faucet for distributing test
Now only the tip of the TON iceberg is open, in other words, only a thin client is available that allows you to use the blockchain. Everything else that remains on the server side is hidden. What are the nodes, consensus - it remains unknown, and therefore a detailed overview of the entire network can not be done yet.
But even with incomplete information, you can perform almost all popular functions, such as sending transactions, publishing a smart contract, calling a smart contract function, and other stuff like that. Initially, the TON architecture involves processing a huge number of transactions by segmenting the network using shards. There is a master chain and there are many shard chains that process transactions. In the master chain, blocks are processed at a rate of one block per second - that is enough to handle huge transaction volumes. But so far these figures have been achieved within a hidden consensus, which is unknown to either the developers or the community. So, it is not possible to unequivocally call TON decentralised just yet.
- What tasks does this project solve and is it a Libra’s competitor?
- In fact, there are many similarities between TON and Libra. And it’s not even in the sence that these projects are from social media, that they all have great potential in terms of technology penetration thanks to a huge user base. Some technical points are similar in terms of naming parameters in signatures of transaction generation functions. There is a suspicion that the very same people were involved in the creation of both of these networks. This is still a hypothesis, however, as practice shows, there are no coincidences of such kind. But the main question now is how Libra, which positions itself as a financial instrument, will hold global acceptance in the context of linking the regulations with anti-money laundering policies (AML)? The fact is that there are traditional financial institutions that have been developing for more than a dozen years. And there are young FINTECH startups. In traditional financial instruments, we have come to some kind of global accountability to the regulator, strict insurance, the ability to identify payments and track the movement of funds. And when we speak of Libra as a financial instrument, there is an assumption that it cannot get away from regulators. When Facebook published the code on GitHub, people began to join the collaboration and make pull-requests that say what needs to be changed. And one of the most popular pull requests is “remove Libra and replace with Bitcoin”. That was the community response. Since what Libra wants to do is pure utopia. Most likely, there will be the same story with Libra as with Coinbase - i.e. legal work within the territory of the EU and the United States with tight limits on working capital and with total control. So, Facebook is not going anywhere from the regulator. And despite the fact that now we see 20-30 payment institutions that were announced to support Libra, it’s just blowing smoke. It has no value until regulation issues are resolved in each jurisdiction where they plan to work with individuals. Therefore, if you take Libra and replace it completely with Bitcoin, then nothing will change, it will only be better - there will be a network, that is time-tested.
- How will the projects from Durov and Zuckerberg affect the attitude of the world regulators to the crypto industry?
- Regulators that deal with cryptocurrencies have equated them either to securities or
cash assets. Those who wanted to help, have already done so. Those who are concerned, too, have already spoken. Libra itself, essentially the financial component, is nothing more than Western Union - i.e. peer-to-peer transfers. And the problem of identification has not gone away. The question is to what extent the regulators are ready to delegate this activity to some third-party companies, including Facebook. After all, this entails additional responsibility and the need for licensing.
In addition, all opinions that we hear are not addressing the technology itself, but those who want to build something applied to this technology. So, if Facebook has enough money to buy licenses everywhere, it will be transformed into PayPal.
- How did blockchain and cryptocurrency affect the development of fin-tech?
- First you need to figure out what fin-tech is. Fin-tech is an activity aimed at improving or replacing traditional financial instruments. Traditional financial instruments have been developing for a long time and have come to a certain point: there are bank accounts, banks, acquiring, and so on. And there are needs of the market. Nowadays the market requires speed. That’s where such payment providers as the PSP organisation appear in fin-tech, and they take on a number of banking obligations. Another example, is a peer-to-peer payment system that does not require contacting banks.
The key feature of fin-tech is “not to break, but to improve”.
The problem with existing fin-tech startups is that they want to destroy something that exists - banking, for example. And the introduction of cryptocurrency in the existing infrastructure, which we are now seeing, does not improve life whatsoever. We really hope that Facebook will manage to get regulated everywhere, and we will be able to transfer digital assets freely. One must understand that regulation does not always mean a ban. It includes, for instance, assistance in fighting all kind of fraudsters, and defending the interests of people.
I see the future of fin-tech with the development of blockchain, but with the landing of proof-of-stake-architecture on the traditional obsolete system -
exchange trading, brokerage. So, when the exchange, a broker, a bank and a regulator participate in consensus. Because, if you now look at the amount of paperwork associated with access to the IPO - that’s simply unacceptable. In order to provide those services, several markets have already been formed that can be abolished - that’s I would call evolution.
- What do we need to come to the mass adoption of both cryptocurrenc ies and blockchain?
- There are a few aspects here. The first one is more ideological and regarding identification: we need some counter party who takes part in a consensus that performs that identification and that everyone trusts. Mass-adoption is bridging the gap between early adopters. This is a gap in age, in the knowledge of technology. Mass-adoption will begin when the technology is fully encapsulated at the level of application tools that provide ultimate value. When, to take for example, my mother will not ask how many confirmations you need to wait for the transaction. Mass-adoption should be connected with convenient and understandable application tools for the technology to fade into the background.
- What trends should we expect in the crypto industry in the near future?
- Now the main trend is IEO. At its core, this is an “under-IPO”, designed on decentralised systems. ICO was an unregulated activity, due to which we received a huge amount of scam. In addition, IEO is more like an IPO, because there is such a player as a trading platform. And given that stock exchange activity is more regulated than any other activity in the crypto industry, this can be a long-term trend. I think that scam on IEO will be much less common.
There is also a kind of split: on the one hand, we have fully regulated systems with an identifier in which the financial regulator becomes a participant in consensus. And on the other hand, we still have a peer-to-peer. The difference is that the volume of regulated operations can be measured, but the one for anonymous peer-to-peer is not.