It was five years ago when Ben, Sam and I launched a derivatives platform using “magical internet money”. At the time, even serious Bitcoin maximalists thought the idea of a liquid platform trading Bitcoin derivatives was insane.
Since then, our niche in the market exploded. The BitMEX trading platform became the leader in traded volume within the industry and we became a respected price-setting mechanism for Bitcoin. As a result, nearly every existing exchange and many new upstarts copy our platform verbatim, in the hope of recreating BitMEX’s liquidity.
Of course, volume and technology isn’t everything. We also need to ensure we are keeping ahead. Which is why we are constantly adding to our team of the most intelligent, driven, and talented people available to capitalise further on the platform we have built.
At the outset, we didn’t have a volume or profit goal in mind. We just knew we wanted to build a transparent, fair, and efficient platform for those interested in derivatives trading. Our attention had to focus on survival if we stood any chance. This meant achieving positive cash flow. It meant finding and appealing to customers who understood the value of our service.
Even when BitMEX had long stretches of zero executed trades, we knew that a few platforms would become massive due to a derivatives focus. The question was: could we survive long enough to become one of those platforms? You know the answer now. The real question is: what’s next?
Onto the Next One
If we take humanity’s continued addiction to internet connectivity and computers as a given, then more and more analogue industries will move into the digital space.
Financial services play an incredibly important role in our economy and in our daily lives. Yet over time it has become one of the most cumbersome and expensive industries. It remains one of the slowest to transform in the digital era.
This reluctance to transform is compounded by the fact that when restricted by a purely physical existence, a government license or charter becomes an impossible moat to cross. It allows banks and other financial institutions (FIs) to exact this high economic rent. As long as governments restrict the number of tickets to the party, the incentive to innovate and deliver great customer service becomes limited.
Today, to be a financial services company you no longer need a network of expensive physical branches, or a hoard of expensive salespeople to build your distribution network. Thanks to increased connectivity, the nature of being a financial services company and the relationship with its users is changing. For example, if Facebook acquired a banking license, it would have the largest distribution network of any financial services player in the world. Facebook has zero branches. Its best salespeople are the users of the social network itself.
This is why the markets that we create and digitise today will depend not only on the global regulatory landscape, but also our creativity. Thankfully, through the success of BitMEX, we have been able to generate the resources needed to maintain our position on crypto-traded liquidity, as well as potentially expand into other digital financial products.
With regulators becoming more aware and evolved in their treatment of digital financial services and crypto-trading, we have the opportunity to help shape the global conversation. By delivering customer-first focus and superior trading technology, we can help drive the financial industry forward towards more efficient, fair and transparent markets.
At HDR, it is a priority for us that we set an example by creating a place where people from different backgrounds can assimilate, do meaningful work, receive great financial rewards, and achieve growth in their careers. It is also important that we reach beyond our organisation and influence positive change in our communities and society.
We are proud to have initiated a $10,000 education grant for our staff last year and have seen wonderful results. A few people have used the allowance to pursue a master’s degree, while numerous others have used the grant to travel around the world to various technology conferences.
We are also proud to create offices and environments where people can do their best work. While many firms believe the office as a physical place is antiquated in this digital age, we believe that as humans we crave communal physical connection and that some amount of physical connection is required for a highly effective organisation.
Finally, while our core customer base is a small segment of the community, we believe we must reach out to people more broadly. As a society, we do not spend enough time raising financial literacy, but at HDR we are in a position to help. This is both compassionate and makes good business sense, because the more knowledge the wider community possesses about finance, the less chance they will go through financial hardship in their lives. Bankrupt traders don’t pay fees. Therefore, I am pleased to announce that we have chosen JA (Junior Achievement) Worldwide as a non-profit partner.
JA Worldwide has been helping young people around the world develop their skills in entrepreneurship, workforce readiness and financial literacy since 1919. Annually JA Worldwide serves more than 12 million youth globally. I cannot think of a more worthy cause so aligned with everything we believe in, so we will be making a donation on behalf of the HDR family and continue exploring engaging ways we can contribute over the coming year.
We live at an amazing juncture in human civilisation. Financial services will be hardly recognisable in five years, and by that time consumers across the world will have cheaper access to financial services as well as more control over their finances than ever before.
Century-old incumbents will receive reality checks from firms that started in the last decade, and this movement is something we are proud to be a part of. At the same time we remain dedicated to acting responsibly and taking care of our teams, our communities, and the world as a whole.