New platform harnesses the power of arbitrage
Monday 03 March 2014
It can be said that financial opportunities are abound with the vast number of exchanges and cryptocurrencies available. However, with the large amount of cryptocurrencies and exchanges, it can be very difficult, if not impossible, to take full advantage of the various price differences among them. This is where a unique trading platform by the name of Elqnt | Arbitrage might soon be able to help.
What is arbitrage?
For those who may not be financially savvy, arbitrage can be best explained with an example. Let us presume that you bought 1 BTC from Coinbase for 500 USD. You then see another exchange like Btc-e, which has 1 BTC selling for 600 USD. In order to take advantage of this difference, you send your 1 BTC over to Btc-e and sell it for 600 USD. When you account for fees and such, you have made a profit of a bit under 100 USD. You just achieved this by performing the very act of arbitrage, which is essentially profiting off of price differences between multiple exchanges.
How Elqnt | Arbitrage comes into play
Elqnt | Arbitrage seeks to make what you just done in your hypothetical scenario much easier and accessible to the average person. It is a trading platform which will automatically find advantageous price differences for you and conduct exchanges from there. So as with your above example, the act of me buying your 1 BTC on Coinbase would be manual; however, the selling of your 1 BTC at Btc-e would be done for me by the Elqnt application. This is quite convenient as you may not know that Btc-e has a higher exchange rate than Coinbase, and since there are a plethora of exchanges out there, you wouldn’t have to go through the hassle of monitoring multiple exchanges.
With monitoring exchanges effectively out of the way, this opens the doors for all of us to focus on more complex forms of arbitrage. These may include arbitrage both across multiple cryptocurrencies and/or multiple exchanges.
More on Elqnt | Arbitrage
As this is an interesting platform, I took it upon myself to approach Stephen Sprinkle, one of the founders and developers of Elqnt | Arbitrage. He kindly took the time to answer a few questions I had about the platform, the team itself, and where it may be headed in the near future.
Daniel Mestre: What sparked you and your partner’s interest in bitcoin and finance?
Stephen Sprinkle: Both Brandon and I have a passion for information security and from this comes a natural passion for transactional privacy. This led both of us into the cryptocurrency space with a passion to develop out tools for the community that would allow for greater decentralization and absolute privacy.
DM: How did you and your partner enter the cryptocurrency space?
SS: After using cryptocurrencies for a good period of time I came to the realization that there was not a solid solution for performing decentralized bitcoin exchanges. As a valued concept that I believe cryptocurrencies should provide I began working on an anonymous + peer-to-peer Bitcoin exchange infrastructure that utilized a network of decentralized nodes running on client devices. This exchange would allow for users that lacked geographical proximity and geographical liquidity to succesfully conduct anonymous cryptocurrency exchange. To simplify this statement: we made a way to conduct Bitcoin exchange that was anonymous, peer-to-peer, and decentralized that would allow for users in different cities to still be able to conduct an exchange from bitcoin fiat without even knowing each other.
A key component of this is a mobile application. This is the point at which Brandon and I began working together. What was originally a contract gig turned into a partnership as we realized our personal alignments and compliment on a number of fronts: morality, long term cryptocurrency ambitions, and skill sets.
We originally hoped to garner investment capital for this venture, but a consistent barrier to this was educating the investor as to the value of a decentratlized network (the pivotal piece to the entirety of the platform). Also, this product, while protected under open source software laws in the United States, did place us in a legal gray area – another aversion point for most investors. Lastly, it's nearly impossible to directly monetize a decentralized network without compromising that decentralization – another aversion point for most investors. Though we had models for ancillary monetization, the runway to achieve those points were too far for most investors.
All this to say, this process, and the motivation to make our company a viable entity, ultimately led us into creating a simple, yet powerful cryptocurrency arbitrage platform that would be a major player for the cryptocurrency space.
DM: Would you consider another crowd funding platform if you cannot reach your goal on IndieGoGo?
SS: We applied to Kickstarter but were rejected due to the sector we're operating within.
We've found Indiegogo to be much more receptive to cryptocurrency related services with the raises such as ours, along with Darkwallet + Coinpunk.
We're keeping a fairly tight development schedule with Elqnt | Arbitrage and as such we don't expect to have time to actually run an additional 30 day campaign before the point at which we'd be ready to offer the platform for alpha user access. The backers we acquire during our Indiegogo campaign will be instrumental in helping us shape the platform feature-set going forward.
DM: Aside from crowd funding, are there any other forms of funding that you would consider using for Elqnt?
SS: In the purest sense, revenue is the ideal funding model and is primarily what we're aiming towards.
That being said, we're open to funding arrangements outside of crowdfunding -- really what it's coming down to for us is the right fit. We've had a number of discussions with potential investors and found that because the cryptocurrency space is still VERY new to most investors, we've gotten the feeling that many are testing the waters and learning as they go, which is totally fair, but we're primarily looking for investors who understand the space already and have either expertise or connections that they can bring to the table to not only accelerate our development with financial backing, but with intellectual capital as well.
DM: Do you have any goals for 2014 aside from entering the early alpha rounds for Elqnt?
SS: At a very high level, we're aiming to successfully launch a full production version of Elqnt | Arbitrage and continue to build out additional functionality that addresses the needs of full spectrum of Bitcoin holders as well as servicing managed cryptocurrency funds.
We also have some pretty exciting functionality that we've got slated for development in the coming year, but aren't publicly talking about those just yet.
Where Elqnt | Arbitrage stands now
There is much work to be done on Elqnt | Arbitrage as it is in its early alpha stages. As explained in their youtube video, above, it will undergo two rounds of the alpha phase. Round one will focus on getting a small batch of users to test if all functionality is working correctly, as well as suggest new features moving forward. Round two will hold similar qualities of round one, but on a much larger scale. Many more users will be allowed to test the platform, which will also act as an endurance test for the Elqnt platform, seeing if their servers can handle the numerous transactions being conducted all at once by users.
How can I help with the development?
For Elqnt | Arbitrage to make significant headway in terms of development, it would be crucial to help with their IndieGoGo Campaign, which ends fairly soon. You can donate either in bitcoin or USD, and will receive various perks such as t-shirts, alpha round two access, discounts off of the service’s yearly fee (for when it is fully released), and so on. Through funding the IndieGoGo Campaign, you can participate in the early alpha rounds and play a key part in its development by providing feedback.
By Daniel Mestre
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