Interview by Katia Lang, Editor-in-Chief.
We caught up with LATOKEN’s Founder and CEO, Valentin Preobrazhenskiy, at his company’s very own Blockchain Economic Forum in San Francisco, about the ways in which blockchain stands to change the world and how LATOKEN is taking a front seat in the revolution.
I managed portfolios in hedge funds for several years and also served as the director of research in an investment fund. I then launched my own hedge fund, and realised how much time it takes for trade settlement and how many mistakes are still made. When I found that blockchain can automate this whole process, I was so impressed that I decided to build a company that solves this problem. That’s the primary reason I’m building our crypto exchange LATOKEN.
In what ways do you think blockchain can change the world?
The first big opportunity is to bring capital markets on blockchain. Capital markets are on top of the incentive structure, which allocates resources across the globe – to companies, technologies and assets, where new jobs are created thanks to the flow of capital. These jobs help people to live their life with higher productivity – that is how economies grow. The more efficient the capital markets, the smarter the money flow, the greater the productivity grows. Eventually that contributes to improving people’s lives.
At the moment, since there are a lot of institutions and people involved in the settlement of trade, it takes a long time. With the implementation of blockchain, which is considered the most disruptive technology since the invention of the internet, this settlement can be done automatically – no need for any human involvement.
Furthermore, blockchain can significantly decrease the cost of listing new assets on exchange. As a result, a wider range of asset classes will be available for a bigger number of people. LATOKEN provides projects with an opportunity to get listed on our platform, they can easily get analysed by venture funds from all over the world and get funded through the purchase of their tokens.
The next big opportunity where blockchain can help is state on blockchain – governments. There is a value creation opportunity of 420 trillion dollars per annum. The global product is just 80 trillion, instead of 500 trillion, which is what it could be if modern technology was used by all of the 8.6 billion people on the planet. But that’s not the case – only around 500 million people use modern technology, and their productivity is approximately $100,000 per annum. Seven billion people don’t use modern technology, and their productivity is ten times lower.
The reason why productivity in emerging markets is so low is because there is no incentive to use technology, as property rights and free markets are not protected. If there is no competition in the market, then there is no incentive to use technology. A simple example is the utility of Mexican land being ten times lower than a few miles across the border in the US, because they do not invest in fertility. Farmers are not stupid, they know that investing will mean their land productivity and profits will make it attractive to politicians. Land is a captive assets and you will lose it if you don’t have ties to political machines, who maintain power for politicians by helping to distribute property according to party loyalty. The more powerful player can come to you and say – ‘give me this property because I am more powerful, or I will send you to jail and invent a reason’. If you’re loyal, you get more powerful, which makes you more loyal.
Running elections on blockchain would involve very low costs and allow independent elections, so would alter this incentive structure – power would go to those who protect property rights and who support entrepreneurs interested in investing in technology and increasing productivity and profit. These entrepreneurs would need to feel this profit is protected, so they would support candidates who build power from coalitions of small business owners. The opportunity here is to use blockchain to create more powerful institutions, such as free elections, property register and transparent state finance, including taxation and court decisions.
What is the vision of your company? The idea behind the token?
We are bringing together traditional trading and trading on blockchain.
Our focus is the liquidity of new tokens and asset classes, and bringing traditional assets on the blockchain technology in order to create more competition. We currently have about 70 tradeable tokens on the platform and we are always adding new tokens. These tokens are accessible to qualified investors looking for new opportunities for investment.
LATOKEN’s token, LA, was issued in late 2017. Last october, we held an ICO and raised 19.6 Million USD.
We also have the Blockchain Economic Forum, which works as a global hub, where we can make connections, look for partners and try to help grow the community. We help entrepreneurs to empower each other and create understanding about how the sector works and capacity to get confirmation from regulators to help compliance in the market.
We always welcome new tokens and new companies to be listed on our exchange, but there is a solid selection process. LATOKEN is building a one-stop multi-asset exchange for digital assets, including tokenised real-world assets. Tokenisation is set to revolutionise the way the economy operates by increasing transaction speed, ensuring transparency and accountability, and bringing in extra liquidity.
As for our international expansion, we already have an office in Korea and are about to open one in Singapore and probably in the US.
What is your vision for the company and for the market itself for ten years’ time?
I’d like LATOKEN to be a top exchange for a wide range of assets, starting from traditional equity tokenised, to works of art. So we want to be a global leader in new assets and the automation of transaction settlements on the blockchain, and to have products which have a synergy with our exchange.
Together we will make crypto official and widespread in order to automate capital markets, money and states. This will save billions of working hours each year. Blockchain can automate elections, courts, state finances and make them more transparent. As a result, 6 billion people will overcome corruption. This is how emerging economies may grow by $400 trillion. At the same time, the costs of state services in developed countries will likely be halved.
How does the cryptocurrencies going down, and everyone losing money, impact your business and your partner businesses?
This kind of activity is unavoidable, because there are such huge stakes of the future involved and uncertainty as to which of the stakes will play out, that’s why the mood changes. But the real time trend is an increase of crypto wallet penetration, so, if it continues, there will be very stable growth.
The market is overvalued in my view, because it is putting high values on the wrong companies. The future is huge, but the market doesn’t see the real projects, so many of the values right now are not pricing the right tokens, that is why they’re a bit high. It’s going to a couple of hundred tokens, but how many of them will actually survive? The exciting thing about this particular market is that you never know what is going to happen.