Interviewed Company: Santiment
Sector: cryptocurrency, fintech, blockchain
Interview Friday 14th July 2017
Interview with Maksim Balashevich
Subjects: blockchain, disruptive business models, brexit, future disruption
Santiment uses a combination of well known server technologies, mobile development, machine learning, Ai and the “most interesting blockchain technology, to store their data in a transparent way.” Ultimately, accurately predicting the cypocurrency “crowd moods” giving the Santiment community the tools to make the best informed trading decisions possible.
The community accesses this data by spending Santiment’s SAN tokens, “Building the information layer for the cryptocurrency market, they aim to become what Bloomberg and Reuters did for the established financial markets. Give every active participate of the market the set of needed and timely-served information.”
Maksim’s background in “software development at IBM…going on to creating his own hosting company and then being part of a social trading team.” Meant that he had the expertise to create Santiment, and combined these expertise with his recently discovered interest in financial behaviours. Last year “he became very interested in the financial aspect of our society…how we interact with each other…what are the mechanics behind when we communicate…do a transaction with one another?”
After further research, Maksim discovered blockchain, which was “one of the driving forces when I realised how revolutionary,” disruptive some may say, “these technologies are, and how it can really change the way that we communicate…transact with each other.”
Maksim knew that he wanted to use the technology and “after a few iterations” he decided that he wanted to use” this technology (blockchain)…to gather information…for financial insights for crypto markets…because of my background.”
“We set out to be disruptive!”
“I’m used to transformation and disruption…in a positive way.”
Fintnews: How is Santiment disrupting your industry?
“When we think about the value of financial information, there is clearly…a huge value…with Hedge Fund (Managers)…Asset Managers…how much they are ready to pay for fast information…for example…a lot of money…there is value for financial information.”
“How this (financial) information is processed and packaged and sold…we have already some quite disruptive technology using…machine learning…some social platforms…and all of this applied to blockchain technologies gives one interesting effect.”
“In a blockchain it is possible to create your own token economy…community are incentivised to see their involvement…to give benefits back.” Santiment give the community the possibility to be part of how they “collect, structure, analyze, measure, package and value…the financial information.”
In order to collect this financial information, Santiment use a wide range of different data sources: “objective” price action data, using “linguistic information…from independant…big communities” or simply by talking “on Reddit or Twitter…this free data is sometimes amazingly precise.” The data is then analaysed by data scientists too, to take the highest quality conclusions from it.
At the minute, Santiment are still in lengthy process of collecting the data, after which they envisage that “machine learning will be applied…to analyze and be taught on this data” in the very near future!
Fintnews: How is your business model disruptive?
Ultimately, “It’s a business model which is basically very disruptive, there is no barrier anymore between…us, the team…me, as a CEO.” Maksim goes on to explain that on one side there are “users and on the other side collectors of information.”
By “working in a community together..we can establish a process where.the quality, amount and speed of information is very high.” Similar to a democracy, the “community become valuable members of the team…providers of valuable information” and as “it’s not possible to avoid hierarchy completely” there is a natural hierarchy who “take care of the quality assurance…that’s all.”
The Santiment community boasts “between 2000 and 3000 registered members” in total. The fact that only around 100 to 200 members actually actively contribute to society, “some users never contribute and are observers, some jump straight into the forum to converse, some do so too but after time.”
Maksim believes that these behaviours are a “mirror of what we have in real life…some always active…natural…really…demands a specific skill to engage actively.” At Santiment, their transparent business model “makes community members a beneficiary.”
Contrastingly, we go on to discuss the distribution of wealth in other online communities, using the Facebook community as an example. “Facebook has a huge community using the product for free…if (you) use the product for free…you are the product!” Obviously, there are a large difference in the stakeholder’s intentions.
Fintnews: Your business model sounds very positive, are there any negatives?
Maksim says that “we are just beginning to have pain points.” Everyone in the community enjoys” being there, contributing and innovating” and this natural process in itself is beginning to allow Sentiment to “disrupt itself with critical feedback.” Which will be used to further enhance the community and their experience.
FintNews: Where do you see the future of blockchain?
“Blockchain cannot be stopped anymore by anyone…nature of technology…it is like the internet…free source.” Maksim says that “technology developing very fast…want to make it faster…maybe adding in a governance model too”
Maksim likens the increase in blockchain use to “ the .com bubble, when it settles down in a few years “after the experimentation phase” we will be able to “solve problems one by one.”
Maksim believes that it will “still remain a human problem” and that we will then “have this growth pattern for less time than it took us after the .com bubble was really disrupted.” He clarifies this growth pattern by saying that “it took 10 years to build up most companies that we know now” after the .com bubble.
Maksim believes that with blockchain implementation “the same disruption” could be seen within “5 years” once the “quality and speed of information is very high,” then it will have the potential to be “really disruptive” due to its “transparent” nature.
Infact, Maksim sees most “online companies…businesses…using blockchain in 2 years” he also agrees that the “insurance sector…banking industries need disrupting.”
Fintnews: Can traditional banks with legacy issues use blockchain to move forward?
As Maksim points out, banks give customers a way to “do financial interactions without having any tech experience.”
By moving from “one technology that has exhausted itself to one that is more efficient” such as blockchain which is very secure too is a great idea in theory.
Maksim states that when transferring technology there is a “huge responsibility and risk of doing things wrong…like (with) a sword ” Yes, the technology allows the bank to better “communicate with the customer…P2P…yes, but someone needs to explain risks from the bank(‘s perspective).”
Maksim concludes by saying that banks can benefit from “partnerships with startups and cannot do it themselves.”
Fintnews: Do you think that there is there a formula for disruption?
Maksim says that some people are naturally disruptive and are “constantly innovating, changing without effort,” and others who are not naturally disruptive have “transformation potential.”
“If people are not so comfortable with change” then the formula for disruption comes from a “personal level…mental power.” Maksim goes onto explain that it is possible to become disruptive in your professional life, but these changes must be embraced it’s only “5-10% about making changes.”
Maksim tells me that personally yoga has allowed his disruption power to remain “constant and burning” and that he is now “more comfortable with failure” and “became stronger and (more) positive” as a result.
Fintnews: How has Brexit disrupted your Santiment at all?
The Brexit decision has had “not so much” impact on Santiment. Maksim explains that “there are “no borders between us” in an online community. Santiment’s community is connected through the “common interest” that the members share.
Regarding the future of blockchain and security, Maksim tells Fintnews that “there is an alarming amount of scams and hacks” which have occurred “recently during the ICOs.” Maksim remembers that “before that we had a period of time where the crypto exchanges were hacked” which saw “money gone a few times a year.” Sadly, Maksim predicts that this trend of humans using blockchain will malicious intentions, “will only increase over the coming years.”
Santiment consists of a team of 9 based in Switzerland, including Europeans and Americans. As a result is subjected to “rules established by the Swiss Regulation Organisation.” Maksim thinks that blockchain regulation “will be necessary within two years” and that “these rules are already beginning to be written.”
Fintnews notes that the two year mark coincides with the official Brexit deadline in 2019. Is there a link between the two?
Maksim replies philosophically that “if you dig deep enough…something will link the two”…