Hi everyone and welcome to another episode of Living on Blockchain. Today we are speaking to Zakhil Suresh. Zakhil is the founder and CEO of BitSave.
He was one of the founding members of CoinX. He’s worked for around a decade in crypto trading, portfolio management and brokerage. BitSave is a simple product.
Basically, it provides indexes, not many choices, but three index options where users can start their investment journey into crypto. They are one of the first to have the Bloomberg index license as well. Zakhil’s conversation with me mostly touched upon what he’s doing with his product and the attraction that they have seen so far, the security aspect that they’re keeping in mind.
Very interesting conversation because I believe simple products do really well because they are easy to understand and they are trying to bridge the gap between Web 2 and Web 3 by bringing in something which is organized, which is easy to use and which does diversify the portfolio as well. I can’t wait for you guys to hear this. Let’s deep dive right in.
Hi Zakhil, thank you so much for making the time to speak to me today. How are you doing? All good, all good. Thanks for having me, Tanisha.
Excellent. For our listeners, can you tell us a little about yourself and your journey so far into Web 3, how you got into Web 3? Because I believe that’s always an interesting story. I guess everyone has, you know, their own journeys and I’d actually, you know, put out a LinkedIn poll like this last week because it was September of 2014 when I actually discovered Bitcoin for the first time.
So it’s almost been 10 years, right? So, yeah, so I was doing my CA internship back in 2014 when I was, you know, like dealing with a lot of client funds through SBI Net Banking and all that. And that’s when I, you know, got to read about Bitcoin for the first time. And since I don’t come from a tech background, I couldn’t understand it from a technology perspective.
But what struck me from a very, you know, financial perspective is that it’s a money that moves faster, right? Because let’s say, especially back in those days, this was pre-UPI. So, you know, like to move money through Net Banking or even through banking channels were extremely hard. And I was facing that difficulty because of whatever I was doing at that point in time.
So it just made a lot of sense because it, I just felt it makes things more efficient, right? If you’re able to settle transactions faster than what you’re able to do with traditional system. And me, a couple of my friends, we, you know, we just started investing with whatever small money that we had from type scholarships and stuff. It was in 2017, I’d finished my internship.
I was preparing for my CA finals. We had some Ethereum, you know, liquidity with us. So we thought, why don’t we do something with that? Because I would also like to I mean, know your Ethex journey as well, because this was the time when, you know, all the main exchanges in India was just offering Bitcoin, if you remember, like coins and all of them.
So I think that was a time when Ethereum had some demand and we thought, you know, maybe we can set up something to fill that gap. So we launched a small brokering setup where we were just doing some digital marketing and getting some leads where we were just helping them buy and sell Ethereum in India. So this went on for a few months.
That’s when CoinX was announced as the first open order book multi asset exchange. We started as liquidity providers on CoinX, which sort of which later became a deeper relationship. So I joined the team as a market analyst.
So I worked with CoinX for like, you know, literally throughout the entire journey of the company. Unfortunately, in 2019, you know, we had to shut down because of the regulatory hurdles. Post then, me and my team, we got full time into trading, trading the markets during that COVID boom.
And I think it was 2021 when we realized there’s a bigger problem that is emerging in terms of asset selection, right? Because when CoinX launched, it was just maybe five tokens on an exchange. And it was not an issue for someone who was starting to figure out, you know, which asset to buy and sell and all that. But by 2021, you know, you go to an exchange, you’re looking at maybe like 200 or assets.
And someone was just new, like, how are you expecting them to figure out what to buy and what not to buy. So we wanted to solve for that. But we didn’t know like how exactly to do it.
But we thought, okay, let’s spend some time researching, talking to people understanding, you know, how dynamics works in different industries to solve for that. So we spend like close to one, one and a half years, maybe from an academic perspective. Also, we were just, you know, like trying to pick up some qualifications.
I took up CMT, my co founder picked up MS in financial planning, because we knew like, this is what we want to do for the rest of our lives. So it was important for us to, you know, have some qualifications also in place. So it was in 2022, we landed at the idea that, okay, maybe an index, index based approach is what we’re comfortable doing.
Primarily, because, you know, passive investing has, has been growing, you know, for other asset classes also, right for equity, let it be us, let it be India. So and it’s, it’s the simplest way anyone can access to anything. And it made a lot of sense for me, especially in crypto, because it’s a largely narrative based market, which means what looks good today will not look good tomorrow.
Right? So an index, index actually automatically, you know, adapts to those changes, right? Like, let’s say, if something is not doing well, it gets removed out of the index, if something is doing well, it gets added to the index, so it will automatically adapt. And it felt, we felt that from a long term portfolio perspective, you know, something like that makes a lot of sense. So we evaluated whatever, you know, the I think we have three or four major indexes for crypto right now.
And we felt Bloomberg’s index makes a bit more sense, because they bring in their research angle into place, which means they try to avoid, let’s say, fundamentally weak projects, for example, they never had a Luna or FDX. And as part of the index, even though these were like top 10 top 15 projects. So we went to them, we acquired the index license from them to build a product that lets people invest into Bloomberg’s index.
So it was last year that we launched Bitsave. And I think Bitsave right now is the only retail application that lets you invest into Bloomberg’s crypto index. So and then we also wanted to solve for, you know, like the transparency, the support and all that, which is like a major issue within the industry.
So, you know, I think we’ve created a platform that is extremely transparent in terms of proof of research, proof of liabilities. We give everyone a dedicated relationship manager so that we can walk them through the entire journey. So sort of trying to give people a sense of familiarity and security, which they are used to in other asset classes.
So we try to focus a bit more on the high value retail audience, which means maybe a salaried and like a working professional category of people. So yeah, this has been the journey. Currently, we manage like over $250,000 in assets.
And yeah, so that’s where I am in my, you know, web three journey. And we try to call ourselves web 2.5 companies, because you know, it’s sort of like a bridge for web two folks to get into web three. So yeah, that’s been the journey so far.
Okay, this is very interesting. So you know, you’ve mentioned, so like you mentioned that, you know, probably one of the first folks to have like the license from the Bloomberg index. And so can you tell me before that, before we get into that, perhaps, can you tell me a little more about Bitsave and how a regular user can perhaps start the investment journey using Bitsave? Sure.
So we’ve tried to create a journey that is extremely familiar. When I say familiar, you know, what they’re already used to on something like a grow or it money or a paytm money for that matter, like you, you come on board, you, you do the regular KYC, or let’s say, from India, Aadhaar PAN and stuff like that, then you get to invest with with UPI or net banking for that matter. And what we have been trying to do at Bitsave is not to overcomplicate things, you know, that’s something that I’ve seen other platforms do, for example, let’s say, you know, there’s no point in having 15 indexes, then again, I don’t, I think we’re still confusing someone to choose the right index, you know, so we’re not really solving for a selection issue there.
So we’ve tried to keep it extremely simple. So currently, we have only three investment offerings. So one is one is a product that tracks Bloomberg’s index.
Second is we have created a combination of Bitcoin, Ethereum and gold. Third, it’s a plain Bitcoin product. So someone who want to have exposure to Bitcoin, you put into that, and you know, you don’t have exposure to all coins in that.
So, you know, based on your risk appetite, for example, you know, that that whole gold combination is designed for someone who’s very new and someone who don’t really want to, let’s say, I don’t think everyone is comfortable with, you know, maybe a 70% drawdown that crypto can have. Right. So maybe that combination works well there, because gold is sort of giving a balance to the portfolio.
Someone who wants to have, you know, extreme is comfortable with extreme volatility, they go for the index product, or they just want Bitcoin because it has its track record, you know, 100% Bitcoin, they go for that. So now we, let’s say if someone on Bitsave need help, we are always there, we have a dedicated relationship manager plus a professional investment planner service as well. So we sit down with them if they require help them understand, you know, what are the risks associated with each of the offerings and then guide them on what to invest, the minimum is 5000 rupees for an Indian, like 5050 USDT.
So whoever want to put money and they can just, you know, deposit and then it works the journey is exactly like how it is on a mutual fund or, you know, like a traditional investment platform, you put the money in like 24 to 48 hours, you get you get your order processed, you can keep tracking your investment up or down and whenever you want, you sell it and take it back to your bank account. So the idea was to create that, you know, familiar, similar journey so that, you know, and and by avoiding all the crypto related jargons, you know, like, like I was explaining, it’s, everything looks same. The only difference here being that maybe instead of a Tata or Alliance here, you have a Bitcoin or Ethereum, every other terminologies that we use every other, you know, part of the journey, it’s exactly the same that people are used to.
So it gives them that sense of, you know, familiarity and you know, that security that that they’re already getting on other platforms. So that’s, that’s been what we are trying to do with Bitsave. All right.
So that’s fairly interesting that, you know, you’re trying to give them basically a space where they feel comfortable investing in Web3 without making it too complicated. Can you, you mentioned that, you know, there are three ways that you guys have indexed this out. So what is the kind of traction or the money that you’re managing currently? Yeah, so we, in total, we manage around, I think, a little more than $250,000 right now.
So, and it’s all public. So when I say this, you know, like you can actually go to the app and verify by our proof of reserves that we actually have this much money with us. And obviously the interest is more for the, for the index product, the Bloomberg’s index product, because obviously the brand Bloomberg sort of helps level of trust that people already have.
Imagine there was some credibility there, right? That they can already come to the index, right? Then traditionally that’s been the case, right? Like, let’s say you have, you have Nifty 50, which is, you know, managed by NSE indexes, right? So, which means traditionally the asset manager and the index provider is different, you know, it’s not the same. So, so that’s something that we were clear from day one. So obviously I think some 60, 65% of BUM is in the index product.
And we have another 20, you know, 2025 in the Bitcoin product, because a lot of people just want exposure to Bitcoin, like, and because that’s the only that they know, that’s the only thing that they’ve heard. And that’s the only thing that they trust at this point in time. So that is there.
And then, like I said, for the beginner, you know, actually we have maybe currently around like 10, 10, 15% is in the, the hybrid offering that we have like with BTC, ETH and GOLD. So yeah, that’s been the case. And fortunately, we were able to launch the product during, you know, like, actually the, it was a plan to build during the bear market so that, you know, like it gave us the time to build a very strong deck, you know, because, you know, like you have enough time to, to test things, make sure that we were sort of rolling it out to like 10, 15 people every week, taking feedback, making, making things better.
So maybe, you know, let’s say early next year, sorry, yeah, early next year, if, when if, if fortunately, if the market sort of turns around, I think we’ll be ready with the best version of the product, because the last one, one and a half years, we, you know, we’ve taken the feedback, making sure that we are refining every, every bit of it. Right. And, and I think, you know, as, as an industry, at some point, I felt that, you know, we sort of stopped creating products for people outside our ecosystem.
Agree to that, like, you know, every product was just focused on web3 native people, right. And what that that was doing was, you know, like, we were not really able to get new people into the system and new capital into the system, it was just the same capital sort of rotating, you know, between different projects that we were creating, right. So we felt there’s a need to sort of create something that that can expand the ecosystem, you know, so we try to focus a bit more on the first time, you know, first time investors in, in case of crypto, and also maybe someone who tried an exchange or something similar, but you know, they have faced difficulties over there.
So the goal is to sort of bring in new fresh capital to the ecosystem to expand the ecosystem so that eventually everyone gets the benefit, right. So that’s why I said, like, we’ve created it in the most simple way, with at most transparency, you know, like, we’ve, we’ve been to the extreme extent in terms of transparency, where, you know, I think proof of reserves is right now a common thing, but I don’t think proof of liabilities is something that is common, right. So we do our accounting also on chain every day, which means whatever money is coming in and going out is recorded on blockchain every day.
So we have both sides of a balance sheet on blockchain, which which is publicly verifiable. So, you know, like, so sort of trying to have a platform that is completely transparent, which which is the idea of blockchain. And with absolutely no unanswered questions, like, you know, we’re always there out in the public answering all queries.
And I think that that that’s a requirement right now, because as an industry, there’s a lot of trust issues that people have with crypto, right? So we wanted to have something that is extremely, you know, easy, and at the same time, extremely transparent, so that people feel comfortable parking their, you know, hard earned money in a crypto platform, right? So So yeah, that’s been the focus. Okay, that’s very, like, interesting, because you guys have a very clear focus on what you’re building, who you’re building for, I would imagine, being as one of the founding members, perhaps for coinx, there must have been many lessons that you would have imbibed. And which kind of lessons did you take carry forward in your journey? While you know, you’re working on Bitsave? Yeah, I mean, I think, like, without coinx, our lives wouldn’t have been, you know, what it is today, right? The sort of experience that we had so early in the ecosystem, especially from a regulatory point of view in India.
I think the best part about coinx journey for us at Bitsave was knowing what not to do, you know, when we were setting things up, because we did a lot of experimentation at during coinx days. So we knew what doesn’t work and what works right. So I think especially the first year of Bitsave, we were able to move very quickly, because the right contacts were there, the right kind of information that we wanted were there.
And we knew, you know, this category of people actually exists, because the data always showed that, you know, like, even on an exchange in India, there’s more people trying to build their long term portfolio instead of actively trading. So we knew that that category of people that we want to target, they already exist. I think the major one probably would be on the banking side, because obviously, that that was a big challenge for us, you know, at coinx, right? For example, you know, I think, and I think it’s, it’s a, one of the major differences I’ve seen over the last five years is that during coinx, we couldn’t actually go to a bank and say, you know, what exactly we were doing.
I think that has changed now. Like currently, we ban with, you know, like almost all the major banks in India, and all of them know what we are doing. And I think, and you know, I have this feeling that banks will work with you.
I mean, it’s not really based on whether it’s regulated or not regulated. It’s not that the banks don’t work with unregulated entities, like for example, digital gold is an unregulated industry in India, right? But then banks are comfortable working with them. So it’s not really about whether you’re regulated or unregulated.
I think it’s always about the sort of risks that is associated with, you know, the transactions. I think a good example here would be let’s say you take a UAE or a, you know, or any other country for that matter, where crypto is regulated. It doesn’t mean all the banks over there are, you know, offering accounts to, you know, the companies, right? So it’s not really about regulations, ultimately about, you know, from an AML KYC perspective, or from a transaction monitoring perspective, like, what is the risk that you know, you’re a you, they’re they’re taking when working with with a company.
And, you know, from whatever I’ve been explaining to you about the platform, and it’s the same thing that we explained to banks also, right? Like, it’s a safe platform for them to work with, right? Because it’s money coming in, it’s just INR coming in and INR going out, you know, from perspective, right? You don’t really have any option to, let’s say, send money to someone else, move, move, move, I mean, do anything with it apart from investing. So it’s, it’s almost on par with the digital gold product, if you actually think about it, right? It’s just, and it’s all, you know, very low risk category people that that would use such a platform, right? So that that was, I mean, we are able to give them, you know, a sense of security from that perspective. And I think they’re comfortable working with us, you know, with this kind of a model more.
Because, you know, let’s say that it’s more time, I mean, it’s very less chance for some fraudulent transactions to happen, or let’s say, from an AML Terra financing perspective, you know, there’s no scope for doing something of that sort. So I think banking has, it has changed over the years. So, and again, we knew that, you know, how to approach them and some of the some of the contacts that we already had from CoinXBase that that was, you know, that were really helpful.
I think a second thing that we’ve been able to do is from a tech perspective, I think, you know, we still, you know, get the feedback that maybe CoinX exchange, you know, the technology that we had as an exchange is still something that is unmatched in India, in terms of, you know, the speed of speed of the trade engine, the quality of support that we were able to give. So I think it’s, it’s the same DNA that we’re trying to do, I mean, trying to carry forward, right? Because half the team right now is CoinX and we’re backed by the founders of CoinX. So the same culture that we had in terms of building, you know, the top notch technology, not not at all compromising on the customer, you know, customer safety and the support that we are giving.
And obviously, the brand itself, let’s say, you know, obviously, everyone will look at where, what is the track record of the founders, right? And when you realize that, you know, we were part of something that was so huge in India, and something that has that legacy still, right? So these things are extremely helpful. When you’re coming back after two to three years and building something again in the same space. So, yeah, I mean, it’s like, we keep saying this, you know, our life, I mean, our career, professionally, personally, where we are today, we owe a lot to, you know, to our, our experience and learnings at CoinX.
Right. Wonderful. So now that, you know, we’ve talked a lot about the product as well as perhaps your journey so far, I would love to touch upon now on your expertise in technical analysis, perhaps.
So, you know, how important do you think technical analysis is in today’s volatile crypto market? And it’s not just today, I think crypto markets in general are, or any markets for that matter, they can be very volatile. And then what is your approach to balancing risk and return in specifically crypto portfolios, particularly for long term investors? Do you have a perspective there? We’d love to know more about that. Sure.
Like, you know, as a platform, I think there’s a bit of a conflict, right? Because it’s a passive only product. So we don’t really, you know, actively trade. But, but having said that, you know, we have our own personal portfolios that we try to actively do.
And see, I would say one of the reasons why we opted for a passive is that even from a regulatory point of view, like, let’s say, one year, two years down the line, in case if we want to be a regulated platform in India, I think, you know, and considering the kind of audience that we want to offer, we want to offer the product, we felt an active approach would be something that the regulator may not be comfortable with, because there’s a lot of trust that they’re putting on our day to day skills, right? So that’s where that’s why we opted for a, you know, index based approach for what we’re building. But as you said, technical analysis as a discipline, it’s just becoming more and more prominent in today’s world. And it’s interesting to see maybe, you know, like, let’s say a bunch of fund managers and traditional fund houses in India, like not really having a CFA qualification, but having a CMT qualification, which is, you know, which is like a gold standard for TA at this point in time.
I think, you know, my me, for me personally, as a trader, the, you know, the day my life as a trader changed was the day I realized that it’s not really about the upside. You know, it’s about controlling the downside, right? Because upside is not really something that is in your control. And most people just try to time the market, try to, you know, catch the ball.
That is foolish. Yeah, it doesn’t, it doesn’t work like that. Yeah.
So the only thing in your control is sort of exiting when when things are not going your way. Yeah, because you can’t make the market go up. That’s not something that is in your control.
So I think, like, let’s say, whoever is into trading and watching this, it’s important to realize that, you know, you just you have to control what is actually, you know, in your control. And if you spend your most of your time trying to control things that not even it’s not going to work for you in the long run. Right.
So and even from even from an active fund management perspective, in the within the industry, I’m not saying specific to crypto throughout, there is a there is an increased, you know, need for technical analysis right now, because even if something is fundamentally strong, you know, for example, let’s say a company is doing extremely well, but maybe allocating to that particular company may not be a good idea, if, if it is in a short, I mean, let’s say, if it is in a downtrend, right. So that is where the combination of fundamental analysis and technical analysis coming into picture because even though active fund managers, they’ve, they’ve realized that, okay, this is a stock that we want to invest, they’re trying to make sure that the entry is timed based on technicals, you know, of the charts, right, maybe something that is going down, it doesn’t, they’re not allocating to it, they wait for it to bottom out, maybe, you know, have a higher high or higher low for that matter. And that is when they, you know, like maybe a breakout, that’s when they try to allocate.
So I think, and it’s extremely important in crypto also, I think TA works so beautifully in crypto, because first of all, it’s, it’s, you know, it’s highly volatile, right. So, which means that, you know, personally, for me, you know, if you are a momentum trader, you, I mean, that’s one of the best strategies you can actually adopt in crypto, because crypto, it’s a lot of, you know, it’s something that moves based on momentum, right? There’s a positive narrative for something, and a lot of people buying it, maybe from a fundamental perspective, it may not really make sense, but purely from a momentum TA perspective, there is enough strength for you to, you know, try to cash in cash into that. So but this very short term, I would say, I think from a long term perspective, personally, I haven’t felt, let’s say anything apart from maybe a Bitcoin or Ethereum at this point is, you know, make sense, let’s say if you’re looking at maybe five years, 10 years from now, right? Because I think those two have sort of passed the test of time.
Others, we still are not really, you know, confident and suggesting for long term portfolios at this point. So that’s where we felt maybe your index approach makes sense, if you’re trying to, you know, allocate to others as well for your long term portfolio. But but TA works so beautifully, if you’re, you know, if you’re a short term or a mid term trader, I think from a trend perspective, from a volatility perspective, from a momentum perspective.
And of course, TA also teaches you a bunch of risk management strategies, right? I mean, what is the right allocation to have? You know, when where exactly you should place your stop losses. So these things are, you know, can actually help you a lot in terms of managing the risk in your active crypto portfolio. That’s, that’s an interesting perspective.
And you’ve, I think, shared quite a few insights here for our listeners. But now I would, I would like to understand your flagship offering is the Bitsave crypto index product, right? So you’ve told us a little about the things that go on in the backend. But I would love to understand, is this at the moment still being manually managed the index? Or do you have like a smart contract in place? Or how are you going about doing the management of this this amount of money? Okay.
So there’s a combination of both. You know, there are a bunch of things that are automated, there are a bunch of things that are manually managed, because primarily, it’s a passive product, right? So we don’t really have to spend 24 by seven looking at screens in terms of when to buy when to sell and all that. What we try to do is, for example, you know, especially if you’re tracking an index, it is important to track it as closely as possible. You know, there’s something called a tracking error, which as an asset manager, you want to minimize as much as possible.
Because, you know, there are a bunch of fees that may be associated in, let’s say, allocating when you buy Bitcoin, you know, you pay some fees to the exchange. When you rebalance the portfolio every month, you know, there’s some fees that will go in. When someone sells and exits, for that matter, there’s some fees involved.
So our job primarily is to optimize for these things as much as possible, like, you know, reduce the impact cost of allocation and redemption and rebalancing so that, you know, we are able to give the best returns or, you know, we are able to minimize the tracking error as much as possible for our clients. And I think that is where our expertise as, you know, professional traders sort of come into play. Because, you know, we try to, let’s say, manage things in a way where tracking error is minimized as much as possible.
The amount of fees that we end up paying is minimized as much as possible so that, you know, so that ultimately it all reflects in a positive way for long-term, you know, in the long-term portfolios of our clients. To answer the smart contract part, it’s not, I mean, we’ve not put things on a smart contract right now in terms of, let’s say, managing the funds or, you know, anything of that sort. It’s a custodial product because you can’t really have a DeFi version of what you’re doing.
At that point in time, what we’re essentially doing is putting all these things in individual wallets and then rebalancing is not really, you know, an easy thing to do, right? Because then you need approvals and signatures from individual clients for every transaction that we do. That sort of goes against the idea of simplifying the experience, right? So this is managed in a very traditional way, if you ask me. For example, just to explain flow funds, let’s say if you want to put in one lakh, right? And that gets converted to USDT and then that gets invested into the fund or the product or the index product that we have.
And let’s assume it’s like 1000 USDT for that matter. And the 1000 USDT gets, you know, allocated to different index components which Bloomberg is deciding. And then we move that to an institutional custody.
And once we move that, you can actually view that much of assets sitting in our wallet through the proof of reserves. Whenever you want to sell, we take it back from the custody, sell it and settle it back to the reverse if the same thing happens. So it’s a very simple way of doing things.
We’re not trying to complicate it by bringing in smart contracts and stuff which may not really make sense for the audience that we are trying to cater, right? I mean, I know in maybe another part of the world, you know, there are similar products that are packaged in a DeFi format. Maybe like a wrapped asset sort of put into a smart contract where, you know, they can trade the tokens of the index and all that. And we’re not really getting into all that considering, you know, the audience that we are trying to target is very different.
So yeah, like rebalancing, I personally do it. Some of the allocations, some of it is automated. Some of it, you know, let’s say there are larger orders, we try to process it manually to get the best rates.
So yeah, it’s a combination of both at this point. Okay. So can you tell me a little about security? Because security is a major concern, say for investors, especially in this space, I think.
What are some of the security measures that you guys have undertaken to make sure that the funds are safe for the users? Yeah, I mean, I think, you know, as an asset management company, you know, like, and especially catering to a long-term audience, it’s extremely important to adopt the highest standards, right? When it comes to safety. So we’ve taken the same approach like any other professional asset management company in the space have taken. I’m talking about maybe someone like a BlackRock or Fidelity or, you know, like Bitwise for that matter, who creates similar products for the similar kind of audience, right? So we work with qualified institutional custodians.
So we don’t do the custody in-house. We work with regulated custodians to say, you know, to store the assets. There’s also insurance in place in case, let’s say, the hardware wallets get damaged or let’s say the private keys get compromised.
So this is the best, you know, any crypto investment platform in the world can adopt in terms of security standards. And that is what we have also done. I believe we are the only platform in India that uses a regulated custody infrastructure to store the assets.
So, you know, so we don’t do anything. We don’t keep anything in-house in our own, you know, like in wallets that we control. It’s all saved, I mean, stored in wallets that are where the keys are, you know, geographically separated and there’s proper, you know, insurance coverage also in place.
So which we will keep, you know, make sure that we are always adopting the highest standard. And like I said, we give, we do this with at most transparency as well. So, you know, anyone can go and verify that these funds are always stored, you know, in these wallets and they’re not really commingled with operational funds or we are not misusing it like, you know, what, like what happened with FDX for that matter.
Right. So, you know, we’re keeping on doing what is, what, you know, whatever is the best that we can do in terms of security and safety. Okay.
Can you tell us a little about, you mentioned earlier that, you know, the proof of reserves are available for people to check. Is it publicly available like on your website? It’s on the app. We’ve not put it on the website yet.
Okay. So if you download the app, you just have to download, you don’t have to do anything else. You just do, if you just sign up on the app, you can actually in the homepage itself, there’s a proof of reserve section along with the proof of liability as well.
So you can actually see both the sections go to these wallets where Bitcoin is stored, where Ethereum is stored and whatever other index components are stored. So that can be publicly verified on via the app itself. Okay.
Wonderful. Can you tell us a little about the compliance aspect so that users have their mind at ease when it comes to compliance and investing in these products? Sure. I mean, you know, I think, I think, unfortunately in India, a lot of people still believe that, you know, investing in crypto is illegal.
Yeah. It’s banned. I think that’s a work in progress for all the industry players and a lot of education that is still needs to be done.
So I think, you know, one of the best things for us have been, you know, like these are mostly people who are very tax compliant and all that, that we try to target. So the moment we tell them, you know, there’s a separate section for reporting your crypto transactions in ITR. So that sort of gives them a sense of comfort, right? Because if something is illegal, the government is not going to say, you know, you have to report all your illegal transactions in a separate section in ITR.
So that sort of gives them a comfort. And, and, and obviously, you know, be following all the other standards in terms of, let’s say, using a DigiLocker for, you know, for fetching your Aadhaar and PAN. Which they’re already used to on, you know, maybe a banking website or on a stockbroker website.
So, you know, it’s all the basic things that you do on any other platform provider. Let’s say if you do higher volumes, there’s an advanced KYC requirement that we have, you know, to comply with, you know, the ML and KYC requirements in the country. But otherwise, you know, it’s pretty straightforward, like, just like investing into any other asset class.
But I think the only difference being, you know, there’s a different tax slab, there’s a different reporting requirement, which also we try to help our clients with, you know, like, let’s say, proper tax statements, which they can just, you know, copy paste to the ITRs that they have, and all that. So we try to help them with whatever other aspects of the investment as well. When it comes to reporting, let’s say, let’s say someone wants them, someone wants us to speak to their CA about it.
We are pretty open to that. Since, like I said, you know, we simply try to work with a very specific set of people. I think we are able, we hope we are able to continue to do this, or let’s say we are, we are able to continue to do this even at a higher scale as well, right? So yeah, we, we make sure that, you know, they all are following the guidelines.
They all are, let’s say, I think even in India, there’s a requirement that if you’re not, if your PAN is not linked with Aadhaar, you know, the TDS needs to be 20% instead of 1%. So that’s something that, you know, we, that’s a check that we do make sure that, you know, they link their Aadhaar with PAN before they invest. So, so yeah, these, these are the things that, that, that we try to, you know, help people with.
And since it’s a pretty standard flow that, you know, and right now with us as part of PMLA, it’s pretty much the same thing that we are doing as much as any other financial institution in the country is doing. So I think it’s not really a complicated thing when it comes to compliance at this point. Right.
Okay. So can you tell me a little about the next big milestone for you guys when it comes to BitSave? Sure. I mean, for us, the, you know, we’ve designed the platform in a way that it’s, it works for any country, right? So the goal going ahead, maybe next six months, 12 months is to have a bit more global presence.
For example, let’s say, I think there are other markets that we are able to tap into where there’s a, there’s a much favorable regulatory environment. So we are evaluating a bunch of global options because index investing is something that is global, right? Like, you know, it’s a product that can work in any, any market, as long as you have these people saving for their or creating their long-term portfolios. And I think we are living in a very interesting time.
Maybe we are six to nine months into what could be a 10-year transition for crypto from that magic internet money to something that is, you know, part of your long-term portfolio, right? So we’re fortunate to be building it at the right time, I feel. So I think the next step was going to be, you know, being a bit more, you know, well, it’s expanding our presence globally, being in multiple jurisdictions and hopefully with some licensing also in place, which sort of gives both us and our clients a level of comfort, right? Because then you know what to do, what not to do. And, you know, our clients will also get some level of regulatory oversight into the products that they’re investing with us.
So yeah, that is the main goal going ahead, maybe next six to 12 months. That’s a focus mostly on the global, you know, expansion side. Okay, awesome.
So I would love to understand once again and revisit basically, you mentioned that, you know, you don’t necessarily keep the custody of these assets and you have an insurer. Can you tell us a little more about the custodian and the insurer? Sure, like we work with, you know, like a bunch of custodians. For example, we work with Sefu, which is the custodian for Binance.
We work with Liminal’s Abu Dhabi regulated entity, which is a regulated platform over there. So it’s pretty different from whatever software that they had, you know, which is sort of in a question right now with one of the largest exchange in the country, but we use a very different product that they offer with proper regulatory oversight. Both these custodians have insurance from Lloyds of London, when it comes to, you know, like, let’s say things like the hardware, hardware wallets getting compromised or private keys getting compromised.
I believe at this point in time, the insurance coverage is much higher than RAUM. So there’s this like 100% coverage that we have right now. And over time, the idea is that, you know, maybe obviously, we’ll have an option to top up the insurance from our end also.
And also, maybe we’ll segregate the funds in a way that, you know, it always make I mean, making sure that maybe, you know, at an individual wallet level, there’s always 100% coverage in case something goes wrong. Right. So I think this level of insurance is something that is available only for regulated or let’s say, from an institutional custody perspective, you know, I think most of the exchanges, what they use is self custodial wallet infrastructures where they have the control, their team members are managing most of the things where, you know, something like this kind of an insurance may not be a may not be a practical thing to have.
But since we work with, you know, like institutional custody infrastructures, they all both of them have, you know, the insurance coverages in place. And it’s the same thing, like if you see BlackRock goes with Coinbase custody, the same kind of insurance that they have, Fidelity has Fidelity custody, the same kind of insurance that they have. And the goal is, as we grow, maybe try to diversify the custody, discuss will maybe start working with, you know, maybe a third custodian or fourth custodian, so that the custody risk is also diversified for our clients.
So like I said, you know, there’s a highest standard anyone can adopt at this point. And that’s what we have adopted. Brilliant.
I think, you know, you’re really solving for a good pain point. So that that is absolutely wonderful. And the kind of measures that you are taking, they do adhere to the industry norm that we have, you’re erring on the side of caution, you have an insurer.
So it all sounds really wonderful as perhaps a stepping stone, a place for newer users to get into crypto. Can you tell me a little about your own personal perspective now, because you’re somebody who has like over a decade of experience in terms of seeing how the market works, since you were 14 to now when you know, you’re 10 years later, what advice would you give beginners looking to enter the crypto investment space? Yeah, I think, you know, like the major challenge for beginners at this point is, you know, the, there’s a lot of noise, right? I mean, for example, like last month, I was I was actually driving from Kerala to Bangalore. And in between, I stopped at a fast tag activation center.
And I saw like, three, maybe early 20, you know, guys is just sitting and figuring out what is the next meme token to invest in? Right? So I think, maybe, you know, like, yes, you get that, maybe, you know, there’s this point 01% that particular investment might make you rich. But I think if you someone a bit more responsible with your finances and looking to build a long term portfolio and realize the fact that, you know, like, active investing, or maybe dabbling in a bunch of new things may not make sense. Then I think obviously, the right way to start is obviously start small.
Because, you know, a lot of people, they may not be comfortable with the volatility of this, you know, this asset class, right. So that’s why we always suggest maybe, you know, maybe put in, like, one percentage of what you have in crypto, try to understand how the market works, how the dynamics work before you start allocating more, if you’re not comfortable, maybe you shouldn’t allocate more. And the best thing is, in especially in crypto is to have a long term approach, right? Because see, no one can predict what the market is going to do.
For example, I think a lot of narratives happened in terms of this year is going to be a bull market and all those things, right? But but yeah, I mean, obviously, we Bitcoin touched all time high, but it was primarily due to some institutional demand that came after ETF. And if you see retail volume is not really picked up, right. So, you know, like, there’s a lot of narratives that we see on social media and all that.
But that’s why I said it’s, you know, it’s easy to get lost in all these noises. But it’s important to have that long term view, I guess, in when it comes to investing in crypto, because over time, you know, like three years, four years, you if you’ve held on to the right assets, you’ve always made money in crypto. And, and like I was explaining a bit earlier, like, you know, I think we are maybe six to nine months into that transition period of crypto from, you know, being that magic internet money to something that is part of everyone’s portfolio, people are going to see it, you know, a bit, I mean, are going to take it much more seriously, I think more countries are going to adopt it from a regulatory point of view, or even from a balance sheet perspective.
So the view of, you know, the perception that humans have towards crypto, I think that’s going to completely change over the next 5-10 years. And I keep saying, you know, that whole dial up to broadband phase that we had for the internet, that is potentially something that can happen to, you know, crypto over the next 5-10 years, especially with more real world applications being built. And it will all reach a point where we can spend crypto without all these complications that exist right now.
So when you are trying to invest into something of that sort, I think it’s extremely important to have a long term view and not try to catch the short term. And we’ve seen like we have some data, even from Bitsave, you know, whenever there’s a 10%, 20% move, some people just try to sell and thinking that it’s going to come down and buy, you know, they can buy low, right. But what happens most of the time, it just goes up, maybe, maybe another 20%, 30%, right.
So, and then you’re sort of missing out on the next big move, right. So it’s important to stay in the market, rather than trying to time the market and figure things out. So, like we keep saying, you know, you do your work, you know, whatever, if you have a job, you have a business, you just focus on that and try to build your, you know, retirement corpus or your long term portfolio with us.
And the thing with Bitsave that we’ve created is a very, you know, safe platform, let’s say whatever you want to put, you want to put 10,000 rupees on one, you just put the 10,000 rupees in and then we take care of the rest for you, right from a long term perspective. So try to have that, you know, try to understand it more from a philosophical perspective, also like money at the end of the day, you know, it’s all about how we perceive it. I think, you know, money essentially, it was decentralized, maybe like, you know, 300 400 years ago, we had that whole fiat system in between.
And if you see, you know, this is we’re talking about maybe something like a Bitcoin, which is actually the currency of the internet, right. So as internet grows, obviously, this will also grow. So if you understand it from that perspective, I think it will help you to keep holding to it.
Instead of trying to, you know, swap it with new things that are coming up. And potentially, you know, whoever is doing that, I think it’s a very small percentage of people that actually end up making money. But eventually, you all lose, lose making money, right? I mean, lose, lose the money in trying to do a bunch of things with it.
So so yeah, try to stay in it for the long term. And I think if it works, it’s it’s, I think all of us are going to be extremely happy. Okay.
So now, you know, Zakhil, we’re almost at the end of the recording time that we have loaded. And you’ve already kind of shared your advice for folks who are looking to invest in crypto. But if you really needed to perhaps give advice to builders who are trying to build in crypto, in WebP, what would be your advice for them to start living on blockchain? I think, you know, it’s almost the same thing, you know, it’s important to have a long term view.
One of the major issues that I’ve seen, and someone actually pointed this out to me a couple of months back that, you know, the fact that we try to call Web3 projects, right? We term it projects, and the projects are usually short term, right? I mean, the term is associated with something short term, instead of actually building a business, which is typically a long term. So I think, what is important is to build for the long term. And I’ll tell you why it is important, right? Because, you know, there is this whole power of compounding, right? And the power of compounding, it’s not just about investing, it’s also about the skills that you have, it’s also about the relationship that you build, it’s also about the business, or the brand that you’re building.
Right now, the issue is that if you if you just try to focus on or try to build for every narrative, maybe, you know, someone was building for Metaverse three years back, and then they started building for NFTs two years back, and now they’re building an RWA this year. Now, what happens after four years is that you end up, yes, you did four things, but you know, you did not become extremely good or, you know, maybe you did not succeed in any of them. So I think, you know, just focusing on or picking that one thing, and then just keeping on doing that for a longer time, I think that is something that I would prefer people to do, even from a, you know, investor perspective or from a community perspective, right? For example, if I am starting in crypto, and I sort of, you know, let’s say I interacted or I invested in one particular product that is out there and after six months, if that product doesn’t exist, then that’s a negative view that I’m creating towards crypto or this industry, right? So we need more long term builders like people with long term vision trying to build for the long term.
And I think that would be beneficial for all of us for the ecosystem for the people that are coming in and for themselves as well. Right. So, so, yeah, I mean, it I know, it’s a very tricky industry.
There’s always like I said, the same thing. It’s a lot of noise, a lot of new narratives. Funding is, I believe last couple of years, getting funding has been extremely hard for us.
But, but, you know, but realizing what can potentially work and then just sticking with it for long term, I think that is really important, even from a builder’s perspective when it comes to Web3 and blockchain. Right. I think that is very good advice to give that, you know, just sort of stick to your guns, persevere, go deep into the solution or the niche that you’re trying to build.
As you speak one thing, right? I mean, you don’t really have to do like a bunch of things. I think that is when again, it goes wrong, because building itself is extremely hard. Now imagine if you’re building, you know, like not just one thing, and again, just compounds the difficulty that you’re putting yourself through, right? So just, just pick one thing.
And obviously, you know, when you start trying to just like, it’s almost like trading, right? Like when you start, you figure out where are you going to exit? You know, what are the conditions for me to exit this trade? And maybe you can have something similar where you’re like, you know, if I’m building this because of these, these reasons, these are my thesis. And if these these things get true and wrong, then I will maybe, you know, stop this and try to do something else. But unless and until that is not the case, unless and until your thesis is not true and wrong, just because of market conditions, I think, you know, you should not just give up on things because market can change anytime.
And obviously, in crypto, it works with different cycles. So there will be times when things are extremely hard, there will be times when capital movement is very slow. And I think we have enough examples to look at, you know, in terms of what has worked and what have not worked.
So that will also give founders a level of understanding in terms of what to pick or which area to pick, you know, if they’re looking to build the next big thing here. Yeah, I think that is very good advice to close this episode off on. Thank you so much, Zakhil, for this very insightful conversation about Bitsave.
What you’re building is a simple, but very pertinent product that I think a lot of new users would be very inclined to test out and stay in. It makes investment easier. And with all the security measures that you’re taking in place and how you are being particular about this, I think would put the mind of users at ease as well.
So thank you once again for taking out the time and all the best for the future. Thank you. Thank you.
It was great chatting with you.