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Breaking the cryptocurrency stigma: Epiphyte

28 October 2014  |  7133 views  |  0

"It's a sensitive space, people still associate it with criminality and dubious activities - like the internet in the early days"

When Finextra wrote a story about Epiphyte winning the Innotribe startup award - it was received with scepticism by some of our readers. When you're talking about cryptocurrencies and banks - you're bound to get people nervous.

In the shadow of last year's Mt. Gox exchange shutdown and the raid of online drugs haven, Silk Road, bitcoin has had a difficult time keeping its reputation clean and an even harder time getting banks interested in its potential.

I spoke to Edan Yago, CEO of Epiphyte about how his startup and software could change the way banks and their customers do business forever.

In short - Epiphyte started two years ago, as a technology that allows financial institutions to talk to crypto-financial networks. Using Epiphyte's cBridge technology, banks and institutions are able to integrate with cryptocurrencies over traditional protocols like Swift.

Despite the fearmongering around cryptocurrencies - authentication, KYC, security and risk are priorities for Epiphyte.

'The myth is that these transactions are anonymous, in actuality they are the most transparent and tracked transactions in the world'

says Edan. He goes on to explain the distributed ledger and how it maintains a complete history of every transaction performed and also how an individual, after being KYC'ed by a bank, can be tied to a transaction.

Epiphyte isn't just about bitcoin. It's about the power of the distributed ledger.

'We do this across all the different protocols, we don't know which protocol is going to win, or necessarily if one will. There's bitcoin, there's ripple, there's stellar, there's hyperledger - we integrate with all of them and do the heavy lifting for the backend.'

The benefits to banks is the speed of the transaction. It'll be close to real time and, crucially, it will work within the existing regulatory framework making it a far more attractive proposition to banks who must maintain a sensible relationship with the regulators.

The software generates sales contracts and protects the buyer from counterparty risk by providing payment upon successful completion of the trade. All of this takes place without the banks needing to be in possession of any cryptocurrency.

I sensed that aside from getting institutions to see the benefits of their technology, Epiphyte also had to battle against cryptocurrencies' image problem.

'The stigma against cryptocurrencies is something you still feel but it's not something we are necessarily plagued by - like the internet, initially it's new and scary - but kinks get worked out and over time people will realise the benefits to it and they'll seal up the vulnerabilities'

'There's no way you could utilise our technology for dark-web type activities - it is unquestionably the most traceable, most transparent financial system that has ever been devised,' adds Edan.

'The banks aren't built for it, it's not yet a core competency to know how to engage with smaller companies and certainly not innovative technologies'

'But with that said, we've turned it into a core competency of ours - we've spent a lot of time understanding what their needs, concerns and language was,' adds Edan.

What you might not know about Epiphyte is that it started life as a consultancy, mingling with banks, building relationships and learning how they work to be better poised when launching a product.

Now, Epiphyte is a team of eight. Edan, who previously spearheaded the virtual currency iniatives at Zynga, has recruited ex-Zynga product manager and current CTO of Dating Ring Katie Bambino to assist in development.

They've signed tier 1 banks (who still can't be named) and smaller, more innovative banks too with their sights set on further funding to go fully live.

With time and knowledge, the stigma surrounding cryptocurrencies is diminishing. Technologies like Epiphyte aren't just helping banks to benefit from a business opportunity, they're also enabling a cultural and mindset shift.

E TagsBlockchainStart ups

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