We are now living in a brave, new world of cryptocurrencies–a world of Bitcoins, Litecoins, Dogecoins and digital wallets.
Three UT undergraduates are standing at the helm of this world, preparing to launch Cryptilla, what they hope will become the largest, most professional cryptocurrency exchange on the web.
In January 2013, Ben Brock, sophomore in computer science and Andrew Belt, junior in math and physics, began discussing the rise of cryptocurrencies: decentralized, virtual currencies lauded for their superiority to traditional money. Created in 2009 with the arrival of Bitcoin, cryptocurrencies circumvent both the governments and credit card companies, removing the “middleman” from consumer transactions.
“It’s the simplicity of a credit card, but if you buy something with a credit card, it is 2-3 percent more expensive than if you bought it without,” Brock said. “So you have that convenience, yet you don’t have to pay the 2-3 percent fee because it’s so cryptographically secure.”
Outside a centralized bank such as the Federal Reserve, the value of a cryptocurrency is determined by the collective consensus of its users– a peer-to-peer network. As these currencies fluctuate in circulation, popularity and exclusivity, users trade them for different amounts. Thus, they rise and fall in value. Seeing a chance to make a profit, Brock and Belt approached their friend Ben Miller, sophomore in psychology and business analytics.
“With most money, like the dollar bill or the peso, you have a king…that tries to regulate it,” Miller said.
Cheaper, more anonymous and less susceptible to fraud, Bitcoin has threatened to transform the world of consumerism. Soon, other cryptocurrencies also emerged as more user-friendly alternatives, innovating upon Bitcoin’s original concept. Known as “altcoins,” there are more than 100 active cryptocurrencies, including Litecoin, Dogecoin, and FeatherCoin. Dogecoin, created in December 2013, reached a market capitalization of $180,000,000, demonstrating what Brock called “incredible growth.”
Users can flip cryptocurrency like stock to turn a profit. Enter: Cryptilla, where entrepreneurs and computer enthusiasts can exchange cyptocurrencies for a nominal 0.1 percent fee.
“Other people own the cryptocurrencies, we just provide the information that allows them to trade,” Brock said.
Belt: “We’re like the eBay of cryptocurrency, essentially.”
By simplifying the current exchange site model, Cryptilla could potentially corner the market. With help from the UT Law Clinic, Cryptilla is one of only two altcoin exchanges registered as a limited liability corporation.
“It’s really amazing how shady some of the other altcoin exchanges are and yet how much money goes through them…” Brock said. “It really doesn’t feel like a safe place to put your money because it’s so poorly designed – some random guy is running it. He hasn’t registered with any kind of record-keeping agency… Yet $2,000,000 were going through the site every 24 hours.”
While cryptocurrency users are still susceptible to hacking, Miller expressed confidence in Cryptilla’s security, saying that his security auditing should minimize threats.
Due to controversy surrounding
Bitcoin, heavily used in the online drug trade
Bitcoin’s use in the online drug trade, as well as the recent exploitation of Mt. Gox, another online exchange, cryptocurrencies have been criticized by politicians.
Brock, however, remains optimistic for the technology behind cryptocurrency
As several banks are already looking to use Bitcoin’s method to supplement their transaction processes, Brock remains optimistic for cryptocurrency’s future.
Still testing, the three undergrads plan to launch Cryptilla early this summer. Placing second in the undergraduate business plan competition, the men behind Cryptilla won $3,000 to expand their business into the future.
