Max Keidun, CEO of HodlHodl: The “Bearish” Market Has Come to an End


Unlike its rival LocalBitcoins, the P2P cryptocurrency exchange Hodl Hodl is actively working on new services and holds a major industrial event called Baltic Honeybadger. Next, the exchange plans to launch a Bitcoin-based predictions service. CEO of Hodl Hodl Maxim Keidun is confident in its success. He proudly calls himself a Bitcoin-maximalist and strongly stands for privacy in the crypto trading. Newconomy media spoke to Keidun about where the blockchain technology can be applied, in what cases centralized exchanges act as casinos, and why the idea of cryptocurrency was warmly met in the former Soviet Union. 

Let’s start with a common question. Last month, the price of Bitcoin rose and consolidated around $4 thousand. Some analysts predict an impending growth cycle. In your opinion, does this really mark a long-term “bullish” trend, or will we see a new downtrend soon?

I try to avoid forecasts. There are so many indicators for price growth, yet the market has only been falling. I think Bitcoin, like the entire crypto market, acts outside the box, and its price is not subject to any sort of analysis.

What does “outside of the box” mean?

Well, this is, basically, a quality of the immature market. There aren’t any pronounced cycles, which are present at more traditional markets of securities and other assets. Of course, I want to believe that the “bearish” market has come to an end, and we are beginning to level off and head to new highs.  

We see that many specialists pledge an upcoming shoot up of the market. I try to avoid predictions, but work and develop the industry, without giving any attention to the prices of crypto assets instead.

Have you noticed the market reversal in terms of trading activity on Hodl Hodl? May be, the number of users or transactions has increased…

Our platform has been growing since day one. We constantly observe the increase in number of users, trading activity and the number of deals. We do not think that this is some overage. The growth of trading volumes does not always mean the imminent rise of the market. There can be active and lucky days on the trading market, but it does not affect the price of Bitcoin.

So, trying to determine the long-term trend looking on current trading activity is a shot in the dark.

Is it possible that the price trends are not important for the trading market at all?

Actually, this was one of the main reasons why we launched the DEX exchange. Hodlhodl exchange allows you to earn regardless of whether the market is falling or growing. There are clients, who want to buy or sell, anyway.

Getting back to the  price, I personally believe that in the long-term the price of Bitcoin will be higher. It is likely to exceed the latest all-time-high of twenty-thousand. But in my understanding, the long-term perspective is three to four years. What will happen in the nearest couple of months or a year, I do not presume to say.

At the end of February Hodl Hodl announced that the predictions platform will launch soon. Why did you choose this service as a next milestone?

We have very high expectations for this project. At least for Bitcoin, there isn’t currently any alike service. It will be a unique product. Yes, there are Ethereum-based predictions platform  – Augur, but they seem to stuck.

We believe in our success because we are trying to make an easy-to-use, transparent service with a simple to handle interface. We won’t have a decentralized Oracle like in Augur. And we will try to moderate announcements ahead of time to avoid issues when it is hard to confirm a disputed outcome.

In our service, we would like users to bet on topical issues – for instance, the price of Bitcoin on a certain day and hour on a given exchange. Why do we think this project will be a success? Because people like to argue about anything.

There is the opinion that, besides trading and gambling, there is little space for the mass adoption of cryptocurrencies. For example, the most popular decentralized applications are online casinos. Do you agree with this statement?  

I guess, the system gradually matures, and more projects are appearing that are intended for a more convenient usage of crypto in the offline markets.

Take for example the applications for payment processing – they attract funding. Last year, the guys from the OpenNode project raised $1.5 million to develop payment tools for merchants. Moreover, there are cashback and tips services – like, Tippin. CEO of Twitter Jack Dorsey is thinking over integrating Bitcoin into his service.

That is, gradually we come to new ways of use, and roughly speaking, we are moving away from utilizing crypto only for gambling and shopping on the darknet.

Certainly, cryptocurrency will remain in those areas, but the industry is developing. Lightning technology is worth mentioning as it will contribute to cryptocurrency development. After a while, anyone will be able to conveniently pay for coffee with Bitcoin, and from a device in the nearest cafe. And this will be fast, cheap and without intermediaries.

Hodl Hodl has announced a meetup on Bali. Is the exact date already clear, and why have you decided to set up the event there?

Yeah, we held a meetup in Bali on March 28th. It was dedicated to the basics of Bitcoin, crypto trading, and the Lightning network.

Frankly, this meetup was spontaneous – it was our employee that had taken the initiative. He went on vacation to Bali and decided to mix business with pleasure.

Do you plan to hold similar events in other countries?

Sure, we organize and participate. Recently, our CTO performed at the meetup in Seattle. Besides that, we are holding an annual conference dubbed Baltic Honeybadger in Riga. We have also organized two or three meetups there so far.

Let’s get back to the events from the market. We see that crypto exchanges are adding new services. Last year, there was a trend of OTC desks. Now, the latest fashion is to do token sales on platforms. How would you describe the ideal suite of services for an exchange’s ecosystem?

Well, we launched the OTC desk last year by opening a proprietary broker-dealer company. This service is made for huge deals. Opening a broker-dealer service is a logical move for any exchange.

As we mentioned above, Hodl Hodl is also rolling out the predictions service. It will be a separate project, although it is a part of our ecosystem. For instance, if a user has bitcoins to make a prediction and place an offer, he will be able to do both these actions via Hodl Hodl.

Also, in the nearest months we will release a very interesting thing for Hodl Hodl. We are keeping it secret, so I can’t mention any details. But it will be a significant improvement to the existing functionality.

But still, what services are mandatory nowadays for an exchange?

They may be token sale platforms or an IEO. For example, Binance has recently launched such a service. Unfortunately, I do not track these kinds of developments. I am a Bitcoin-maximalist, so I am not really interested in anything outside of it.

Large crypto exchanges could probably launch IEO platforms to cut money off “hamsters”, you know. But speaking candidly, I do not see any difference between an ICO and a token sale processed through an exchange.

Administration trading platforms claim to carefully select projects.

They claim so, but during the ICO hype numerous “rating agencies” came in sight to evaluate projects. And we are familiar with where it all led. I have a feeling that both exchanges and people are struggling to come up with how to get rich for free, and the easier and faster, the better.

Retail investors need to understand that exchanges become casinos in that case. There is a rule: the casino always wins. You always have to remember that.

I get it. Meanwhile, more and more centralized exchanges are launching decentralized trading divisions. Further, many standalone decentralized exchanges (DEX) turn up. How do you think they will develop, separately or compete?

Those are two segments that will develop in parallel. There is enough space for everyone. It’s just centralized exchanges are better for so-called day traders, who make several deals a day. They value cleanliness and liquidity. It is also important for them to have an opportunity to promptly sell and buy decent volume. P2P exchanges are more suitable for those who rarely trade or simply hodl.

Again, there is the issue of KYC and AML procedures, someone is willing to provide documents, and someone is not. Still, do not forget that the anonymity, absence of the intermediary, and the freedom to manage funds are important features of Bitcoin. Let’s remember the cypherpunk movement, where the concept of cryptocurrency was born.

And do you agree with the official data of trading volume, which shows that DEX is not as popular as trading platforms?

Yes, DEX has lower numbers, but again, how exactly could you calculate that? If we check wallet balances, a DEX simply does not have any. As for the frequency of transactions, then, for example, OTC trading data on our platform is private. There may only be one OTC deal per week and it overrides the weekly trading volume on the exchange. Therefore, how do you find out the actual trading volume on Hodl Hodl?

I won’t deny that centralized exchanges are popular, and have more users and trading volume. But, for instance, recently new research was published claiming that the major share of trading volume on centralized platforms may be forged.

We have to consider yet another thing. It is much harder to bring a customer to a decentralized exchange. But those who become loyal are more difficult to lead away.

I’ve noticed that you pay a lot of attention to the concept of keeping privacy in crypto trading operations. However, the increasing regulation in different countries frequently requires removing anonymity. Do you think a place will remain for anonymous cryptocurrencies, or will they eventually be outlawed?

I am convinced that anonymity will remain intact. The industry develops in response to the regulation and the attempts of authorities to crush it. The very history of Bitcoin proves that. It was attacked by miners, states… That’s why Bitcoin users are striving to come up with countermeasures all the time.

For instance, Blockstream launched a satellite into space, which broadcasts its blockchain network over the globe. The development of Mesh-networks, that do not require an internet connection, are in progress. So there can be an opposition to any action.

The difference is that states and institutions have to coordinate globally, while all participants of the blockchain industry pursue one goal without the need to unite. It is hardly possible to shut down everyone. As soon as one platform is closed, two others emerge.

So, there are plenty of ways to avoid pressure. And we all hope that we will not have to resort to them, and that we will grow and adapt. The issue is not whether there is regulation, or not. The issue is, what is it? Currently, many countries try to apply banking regulation to blockchain startups. But the difference is that there are 5 employees in a blockchain startup compared to 500 in a bank. The latter can afford to enforce compliance, while it is hard for a startup.

I can tell you as a representative of Hodl Hodl, we have not implemented a KYC-AML procedure as we do not process users payments, they interact directly with each other. We only provide a technical solution for their exchange.

I see. We could talk about the regulation in detail. Although Hodl Hodl is registered outside the European Union, this is an area familiar to you. To say the least, you hold the large industrial conference in the Latvian capital, Riga. What could you tell me about the laws of the Baltic states on crypto?

As far as I know, Estonia is a popular country for crypto projects. For instance, our broker-dealer is registered and licensed there. There are more countries in Europe with crypto friendly regulation: Liechtenstein, Luxembourg, Malta, Switzerland with its Crypto Valley. As for Latvia, in terms of blockchain and cryptocurrency, it is peaceful and quiet there, meaning nothing happens.

In general, I’ve never found any jurisdiction in the world, having read the laws of which, that I would say we would benefit from registering there, as the crypto industry is still immature, so the regulation is yet to be concluded.

Officials try to use old approaches in our industry. Take the same example that the rules for the financial sector apply to the crypto industry. It won’t work, because it is a different community with a different set of rules. Alternate action mechanics. It is a revolutionary technology which is not in vain, compared to the Internet.

To make proper regulation, it is necessary to listen to the market participants, even give them a blank check for creating the laws. There has to be some sort of self-regulation, so we could decide by ourselves – with the participation of the state, of course – what rules should work for us.

Hodl Hodl supports several options of exchanging Bitcoin for the ruble. How popular is this fiat currency among your users?

Although our users are from different countries, RUB/BTC pair is popular and periodically breaks out into first place. We have a version of the website translated into Russian, our team partially speaks Russian, our technical support is completely Russian-speaking.

Truly, we do focus on the entire CIS region as it is a huge piece of the pie. Wherein, this region lacks “native” trading platforms. LocalBitcoins service is blocked in Russia, but this country remains the second most important state on the service in terms of trading volume. So, it is common sense. We want to develop there because we see huge potential.

It is an amazing and paradoxical situation – Hodl Hodl, a project with Russian roots, is popular in the English-speaking world, but not that popular in the CIS countries.

It is interesting that crypto trading so popular in Russia, but there aren’t any local exchanges…

Because regulation is not the final arbiter- there are simply no clear rules or practices. However, there is a market in Russia that needs further development.

I have to say that the idea of cryptocurrency is appreciated in the CIS countries: historically, people there are not used to trusting the state or banks, or any other third party.