As the cryptocurrency industry has continued to mature, crypto has gone increasingly ‘mainstream’: the anarcho-capitalist ‘magic internet money’ of 2010 has transformed into a multi-billion dollar, increasingly-regulated mainstay of the mainstream corporate and financial worlds.
Indeed, a number of major retail brands have adopted cryptocurrency or blockchain technology in one way or another; crypto has become the stuff of VCs and hedge funds, and–with a little luck–US-based ETFs.
For better or for worse, however, the cryptocurrency industry is still a grassroots movement–one that is created, shaped, and re-shaped every day by the people who belong to the online communities from which it was born.
In the cryptosphere, information spreads first by word-of-mouth and social media before it has a prayer of reaching a major publication; users rely heavily on recommendations from other members of the space to choose the products and platforms they use. Additionally, the cryptosphere is sometimes better-equipped to handle crime and catastrophe than law enforcement officials; your colleagues can be your greatest allies (or, sometimes, your worst enemies.)
As such, community plays a uniquely important role in reputation and security within the cryptocurrency industry. Recently, Finance Magnates spoke with Pauline Shangett, Chief Communications Officer at cryptocurrency exchange ChangeNow, about the role that the cryptocurrency community plays in building brand recognition and creating a more secure exchange environment.
What is ChangeNow?
Shangett explained that ChangeNow is an ecosystem that includes several different services a crypto payments system, a set of Web3 nodes for centralized application development, a token swap service, a Lightning Network node, and several other products.
The most popular of these, however, is a non-custodial instant crypto exchange service that doesn’t require KYC registration: “for example, you have Bitcoin and you would like to buy some XRP. You pick Bitcoin out of the list of currencies you would like to sell, you pick [XRP] out of the list of currencies you would like to buy, you enter the amount, press a couple buttons, [and] leave your recipient wallet address.”
“We oppose custodial models as the main customer-oriented model of handling crypto. ‘Not your keys, not your Bitcoin’–that’s our primary motto. So, we try to [stay] away from custodial models as much as possible.”
On building brand recognition: “we don’t really do ads”
Shangett was also recently featured as a keynote speaker at Finance Magnates’ Barcelona Trading Conference in July, where she delivered a speech entitled “How To Create a Perfect Exchange Service (And Beyond).”
“There isn’t enough solid information (either on the internet or just by word of mouth) on how to proceed when you’re a young business and no one really knows about you–how to create and manage your reputation; how to make sure as many know about you as possible.”
As the exchange’s Chief Communications Officer, Shangett explained that ChangeNow’s strategy for building its presence within the space “has always been about words.”
Indeed, narrative is important–”[we create] text which will grip people–which will draw as much attention to the company as possible.”
This includes a healthy dose of social media, as well as interviews and presentations that the exchange regularly publishes. However, one thing in particular is absent from the company’s growth strategy–traditional advertisements.
“We don’t really do ads,” Shangett said. “We don’t work with ad networks; we don’t really do CPA [or] CPC [campaigns]. We mostly spread the word about our company through social media and also through personal contact,” including in-person at conferences.
Shangett also explained that ChangeNow is working to make its user experience a bit more “personal”–the cryptocurrency industry is infamous for anonymity on the development side of things. To this day, the creators of a number of major cryptocurrencies–including Bitcoin–remain unnamed.
“A lot of creators are trying their best to preserve their anonymity–they’re private people,” Shangett said. While this may be “completely understandable”, this kind of behavior “doesn’t usually garner a lot of trust from the general public.”
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So, ChangeNow is taking a different approach. “Right now, we’re looking at personal brand development as a way to promote the company so that people know that there is a face behind the company which they can contact if something goes wrong, or they can talk to if they have feedback.”
“People are giving you their money, and they can stop doing that if they don’t like you.”
“You always have to communicate with the community,” Shangett said. “In the crypto space, not a lot of information is spread around via big outlets, like the New York Times or Bloomberg or Politico or whatever. Everything is really community-based, so you have to constantly communicate with the people who are in the same infospace as you.”
“And you have to listen,” she continued. “If there is any feedback which comes your way, and you feel like it’s something that can actually be fixed and not just a useless rant that someone posted on Twitter or Reddit…you fix it, because that’s what the most important thing in our business is.”
“People are giving you their money, and they can stop doing that if they don’t like you. So, you have to listen first and foremost to the people [that use your platform]. Because otherwise, who are you even working for if not the crypto enthusiasts that are basically the same as you?”
Dealing with attempts to ‘wash’ hacked coins
A major part of listening to and protecting users in the crypto industry centers around cybersecurity. Because of the non-custodial and user registration-free nature of ChangeNow, the exchange faces a rather unique set of challenges.
This includes dealing with hackers and other financial criminals who wish to “wash” their coins–in other words, when cryptocoins are stolen from an exchange, they are marked as stolen property, and cannot be used in many locations. Therefore, hackers try to quickly exchange these ‘dirty’ coins for ‘clean’, unmarked ones that can be easily used anywhere.
— Cyberam 💡 (@ramlevi) September 3, 2018
Unfortunately, they are often successful–in January, The Next Web reported that “64 percent of last year’s dodgy cryptocurrency, which amounted to over $1 billion, was washed by simply depositing it onto digital asset exchanges and trading it.”
Because ChangeNow is registration-free, these hackers target ChangeNow in particular as a platform that can be used to wash coins. However, Shangett explained that the exchange has developed a set of protocols that are enforced in order to identify stolen coins and stop hackers in their tracks.
”The info is spread partially through word of mouth.
“If we’re talking about exchange hacks, the info is spread partially through word of mouth. For instance, our staff is constantly monitoring various groups of crypto activists [and exchange employees] who deliver all the info about address lists [associated with] crypto hacks and all of the other relevant info that might be helpful for us in order to stop the money that people are trying to wash through us.”
Shangett added that ChangeNow has a risk management system in place for these kinds of situations–“if there’s a set of addresses that people have ‘blacklisted’ for us (for example, EOS Patrol, which handles EOS hacks)…our risk management system can see which addresses have been blacklisted, and if people try to execute exchanges on ChangeNow using those addresses, those exchanges are stopped.”
“So, for example, [say] an exchange just got hacked, we got a list of addresses five minutes later, and we blacklisted them; [the hackers] try to come onto our website and exchange crypto–their exchanges are either ‘failed’ or stopped for KYC. If they’re stopped for KYC, we manage to retain the funds (freeze them) and send them back to their original owners as per official requests from the [hacked] exchanges themselves and from law enforcement as well.”
When end users report crypto theft to law enforcement, “nothing really happens”
“The crypto industry is obviously in its sort of ‘juvenile’ stage,” Shangett explained. “All of its elements have a ways to go in terms of its development, and the same goes for law enforcement.”
“For example, the fact that exchange staff can turn to us with an official request to send back funds that have been stolen after a hack is all good and fine, but when it comes to end users, they generally don’t have anyone to turn to.”
As an end user, “you can submit an official complaint to law enforcement, and they’re going to accept it.” But then, “nothing really happens.”
In terms of the way that law enforcement officials operate within the cryptocurrency space, “that is the element that has a lot of room to improve.”
This is an excerpt. To hear the rest of Finance Magnates’ fascinating interview with Pauline Shangett, please click the Soundcloud or Youtube links.