Andre Duka Defies ICO Market Stagnation, Launches Dukascoin

Although it may seem like light years in the fast-moving world of cryptocurrency, it was less than six months ago that Swiss bank Dukascopy announced that it would be launching its own cryptocurrency.

Tentatively called Dukascoins, the company, despite announcing that it would be attempting to launch the tokens, was initially reticent to discuss the project. FINMA, the Swiss financial regulator, still had to give its approval to the new digital assets and any public statements from the company could have jeopardized its efforts towards receiving that regulatory thumbs up.

Then, in December 2018, Dukascopy at last announced that FINMA had said that there were no regulatory obstacles to the ICO. Having received the green light from the regulator, the Swiss firm said that it would be ready to launch the tokens in early March.

After months of pestering him for an interview, Finance Magnates was able to sit down for an interview with Dr. Andre Duka, Co-CEO and Founder of Dukascopy, at the end of February. With only a couple of days to go before the launch of the new coins, Duka was able to provide a number of insights into the new cryptocurrency, the wider digital asset marketplace and the future of banking.

Unlike many other CEOs, who would be quick to shy away from tougher questions and leap at the opportunity to blatantly shill for whatever service they happened to be offering, Duka was measured in his responses and didn’t obfuscate when answering tricky questions.

The CEO’s media savviness likely comes from experience. Duka has been in the banking business for over twenty years. Having founded Dukascopy as a technology provider back in 1998, he went on to launch a brokerage in 2004, a TV station in 2008 and a bank in 2010. The ICO, which is being launched this Thursday, is the latest entrepreneurial move in the businessman's long career.

Today is the official start of the Dukascopy ICO project. What are the main characteristics of your tokens? Why should cryptocurrency traders, or those who are considering investing in digital assets, be interested?

As far as I know, this will be the first payment coin issued by a licensed and regulated bank - certainly Swiss bank at any rate. We have chosen the popular ERC-20 standard on the Etherium Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term and called our token the Dukascoin (ticker DUK+).

The key benefit of it is not the complex structure of a smart contract – the coin is quite unsophisticated from that perspective – but a unique positioning as the instrument that will co-exist in two environments at the same time – in the balance sheet of a traditional bank and on the blockchain.

The ICO itself will be organized in the form of the Airdrop. Every person opening a current account with us will get 5 Dukascoins for free. Moreover, referral activity will also bring the reward of 5 tokens per referred friend. Further, there will be a marketplace/bulletin board inside the bank to buy and sell the coins, where clients can freely determine the price of the token.

Cryptocurrency euphoria has died down significantly in the past six months. In this sort of environment, why do you think your project is likely to succeed?

I totally agree that the ICO market was, and still remains, like the Wild West. This can be said about the cryptocurrency industry in general. Actually, it reminds me of what the foreign exchange market used to look like in the pre-regulatory era.

Consequently, I believe that more regulation will wipe out the undisciplined and fraudulent crypto players. We see this already playing out in Switzerland, where thoughtful steps taken by the local regulator and the government are helping to put the crypto market in order. As we are based in Switzerland, Dukascopy Bank’s crypto initiatives are operating within this healthier, more legitimate marketplace.

Getting back to our ICO, I must stress that this project is conceptually, structurally and strategically different from anything that has been presented to the market so far. To start with, we do not aim to raise capital using this method, rather we distribute the coins free of charge to all new customers.

How do you plan on marketing your new coin amidst all of the hubbub that exists in the cryptocurrency industry?

The mere fact that a Swiss regulated bank is issuing its own cryptocurrency is likely to generate a lot of media buzz. Aside from that, we have a large existing client database and more than a thousand new account opening applications per day - even without a cryptocurrency in the product line. So unlike a lot of players in the cryptocurrency space, we can't be described as 'a new project.'

We also operate an extensive referral program that has proven to be very successful in the past year and this program will turn into the cornerstone of Dukascoins' distribution. On top of all that, over the years we have developed our own popular media channels. For instance, Dukascopy TV and our accounts in social networks have about 3 million subscribers.

Do you plan to list your token on any crypto exchanges?

We are considering working with independent exchanges that would want to list the Dukascoin and we aren't going to turn away any exchange that wants to work with us.

However, we are not going to rely entirely on third party solutions. We created our own marketplace that would provide a secure and convenient environment to buy and sell the tokens.

Trading with our internal marketplace is also better for clients as, through us, they can obtain a trustworthy bank statement that would be accepted by other financial institutions and official authorities.

A common problem with airdrop-type ICOs is the price stability of the coin because of constantly increasing supply. How do you plan to persuade the crypto-community that it makes sense to expect Dukascoin to increase in value?

We have prepared a set of unique instruments to support the stability of the token. For instance, there will be a special program to remunerate large providers of liquidity. Also, we will offer a system of significant rewards motivating our coins savings. Rewards will be based on both crypto and fiat currency.

Another practical measure will comprise the benefits for our brokerage clients to acquire Dukascoins and use them as collateral for trading. Last but not least there will be a limited supply of coins – new tokens will get to the market only with new clients opening current accounts at the bank. We believe that such measures should not only help to sustain the value of the Dukascoin but may also provide the fuel for steady growth.

How can I, as a potential holder of your coins make money from them outside of speculation on the exchange rate?

I should clarify here that ownership of our coins by itself will not grant any right for income or reward – we deliberately avoid any similarity to security tokens. Rather, we will focus on remunerating the active use of Dukascoins. The holders will have an option to choose between diverse programs that will form their income source. I will name just two opportunities here, though I believe that there are others.

We plan to stimulate buyers’ activity by introducing a special program of fiat (cash) reward for deposits placed in Dukascoins and kept inside the bank. The deposits will have a fixed term of one year and a cash reward of 0.5 EUR per coin will be paid at the beginning of the period. To be eligible for this offer, our client will have to obtain a certain number of coins. For the first month, the bank has set a threshold of 1000 coins. Later it is planned to increase to 5000 coins and more.

Alongside this, we also plan on propelling the buy-side liquidity of our marketplace by creating the ‘Fat Catz’ facility. This will be a revolving remuneration program for large Dukascoins holders. These large holders will get paid a variable bonus that will accumulate from the commissions charged from the sell-side. The members of our Fat Catz community will benefit from multiple other financial and non-financial bonuses.

What about the longer-term prospects for your coins? Where do you see your coin, for example, in one year’s time?

I would avoid any speculation about the future, but I personally see a comfortable price level at 10 EUR per coin. My expectations are based on the reasonable estimate of costs for account opening. I think that 50 EUR (5 coins at 10 EUR each) is good compensation for the effort required to open a Swiss bank account.

I also think that this price for the coin will satisfy the needs of us as a company and in the future it makes sense to consolidate the coin’s value at this level. My personal recommendation for those who want to better understand the plans of the bank and how to profit from them is to carefully read and analyze our white paper. This is not an ICO scam, we have put a huge amount of effort into launching this product and the white paper illustrates our thought processes, plans and the project’s infrastructure.

Speaking of infrastructure, existing banking systems are considerably different from a system that is underpinned by blockchain technology. How have you managed to make those two systems work together in unison?

It wasn’t easy, of course, as wouldn’t be any new process for any first comer. Technologically, a client who is holding Dukascoins will reside in two environments. When tokens are kept outside Dukascopy bank they conform to all the rules of blockchain – transactions there are neither immediate nor free of charge and the account is not insured, however, anyone can benefit as “a banker for themselves”.

In addition, a client can move the coins freely between the blockchain and the bank, conditional of course upon having an account with us, passing KYC and AML control and respecting the deposit limits.

Keeping the coins in our custody creates an in-balance sheet liability for the bank with all due consequences. In fact, these consequences are most attractive for the clients.

Think for yourselves – low-to-zero AML risk because all parties are identified under strict Swiss AML regulation, Swiss deposit insurance scheme covering CHF 100,000, protection against hacking or technical failures from the bank, free and immediate transfer of coins inside Dukascopy by simply knowing the receiver’s phone number and an opportunity to use standard banking infrastructure like payment cards. This is not an exhaustive list.

Lastly, why did you, as a bank decide to get involved in something as turbulent as the cryptocurrency industry?

We have a strong vision in mind that to stay afloat and remain successful in the next decade, retail banks should heavily invest and develop five main components in their infrastructure.

First and foremost, they need to have a powerful mobile app that would provide comfortable access to all banking services. Next, their mobile app has to be messenger-friendly and include modern full-scale messenger functionality. This produces a huge resource for bank-to-client and client-to-client communication and instant Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term.

Furthermore, it is essential to become equipped with AI/chat-bot technology to secure cheap and efficient servicing of customers. Another critical element is smart remote account opening framework. In a couple of years you will scarcely meet a client who would come to a bank by foot to open an account. The old approach will quickly become obsolete. Finally, banks will have to adopt crypto technology and become crypto-friendly.

Concerning Dukascopy Bank, we already have a full-scale messenger that not only includes banking services, but allows audio and video calls, sending gifts, files, etc. We have developed and constantly improve our AI/chatbot technology. Our clients work with it on a daily basis as the majority of the requests to our support are processed by bots. We have also developed our remote onboarding technology that is grounded on video identification of clients. With every update the process becomes more and more automatic. Today is Day X for another milestone – Dukascoins, which we worked so hard for. I am keeping my fingers crossed.