Ben Eason
22 March '20

7 minute read

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Alex Batlin’s two-year-old FinTech start-up, Trustology, has already lured $8m in seed funding and has jaw-dropping growth potential. We speak to an entrepreneur who wants to disrupt banking’s traditional business models to find out more…

Cryptocurrency is like online dating. For some it’s alluring and full of promise; for others it’s confusing, risky and best avoided. Alex Batlin is a fan. For him, crypto assets and the system on which they’re built – blockchain – are the future. So strongly does he believe in them that he’s founded a company that relies on their global proliferation. The performance of Trustology – just two years old – suggests he’s backing an exciting horse. It has already raised $8m in seed funding. Why?

“My kids ask me what I do, and I tell them I’m the keeper of secrets,” says Alex. “But technically Trustology is known as a ‘custodial wallet provider’. We keep everyone’s crypto assets safe. How? Well, to access your crypto assets – whether they are in Bitcoin, Ethereum, security tokens or whatever – you need a ‘private cryptographic key’. Think of it as a very long password. The only way to move your virtual assets is with that private key. If you lose that key, you’ve lost your crypto assets. No key, no access – because in the decentralised world of cryptocurrency, there’s no one to call on for help. So, people have lost billions in virtual assets because they haven’t managed their private keys properly.”

Alex continues: “Traditional banks act as the custodians of assets. Trustology is the custodian of private keys. We not only keep them safe on your behalf but we also create them, manage them and back them up. We offer transaction-management services too. If you ask us to move your crypto assets, we validate your instruction and action it.”

Alex believes he’s looking at an enormous opportunity, and so do Trustology’s backers. To better understand why, let’s take a quick look at this entrepreneur’s background.

After studying computer science at Bristol University, Alex went into banking with JP Morgan and eventually joined UBS, where he spent 14 years. For five of those, he was head of UBS’s Level 39 – Europe’s largest FinTech incubator.

“At Level 39, we looked closely at what technology means for banking,” he says. “We worked with research analysts and FinTech start-ups so we could best advise UBS’s board. I saw at first-hand how technology had the power to evolve from a mere banking support function to a disruptor of banking’s business models.”

from traditional banking to virtual money built on decentralised blockchain. He explains why: “Cryptocurrency and blockchain reduce the friction of conventional banking systems. When you move money between traditional bank ‘A’ and traditional bank ‘B’ via credit card, you need two banks, a credit network such as Visa, and a payment service provider like PayPal. That’s a lot of intermediaries, and each adds cost and delay. But they are all needed because no one trusts the idea of a single world bank.”

“Blockchain is more efficient. With that, you have a single database – the Bitcoin ledger for example – which shows how many Bitcoins each ‘address’ [the blockchain equivalent of a bank account] owns. There’s one database and anyone can have a copy. So all of a sudden, you no longer need central banks, payment service providers or payment networks. You simply work on a single ledger. Everyone can trust this single ledger because they always have a local copy and a remote copy.”

The logic of using blockchain is compelling, but another reason why Trustology has lured $8m of seed funding is the rapid evolution and growth of the virtual-asset market. Once there was only Bitcoin but now there are many more including Ripple, Ethereum and Tether. However, the game-changer as Alex sees it, is the rise of virtual security tokens.

He explains: “The total crypto assets market peaked at around $800bn in 2017. Today it’s worth around $250bn. But what we’re now seeing is the tokenisation on decentralised blockchain of everything – not only currencies but fund units, real estate, artwork and commodities. Therefore, the new crypto-securities market is worth trillions and trillions.

“As soon as the world begins to tokenise everything, the security and management of private keys become vital. That’s why operators like Trustology, if we get it right, could be providing trust services that cover staggering sums of money.”

Being the provider of a virtual safe that holds the unique passwords to trillions of dollars’ worth of assets puts you in an interesting position. You are in huge demand yet also under massive pressure – a task for neither the easily stressed nor for the overly relaxed. It doesn’t take a genius to list a long set of potentially critical threats to your business; from cyber-attacks to system failures to organised crime. So how does Trustology deal with those?

“You need the right technology, the right team and the right processes,” says Alex. “It’s essential to have people who really understand not only the crypto market but the traditional market, too, because the two are blurring. And you must underpin that knowledge with superb technology. If you’re providing services akin to a global bank, you can’t have outages. If you do, people can’t buy food. So, you need highly resilient technology. Your software architecture must allow you to deploy across many different datacentres in different regions, so if one fails, traffic automatically flows to another. You must plan for worst-case scenarios. If natural disaster or war destroys some of your datacentres, you must be able to reroute traffic with no issue for the end-user.”

The substantial risks that Trustology must navigate are matched only by the enormous rewards that lie before it. If Alex is correct and crypto-assets do become as common as ten-pound notes, then he and his team are beautifully placed to grow their company into a FinTech titan.

But will human beings – even the most conservative of us – ever accept crypto as entirely trustworthy? Only time will tell. However, it’s worth remembering that in the past 20 years we’ve embraced internet banking and, more recently, contactless payments. We’re becoming ever more trusting of financial technology and, as a species, we seem to be happy to embrace change if it makes our lives more convenient.

Can crypto and decentralised blockchain pass the trust and convenience test? If they can, then Trustology is in for an incredible ride.

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