How VALR disrupted the SA crypto market

By offering low fees, more than 50 cryptocurrencies and iron-clad security.
VALR's four co-founders were all originally part of Rand Merchant Bank’s blockchain team. Image: Chris Ratcliffe, Bloomberg

It’s been over two years since crypto exchange VALR opened its doors for business. It’s been a remarkable ride from nowhere to one of the largest crypto exchanges in SA in terms of trading volumes.

In the space of a year, its cumulative trading volume shot from R10 billion to R50 billion, but even more impressive is the growth in the customer base – up from 20 000 a year ago to over 125 000 today.

One year after it launched bitcoin-rand trading, it registered the highest trading volumes of any crypto platform in SA and the continent.

VALR was created with a simple proposition: offer the widest range of cryptos available in SA (more than 50), cut fees to the bone (and actually pay rather than charge customers who provide liquidity), and ensure the best security on the market.

None of this comes cheap. On the security side, it partnered with Bittrex, one of the world leaders in crypto security, and in July 2018 secured a $1.5 million investment from Bittrex and Michael Jordaan, the former CEO of FNB. More recently, VALR raised an additional $3.4 million from 100x Ventures and SA venture capital firm 4Di Capital, bringing the total raised to date to R79 million.

With a five-minute sign-up process, VALR pitched its offering as much to beginners as seasoned crypto investors.

VALR has worked closely with the South African regulators, playing a critical role in educating policymakers about cryptocurrencies.

The four co-founders of VALR – Farzam Ehsani, Theo Bohnen, Badi Sudhakaran and Chris Tsimogiannis – were all originally part of Rand Merchant Bank’s blockchain team.

“We founded VALR with a sense of purpose, because we really believe cryptos can make a better world. There is so much about cryptocurrencies that addresses the failings of the current financial system,” says Ehsani. “For example, the idea that it takes two to three days for a banking payment to clear is absurd. Blockchain technology on which cryptos like bitcoin are built can do this almost instantly.”

Ehsani was born in Kenya to Iranian parents and spent most of his life on the African continent before moving to study in the US at the University of California – Berkeley. He was the inaugural chair of the SA Financial Blockchain Consortium, and previously worked at Deloitte Consulting in San Francisco, then consulting firm McKinsey. A committed member of the Baha’i Faith (he worked at the Baha’i World Centre in Haifa, Israel for some time), he sees cryptos as a way to overcome national and sectarian divisions.

“But the real democratising force of cryptocurrencies is that no one has unilateral control over them, and everyone is welcome to participate.

“We are at the start of a financial revolution that will roll out over the next 10 to 20 years where humanity’s conception of money and value will drastically change,” he says.

“Few realise that Bitcoin is still undervalued. At $1 trillion it is still an order of magnitude less than gold, but is more portable and scarce. No one controls the issuance of bitcoin. There will only ever be 21 million bitcoin in issue and that explains the extraordinary price gains we have seen over the last 12 years. Bitcoin is fulfilling its purpose as a store of value or what some are calling Gold 2.0.”

This is in stark contrast to inflationary government currencies that get devalued every year through enormous money printing programmes of central banks across the world.

Referral programme

Another feature VALR introduced was a referral programme which rebates customers up to 15% of their trading fees for introducing new clients. You can also earn 10% on the fees paid by the person introduced.

Safe custody of digital assets

This may not register high on the list of concerns of those new to cryptocurrencies, but it should.

The birth of cryptocurrencies was marred by some terrible security breaches, such as Mt Gox, a Tokyo-based crypto exchange that grew into the world’s largest until it was hacked and an estimated 650 000 bitcoin (worth R481 billion today) was stolen.

VALR holds clients’ cryptocurrencies in both ‘cold storage’ and ‘hot wallets’. Cold storage refers to offline institutional vaults that are geographically-dispersed, access-controlled, and video-monitored. Hot wallets are online multi-signature wallets required to maintain operational liquidity.

Client personal and account information is encrypted both in transit and at rest, and two-factor authentication (2FA) is required as an additional layer of security by default for all critical transactions (2FA is a time-sensitive code linked to your smartphone that verifies you are the account owner before logging on). VALR requires your authorisation for all attempts to access your account from any new device or location.

Internal controls prevent any individual within VALR from single-handedly transferring cryptocurrencies. The movement of funds can only be achieved with the sign-off of multiple signatures. No cryptocurrencies are stored in VALR offices.

How to start

You can sign up at VALR.com. You will only need your ID to get going. The process will take about five minutes and then your account will be verified, at which point you will be asked to fund your account, either with rands or cryptos you already own.

For newcomers, perhaps a good place to start is buying some bitcoin (you can buy as little as R10) or Ethereum. For the more adventurous, there are more than 50 other altcoins (any cryptocurrency that is not bitcoin).

VALR has also introduced a crypto arbitrage service – VALR Arbitrage – that capitalises on the differences in local and international Bitcoin prices to give customers a legal, immediate return.

Brought to you by VALR.

Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.

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Iron-clad security, eh?
LOL!

“How VALR disrupted the SA crypto market.” – VALR

End of comments.

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