Crypto.com is a cryptocurrency exchange app founded in Singapore by Bobby Bao, Gary Or, Kris Marszalek, and Rafael Melo.The company was founded on the belief that consumers have a basic human right to control their money, data, and identity.
Crypto.com makes money via debit card interchange fees and maker-taker fees that it collects for matching buyers with sellers.
Crypto.com also collects loan interest and charges two different sales fees in its NFT marketplace. Through Crypto.com Capital, the company also makes money by investing in emerging start-ups and selling its stake for a profit.
Crypto.com is a cryptocurrency exchange app founded in Singapore by Bobby Bao, Gary Or, Kris Marszalek, and Rafael Melo.
In a 2020 interview by FinTech Magazine, CEO Kris Marszalek gave the following reasons for the creation of the trading platform:
“Crypto.com was founded on one belief: that it’s your basic human right to control your money, data, and identity. By harnessing the technology of blockchain and cryptocurrencies built on it, we can democratise finance and bring much needed transparency to banking systems, shifting the balance of power back to individuals and away from society’s most powerful institutions.”
The company was initially founded as Monaco in 2016, with plans to offer a Visa debit card where transactions were settled using a native currency called MCO.
The company secured a $26.7 million round of funding and signed deals with exchanges such as Binance and Bittrex to give it more exposure.
Though a functioning product was yet to be released, the company also managed to secure approval from financial regulators in Singapore in November 2017.
Three months later, the rebranded company shipped the first cards to Singaporean customers with regulatory approval then coming from the United States.
Native token CRO was released around the same time, which to some extent helped the platform surpass 1 million users by September 2019.
Rapid growth ensued after the platform offered derivatives trading and expanded into 31 European countries.
Crypot.com then acquired Australian fintech company The Card Group to secure a license to operate in that country, with an NFT marketplace unveiled in March 2021.
Additional new features included a free tax filing tool for crypto traders and a start-up fund dedicated to investing in crypto start-ups.
Crypto.com makes money via interchange fees, various trading fees, loan interest, NFT sales fees, and investment capital gains.
Below is a general look at the multi-dimensional revenue generation strategy of this private company.
Interchange fees
The Crypto.com branded debit card gives users access to various perks, including cashback rewards, cheaper subscriptions to Spotify and Netflix, and access to premium airport lounges, among other things.
The company makes money on interchange fees which are paid by the merchant to the card-issuing bank to cover the cost of facilitating the transaction. The fee is usually around 1% and is split between Visa and Crypto.com.
Trading fees
Like many cryptocurrency exchanges, Crypto.com works on the maker-taker trading fee structure.
Makers create buy or sell orders that are not carried out immediately, which increases liquidity when certain price conditions are met.
Those who do buy and sell instantly are called takers, who fill the orders created by the makers.
Crypto.com makes money by charging trading fees for matching buyers with sellers. Makers tend to be charged lower fees than takers because they are adding liquidity to the exchange.
Having said that, any trader can receive a discount on trading fees if they stake more of the native coin CRO or execute more trades.
The company also charges withdrawal fees, with the exact fee reliant on the destination of the funds and the type of currency withdrawn.
Loan interest
Crypto.com also offers margin loans to traders and more general loans to any account holder using the branded debit card.
Loan collateral can take the form of CRO, BTC, or ETH and the loan itself can be issued in either USDC, USDT, TUSD, or PAX.
The company collects interest on these loans according to the total loan amount and other factors such as the amount of staked CRO and the collateral provided.
NFT sales
Crypto.com operates an NFT marketplace where users can buy, sell, display, and even create NFTs.
For every NFT sale, the company charges creators a 15% fee. Sellers involved in secondary NFT sales are also charged a 5% processing fee to cover the operational costs of the marketplace.
Investment capital gains
In March 2021, the company launched Crypto.com Capital, a $200 million venture capital fund dedicated to investing in crypto start-ups at the seed and Series A stage.
Similar funds have been launched by competitors such as Binance and Coinbase to realize capital gains in emerging companies.
However, this strategy also gives the investing company access to private data that is used to guide future business direction and product development.
Web3 describes a version of the internet where data will be interconnected in a decentralized way. Web3 is an umbrella that comprises various fields like semantic web, AR/VR, AI at scale, blockchain technologies, and decentralization. The core idea of Web3 moves along the lines of enabling decentralized ownership on the web.
A blockchain protocol is a set of underlying rules that define how a blockchain will work. Based on the underlying rules of the protocol it’s possible to build a business ecosystem. Usually, protocol’s rules comprise everything from how tokens can be issued, how value is created, and how interactions happen on top of the protocol.
In software engineering, a fork consists of a “split” of a project, as developers take the source code to start independently developing on it. Software protocols (the set of rules underlying the software) usually fork as a group decision-making process. All developers have to agree on the new course and direction of the software protocol. A fork can be “soft” when an alteration to the software protocol keeps it backward compatible or “hard” where a divergence of the new chain is permanent. Forks are critical to the development and evolution of Blockchain protocols.
A Merkle tree is a data structure encoding blockchain data more efficiently and securely. The Merkle tree is one of the foundational components of a Blockchain protocol.
The nothing-at-stake problem argues that validators on a blockchain with a financial incentive to mine on each fork are disruptive to consensus. Potentially, this makes the system more vulnerable to attack. This is a key problem that makes possible underlying blockchain protocols, based on core mechanisms like a proof-of-stake consensus, a key consensus system, that together the proof-of-work make up key protocols like Bitcoin and Ethereum.
A 51% Attack is an attack on the blockchain network by an entity or organization. The primary goal of such an attack is the exclusion or modification of blockchain transactions. A 51% attack is carried out by a miner or group of miners endeavoring to control more than half of a network’s mining power, hash rate, or computing power. For this reason, it is sometimes called a majority attack. This can corrupt a blockchain protocol that malicious attackers would take over.
A Proof of Work is a form of consensus algorithm used to achieve agreement across a distributed network. In a Proof of Work, miners compete to complete transactions on the network, by commuting hard mathematical problems (i.e. hashes functions) and as a result they get rewarded in coins.
An Application Binary Interface (ABI) is the interface between two binary program modules that work together. An ABI is a contract between pieces of binary code defining the mechanisms by which functions are invoked and how parameters are passed between the caller and callee. ABIs have become critical in the development of applications leveraging smart contracts, on Blockchain protocols like Ethereum.
A Proof of Stake (PoS) is a form of consensus algorithm used to achieve agreement across a distributed network. As such it is, together with Proof of Work, among the key consensus algorithms for Blockchain protocols (like the Ethereum’s Casper protocol). Proof of Stake has the advantage of security, reduced risk of centralization, and energy efficiency.
Proof-of-Activity (PoA) is a blockchain consensus algorithm that facilitates genuine transactions and consensus amongst miners. That is a consensus algorithm combining proof-of-work and proof-of-stake. This consensus algorithm is designed to prevent attacks on the underlying Blockchain.
According to Joel Monegro, a former analyst at USV (a venture capital firm) the blockchain implies value creation in its protocols. Where the web has allowed the value to be captured at the applications layer (take Facebook, Twitter, Google, and many others). In a Blockchain Economy, this value might be captured by the protocols at the base of the blockchain (for instance Bitcoin and Ethereum).
A Blockchain Business Model is made of four main components: Value Model (Core Philosophy, Core Value and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
Blockchain companies use sharding to partition databases and increase scalability, allowing them to process more transactions per second. Sharding is a key mechanism underneath the Ethereum Blockchain and one of its critical components. Indeed, sharding enables Blockchain protocols to overcome the Scalability Trilemma (as a Blockchain grows, it stays scalable, secure, and decentralized).
A decentralized autonomous organization (DAO) operates autonomously on blockchain protocol under rules governed by smart contracts. DAO is among the most important innovations that Blockchain has brought to the business world, which can create “super entities” or large entities that do not have a central authority but are instead managed in a decentralized manner.
Smart contracts are protocols designed to facilitate, verify, or enforce digital contracts without the need for a credible third party. These contracts work on an “if/when-then” principle and have some similarities to modern escrow services but without a third party involved in guaranteeing the transaction. Instead, it uses blockchain technology to verify the information and increase trust between the transaction participants.
Non-fungible tokens (NFTs) are cryptographic tokens that represent something unique. Non-fungible assets are those that are not mutually interchangeable. Non-fungible tokens contain identifying information that makes them unique. Unlike Bitcoin – which has a supply of 21 million identical coins – they cannot be exchanged like for like.
Decentralized finance (DeFi) refers to an ecosystem of financial products that do not rely on traditional financial intermediaries such as banks and exchanges. Central to the success of decentralized finance is smart contracts, which are deployed on Ethereum (contracts that two parties can deploy without an intermediary). DeFi also gave rise to dApps (decentralized apps), giving developers the ability to build applications on top of the Ethereum blockchain.
The history of Bitcoin starts before the 2008 White Paper by Satoshi Nakamoto. In 1989 first and 1991, David Chaum created DigiCash, and various cryptographers tried to solve the “double spending” problem. By 1998 Nick Szabo began working on a decentralized digital currency called “bit gold.” By 2008 the Bitcoin White Paper got published. And from there, by 2014, the Blockchain 2.0 (beyond the money use case) sprouted out.
An altcoin is a general term describing any cryptocurrency other than Bitcoin. Indeed, as Bitcoin started to evolve since its inception, back in 2009, many other cryptocurrencies sprouted due to philosophical differences with the Bitcoin protocol but also to cover wider use cases that the Bitcoin protocol could enable.
Ethereum was launched in 2015 with its cryptocurrency, Ether, as an open-source, blockchain-based, decentralized platform software. Smart contracts are enabled, and Distributed Applications (dApps) get built without downtime or third-party disturbance. It also helps developers build and publish applications as it is also a programming language running on a blockchain.
An imaginary flywheel of the development of a crypto ecosystem, and more, in particular, the Ethereum ecosystem. As developers join in and the community strengthens, more use cases are built, which attract more and more users. As users grow exponentially, businesses become interested in the underlying ecosystem, thus investing more in it. These resources are invested back in the protocol to make it more scalable, thus reducing gas fees for developers and users, facilitating the adoption of the whole business platform.
Solana is a blockchain network with a focus on high performance and rapid transactions. To boost speed, it employs a one-of-a-kind approach to transaction sequencing. Users can use SOL, the network’s native cryptocurrency, to cover transaction costs and engage with smart contracts.
In essence, Polkadot is a cryptocurrency project created as an effort to transform and power a decentralized internet, Web 3.0, in the future. Polkadot is a decentralized platform, which makes it interoperable with other blockchains.
Launched in October 2020, Filecoin protocol is based on a “useful work” consensus, where the miners are rewarded as they perform useful work for the network (provide storage and retrieve data). Filecoin (⨎) is an open-source, public cryptocurrency and digital payment system. Built on the InterPlanetary File System.
BAT or Basic Attention Token is a utility token aiming to provide privacy-based web tools for advertisers and users to monetize attention on the web in a decentralized way via Blockchain-based technologies. Therefore, the BAT ecosystem moves around a browser (Brave), a privacy-based search engine (Brave Search), and a utility token (BAT). Users can opt-in to advertising, thus making money based on their attention to ads as they browse the web.
Uniswap is a renowned decentralized crypto exchange created in 2018 and based on the Ethereum blockchain, to provide liquidity to the system. As a cryptocurrency exchange technology that operates on a decentralized basis. The Uniswap protocol inherited its namesake from the business that created it — Uniswap. Through smart contracts, the Uniswap protocol automates transactions between cryptocurrency tokens on the Ethereum blockchain.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
