Rodrigo Marques is the CEO and founder of Atlas Quantum, Latin America’s largest cryptocurrency investment platform. In fact, it’s Latin America’s largest cryptocurrency company, period. And he’s on a mission to make it a top five global one by 2020.
I caught up with Rodrigo at Web Summit in Lisbon to find out more about his company, his personal take on the importance of access to financial instruments--and why he believes that Atlas Quantum can take on the world.
Blockchain Technology to Help the People
It’s easy to look at a financial services company and assume that the founders care only about creating wealth. But that’s not the case with Rodrigo. He’s a software engineer who also has a financial background, working for Brazilian banks and the Bovespa (Brazil’s stock exchange).
He got into Bitcoin all the way back in 2010 and saw an opportunity for the technology to cut out intermediaries--specifically, in the coffee production industry.
So he took his knowledge, youth, and enthusiasm and headed to Central America to tackle the seething pit of corruption in the coffee supply chain in Honduras in 2013. He set up a commodities exchange to bring transparency and fairness to the system.
“It was a huge opportunity,” he explains, eyes blazing, “there are about 100,000 families that depend on coffee production and they receive like $2 for a bag of coffee. Then there is the other side like Nestle and Starbucks that pay $20. In the middle, there are 4-5 intermediaries taking all these profits. I saw this chance to make a commodity exchange that could make it transparent for both sides so they could meet openly on this market.”
But he ran into hurdles. Namely, the fact that most of the middlemen he wanted to cut out were also criminals and cartel members.
“The plan was to make prices available in local currency, dollars, and bitcoin. But what happened is that those intermediaries that work in Honduras…” he pauses for a moment, trailing off as his eyes mist over…
“Well, they were also criminals. Some producers that sold coffee to us, to be able to sell to Nestle and Starbucks, these guys went down and burned their farms." There's a short silence again before gathers himself and says, "So it didn't work out.”
Shaken but undeterred, he returned to his homeland of Brazil to think of another way to combine his knowledge and skills. He wanted to help people with this technology. “That’s where I arrived at Atlas Quantum,” he says.
Investing, Rather Than HODLing Your Bitcoin
I ask Rodrigo to tell me a little about his company and how exactly people invest their bitcoins. He says, “We believe in making wealth through cryptocurrencies and we have two types of products. The first product is Atlas Quantum. The only way to invest is with bitcoin and when you withdraw, it is with bitcoin.
The other product that's just for Brazilians is OTC, whereby you pay with Brazilian reals and you can buy bitcoin and you can withdraw in reals or bitcoin.”
So, what about the investment strategy? How does it work?
Our main premise is that real people don't need to know exactly how finance works and they don't want to know how finance works--but they still want to have access to financial products. That’s why what we do is put all that work in the hands of specialists who really know what they're doing, so people can just invest and monitor their investment.
Under the hood, we take those bitcoins and through automated strategies, especially through arbitrage, we discover price points where it's better to sell and buy at the same time.
And this is all automated?
Yeah, every day they receive a report with their profits in bitcoin.
And their losses as well?
Well yes, it’s important to say that it's possible to lose with any kind of investment, it's not a guaranteed investment. The volatility associated with bitcoin is all part of the normalization of a still immature market. But usually, with arbitrage, it's a really safe bet and we’ve been able to provide profits again and again for almost two years.
It's also important to note here that not everyone is in agreement with Rodrigo's sentiment about arbitrage being safe. In fact, several outlets have been quick to label it a "scam." To be fair though, in the crypto world, being labeled a scam is pretty much a rite of passage.
But still. It seems that using a trading bot to crawl the spread between exchanges to ensure continued profits in a bear market is something the crypto community has heard of before. And not in a good way. Something about a company promising 50.57% returns in a year rings the alarm bells for even the rookiest of traders.
It makes them think it's a Ponzi scheme. And it makes them think of Bitconnect. Neither of these are positive associations. I called Rodrigo out on this and asked what he had to say about the accusations that his company trying to dupe investors.
"There is a lot of disinformation in the crypto space currently," he affirms, "and anyone who attempts to paint Atlas Quantum as a scam is simply uninformed. We welcome anyone with questions to reach out to us--we have conversations with clients all the time who want to learn more.
The bottom line is that crypto markets, broadly speaking, are still in their infancy and there are significant opportunities to make money right now. Our strategy of choice, high-frequency automated arbitrage, continues to generate solid returns for our investors and we have every intention of continuing to broaden our strategies and product offerings."
What Is Arbitrage?
Just in case you were reading this and wondering whether to open up Investopedia, arbitrage, in this case, is basically the simultaneous buying and selling of bitcoins in different markets that takes advantage of differing prices for the same asset. In short? Taking advantage of the spread between exchanges, buying low and selling high. Rodrigo says:
Arbitrage can work because the spread between exchanges can be very big. There are times the spread grows and reduces--that’s normal. As more money goes into the market, the more spread we see, and as the markets continue to evolve we’ll see more and more opportunity for arbitrage.
At the same time, that's not the only strategy that we are using right now. We are using artificial intelligence to make market predictions. That's a small size still but I believe that as the market matures that will be a bigger and bigger side of the business.
Who is Atlas for then? What type of customers do you attract?
So we believe that Atlas Quantum is for everybody that doesn’t want to be in traditional markets, that wants to be cooler, smarter and on the edge on innovation.
70 percent of our users made their first life investment on Quantum. We’re much easier to invest in than a traditional bank in Brazil or anywhere else in the world for a matter of fact. Our typical clients go from 20 to 45 years old, and we usually have two or three types of clients.
The first type are the new ones that want to show their parents that there's a new and smarter way to invest. The second type are the veterans that know how to invest in traditional markets and are diversifying their portfolios, and then right in the middle, we have people that are from all the market that, for the first time in their life, they have access to financial instruments. This is a big revolution for them.
And Atlas is mainly available in Brazil?
The OTC product is only for Brazilians, but we have clients in 50 countries already, most of them are in Brazil but we are planning to expand to other countries outside of Latin America as well, so for 2019, that will be our focus.
So, world expansion? What are the main challenges for you with that [besides being labeled a Ponzi scheme]?
Well, I would say the software is almost where I want it to be so a lot of the work that we have to do now is to make it available and make it so a lot of people know about it. We have a huge conversion rate. When people see it, they like it, they want it, so the challenge is to make it culturally available for each type of customer in each country that we plan to expand to in 2019.
Bitcoin is a word in the mouth of everybody especially in Brazil, so we’re reaching those customers through offline media and visual content as well, bringing awareness to the brand and helping people try the product and make it easier to invest in cryptocurrency through our platform.
What’s the situation like with banks in Brazil?
It's an evolving question and was a big question in 2018 and I believe it will still be a big question in 2019. Some banks have concerns about anti-money-laundering policies that some players in Brazil are doing. We are explaining as a whole as a market what the policies are that we are following.
Several players are following what is almost like a guideline and the government and banks need to be able to make sure that we really can know our customer and it's not possible to do money laundering through our platform.
So you have KYC?
Yes. Looking through the Atlas Quantum promotional material, flyers and the like at their stand, I see many claims that make me raise my eyebrows slightly. For example, they speak of Bitcoin being trustworthy, private, faster, seamless and stable, among other things--many of which are in dispute. So, I have to wonder, what are they comparing it to?
That's a really good question,” he says, pausing as he ponders his answer. “I mean, look at the countries in Latin America, especially Venezuela and Argentina. It’s very hard for people to move money outside of these countries and people see bitcoin as a way to protect their investments.
So it’s not just a matter of it’s faster and more stable, but making it possible for some people in some places to actually hold on to what they own, protecting their wealth.
But when we talk about faster, and stable and seamless, we come back to the same discussion of whether bitcoin is a payment method or a reserve of funds. If we are talking about a payment method, it’s important to be fast. But if it is a store of funds that doesn't matter, because that's the benefit of protecting your wealth and investing as we do.
I do believe that 2019 will see several products that will make bitcoin and other currencies easier to use as a payment method though, and it will be very interesting to see how this evolves.
Are you working just with bitcoin or other cryptocurrencies as well?
Right now we just do bitcoin, we are looking at working with other cryptocurrencies as well and working with spreads but for our customers right now only bitcoin is available. The reason for this is there is not too much pressure from our customers right now for other cryptocurrencies. I believe that they see bitcoin and an umbrella for cryptocurrencies.
"It's Impossible to Say You're 100% Secure"
What about security? Are you custodians and how do you stay one step ahead of the hackers?
It's pertinent to add here that Atlas was hacked earlier this year. While the company maintained that users' funds were safe, more than 264,000 customers had their personal information leaked, including emails, names, and phone numbers.
A company statement at the time said:
“We would like to point out that this wasn’t a bitcoin theft or a violation of our accounts in the exchanges. However, our customer base was exposed. At the time of the incident, we took immediate steps to protect the database and [the] passwords and private keys are encrypted.”
Yes, I mean even Facebook was hacked recently so it's impossible to say that you’re 100 percent secure but we have a Chief Security Officer that’s a reputable person from Brazil that oversees our operation. We work with Tempest, the biggest cybersecurity provider in Latin America and they provide security for the big banks in Brazil, and we always try to keep ahead by testing the product, again and again, to be sure that we are safe.
So, it's always a long run, right, so you have all these scripts with the product and whatever languages you develop on or operational systems… We look to patch our servers as fast as possible and to keep looking also on the dark web to see if someone is talking about us. If they are, we’re protecting it (the platform) more. So, this way we’re managing to stay one step ahead.
What about the negative side of bitcoin? The people who associate it with criminals, that point to lack of regulation, or say that it’s a bubble... what do you say to these people?
Well it's interesting, people have been saying that bitcoin was a bubble since it was in the $20-dollar price range. So, I don’t believe it's a bubble because there are actually fundamentals behind Bitcoin. Blockchain is a technology that's evolving and bringing humankind to a future that is disintermediated.
People see value in that proposition and that's a huge fundamental for bitcoin. I don't think that will burst like a bubble. In the early days, maybe some people were attracted because it was unregulated, but now, the markets are evolving to bring more money, more traditional money to this market and clear and simple regulations are required.
I think that this is the main message of Bitcoin, it’s not a finished technology, blockchain is not ready, but it’s going in the right direction.
I believe that we’re only at the beginning of this technological revolution that points us to a disintermediated future where people can have great access.
Several great players will continue to build on that premise because that's really what people want: direct access. Direct access means transparency and this can actually change people's lives.
And do you think yours is a model that can compete internationally? Where is the next market?
Well, our biggest plan is international expansion. Our customers in Brazil proved that our value proposition is worth it and we plan to bring this everywhere. Right now we are the biggest cryptocurrency company in Latin America and within two years we believe that we will be between the top five players in the world in the crypto space.
No one could say that Rodrigo Marques is a man without ambition. One can only hope that the intermediaries being cut out over the next few years won't be burning down more land--and that their arbitrage bot won't turn out to be a cousin of Bitconnect.