As millennials and GenZ look to newer modes of wealth creation, fintech is experimenting in the similar domain to cash in on the demographic. Hence, hail the rise of cryptocurrency, NFTs. Once regarded (and still continues to enjoy the status, though) as a revolution in fintech and also adding to the rebellious image of the generation of not conforming to the traditional institutions and expanding it to the wealth creation.
Now the same entities have also had a true roller coaster journey of lows: investigations into alleged money laundering activities, regulatory instabilities and clampdowns; and the highs including financial backing in terms of funding, adoption as legal currencies and widespread momentum in adoption by their target demographics irrespective of the lows. But what can’t be denied is the market is booming, courtesy the unprecedented demand.
And riding one such high is Ethereum scaling platform Polygon. The blockchain startup, initially known as Matic Network, recently landed investment from tech billionaire and investor, Mark Cuban. Founded by Jaynti Kanani, Sandeep Nailwal and Anurag Arjun, Polygon aims to navigate the limitations of low throughput, poor UX and lack of sovereignty associated with Ethereum ecosystem, with a framework that would not only connect the Ethereum-compatible blockchain networks but also be home to a security as a service option.
In a freewheeling conversation with DQ DeepTech, Sandeep Nailwal speaks about cashing in on the NFT trend, regulatory instabilities and its effect on the startups like Polygon and competitive advantage in a fintech ecosystem.
How are you cashing in on the NFT trend?
Polygon when looked from the NFT side is by far the biggest platform. Also, we have integration with the top blockchain NFT infrastructure applications like OpenSea and many NFT Wallets. This NFT buzz is getting more and more developers to develop these applications which is definitely helpful for us as it is increasing our adoption to some extent.
What developments are you are working on currently?
Polygon is an infrastructure company. Our job is to provide the infrastructure at a fundamental level- to create/provide developers the friendly environment where they can build these applications in a smooth way and then take it out to their end users.
We have launched a lot of integrations with the credit card & debit card providers, etc. If you are building an NFT application, Rario, for instance—which is launching cricket NFT cards—people can come on Polygon, swipe their card and buy some NFTs for the on-going matches. Our job is limited to this, we provide the infrastructure. After that, the developers build these applications.
What is your competitive advantage?
We have always had competitive advantages.
Scaling: The key advantage is the scaling benefits we have- as these games need a much larger scale.
Developer friendly: The next one is our focus on developer experience. We try to make it as easy as possible for any of the developers to build easily on Polygon.
Production ready: According to the industry our tooling is said to be one of the most- production ready blockchain as it includes the tooling support.
We have a Polygon investor network, there we broadcast whichever projects are building on Polygon to this venture network and from there automatically they get in touch with some bigger investors.
What is your take on the regulatory instability in terms of Blockchain, Crypto and FinTech Management? How is it affecting you and what you see in the future regarding this?
Definitely, a level of uncertainty affects us because a lot of entrepreneurs are moving out of India and in this Blockchain space- the “Brain Drain” is very easy. You are not building the solution for Indian customers.
For instance, it is very different from building Flipkart which is making physical deliveries but here you are building a completely digitized system. So, as an entrepreneur it takes you only two-three hours to take a flight and be out of India and work from abroad.
People like to travel around so a lot of developers have moved out of India and they are working from there. The Indian government needs to realise that it is already very easy for anyone to move out of India and with this kind of uncertainty, it makes it an extremely difficult proposition for any blockchain entrepreneur to stay in India.
Where are we heading with the crackdowns on money laundering and improper KYCs? And how can they be brought under control?
The next step for crypto is to become more regulated, with governments allowing floodgates of their financial system to come into crypto. For that, there will be a transition period which will be painful. This strongly concludes that previously people of some other exchanges used to think that they can bypass but now finance also has to comply with all these things.
Anybody new coming into the ecosystem is very clear about complying with the KYC and other critical requirements. It is all moving into the right direction as people are not unhappy with it; rather they are assertive about how things are moving and eventually this is helping them to get the official licensing. Slowly, they are now getting those licenses and they can go in many of those geographies.
Did you think of any action plan as soon as you found out that there are gaps in the system? Or was it fail-proof that you didn’t have to worry about it?
If you see, I know almost 90 percent of all the applications or the developers who are building some product or startups in crypto space, they are connected with me in some or the other way. And I don’t know even a single startup who has been served notice from the government. Our government is handling this thing nicely, where they are not hurting any kind of innovation.
All that you see in the news is about exchanges and it is the right thing to do because these exchanges now have a billion dollars volume from India. And all the problems of capital flight and AML, even retail, have a big tendency of getting fooled into vague investment schemes. So, the government has to protect retail.
What is its future and the challenges?
Skill shortage is there but it is not a big issue. Because India has a huge factory of developers. The number of developers that we have is more than the population of many small European countries. We are the software factory of the world. More and more people are getting interested and attracted to this technology and they want to build these solutions.
But uncertainty is a big problem. There have been scenarios where we liked a developer, gave him a nice offer but in India we still have a lot of “Sharma ji ka ladka(s)”. So they would discuss with someone in the family and they give them all the wrong advice. They tell them that Crypto could be really problematic and could involve legalities, etc. This brings down the developer’s confidence and he denies the offer.
Polygon or any other company in the crypto domain might have the same viewpoint on this. I had a tough time dealing with these kinds of situations and the stigma that people have about it. Though it is not that big of an issue but we need to work very hard as a country. Otherwise, we would lag behind in this technology.