Equibit Development Corp., creator of the Equibit capital markets network, is moving ahead with its ambitious development roadmap after the successful closing of its initial coin offering in March. Christopher Donville spoke this week with EDC Chief Executive Officer Chris Horlacher about what comes next for the Toronto-based blockchain company.
Donville: EDC has lined up an impressive list of goals over the next two years. Now that the initial coin offering has closed, what’s next on your development calendar?
Horlacher: We’re on target for release of our source code at the beginning of the third quarter. We’ll be publishing two applications online and making the GitHub repositories public. One application is Equibit itself, which is the peer-to-peer network. This is the piece of software that you run in order to have a full node on the Equibit network, perform proof-of-work and earn mining rewards in turn for providing the functionality the network requires.
The other app we’ll be releasing will be the code to our web wallet, or “Portfolio”, as we’re calling it. That will be for secure key management and everything you would expect out of a wallet with a securities registration system, a passport system and your portfolio management to acquire and sell companies that are listed on the Equibit network.
Donville: How has your wallet design been influenced by the products of other software developers?
Horlacher: There are a lot of best practices set up already for wallet programs. Blockchain.info, Copay and Mycelium are all great wallets and good examples of how one can function.
Under the hood, we’re certainly looking at producing something that’s similarly secure so that you have absolute control of your assets and money. We’re also working with some designers who are really examining the whole user experience of creating your wallet, administering the security, how information is displayed to you and how you encounter it in your day-to-day use of the application.
We’re hoping to come up with some big improvements to the user experience in using cryptocurrencies because we want to make it as simple and as accessible as we can for the investing public as well as for issuing companies. We also want to be able to scale to provide professional-level wallet services where either you’re a money manager, you’re running a family office or managed accounts and you can do so and have your own client facing side for yourself. That would be the Equibit Pro app for the Supernode which we’d be targeting for the summer of 2018.
DONVILLE: What can you tell us about the planned release of EDC Funds later this year?
Horlacher: EDC is planning to create a securitization vehicle and working with a legal expert in Europe on setting this up. We’re creating a very flexible entity that’ll be able to package up mainstream companies or mainstream indices and then launch those very same investment products in an asset-backed note on the Equibit network.
That would introduce investments like the S&P 500, the Dow, Apple shares and Microsoft shares directly to Bitcoin. As companies begin populating the Equibit system with their issuances, we can then create Equibit company indices, run the assembly line in reverse and launch that as an asset-backed note on a mainstream stock exchange like in London or New York or Toronto.
DONVILLE: Would this be a first of a kind in the digital currency space?
Horlacher: Probably the closest thing we’re seeing right now in the industry would be the Mainstreet Investment fund being set up by Intellisys Capital. That’s the first attempt in a big way to bring investments other than other cryptocurrencies into Bitcoin’s reach.
DONVILLE: What have you learned from the challenges facing Intellisys that you can apply to Equibit?
Horlacher: Well, when you’re working in finance, the number-one thing is: compliance, compliance, compliance. They’re setting it up on the Ethereum blockchain, so it depends on the contract you’re using. And does it also provide for compliance, whether that comes in the form of a transfer restriction or some other way? It also has a lot to do with your regional securities laws and ensuring that you filed the right documents when you’re selling equity, etc.
Equibit is built purposely for the securities industry and is set up with its own compliance system. So if the Mainstreet fund succeeds, they’re welcome to try operating on Equibit. They’ll find that it works great and is certainly going to help them in a lot of ways.
DONVILLE: How important is securitization for the long-term success of Equibit?
Horlacher: It’s providing value, not only to investors, but it makes the system itself attractive to even more investors because Equibit is, without issuances on the system, like having a big, empty department store. So by introducing investment products into the network we will increase the attractiveness of Equibit for other people to introduce securities when they see that we have a very simple, easy-to-use direct registration system.
DONVILLE: Can you elaborate on the upcoming release of the Equibit Pro app?
Horlacher: This application is made more for the asset-management community. It’s specifically designed for full-service brokerages, family offices, fund managers, or trust companies. Any instance where somebody else other than the owner is administering what goes on in the accounts. So this will allow businesses such as these to set up their own internal structure and have user rules and restrictions assigned accordingly.
It will also have a client-facing end where, or course, their clients could log in and see their accounts and what trades have taken place since the last checkup. It will show their account statements and everything that someone who is in that business is going to need in order to take care of their clients and administer those assets.
DONVILLE: To what extent are you working with fund managers to address their specific needs?
Horlacher: I have firsthand experience working with the software in that industry and certainly a lot of the feedback I get from people who are moving up in the financial world are common complaints about the quality of software and user interfaces. Everything is dated and written in very old languages. Which is not necessarily a bad thing, but it does make finding talent harder and harder as the knowledge base and support for those languages dwindles. Where we can improve things the most in the financial industry is in better interfaces. This is something I’ve heard for many years now.
DONVILLE: At the far end of your roadmap in the fourth quarter of 2018 is your plan to launch an ASIC miner. For the uninitiated, what is an “ASIC miner”?
Horlacher: ASIC stands for Application Specific Integrated Circuits. It’s basically a computer chip that can only do one type of calculation. We’re familiar with chips like the Intel i7, for example, that can do all kinds of different calculations. But it can’t do all of them as fast as a chip that’s specialized in doing only one kind of calculation. That’s where an ASIC comes in.
In many cases an ASIC can perform these calculations several orders of magnitude faster than your average CPU or GPUs, the graphics processors used in today’s high-end video cards. A GPU is just another example of hardware that’s been tailored to do a more specialized set of calculations. The ASICs provide computational power to secure the network and earn a reward. It’s a game of pure horsepower and so if you’re providing ten percent of the hashing power of the network, you get approximately ten percent of all the block rewards. There are transaction fees on top of that and lately transaction fees have been going up. You want to be as efficient as possible when you’re mining and ASICs give you far more hashing power for your electrical dollar.
DONVILLE: How does your plan to create an ASIC miner fit into the Equibit story?
Horlacher: The ASIC miner is part of our long-term strategy. It may happen. We hope it does since it would mean EDC can then get into the mining business. That can come in a number of different forms. We can register the IP on the chip itself so we become sort of like the Intel of ASICs for the Equibit network or we just license those designs rather than building the miner itself or anything in between, really. So, we’ll figure out the best way to go as we do that.
The first step will be in developing our first in-house ASIC for the hash that we put in Equibit. So we’re very interested in this. The Bitcoin mining space is becoming a very big industry. There’s over $2 million a day that’s up for grabs with all of the increases in the Bitcoin price lately. This is a highly lucrative component of the cryptocurrency industry. If you’ve got a blockchain that’s going to be economic for an ASIC to be working there on the network there’s really no way to stop that from happening. Of course, we’ve had a couple of different hashes that have been out -- Scrypt is one, which was used by Litecoin. X11 was another one. Both of these hashes were marketed as ASIC-proof or ASIC-resistant at least. And yet, here we are today and there are ASIC chips for both of these hashes now. So if Equibit is successful it’s going to be economical to have an ASIC for it as well. As the creators of this system, we hope it does become successful so we can take on that project.
DONVILLE: What is beyond your published timeline?
Horlacher: After that it is just grow, grow, grow. At that point in late 2018 we will have a fantastic product lineup, things that cater to every corner of the market. We’ve got our applications and products for miners, individuals and for industry. Our biggest challenge at that point will be to grow and introduce these solutions to more markets and reach out globally.
Christopher Donville is a journalist and communicator. For more than 20 years he reported and edited in North America and Asia for Bloomberg News, one of the world’s most respected news agencies. Most recently, he was the company’s Vancouver Bureau Chief, responsible for coverage of B.C. business, politics and the economy. Prior to Bloomberg, he was a Calgary-based staff correspondent with the Globe and Mail and a successful freelance writer and broadcaster in Southeast Asia. He has a degree in Political Science from the University of Calgary.