While Luno was born here in South Africa, the firm has grown in the last year to service a number of other markets including the UK and parts of the Asia-Pacific region.
Last year over one million customers were using Luno as a wallet or a way to trade Bitcoin on the Luno exchange.
To find out more about the service we sat down with Luno co-founder Marcus Swanepoel at Blockchain Africa Conference 2018 last week to chat about South Africa’s biggest cryptocurrency platform.
Humble, hardworking beginnings
The co-founder tells us that back when BitX was founded everything was done manually. Customers that signed up in the early days of the website will find it interesting to know that their information was verified by a member of the original team, possibly by the founders themselves instead of a machine making a call to a database.
“When somebody would make a deposit we would just allocate it manually,” Swanepoel tells us.
“It was difficult to get the basic stuff going but it wasn’t a problem. Where it became difficult is when there were a lot more customers and we had to scale our systems.”
From there the team decided automation was the answer and so automation was implemented for identity verification and the movement of funds.
While building its own systems up the firm started to build software for banks and Swanepoel tells us that this is where the firm learned the most valuable lesson it could – compliance.
The only real currency – trust
Banks and financial institutions bear the burden of having to comply with various rules and regulations. These rules are designed to protect customers and insure that there is a base of trust. Banks could store your money and demand massive (more massive than they are now) fees to withdraw it but thanks to regulations this is not the case.
Cryptocurrency exchanges are not beholden to those rules and regulations but Swanepoel tells us that Luno opted to implement the procedures it learned while working with regulators and compliance officers at banks.
“We self regulate partly because we anticipate that we will get regulated and partly because we believe it’s the right thing to do. We want to make sure that there aren’t any money launderers or terrorist funding that comes through the platform,” says Swanepoel.
In the absence of regulation then Luno wants to build trust with its users and use that as its unique selling point in a time where slapping “crypto exchange” into a search engine will net you a bevy of results – scams included.
The firm conducts third-party audits to make sure that it is compliant, it has several backup servers across multiple countries all for the benefit of the user.
Naturally this has the knock on effect of more people using the service which benefits Luno but then your bank benefits from your business because you trust your money is safe with them. Yes there are other factors to consider but ask yourself how willing you would be to put your monthly salary into a bank that was not compliant with regulations.
Chances are you would not use that bank, so why use a cryptocurrency exchange that hasn’t proved to you that it can be trusted?
“I think regulation is important because it will force people to play at a certain bar and it will help the overall perception of the cryptocurrency industry,” says Swanepoel.
Regulation could help everyday citizens get on board with the idea of decentralised currency because right now if an exchange gets hacked or decides to run off with your money you have little to no recourse.
Where is Dogecoin?
Luno’s two main currencies are Bitcoin and Ethereum there are 1560 cryptocurrencies being traded on exchanges around the world right now with an estimated value of $363 billion.
We wondered whether supporting all of these currencies meant a lot of hard work for Luno but Swanepoel tells us it wouldn’t really be all that tricky.
“The way our system is set up we could add many new cryptocurrencies all at once. We could triple our revenue if we just added 20 different coins but what we’re trying to do is build a trusted brand,” the co-founder tells us.
“People can come to us and learn more about this technology. We’re not trying to rip people off, we’re trying to look after them. I could say that “Oh I can’t tell you what to do with your money” but I don’t think that’s right because most people don’t actually know what they’re doing,” Swanepoel says.
Luno does extensive research before allowing a currency on its platform including finding out about the creators, the purpose of the coin and other nuances that might negatively affect a user’s experience while using Luno.
“It’s important for us to curate currencies because people could potentially lose a lot if a currency is found to be a scam and we don’t want to be responsible for that.”
“Sometimes we do make a mistake in the other direction and support a currency too late but I’d rather err on the side of caution,” adds Swanepoel.
The future for Luno is very much a case of streamlining its services, building trust and most importantly education.
It’s clear at the end of chat that Swanepoel wants to help people understand not just cryptocurrency but the basics of money.
“There’s a lot of work to do at the base level and once we’re done getting that right we’ll consider expanding,” says Swanepoel.