Bitcoin Market Founder Will Compete With Bitcoin Market

In 2019, entrepreneur Rodrigo Batista sold his stake in Mercado Bitcoin, a virtual currency exchange he co-founded in 2013 alongside brothers Gustavo and Maurício Chamati. Since then, he has been involved in different projects. From a digital insurance company to a stock exchange for startups.

In recent months, however, his focus has shifted to the cryptocurrency market with Digitra.com. After raising, in May of this year, a contribution of US$ 5 million with Profitus Participações, an investment company owned by Ricardo Vilella Marino, heir to Itaú and partner in the holding company that controls the bank, Batista will place, in the coming weeks, his new air operation.

And, irony of ironies, its second exchange, which was born to face global giants like Binance and FTX, will also compete with the Bitcoin Market in Brazil. “I always thought that the crypto market would be dominated by companies with global solutions,” says Batista in an interview with NeoFeed.

Still under construction, Digitra.com is betting on this thesis because it will be open to customers from all over the world. Still offline for negotiations, the platform is already allowing users to register and has received registrations from countries such as Portugal, Ukraine and Argentina, in addition to Brazil.

The expectation is that the business conquers 1 million customers in the first 12 months of operation. The target is aggressive. On the other hand, if it is still far from the 28.5 million Binance users registered until October last year, the first million registered accounts would put Digitra.com in a fierce fight in Brazil.

The Bitcoin Market has 3.8 million accounts, while Foxbit ended last year with “nearly a million customers”, according to data from the companies themselves. In international competition, the dispute would also be more level against FTX, whose American operation has 1.2 million users.

Gaining scale is essential for Digitra’s business to succeed. That’s because the company’s strategy is to zero the fees for buying and selling coins within its platform. The plan follows a trend in the market, which has already been reducing rates in recent years, in a movement that began to gain traction with Binance and that was followed by other exchanges.

“I saw that the companies’ business model would change because rates were falling”, says Batista. He says that the Bitcoin Market even charged 4.5% per transaction made. Currently, the Brazilian exchange charges 0.3% to anyone who is sending an order to buy or sell a crypto asset. Binance, in turn, works with a lower rate: 0.1%.

The decrease in these rates can only be made possible when a company has enough scale for the account to close with lower margins. In addition, of course, to having a structure that allows the operation to obtain revenue from other sources. The Bitcoin Market, for example, already operates with NFTs and Fan Tokens, financial products, will create an exchange for startups and seeks to become a Payment Institution.

Without this source of income, Digitra.com wants to generate revenue from other services within its platform, which includes offering financial products such as derivatives and options. If it scales, it will have a sufficiently large base to support its operation.

On another front, the exchange will also operate with a division aimed at customers with larger tickets – an average of BRL 300,000. The “wealth solution” started operating in November last year and already has around 200 clients. “These are family offices that look to crypto in search of a more structured investment and with options to carry out ETFs”, says Batista. “Demand is lower, but more personal.”

About other forms of income, Batista says that nothing is written in stone. Which means that the service can change its operating model over the years to, for example, charge a monthly subscription that allows users to transact and carry out different operations in an unlimited way. This plan, however, is still being studied.

To attract customers, Digitra bets on the use of tokens – which are different from digital currencies. These tokens are given to users who register and carry out operations within the platform as a form of remuneration (with no monetary value, at the beginning) for using the platform. “I reverse the logic of the exchange market”, explains Batista. “The client is paid to operate.”

300 million tokens will be created under the acronym DGTA and which are transacted from the Stellar network blockchain. These tokens guarantee benefits for users, such as discounts on fees applied to some of the most robust transactions on the platform and exclusive advantages such as early access to new functions. In the future, these tokens may be traded.

The model can be called trade to earn (trade to win, in the literal translation). The format is similar to that adopted by virtual game companies that remunerate users based on actions they perform – hence the term play to earn (play to win, in Portuguese). Socios.com, which works with fan tokens of football clubs and other sports, follows this line with its own token.

busy market

For now, Digitra focuses its attention on launching the platform. Initially the operation goes live enabling transactions between bitcoin and ether with parity to the dollar. The idea is to have 50 “pairs” of virtual currencies by the end of the year and 200 at the end of the 12-month period.

To bring new coins into the platform, the company is using part of the investment received. The value, by the way, is much lower than what rival companies, already much more established, captured recently.

Last year, Bitcoin Market raised $200 million and was valued at $2.1 billion. This year, FTX raised US$ 400 million in an investment that included investors such as Softbank and Temasek and was valued at US$ 8.5 billion. Binance, meanwhile, is already valued at $43.7 billion. Another rival, Coinbase is worth $15.4 billion.

Batista says he intends to seek other investments. “We want to seek more capital, but we understand that the market is more challenging,” he says. “The money exists, but investors are more selective and want businesses that have proven themselves. At some point, the funds will need to allocate the money and we will have already done that.”

Attracting new investors can also be complicated by the market’s momentum. Digitra.com arrives as cryptocurrencies face an all-time low. At the end of last year, with the sharp drop in the prices of the main virtual currencies, investors who bet on the segment even coined the term “crypto winter”.

Batista, however, expects the sector to recover and says that the current asset price does not negatively affect its operation. “I believe that it is easier to found a company in a low moment than in a high one, as long as the operation has the capital to support this period”, he says. “This bearish moment puts aside the rush dictated by prices and short-term pressures.”

The cryptocurrency market presents different numbers. Between November of last year and the end of June of this year, the price of the main virtual currencies plummeted. Bitcoin, for example, has dropped from $65,000 to less than $20,000. A survey by the company Crypto.com, meanwhile, estimates that the number of cryptocurrency users will increase from 295 million to more than 1 billion by the end of this year.

Brazil also presents promising numbers for entrepreneurs in the sector. The segment moved R$ 300 billion last year, according to data from the Central Bank. For comparison purposes, this amount represents half of the amount traded in shares, funds, BDRs and ETFs on B3 during the same period and 27% funds deposited in savings, according to Anbima.

Source: Neofeed