Editor’s Note: In our inaugural interview, CoinSnacks sat down with Clay Collins, Co-founder of Nomics, whose mission is to grow the decentralized financial system by making it accessible, useful, and understandable to investors.
The last 20-plus years have been a revolutionary time for retail investors.
So many of the resources we now take for granted are, in the big picture, effectively new. Things like live ticker pricing, access to analyst reports and, yes, even ETFs are fairly young in the long history of the markets.
But there’s one development that stands out among the crowd of life-changing improvements for investors.
It happened in 1997, and radically altered the way that most of us think about and monitor our investments.
We’re talking about the launch of Yahoo! Finance.
Granted, online stock trading had been around for about a decade by that point. The Trade*Plus retail trading platform launched on America Online and Compuserve in 1985, and one of its founders created E*Trade in 1991, followed by WealthWEB in 1994, but these were all — at first — just online versions of the traditional broker experience.
Their information platforms were still only available to clients and paying customers. Investors still had to deal with a middleman between their money and the rest of the market. And pricing was far from real-time (again, at the start).
Yahoo! Finance changed all that.
It brought free stock pricing and data to the masses.
Now investors could watch their portfolios fluctuate over the course of the trading day, making moves rapid-fire and outside of the traditional walled garden of brokerage houses.
It may not seem like much now, but the creation of Yahoo! Finance — and all of the copycat tools that came after it — played a very important role in the maturation of the market.
It leveled the playing field. Suddenly, everyone was working with the same pricing information. Data wasn’t siloed anymore. It was free, and it was universally accepted.
Clay Collins is trying to do something similar in the cryptocurrency market with Nomics, a startup that is working to grow the decentralized financial system by “making it accessible, useful and understandable to investors.”
He’s creating the Yahoo! Finance for cryptoasset investors.
In addition, Nomics aspires to be the data backbone for professional crypto investors, with an API that “archives, aggregates and analyzes both on-and off-blockchain cryptoasset data relevant to investors and traders.”
CoinSnacks sat down with Clay recently to learn more about what Nomics is working on and to get his personal take on the crypto space as of 2018. Here’s what he had to say.
CoinSnacks: Clay, it’s great to meet you. Let’s start with an easy one — what’s your background and what brought you to crypto investing?
Clay Collins: Prior to starting Nomics I co-founded a company called Leadpages, a marketing technology company. We raised $38 million in venture capital, grew that to roughly 50,000 paying customers and then when the company got to a certain size, around 100–150 employees, I had this realization that I really thrive in the 0–100 person range as a CEO. Past that, I’m just not in my sweet spot.
So I moved from CEO to chairman of the board and we hired a CEO who’s fantastic. Then I moved to start Nomics.
CoinSnacks: Tell me a little bit more about what you’re working on at Nomics and what you’re trying to accomplish.
Clay: I saw something happening in the marketing technology space when I was at Leadpages, which was that roughly every year the number of marketing technology apps was doubling, and with that came this decentralization of data about the customer.
And it got me thinking a lot about how do you deal with data when it’s so decentralized?
Fast forward to crypto and I’m seeing the same type of thing happening. As of roughly eight months ago, 10 of the exchanges were processing 50% of the volume. Now about 38 exchanges process 50% of the volume.
So you can see there’s this decentralization of data. You’ve got to collect data now from 38 exchanges instead of 10 if you want to capture what’s happening in the space.
We’re not a blockchain company, we’re not a crypto company; we are a traditional API company. We’re a data company. First and foremost what we provide is our market data API.
Eventually we’re going to open source Nomics.com in the mobile apps also that we’re producing. So if you want to create a Nomics.com plugin, you can do that.
CoinSnacks: Is part of the model simply to bring a whole lot of data together in one place and make some sense out of it?
Clay: The value is really in normalization. So what we’ve seen is that ticker symbols are inconsistent across APIs. On one exchange, one ticker might be basic token and on another it could be different coin.
On some exchanges, trades are time stamped in UTC. On other ones it’s a Korean time.
And not only are the time stamps different, but the precision is different. Some might report it to the second or the millisecond, where others are showing it with a minute time stamp.
So we’re just providing standardization on tokens, providing standardization on time stamps, providing standardization on what happens when a market goes down.
On some exchanges, when a market goes down they just persist the last candle or they’ll persist the last piece of data they have. So they’ll actually report inaccurate data either in instances where there’s no trades or in instances where their data feed is down.
They’ll just cash out and persist the last data that they have.
Or on another exchange they’ll record all zeroes. So they’ll actually say nothing happened when trades are in fact happening.
So it’s really about making sure we can interact with and process data in the same away across all these exchanges. A lot of hedge funds will hire a hotshot data scientist to find opportunities, but they’ll end up spending the majority of their time normalizing and cleaning up data as opposed to making money for the business. That’s the problem that we solve.
CoinSnacks: How are you different from something like CoinMarketCap.com?
Clay: There are several levels of differentiation, and I’ll start off with the more superficial one. We put our contact information front and center. There’s a phone number on our home page. We’re not anonymous or pseudonymous. We’re here to engage with the market, talk with customers, be present.
The second point of differentiation is that we’re transparent. We post our pricing methodology.
The third layer of differentiation is we’re ingesting raw trade data from exchanges. We don’t take people’s interpolated data. We’re not taking ticker data or candlestick data from the exchanges and just believing that they’re true. We’re ingesting the trades that they have and constructing our own candles and pricing the market according to our methodology.
I think the raw trade aspect of this is really, really important.
CoinMarketCap will give you the historic aggregated price over time. They won’t tell you the price of the Ethereum to BTC historically, and they won’t give you every single trade that happened on that market to the very beginning of that market.
We’re focused on the fidelity of the data. It’s just a much richer dataset that we have.
CoinSnacks: Explain your pricing model for us.
Clay: In short, it’s a volume-weighted sizing methodology; we price crypto assets against Ethereum, Bitcoin, and then fiat.
The way that others are pricing their crypto assets is somewhat circular. In other words, Bitcoin is priced in Ethereum, and Ethereum can be priced in 0x and 0x can be priced in Bitcoin. There’s lots of room for error there.
We take each crypto asset and we consider how that crypto asset is priced in Bitcoin and Ethereum. And then we go to fiat. And then we exit the system.
So let’s say you want to price Monero. We would only consider Monero to Bitcoin and Monero to Ethereum, and Monero to fiat for the purpose of pricing, because once you start allowing additional cryptocurrencies that don’t have sufficient volume to be the basis of pricing your cryptoassets things start getting a little bit wonky and the fluctuations of the entire space start being a real liability.
CoinSnacks: Got it. What are your thoughts on the crypto market overall right now?
Clay: I got into this at the end of 2013, and during that time the price had spiked around $1,200 and then fell back. It just took a nosedive back to the sub- $100 level and it took all of 2014, all of 2015, and all of 2016 and even the beginning of 2017 even to recover to the kind of prices we saw at the end of 2013.
So I’m just patient and I’m very awake to the possibility that we could be in a situation here where all of 2018, all of 2019, and all of 2020 could be flat. And the resurgence doesn’t happen until 2021.
I’m not going to say I’m fine with that outcome, but I’m OK. I’m in it for the long haul.
I denominate my personal finances in BTC, so I think a lot about the unit of account aspect of money. There’s cryptocurrency, or money, as a means of account, a means of exchange, and a store of value.
I think we more or less understand how to measure the store of value. Arguably that’s just market cap.
Means of exchange is potentially measured by transaction volume.
But I think the big opportunity for cryptocurrency projects and cryptocurrencies that want to grow is really around being the unit of account. That’s where there’s just so much opportunity.
Cryptocurrency dominance is not market cap dominance, so when I look at a market, what cryptocurrencies have the most markets, the most trade volumes that are like denominated in that currency?
Right now most of the trade volume is denominated in fiat. Next is Bitcoin. And next is Ethereum, and then Tether. But I think that the real “flippening” occurs when the co-currency dominance flips from fiat (that’s USD) to Bitcoin. I think that’s when we’ve come of age as a formidable force in the world, when the majority of these markets are denominated in BTC rather than USD.
CoinSnacks: You just said a word that just jumped out at me. What does “flippening” mean to you? That’s the name of your podcast, right?
Clay: Yeah, so I think most of the time when people think about flippening they’re referring to this phenomenon during 2017 where people expected the value, the market cap, of Ethereum to pass the market cap of Bitcoin. The flippening that I have in mind is where the total crypto market cap exceeds the total fiat market cap and the world essentially gets tokenized. Not hyper “bitcoinization,” but hyper “tokenization.”
I think it’s just a matter of time.
The biggest growth opportunities over the last 10–15 years have been around digitizing something, letting it hop on the back of a larger growth curve and riding that to the top.
When Instagram sold to Facebook, it was worth more than Kodak and Polaroid and all of those companies put together. Same with music, same with so many other technologies and that is happening with money and it just makes sense to have digital money.
CoinSnacks: What do you read every day? Anything in particular that’s a must see for you?
Clay: I’ve found crypto Twitter to be the perfect aggregator. There’s a list of people that I follow on Twitter that’s publicly available that’s my crypto list, so I consume that on a daily basis.
There’s Bloomberg and the Wall Street Journal that report on institutional adoption, and there are reports from individual hedge funds, but there’s really no single place to get everything other than Twitter.
CoinSnacks: Any people in particular in this space that are really worth following?
Clay: When it comes to macroeconomic trends, there’s a great podcast called the Animal Spirits Podcast. In terms of newsletters, Eric Meltzer has a great newsletter called Proof of Work that’s a report on what crypto projects are doing from the founders and operators of those projects. I really enjoy that and find that to be a great source of information.
I find that usually the best way to learn about what’s happening is not necessarily by listening to analysts but from going to conferences like the Scaling Bitcoin Conference and really interacting with the makers and builders directly. That seems to be the greatest return on investment for time spent gathering info.
Coinsnacks: Great, well thanks for talking with us today. This has been interesting and I really appreciate it.
Clay: Yeah, me too. I appreciate the opportunity. Thanks for having me.