In this edition of B2C2’s client spotlight, I chatted with Lev Mazur, Founder of Quantfury, a global crypto brokerage firm. Lev provides great insight into a wide range of topics, from stablecoins, to regulation, to how crypto can give back. His unique interest in psychohistory pervades each of these topics, resulting in an incredibly interesting conversation.
Without further ado, let’s jump in!
MM: I want to talk about your interest in psychohistory. I think that’s really very different, at least from the outside, from crypto and finance. How did that interest lead you to where you are now and how do you apply those ideas to what you are doing?
Lev Mazur: I think a lot of economists take interest in the concept of psychohistory. It may not be something that the crypto space is looking at because it is so young. But, if you look at the crypto space: different foundations, the Ethereum Foundation — I think that is taken from Asimov’s book “Foundation”, where psychohistory plays a key role.
The idea of psychohistory was to predict certain events in society. If you have enough data and enough tangibles, you can really predict human behavior and the outcomes of different events. It wouldn’t just be social matters but could also be economic matters. Our economy drives a lot of our social life. I just found this concept fascinating.
I always looked at the global economy and financial markets. I understood that there are certain rules behind them that are known and have existed for a long time. They don’t change that much. If they change slightly, it still always comes down to the fundamentals. I realized that there are a few sets of tangibles, and I wanted to understand if the prediction methodology can be applied to them.
When I began my career in finance, the psychohistory concept couldn’t be applied, so I was looking for various trading strategies and trying to observe and detect patterns. As this world became more globalized and everybody gained access to financial markets, I felt that this is the time to tap into the data and make this data work for the people who really need it.
MM: That’s really interesting. You touched on how you started to try to apply psychohistory when you got into traditional finance. Are you doing that now with crypto and have you seen any similarities or differences?
LM: 100%. But first, you need to understand what Quantfury does. Quantfury is a global brokerage with 300,000+ users worldwide. Our users, or as we call them Quantfurians, trade with unmatched conditions — they don’t pay fees or any commissions of any kind, and they trade stocks, crypto pairs, ETFs, index, and commodity futures contracts at their real-time spot prices on global crypto exchanges. This allows us to have a very detailed view of the market sentiment. We take that trading data and use it internally to develop proprietary trading strategies.
In the crypto space, this methodology applies even more because a lot of people have first-hand access and are just responding to the news 24/7, rather than, let’s say, Wall Street, which is open from 9:30 to 4:00 pm. This makes the market sentiment in the crypto space unique and very detailed. We see the market sentiment and how people react to price action, and it can be predictable.
Of course, we can’t always predict the market, but we have much better visibility about things that are about to happen. We always see the inner structure of this matrix that happens around us and can study the decision-making process.
We don’t know if bitcoin will be 25k tomorrow or 55k. We do see at any given point in time the probability of where people will lean. Sometimes it happens in people’s direction, sometimes it happens against most of the people’s direction. We study the market sentiment and can predict what will happen with the market with a high degree of certainty, which makes Quantfury very efficient from the proprietary trading standpoint.
MM: So you talk about having the incentive to provide unmatched conditions and no fees, and your tagline is “Everybody’s Honest Trading & Investing.” Can you talk about that ethos?
LM: We believe that decency and dignity are crucial in today’s society. We basically say to people — statistically, you’re most likely going to lose, don’t trade. We are evil, we are just the best out of the evil.
We have a transparency mechanism that supports and validates our business model. There is a smart contract that confirms all Quantfury’s trading conditions, so it’s impossible for us to cheat our users. We publish anonymized trade data with a 30-day delay, so any user can find their trade and verify that they traded at the actual NASDAQ price, NYSE price, or Binance price at any moment in time.
We also let users participate in our business model, through the QTF token. Our philosophy is that it’s not about us, it’s about our user base. We are not innovating anything; we are just helping people do something with much better conditions than elsewhere. Hopefully, they will lose less, and that money will be used elsewhere.
Trading is a very toxic thing, because it’s very much a male-dominated field. It’s a known and proven fact that women are statistically better traders. We do a lot of things to support women. This year, we are sponsoring a women’s racing team in the W One series, which takes place together with the Formula One tour.
If we can bring some decency to the markets, that’s something which we always do. Quantfury could probably grow much faster as a company, but ethics, dignity, and doing things the right way have been important for us from the beginning.
MM: So, you’ve talked a bit about how Quantfury gives back. Can you talk on a wider scale about how you think cryptocurrency can give back socially?
LM: For me, it’s questionable whether cryptocurrency gives back to society. Everything should produce value. Bitcoin and other cryptocurrencies are no exception and have to face the question of whether they produce any true value besides being a speculative asset.
If you start questioning, the crypto community will say: “No, no, no, hold on for a second, you’re talking about value. It is the new money energy, you’re anti-Bitcoin, it’s a different type of value.” But at the end of the day, that value must be there. To me, it’s clear that cryptocurrency and Bitcoin are supposed to bring more competition to the world and give power back to the people. Over the last 20 years, the world has become much more centralized. We are seeing companies getting bigger, merging, and they create monopolies in industries that small guys cannot penetrate.
Any economy and infrastructure have the underlying payment mechanism that drives this. I saw Bitcoin as a cross-jurisdiction, cross-country, cross-company, cross-people monetary system, where everybody can transact with each other. It should eventually decentralize the regulations, create a more competitive landscape for the economy. We can finally take a lot of unnecessary bureaucracy out of the equation. For me, that always is, and was, what blockchain technology is all about.
MM: What would you say is working really well in the cryptocurrency market right now?
LM: I think stablecoins are a very interesting concept. Everybody can relate to it. It’s cool, it’s easy, it’s efficient. You have payments and the value that changes hands, which replaces the existing banking mechanism that is very outdated and inefficient. I think central banks will take it to the next level.
MM: Okay, so, El Salvador is now accepting Bitcoin as a currency. In your opinion, why wouldn’t they choose a stablecoin instead? In the future, do you see nations looking towards stablecoins versus other coins?
LM: El Salvador still has their national currency and they use Bitcoin as a legal tender. I think it’s kind of a joke, but that’s how I see it. It doesn’t make any sense to me, because if there is a government, the government must retain its own jurisdiction by creating its own budget and having its own national currency. And that means that this national currency must be controlled by that government, they have to be able to print that currency, and they have to be able to spend that currency and finance certain causes.
I realize that in El Salvador there is hyperinflation. They will try to offer Bitcoin to the population to escape the inflation of their own currency, but that’s not a solution. A government needs to spend money on building roads, supporting the social sector and the economy, and so on. If the government doesn’t have control of its own currency, it’s all over.
Stablecoins are different. If governments create their own stablecoin, then something interesting can happen. There is a public ledger, and they operate using that stablecoin. The government operations become more transparent, assuming it’s a public ledger. We can then see where the government spends money. It can create a concept of electronic money that is destined to happen for a number of reasons. For example, there is a natural disaster somewhere and the government spends $6 billion to fix things. But after that, we see that $2 billion never arrived and was spent on something else! With digital money, you can actually create money for certain spending purposes.
From the government’s perspective, it creates efficiency and fiscal accountability. Now, they print money and where does it go? Nobody really talks about that. In my opinion, that’s the future.
MM: One thing that people really like about cryptocurrency and blockchain is the decentralized aspect. And now we’re talking about the governments utilizing it. And obviously, that comes with regulation. So how do you view that kind of tension?
LM: Governments are good. The corruption in the government and abuse of power — that’s bad. A good example is Uber. They said that taxis have a monopoly on driving you. So, they set out to decentralize it: everybody can be a driver. It’s just a way more efficient supply. We know that when a company’s process is so big and so engaged with the government, and competition does not thrive, it’s bad for the economy. That’s the angle of decentralization and regulation of cryptocurrency. It’s a welcome thing.
I think we don’t need to regulate cryptocurrency itself unless it’s trading. You can regulate, to a degree, who is using it, how it’s being used, what their personal details are, things of that nature. But then there is a huge amount of trading. Many try to shy away, but it’s about regulating people who are trading and making money or losing money. Which are those marketplaces that drive that trading? They need to be regulated, 100%. A lot of them are not fair players. When the government regulates, the government protects its own citizens so that no one can take advantage of them. A good example is the United States — the best jurisdiction from a regulatory perspective with the Investment Act. That’s what we need to regulate — trading and speculation must be regulated.
MM: What would you say to anyone who’s looking to invest in cryptocurrency? What advice would you give them to start trading if you wanted them to start trading? And then how do they trade as responsibly as possible?
LM: My advice to anyone who wants to speculate on the markets is: don’t do it.
If you really want to do it, you have to do it responsibly. Don’t use significant leverage. Don’t listen to anyone. That’s just the best thing to do. Create a pattern of your decision-making. It could be based on your habits. I don’t have an exact recipe, everybody has their own strategy. From a mathematical perspective, if you trade with a certain pattern, most likely you will be able to see the mistakes you make, and unfortunately will most likely repeat them.
The most important thing is if you lose, and if you win, you have to be emotionally detached from it. It shouldn’t make your day good or bad. It’s just normal. Do it for fun, without any expectations. That is from the perspective of trading.
Investing is something different. It’s very hard for me to give good advice about investing because I invest in things that I use. I see a good product that I like, I see a company I like — I say okay, fine, I like it, let’s go.
I always ask people what they like, what they use, and why they like it. In the cryptocurrency space, it almost always has to do with financial services. Technology can help the financial services industry to do a better job. That would be something I would be looking at.
It’s challenging to invest in cryptocurrency based on a real thing that you see and you can feel in your daily life; not in that virtual life where you trade, or play games, and things of that nature. If somebody plays games and likes certain projects in the game space or NFT’s, for example, and it really speaks to them — they should invest. Whatever speaks to you and you like: buy it and hold it. Don’t pay attention to the sell-offs.
It’s challenging to invest in cryptocurrency based on a real thing that you see and you can feel in your daily life; not in that virtual life where you trade, or play games, and things of that nature. If somebody plays games and likes certain projects in the game space or NFT’s, for example, and it really speaks to them — they should invest in it. Whatever speaks to you and you like it: buy it and hold it. Don’t pay attention to the sell-offs.
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