XS2, a platform to trade and store cryptocurrencies feels like a fresh breeze amidst the cliché crypto exchanges you see all over the place. It has a much more straightforward and beginner-friendly user-interface, some really cool features and positive outlook towards building customer transparency. We recently had an opportunity to interview its CEO Bart Jellema.
Q: What's the story behind the name XS2?
XS2 is an abbreviation sounding like 'access to.' We provide easy 'access to' crypto.
Q: XS2 has a unique security feature called XSKeys. Can you explain what it is and why was it introduced?
When we designed our user security, we realized we had to accept the facts that:
People have weak passwords
People lose their phones all the time
Keeping this in mind, the common 2FA system isn't a perfect one. It doesn't provide much security against phishing attacks and creates a support nightmare for both the exchange and the customer when phones are lost.
This is why we introduced the XSKey system. When you first sign up, the device you use has your XSKey, which allows you to trade and withdraw. When you want to enable the second device, you authorize it from the first one (or any that has your XSKey). So unless an attacker has actual full access to a device with your XSKey, your account is safe. This makes phishing attacks pointless. Password hacks and email account hacks only allow the attacker to see your account, but not to trade or withdraw. So with XSKeys, we provide a higher level of security, with a better user experience for our customers.
Q: The website depicts that user's funds are stored in cold storage. This increases the security but how the exchange handle active trades/withdrawals in this case?
In the short term, withdrawals are only processed manually. With the string of exchange hacks over the last year, it is clear that the model most exchanges follow doesn't provide the required security. In the medium term, we aim to use our own funds to load a hot wallet. This way, 100% of our customer's funds are always in cold storage, while also supporting fast withdrawals (limited to the size of the hot wallet). If the hot wallet is compromised, we lose company funds, but never customer funds. We believe this should be the industry standard and leaving your customer's funds connected to the internet is irresponsible. Trading is unaffected by this. Our customers can freely trade their funds at any time.
Q: How does XS2 maintain transparency with the traders?
We provide proof of solvency of the exchange; this proves the total of our customer's balances as well as that we hold those funds. As far as we have found, CoinFloor in the UK and us are the only exchanges currently providing this level of transparency.
Furthermore, we're an Australian based company and our registration can be found here. We are a private company and the only stakeholders are the founders. We are easy to reach, and if any traders have questions, we encourage them to reach out to us via email or through our support portal.
In terms of transparency in the markets, there is only one API that is used by all platforms (website, mobile apps and trading bots) and all customers trade under the same conditions. We don't provide special access or fees to any customers or liquidity providers.
Q: Since XS2 exchange is self-funded without any ICO or crowd-funding, how does the exchange manage to have withdrawal fees as low as 0.0001 BTC and still be profitable?
We want to support the use of blockchain technology, and therefore we don't add extra fees to withdrawals. Many people think transfers are expensive, but the reality is that currently both Bitcoin and Ethereum are very cheap for transactions. Earlier today we processed a Bitcoin withdrawal for 0.00000554 BTC ($0.04) and Ethereum token transfers for around $0.03. We will adjust withdrawal fees to make sure over the long run that we break even.
Q: If we see the User-Interface of the XS2 exchange - it's quite different from other crypto exchanges in the market. Why is that so?
The first exchanges that were created seemed to be copies of the day-trader interfaces for stock brokers. Since then nearly every exchange has simply copied this interface. Day-traders aren't the only users of exchanges though; we believe there are 3 major groups of users:
High-frequency trading bots/market making bots - These use our API and don't need the web interface.
Day Traders, spending many hours each day watching the charts and analyzing the market, buying and selling in a timeframe of minutes - This is the group most exchanges are trying to cater to, but in crypto, this is only a small part of the ecosystem.
Retail Investors. Managing a portfolio of coins and tokens. Buying, hodling and selling in a timeframe of days, weeks or months. - We designed XS2 for these investors. That's why coin information and news is front and center and the trading experience in simplified, without jargon like 'limit orders.'
Q: When can the Android users expect a user-friendly app like iOS?
The Android app is nearly finished. We hope to have it available in September.
Q: What criteria does XS2 exchange follow to list a cryptocurrency/coin?
We outline our listing process here.
Q: Does XS2 exchange plan to introduce its own coin as Binance did?
First, we want to create the best platform we can, and then we may consider issuing tokens or raising funds.
Q: What has been the biggest challenge for the XS2 exchange in not creating a conventional platform that currently exists in the market?
We've had to rethink the user interface from scratch. We've gone through many iterations, and I'm sure we'll go through many more. While challenging, this is also one of the most exciting parts of the process. After all, we did start our exchange fix the issues we saw with the existing exchanges and to provide a secure, easy to use platform to buy, hodl and sell crypto with excellent support.
Q: How has the journey been so far? What is the next step?
It's been an exciting but exhausting 7 months with the team working around the clock, often 7 days a week to get the platform out there. We're delighted with where we are at, especially considering others are spending millions of dollars, yet we've only invested a modest amount in getting a full exchange built (in-house), as well as the mobile apps, legal, pen testing, etc. The next steps are finishing the Android app and then adding lots of coins and tokens to our platform.
It looks like crypto exchanges like X2 are the way forward for crypto trading. It's quite evident that the team is striving to address all the drawbacks of current exchanges and spread the right message in the crypto space. We wish them all the best for their future endeavors.