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Will This Change Trading Forever? SPECTRE’s CEO Reveals All

 

Investing.com sat down with SPECTRE CEO Karan Khemani to discuss what appears to be a revolutionary moment in online financial trading. The SPECTRE team is launching a trading platform based on an autonomous decentralised liquidity pool. Finally, blockchain technology and online trading have combined to provide a fairer and more secure trading environment that anybody can participate in.

SPECTRE

Investing.com: Is SPECTRE a trading platform, broker, both or neither?

Karan Khemani: SPECTRE, short for speculative tokenised trading exchange, is a financial prediction market platform backed by a tokenised liquidity pool and is definitely not a broker. The model we introduce removes the broker from the equation completely.

SPECTRE is a trading platform that has a range of trader protection algorithms which help with emotion control, risk management, trade opportunity recognition and the ability to track one's stats including strengths and weaknesses through time. SPECTRE learns the trader's weaknesses over time and alerts them when they are about to make a silly mistake.

In addition, SPECTRE's unique tokenised balance sheet model allows traders to trade 24 hours a day, acting as counterparty to all trades, where required. The pool pays out 2% dividends to dividend-token holders and 2% to the SPECTRE team as a technology fee, each time the trader takes a trade (there is also a utility-token, for those not wanting to participate in financial rewards, but instead on in-platform volumes and trade it on larger exchanges after the ICO). All transactions are governed by smart contracts meaning that the broker is completely removed out of the equation ensuring a new level of trust and transparency in financial trading.

Moreover, we remove the concept of depositing at a broker. In order to trade in SPECTRE you, as a trader, do not need to send any ETH or money to our account, as you do with brokers. You just need to have it in a private Ethereum escrow account that we have no access to, but that talks to our platform so that we can confirm that you have the amount you are placing on trades. Since there is no deposit, then there is no concept of withdrawal either, so your capital is always with you unless you are actually trading it.

SPECTRE appears to be truly disruptive. What were you and your team’s motivations for developing something so revolutionary in what is quite a conservative industry?

We have been in the financial trading industry running our own financial education and trading group for more than 11 years now, and we have been interacting with traders around the world on a daily basis. From the very first days we realized that the main reasons why traders lose money are: 1) they simply do not know how to trade, 2) they do not have the proper discipline to control their emotions and 3) they fall victims of broker’s fraudulent tactics, even when they manage to avoid reasons a and b.

Since we had entered the industry taking a trader’s approach and not a broker’s approach or an affiliate marketer’s one, we were determined to do our best to fight the aforementioned 3 reasons and increase a trader’s chances to succeed.

So if you look at SPECTRE, the platform itself offers education and helps the trader stay disciplined, so it helps against reasons 1 and 2 above, while the liquidity pool in the backend helps against reason number 3 above. It is time to drain the swamp.

SPECTRE helps us achieve what we wanted from the beginning; Create a fair environment and give traders all the tools they need in order to be successful. That does not mean we are a hedge fund or that traders will make money on the platform. We just create a fair environment.

So does this spell the end for MT4/5 trading and the brokers who promote such platforms?

Let’s break down the question. Is this the end for MT4/5? No, MT4/5 is the Walmart platform with powerful tools and functionality. We feel that our offering is quite different than theirs though and also that MT4/5 is catering more to professional traders rather than traders of all levels. SPECTRE’s trading platform offers most of the tools that a trader wants to see, including risk management settings and detailed analytics on their performance, but at the same time is quite simple and straight forward for a novice trader to understand as well. It is, if you will, the Apple Mac of trading.

Now, to move to the second part of the question. Does SPECTRE spell the end for brokers that promote MT4/5? Again the answer would be no. We would be considered a threat to FX brokers that are using B-book for their clients or a threat to binary option brokers but that would be because of their business model and its inherent conflict of interest, not so much because of the platform they are promoting. The platform is just a trading skin in a way, if you remove the connection to what acts as a liquidity pool for them, ie their balance sheet. If they wish to offer a new platform or trading interface then they can simply contact us and we will find a way to offer a whitelabel version of SPECTRE for them, no problem. The other alternative is to build a decentralized application (DAPP) for our upcoming DAPP store.

For those new to understanding blockchain and cryptocurrencies, can you explain about how your tokenized liquidity pool works?

Sure. The liquidity pool acts as a counter-party to all trades that a trader takes inside the platform, when the opposite trade cannot be found. So if we cannot match opposite positions, then the liquidity pool steps in and a trader can still take the trade. If the trader makes a trade for $100, just to keep the numbers round, and wins, then the liquidity pool will send to the trader via the smart contract $75 and at the same time will allocate $2 to all dividend-token holders and $2 to the SPECTRE management team. If the trader loses the trade, then the liquidity pool will accept this $100 trader loss, keep the $96 and allocate again $2 to all dividend-token holders and $2 to the SPECTRE management team.

At the end of the year, if the liquidity pool has exceeded certain growth targets, then the extra amount on top of the growth target will get allocated again, in the form of special dividend, to the dividend-token holders and the SPECTRE management team at a 70/30 split, 70% going to the dividend-token holders. Note that this scenario is for Smart Options, which replace the defunct binary options. We will shortly introduce an entirely new type of CFD known as the ULC-CFD which is a synthetic FX asset catering to the 4 million strong retail trader base that is at the mercy of B-Book trading. There the 2% fees are not the same.

Now this is all good, but someone may ask, “how does the liquidity pool get created in the first place?”. Well, the answer is via an ICO (short for Initial Coin Offering), which basically works as a crowdsale. We have created two types of token, one utility-token that offers in platform benefits to its holders and one dividend-token that allows its holders to get a part of the 2% fee described above. In order for these token holders to acquire the above tokens that have the above characteristics, they need to purchase these tokens during their respective sale, the ICO. A part of the proceeds from this sale fund the liquidity pool which as we discussed acts as the counterparty to all trades. No one has access to the liquidity pool, and the only ways that its balance may change is when trades are settled and when SPECTRE and dividend-token holders are paid their volume based fees.

Does this finally mean that traders can be 100% sure that their isn’t another party rooting for them to lose?

Yes! The SPECTRE team and the dividend-token holders receive a 2% fee irrespectively of the outcome of a trade. There is 0 conflict of interest between the traders and any other part of the equation.

Transparency appears to be the name of the game. Has the era of blockchain made the financial markets a safer place to invest?

Transparency is a key factor and blockchain is a tool that can help towards that direction. But the most important thing is the company using each technology and not the technology itself. We have seen companies using blockchain in order to commit fraud against users but you also have very good and transparent companies with proper management teams that try to solve real problems in a transparent and safe way utilizing the power of the blockchain.

This is why, we lately see more and more big players turning their attention to blockchain with the Ethereum Enterprise Alliance comprising of companies like Microsoft, Intel, UBS, ING and many others being just one of the most known initiatives. Another one is the BARAC project, which is a research project backed by UCL and LSE here in London and also FCA and CySec amongst other, that represents an effort to use blockchain to facilitate compliance in the financial sector.

So as we see, blockchain appears to be here to stay and more and more businesses are trying to utilize its capabilities in order to create a safer and more transparent environment for people to invest.

How can a regular investor profit from SPECTRE’s token sale?

As mentioned above, there are 2 tokens available in the SPECTRE token sale: the utility-token and the dividend-token.

The utility-token offers a lot of benefits to a trader inside the platform, but as an investor you can get yield from holding it and buying/selling it in exchanges as all other known utility tokens. From our side, what we are doing to support the price of this utility-token is to actually buy back up to 15% each year of the available quantity in the market using proceeds from the operations of the platform and burning them afterwards, therefore reducing the total number of available tokens and implicitly increasing its value.

The dividend-token is for someone who is looking at SPECTRE from a profit-sharing point of view. And this is because it pays up a normal 2% dividend on each transaction but also a special dividend if certain liquidity growth targets are met, as discussed above.

There is detailed information on our website regarding the financial forecasts but I would like to mention that should someone go to our site, www.spectre.ai, there they will find a detailed discounted dividend model (DDM) as well. This model shows how in our base scenario, the ROI on the first year is about 80% while the total lifetime ROI of each dividend-token exceeds 3600%, theoretically. This of course is not investment advice but just an educational model.

What is SPECTRE’s five year plan and what benefits lay in store for early investors?

Our plan involves certain milestones, most of which are presented on the roadmap on our site. But to answer your question, our plan can be described in brief as follows: First we need to complete the ICO successfully by the end of this year, and then apply for an EU MIFID compliant regulatory license immediately afterwards. Next step will be the launch of the platform in Q1 of 2018 and afterwards the expansion of the platform in order to be able to offer more types of trades to the users. The next step would be the creation of a decentralized app store, where other companies will be able to list their products and connect with the liquidity pool that would be acting as a counterparty to their own operations/trades. On these occasions, the dividend-token holders will be receiving a % fee from these new apps as well.

Such a store will open up a whole new range of opportunities and it will place the autonomous and decentralised liquidity pool as the engine behind a range of solutions across multiple industries (not just financial trading).

In the meantime and depending on the developments around us, we will try to connect SPECTRE with projects like the BARAC project mentioned above or be involved with the blockchain that the Ethereum Enterprise Alliance is considering to create in order to be able to offer more flexibility to our users.

The potential for us, as SPECTRE, our community of traders and, last but not least, the investors in the token sale are limitless and we hope they get to join us as early as possible so that they can enjoy this journey from the very beginning. I can honestly say that the sky is the limit and our journey has just begun. Time to drain the swamp!

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