When you call Nischal Shetty, the 2010 blockbuster song Pumped Up Kicks plays as the caller tune. Appropriate you conclude, given that the Foster The People track is about a person’s psyche. He’s certainly pumped up.
But the past few days have been unkind on Shetty and his cryptocurrency platform, WazirX. The crypto exchange is confronted with irate users who are complaining on Twitter and LinkedIn about their inability to withdraw money, or deposit. WazirX’s payment methods have been unable to keep pace with the roller coaster ride in bitcoin in recent days, according to them.
Few are polite. Phrases like “white collar criminal” and “ponzi scheme” are bandied about.
Wild accusations maybe, but WazirX has developed a reputation for crashing when the cryptocurrency markets go wild (which is every other day these days).
Shetty, 36, has his hands full. He is confronted with thousands of Twitter notifications a day. He has over 10,000 pending requests—connections and complaints—on LinkedIn.
Nonetheless, he is content. Because what the outages fundamentally mean is that more people are using WazirX than ever before. That’s all he wants.
Shetty, an engineer by profession, and his company are in the midst of technological upheaval, navigating an industry that barely existed in 2010. WazirX is working on new backend technology, improving its systems and lobbying with regulators to clarify that cryptocurrencies are legal in India.
In an interview with Moneycontrol, Shetty talks about the crypto industry’s unexpected growth, regulatory reckoning and WazirX’s technological overhaul.
Nischal, how are you dealing with all the craziness? Price crashes, selloffs, record demand, and WazirX crashing?
My social media has gone crazy. My teams are working through the night. But it's worth it. See the thing is, you also get praise when you do the right thing. Obviously, if there is something not working, people will get angry, you have to accept it. I think the only thing we can do and which we are doing is get better. Like yesterday we saw some record traffic, but we were not down. So I think that's a good thing for us. But those things don't make noise. Because it's usually when your product does not work.
For the recent outage I think the only saving grace was we were not the only ones. Everyone around the world went down on Wednesday- Thursday when this happened. I think all exchanges face trouble. So that's fine. We are all learning.
The scale we are seeing right now is unprecedented. I would not have imagined this in my wildest dreams. The small exchanges are fine because they are not even half our size. We are operating at a different level.
So, how big is WazirX now?
So we signed up 1.1 million new customers in April alone. But the three years before that, we had signed up about 2 million customers. So 50% of our three year customers signed up in one month. We haven’t announced this yet but this month will be even higher than that. And most of these users are active. They don’t just sign up and go. They're actively trading, watching prices. During a real boom, there are hundreds of thousands of people concurrently We are learning and improving and expanding our scalability. We are getting better.
How are you solving these issues?
You should ask the banks and regulators why crypto is not being given access to banks. The rest of the world is progressing in crypto tech, and in India we are not even able to reach consensus among ourselves. When there is in-house confusion, how can we go ahead of the world?
We are trying to talk to banks, following KYC and Anti Money Laundering policies, putting everything in place so banks don’t have to worry about compliance. When the industry is doing everything for compliance, why do they still not get banking access? And we are not getting answers. I’m really surprised.
Some exchanges say all banks have stopped support while some are getting selective support from small banks. What exactly is happening with WazirX?
So the API-based banking access is not available. Which means we aren’t able to automate these things. By automate I mean, if you deposit money, we automatically credit it to your WazirX account because we have banks tell us, via programs, that “Sriram has deposited Rs 100,” and we can deposit it in your WazirX wallet. In the absence of API we have to build automation on our own and that won't always be optimum, especially at our scale.
I’ll give you an example. With APIs, we can make sure that users can deposit only from the one bank account linked to us. The moment we don't have API access, there is no way for us to understand which bank account is being used.
But API is only a part of the problem, right? Because even if banks don't give API access, you can do it manually. But a lot of them have cut off access entirely, right?
Yes, but we don't know how long we can do manually. So without API, you will deposit it as you deposit to any other bank account of yours. And then the exchange would have to read through the bank statement, either through a manual process, or they can write some code to read that bank statement. But in the statement, if the name is not right, or if the bank account number is not displayed properly, there can be these issues.
And also, as a customer, you will have to put the transaction ID on the website to get confirmed. Once you make a transfer, you get a transaction ID on your bank. So you'll have to come and put that because only with that transaction ID can we match it, as opposed to a traditional online payment method where you don't have to do any of those things. That is the difference.
Do you worry that WazirX is getting a reputation for crashing regularly? Users can easily go to another platform. And with this reputation, new users may not join you.
Data does not show us that. People do understand. For example when it happened on Wednesday, no large platform could service anyone. People do face issues and they'll talk about it. But ultimately the biggest question is why are people using WazirX? Because we have the highest liquidity in the Indian market. When you want to buy bitcoin for Rs 1 lakh or Rs 10 lakh, you will get the cheapest option on WazirX. The same transaction on any other platform, there will be slippage and you may lose even Rs 10,000.
Secondly, we have the lowest fees in the market. These can go as low as 0.1% if you use WRX (their own token) Thirdly, our app is one of the most stable apps. This is a result of the popularity.
Two times in the last 30-40 days we have had infrastructure issues. And we are working to see that it never happens. Only during peak traffic and when a massive dump happens that it becomes a little hard. Tell me why did Coinbase, a $70 billion, nine year old company go down on Wednesday?
We also unfortunately had other issues where we weren’t able to go beyond a certain limit. We need to re architect our systems. We are pushing our re-architected code everyday. So yesterday there was a bump in the market but our code changes helped us. Millions of people signing up seems to be the new normal.So we are just working on building a robust platform, and we'll definitely get there.
On the one hand, the crypto industry is asking to be legitimized and declared legal- which will make you more popular. On the other hand you’re also not able to give a safe and seamless experience to your existing users. How do you deal with this contrast?
By that logic, there have been glitches in the NSE and in all regular stock broking apps. No traditional exchange in the world will have been perfect 99.9% of the time. Does that mean you stop them? Every technology has scaling issues. What people don’t realise is that we have 10 times more users than six months before. No other industry has seen a 10x rise in users in the last six months. If you ask, how will you sustain once you have regulation, we are sustaining even without regulation now! You have to see how lopsided things are against our industry right now.
How is your tech team dealing with this surge?
They are working day and night. Not even in my wildest dreams would I have imagined this kind of scale in 3 years, or in the last six months. One of our developers is in Goa, he lost electricity and so could not even access his computer or the internet. We are going through COVID and people’s families are affected.
I cannot blame them. We are now redoing our trading engine, called Project Raftaar. Next week we are going live with one part of this, and it will make us much more scalable. We are hiring actively, especially for Senior VPs and technical folks
What is your state of mind right now?(Laughs). I can't rest on the good things that are happening. I’m trying to see what are the top priorities and how to solve them quickly. How do I solve all the problems customers are facing? That’s my state of mind now.