Electroneum agreement with XIUS comes at difficult time for cryptocurrencies

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A mobile-friendly rival to Bitcoin developed in Kent has signed an agreement with a payment technology company which processes $1 billion of transactions every month.

The tie-up between Maidstone-headquartered Electroneum and XIUS, which has 65 million subscribers, comes at a delicate time for the digital currency market.

The signing of a memorandum of understanding between the two companies was announced days before a crash in the value of several cryptocurrencies, with 20% wiped off Bitcoin in one day.

Bitcoin has fallen in value since the start of the year
Bitcoin has fallen in value since the start of the year

Electroneum said its agreement with XIUS, a market leader in mobile payments, was a huge leap forward as it aims to become the first online currency to enter mass usage.

The company raised $40m last year in its so-called initial coin offering or ICO, an unregulated method of raising funds for new cryptocurrency ventures.

It already has close to 500,000 registered users, despite having to suspend its launch in November following a hack on hundreds of its users’ accounts.

It relaunched a month later after appointing a security agency that works for the US Department of Defense to audit its systems following the cyber attack.

Electroneum was forced to abandon its launch after hundreds of user accounts were hacked
Electroneum was forced to abandon its launch after hundreds of user accounts were hacked

The company’s chief executive is entrepreneur Richard Ells, 47, who also founded Maidstone-based digital agency SiteWizard in 1996.

Cryptocurrencies, which are not regulated by central banks or countries, were given a huge legitimacy boost in December when Bitcoin futures began trading on the Chicago derivatives exchange Cboe Global Markets.

It was the first time investors have been exposed to it via a large, regulated trading platform.

Yet many business leaders in the county remain sceptical about investing in digital currencies.

Electroneum chief executive Richard Ells
Electroneum chief executive Richard Ells

Sevenoaks entrepreneur Owen Hunnam, who runs tech start-up Idea Drop, said: “The world of cryptocurrencies are a like an action movie – thrilling, fast-paced and hard to stop watching.

“The underlying blockchain technology, coupled with growing hype and mainstream awareness, is serving as the fuel for growth of thousands of cryptocurrency start-ups globally, so it’s great to see a Kent-based company in the mix.

“It’s been fascinating to watch relatively unknown start-ups, often with very little in the way of a proven business model or tangible results, raise huge sums of money via ICOs.

“One example of this is Envion, which just this week closed a $100m ICO in just four weeks.

Sevenoaks entrepreneur Owen Hunnam
Sevenoaks entrepreneur Owen Hunnam

“It’s hard to believe that ICOs are still completely unregulated in the UK – from an investment perspective, it’s the Wild West.”

Speaking on KMTV, Stephen Askew, a partner at accountancy Haines Watts in Canterbury and national councillor for the Federation of Small Businesses, added: “It’s a very volatile market.

“Like any currency exchange, you have to keep on top of it on a day-to-day basis. You can’t just go in and buy and hope it’s going to be OK.”

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