Hello and welcome to episode a Bitcoin episode 52.
My name is Brian David Crane and today's August 10th 2014,
Sebastian is still on vacation, he's about to come back I think
tomorrow. So from next week on we will be
back in the server original constellation.
But this time again I'm sort of a sort of rose and I'm joined
today by two people and their ear are Miller and fair Stevens.
Here is the CEO of coin support and report this wallet provider
Merchant solution that he found it together with Erik Voorhees
in 2012. So of course, Erik Voorhees is
very well known in the community, I think, primarily
for Satoshi dice. But but he's also been involved
in other projects. Instant kind of a spokesperson
for a long time and then prayers a marketing specialist for
calling apple. And this is also the founder of
the Bitcoin UK podcast. So I still haven't actually
gotten around listening to another episode, but she has
great views of It's one of my goals as to see that as soon as
possible. So today we will be talking
about Corner pulled and especially by the new feature,
they launched was called locks and the locks features kind of
addressing a really key criticism that's often heaped on
bitcoin which is the volatility. And it's often seen as soon as a
roadblock in the way of mainstream adoption.
So they're trying to address this with this, the locks
feature, and it's a really cool now.
Interesting. And they're also talking about a
project called, Let It Drop. And the basic project, the basic
idea of the project is to bring Bitcoin to Caribbean island.
So sounds of course we we cool. So, here are a, thanks so much
for joining me today. Hi, yes, you're welcome.
Thanks Brian. By the way, it's IRA.
Oh, a poultice Tyra. Yeah, no worries.
So I owe you down in Panama at the moment I am.
Yeah, it's a nice sunny day so let's just perhaps a dive in.
Can you tell us a bit about how do you get started with
pineapples? So Eric and I started Corner
Pole to in January of 2012 and it was designed just to be a
very, very simple wallet to allow people to introduce new
users, to bitcoin, by sending it to Email or cell phone.
And it was really designed as the simplest possible way to do
this. So at, you know, the original
Quantum pulp.com just had a form that said, email address message
and then it would allow you to to deposit some Bitcoins to an
address for the recipient. We've taken that concept and
turn it into a much more sophisticated wallet service.
Now, with accounts and some Advanced hedging features like
you mentioned. So So what made you in 2012,
decide on starting a wallet service.
Did you feel that was a kind of a big gap at the time?
It was at the time actually we were the first I believe the
first Bitcoin over email service and also the first SMS only
wallet. So you know, there a lot of
people that have wallets where you can send somebody an SMS and
then it redirects them to a web page where they log in and start
using, but They didn't have the internet then they wouldn't be
able to use it. Our system is different in that
it allows people to use Bitcoin using only SMS messages, but you
still have to set up a wallet online.
Then, no, you don't. You can simply receive a text
message. It says, you know, welcome to
Kona pulled. You've got some Bitcoin when you
want to send it to someone else, you just text back to us, you
say, send it to this number, and we sent a similar message to
them. Wow, that's really interesting.
So I guess that's slightly off topic.
Just as beginning but let's get into that.
Then you are you familiar with 37 points and how does this
compare to the 37 coins service? I am familiar with 37 coins,
they've got a great model and it's very similar.
I said we were the first such wallet but now there are others
popping up and they're very welcome.
This is very hard to do because you need tell Cam Partners in
various places and 37 points is picked a Innovative way of
getting around that by allowing their users in various countries
to kind of become nodes for their, their Network.
Now, how cool. So, did you guys see any
traction with this SMS service? We saw some traction.
There have been, some people using it for in the last two
years. Since it came out,
unfortunately, due to our Telecom providers, we were only
able to launch it in the US and Canada over the last two years.
And it really just isn't a very good fit for those markets.
You know, most people in those markets have the internet and
have smartphones and can use more advanced Bitcoin wallets.
But we think that SMS is a great fit.
It for Bitcoin overall. Because most of the unbanked
people in the world, well, maybe not most, a lot of the unbanked
people in the world don't have internet access and they do have
feature phones. So it can you talk a little bit
about how coin apples develop? So you originally there was this
idea of having a really usable where wallet and the SMS thing
and I guess this was super early for Bitcoin company know, it's
like more than two two and a half years ago.
Which is sort of dinosaur age in the Bitcoin world.
So what has happened since then and how has your division for
coin Apple changed over time? Say, we initially launched,
these consumer wallet Services, the to allow people to send over
email and SMS, we offered these services for free.
So basically, we didn't make any money off of it.
To kind of help fun things and pay the bills feed us.
We started doing big business to business services so people
could sign up with our API. II and send to their users over
SMS. And so on, after some time, we'd
also developed some very sophisticated Market making
software, that would allow us to buy and sell Bitcoin to
basically act as a broker. We did that for quite some time,
maybe the last year and a half. We've been doing that sort of
business, for instance, you may have purchased, if you're in
Europe, Bitcoins from say fellow.
We help them acquire and clear all of their Bitcoins.
Basically, this Market making software that we used for
liquidity. Providing turned into our locks
technology that we're now, allowing all of our consumer
wallets to access. So is that market-making service
are you doing with Arbitrage? So over you, were you using
different exchanges to Yo trade. And basically, you are charged
on them or is that the software service you're providing to
exchanges or Guest Services likes, a fellow that directly
sell Bitcoins to Consumers. Yeah.
We provide services to companies, like so fellow that
need to buy and sell Bitcoins for their own business to work.
And we do do Arbitrage and trade on all the, the major exchanges
in this way. We feel that we can get to a To
a very well-informed price, we can have a price that is more
average and more stable on a global scale than any single
given exchange. And when you, when you looked at
kind of forward and to kind of poked and I guess two years down
the line now, where would you like to see the company?
I like to see our SMS Services taking off and among the
unbanked. I think that Is the most
important thing for Bitcoin as a whole is to bring new consumers
in and to grow access to bitcoin.
I think that so far Bitcoin has mainly gain traction, among
very, sophisticated educated, people who have very good
internet access who are not just able to access the internet but
are typically the most Savvy people on the internet.
And I think that if we really want Bitcoins to succeed if we
want the price to go up and and more People to use it, we need
to expand our community beyond the most Savvy, early adopter
types, and we need to reach out to people who just want a simple
services and aren't necessarily trying to to jump on the coolest
new technology. Okay, cool.
So the focus is really kind of on especially adoption a
facilitating adoption and I guess, especially among on Bank
people or people that Are kind of outside of the privileged
first world educated computerized groups.
Exactly. I might just jump in here and
one of the reasons I got involved with coin a pulse is,
it's because, as you say, they've been in the Bitcoin seen
for a while since the early days, when there was perhaps
more focus on the The promise of Bitcoin is as the great
equalizer and yeah, just the, the Grand Vision for quino,
poult to my mind. And one reason I got involved
with it is is this expanding access to people who haven't
been in the financial system? Haven't had bank accounts and
just yeah, getting more people involved.
Sofia is how long have you been kind of involved with Bitcoin
projects? So I got involved at Christmas
last year. So yeah, I'm a relative new be,
but one of the things that attracted me to it was was the
the ability for Bitcoin to, you know, introduce more democratic
ways for people to get muddy. Does it seem Like a more
democratic system to me than the sort of?
Well I most people know the story he listened to your
podcast, you know the bank's centralization of of wealth and
to you know privileged few. Yeah.
Okay. So you were attracted to that
side which I'm you know I'm sure a lot of us are and then you saw
that kind of encounter poke the company that's pursuing that
kind of vision and trying to realize that potential of
Bitcoin. Yeah.
You know they really are involved in the in the Go game,
you know, they're looking at ways to improve the Bitcoin
ecosystem, you know, in the long run, you know, not just a
short-term profit making, you know, which I don't know about
increasingly. I see companies coming into
Bitcoin space, that you know, are seeing a short-term money
making opportunities and you know, it's nice to be involved
with a company that have that, you know, see, see the bigger
picture. Yeah absolutely.
Well let's kind of dive in a bit more into how kind of holds
exactly works. So there's the locks thing which
I want to talk about in a little bit and then this obviously the
web wallet. Are you guys also working on
mobile wallets? We're not actually working on a
mobile application. At the moment I our main goal is
to kind of grow access the Bitcoin ecosystem overall and
they're already a lot of really good.
Mobile apps out there in addition we've mobile optimized
our website. So any any mobile user can still
use our wallet in a? We think a pretty good
interface, this kind of protects them and us from say apple
changes their mind again and decides to kick all Bitcoin apps
out of the store. Our users can still access their
their wallets in their funds and so on.
But I'm curious. So is there a QR code scanner
when you use it? On the web there's not that's
one. That's one thing that's
definitely missing and we will work on that.
Yeah, that seems like that should be.
Also, I guess something if especially if you Target and
consumer know that will be important in the future.
Absolutely. Okay.
So there is that and also I've also seen on your website that
you guys are offering some kind of merchant services is that
similar to let's say bitpay it is very similar to Sure.
To repay you. We will help your company
receive Bitcoin and then immediately convert it if you
wish or lock it to to gold so you can spend it later as
Bitcoin again. We also do the opposite so if
you're a company that wants to net purchase Bitcoin, you can
sign up with us, send us some wires and we'll help you
purchase when you're ready. So you guys are also providing
the service of. I'm a merchant, I get Bitcoin
and then you guys can take those Bitcoins, sell them.
And basically give me, let's say US dollars in the bank account
or you guys exactly? Okay.
So you can, I guess, choose either as a merchant, I do
receive the receive the u.s. dollars or like the fiat
currency or sort of get rid of the volatility, through the
locks ping, or just keep the Bitcoins.
Is that correct? Exactly, that's cool.
I guess that's a good segue into into that locks feature.
That we should have mentioned a few times that I haven't really
gotten into it. Can you tell us what the locks
feature is? It's a lox is a volatility
reduction tool. Basically, it allows anyone any
kind of pulled user to deposit Bitcoins, into their account and
then tie the value of those Bitcoins to stable asset of
their choice. So let's say that you really
like gold and you think that Bitcoin is very volatile and you
wish that you could store some of your value in gold and and
have it fluctuate with the piranhanano.
Price of gold rather than with the price of Bitcoin.
You would then go to your flocks page, unquote apple.com.
You would select block to Gold, say how much, how many ounces of
gold you want to lock? And you can out, lock down to a
hundredth of an ounce of gold or roughly $10 or $12.
When you click submit, it'll deducts, the Bitcoins or you can
send it in from different wallet if you want.
And then from so pardon me from that point on it's like, you
have say, one gram of gold at spendable on the Bitcoin
Network, anytime you want and as the Bitcoin and gold prices
fluctuate, we will make sure that you always have exactly one
gram of gold to spend. So for example, if the Bitcoin
price Falls in half and gold, stays roughly the same when you
unlock your one ounce of gold, you should get twice as much
Bitcoin back. Now, the downside of that is Is
if the price of Bitcoin doubles then you unlock your old, you
would get half as much Bitcoin back.
Yeah, so essentially, it's similar to, let's say, I get
some Bitcoins and I say I want to don't want to have the
volatility. I put it on bitstamp, I sell it
for US dollar and just hold the u.s. dollars there.
Of course in your case it's more convenient because it's
integrated in the wallet but it's essentially a similar
thing, right? It is very similar thing.
Yes. I We think that we've basically
made this tool just easier and more accessible, you know, you
can take weeks to sign up and get approved for an account with
an exchange. And then you have to know how to
use an exchange, what our limit orders, what our Market orders,
you know, what does it mean to say that?
You know, there's this much volume at this price.
Most people don't want to have to learn all these things and
they're not traitors. So we really build blocks as a
tool for everyday users. So when you talk about, let's
say, I want to lock it to Gold because you guys.
Of course, I have to charge a fee.
No. Because essentially, on the back
end, you are, you selling the Bitcoins?
No. And, for example, for US dollars
or for gold? Yes, we are.
We are, when you block to an ounce of gold, we sell an
equivalent amount of Bitcoin as you gave to us to create the
lock and buy 1, ounce of gold. And in this way, this is how we
can guarantee the that will always have the right.
Right amount to give you in the future is because we hold a
hundred percent of the collateral as far as the the fee
we charge. It's just a spread.
So there are no fees in the traditional sense, but there is
a difference in the bid and ask prices, typically, the
difference between the bid and ask prices is 2%.
So if you've locked and unlocked immediately, you would have
roughly two percent less than you less Bitcoin than you
started with. Over clearly the service isn't
designed to be you know immediate lock and unlock that
doesn't serve you any any good it's for a limited eliminating
volatility over time. So we think that over the course
of maybe a week or two this one or two percent is basically
wiped out by the natural volatility of Bitcoin.
Yeah. I mean I guess it last week and
it worked exactly the way the way advertised.
I just like a one dollar. Or to lock it to or one Bitcoin
$1 worth of bitcoin to lock it to dollar and then lock it back
and it costs exactly to sent in the end to do that.
So I also read afterwards, I went to the blockchain and I
checked, you know, what happened to my coins and they never moved
from at once I paid them in. So how does that exactly work?
You hold an amount of Bitcoin sort of on Nerve with exchanges
or it? Can you talk a bit about the
kind of what goes on behind the scenes when that happens?
Absolutely. So as I mentioned here, when you
create a lock, we sell an equivalent amount of Bitcoins
and by the amount that you lock to.
So if you're locking an ounce of gold to continue with our
example, and it's costing you to point to Bitcoins today, which
is just a very rough estimate. We We'll sell 2.2 Bitcoins and
buy 1 ounce of gold upon locking.
And when you want to unlock, we will sell the one ounce of gold
and by however many Bitcoins. It is that that market price and
make those available to you. We do have accounts on numerous
exchanges and other liquidity Bitcoin, liquidity providers to
be able to facilitate this and we do keep Bitcoins on reserved
for these our own Bitcoins for. Exactly for facilitating this
sort of liquidity. So Bitcoin that you sent us
initially goes into our shared wallet and it's not necessarily
that exact Bitcoin that we're promising.
You back were promising an equivalent amount of Bitcoin
back and yeah, absolutely. So if you talk about the the
silver thing I think that's interesting, right?
So because you offer gold and silver.
Now it makes sense to me that like the dollar is really easy
because there's a very liquid Market there.
But when you talk about Buy gold and silver does that mean you're
going to have to trade dollar for at the Bitcoin for dollar
and then the dollar for silver and does that mean the fees are
going to be much higher or you have some other ways of making
that work, you hit the nail on the head.
We do because of liquidity problem with between Bitcoin and
silver. For instance, we do purchase the
silver using dollars or euros and somewhere with gold but for
us Is this is not a significant cost, you know, once we've got
the infrastructure set up to do this and to do the accounting
for it, then it's very easy. It's not significantly harder
than locking. Two dollars or Euros or British
pounds for us. So we don't charge any more for
it. You get the same 2% spread
within your blocking silver or gold as you do with your locking
dollars or euros. No, that's cool.
II will be expected that this would be more expensive.
No, because you have more liquid markets, Etc, but that's really
cool that you able to do this for the same be thanks.
Yeah, I mean we're letting our liquidity just to provide the
best possible user experience So there's one topic I kind of want
to touch on, I guess before that one, one more point on this.
This is that what about counterparty risk?
In this case? So it obviously you guys are web
wallet. So, you know, anybody who sort
of understands how Bitcoin Works, they realize that well
there's a kind of party risk there.
I just the same as with coin based on cetera you know if
somebody hacked Sony pulled and well there's a risk but
essentially we Doubling the kind of party with, no, because
there's a risk on your side. I guess, in one hand and there's
also the risk on the side of the parties that you guys hold those
values with is that correct? That's one way to look at it.
I think that that can be we do a lot to greatly reduce that and
in a lot of cases, the parties that we are holding for
instance, Euros with those accounts are actually insured to
some degree and we're looking at getting more advanced insurance
for them. So it's not necessarily doubling
the risk in some ways, we hope to actually be able to greatly
reduce the risk. But yes, you know, anytime you
are using a service like this. There is some counterparty risk.
We don't want to mislead people into believing that, you know,
more somehow getting rid of that.
And frankly, we just want to prove ourselves as a party.
That's worthy of that through good stewardship and following
through on our promises, he's also got to weigh it up against
the risk that people perceive in entering the Bitcoin space in
the first place, which is is What we're really trying to
tackle the people that aren't in Bitcoin at the moment, because
they see it as such a great risk.
So you know, if we can mitigate that risk, To some extent.
So I mean, that's I think that's doing a service to the Bitcoin
ecosystem. Yeah, absolutely prayer.
That's a good point. And of course, another point is
that, you know, even if you hold in your own computer, it takes a
considerable expertise to do that in a way, that's actually
saved. So, in, in many cases, people
may be better off to keep their Bitcoins with a company like
Corner Pole to point base, or web wallet like that.
Yeah, absolutely. And As somebody who definitely
didn't come into Bitcoin with technical knowledge of how it
works. I'm a good time a good sort of
tester for their system. You know, if it makes sense to
me and and I find it easy and enjoy using the service.
That's always a two thumbs up that, you know, the general
public will will also think the same.
Yeah, absolutely. Now I'm really curious about
stomping so, And then I'm sure you guys have looked into that
because one on one of the promises says that has been in
you know in the air for a long time by projects like Master
coin. A lot of these other Bitcoin 2.0
projects is to create cryptic currencies that are essentially
tracking or Peg to fiat currency.
So let's say the US dollar and I think I get one way of doing
that is having some sort of contract for differences, or I
honestly haven't never looked deeply into how exactly, and
they were thinking of doing that and I guess I'm not sure if
something like that exists, but have you looked into that?
Do you think that is it's possible?
Do you think that maybe something where you could go to
in the future? Yeah, we've looked into this
pretty extensively, and we think that most of these systems are
still very early and they're not actually addressing the
counterparty risk, which is kind of their main claim is that
they're going to somehow reduce the counterparty risk.
But no matter what sort of contract you try to do, if the
other party is betting on, for instance, gold, and they don't
actually have the gold then Not going to be able to keep good on
their end of the contract. So for instance, you mentioned
the contract for differences cfd if the if you are making
contract for difference between Bitcoin and gold and you're on
the Bitcoin side and the other party doesn't actually have the
gold. I have an equivalent amount of
gold. They may not be able to make
good on their side of the contract and then a much simpler
case than a A cfd, for instance, on Ripple.
Now, there are people issuing, you know, gold-backed Ripple
tokens and and similar. But in these cases, it's even
more clear where the counterparty risk is its with
who the token issuer is who actually is holding gold and and
issuing gold, Ripple tokens. And, you know, these transact
around the Ripple Network and yet they all everyone holding.
One of those are accepting. One of those is implicitly,
trusting the issuer and the continuer holder continual
holder of the underlying collateral the gold.
So really, we see locks as no different from these.
You know, we could easily issue a, you know, a gold Ripple or
Master coin, a colored coin, something like that.
But we wouldn't actually be solving any problems.
There would still be the exact same counterparty risk.
You the users would still be trusting Kona Pope and what's
more our users then wouldn't be able to use the Bitcoin Network.
They would be stuck on one of these smaller less
well-connected less supported cryptocurrency networks.
So an example is with with coin upholds and a gold lock.
You could go to overstock.com and purchase a laptop directly
deducting from your goal block. So it's almost As far as you're
concerned, like you're purchasing a laptop for gold.
Whereas if you know you were using Ripple or real coin which
is a dollar back Master coin, that is announced.
You would have to first convert your master coins, or your
Ripple tokens to something that Overstock would accept Bitcoins
and then you would be able to go and purchase your goods using
Bitcoin. There are some some retailers
that accept People and hopefully soon there will be some that
except master coins but it's just a much smaller community.
And therefore, we think less valuable to our customers.
Yeah, absolutely. No nothing.
That makes total sense SOI. I mean, I've just always been
curious about this, you know, is that actually possible and how
will this work? Of course, if it just sort of
shifts the counterparty risk somewhere else, you know, then
that's not necessarily, and that's not necessary.
We benefit at all. That's that's basically how we
feel. Now, I'm have you looked into
whether there is a way of decentralizing this.
Somehow when you say decentralize this, there are
few, there are few different risks, a few different steps
along the way, some of them can be decentralized.
Some of them, can I think the the biggest question that people
have is for counterparty risk, like we've just been discussing
and I think that a lot of these Bitcoin 2.0 systems claim to be
reducing the counterparty risk. And we think that's pretty
misleading, because there's always another party to
transactions like this. And to say that you're not
trusting them is simply incorrect.
There are some things that can be decentralized about about
blocks or a similar sort of service.
In locks case. We are basically just plugging
into the Bitcoin protocol. Call which as you know is
already decentralized. So we're we're admitting that,
you know, we are the counterparty risk for when you
want to use to store your value in a centralized asset as there
is no other, there is no other way.
Aside from trusting, some counterparty, our goal isn't to
be a trusted counterparty to allow you to do this when you
want to. But when you don't want to, to
give you immediate access to the decentralized network, where you
then take full control again. It's a really the Bitcoin
protocol is our mechanism for allowing our customers to
decentralize their their assets whenever they choose to.
And the way that we've tried to connect, the two is to make it
as easy as possible to go from Bitcoin into a lock and out of
the lock, maybe even without signing up for an account.
You can fund a lock directly from the network.
You don't have to first deposit it into your clinic.
V account and then block it after.
And similarly you can withdraw it directly from a lock to any
other address on the network. Yeah, I'm cool know that.
I think that makes that makes sense and it's, I mean, I think,
you know the way I guess I look at something like logs.
I think it's just a really, really nice and useful service
that deals with you know, deals with an obvious problem in
Bitcoin and you know it. Yeah.
I mean, I think so. I think that's something is
something Positive and are something I like a lot.
And I like a lot that you can essentially stay 100% in Bitcoin
but get rid of some of the volatility, right?
So if you had say a merchant and you accept Bitcoin and you don't
like them all till the, but you still want to be 100% in
Bitcoin, you know, then that's something you can basically do
if this at, you know, pretty reasonable cost.
You 2% obviously, no cheap, but it has a big advantages because
if you know, with the high voltage lie, that Bitcoin has,
and I I don't personally, don't think it's going to go away
anytime soon then, you know, that's it real benefit.
Absolutely. You know, you mentioned
businesses, we think that this could be very interesting for
businesses as they start to complete their supply chain.
So for instance, there's been some speculation recently as
Overstock, accepts Bitcoin already.
And recently, Dell started accepting Bitcoin and Overstock
cells Dell products. So, one, one possibility now,
That Overstock can start to integrate their Bitcoin into
their supply chain. We called vertical integration
and purchasing their stock from Dell using Bitcoin.
This is just a I don't think either company has talked about
this but it's just a clear possibility at this point that
people in the community are talking about.
If that happens then Overstock may wish to use something like
locks in that case because they know that they're going to need.
Some Bitcoin in the future for purchasing their their stock to
refill after purchases and rather than converting to
Dollars, which is what they do with most of the Bitcoins that
receive today. They would almost certainly
prefer to keep as much of it and Bitcoin is the could to
facilitate this future transaction at that point,
though, they're exposing themselves to risk for, let's
say the one month in between, you know, when they Sell the
last laptop and when they need to pay for the next one that
they're buying to replace it in their stock.
They would, they could use a lock for that period to protect
the profits that they have. And at the time, when the bill
is due, they would simply unlock pay over the Bitcoin Network,
and we would have hopefully a new level of integration in the
Bitcoin economy. It's an additional tool.
So we that's one use for it, but we expect that the community
will find new uses for it that we perhaps haven't thought of
yet, you know, for business as an idea where they want to use
the Bitcoin network. But you know, obviously, the
price volatility is an issue. They can partner with us and
provide locks to their users. I've noticed when I signed up
there was a limit, it set of three thousand dollars that I
was able to lock, why is that you require some kind of a kyc
to go higher or how does that work?
Yeah we will be raising this in the future.
Three thousand dollars is actually per transaction so you
can lock I think up to 25,000 dollars okay now but you can
only do three thousand at a time.
Okay. No, no that changes a bit.
The poor. 25,000 is a lot more than 3,000 that's actually per
asset. So there are five assets, gold
silver dollars, euros, and pounds.
So you can do 25 thousand dollars worth of each.
Yeah, too, right, yeah, of course, if you're targeting
businesses, then I guess in ten pence a lot, but I'm sure you
have been sort of individual conversations with those
businesses to have. Yes, absolutely.
Yeah. For businesses that are willing
to go through our kyc process, we can lift all these limits.
So a cave, I see process. He's talking interesting, is
there, does this have any kind of regulatory implications?
Do you guys have to is this financial services locks thing?
I mean, you guys are in Panama. I have, you know, I have no idea
how this works down there, but it can you talk a little bit
about that? Sure.
Absolutely. We think that lux is basically a
new service. It's a new type of tool.
We don't necessarily believe that that bit A coin is money or
currency in a lot of places in the world, it's not legally
defined that way. There the landscape around
Bitcoin, legally is very diverse though and so we look at it on a
country-by-country basis and in areas where it looks like these
Services would be more regulated, we've taken a
wait-and-see approach and have blocked those markets.
So, indeed in the u.s. we have actually blocked, the US market
for the moment. As things like the bitlicense
are kind of flushed out and we see really, what the rules of
the road are going to be going forward.
So you do this by blocking the IP address.
Exactly. I guess out of that brings up
the topic that I wanted to touch on as well.
And I, since the bitlicense proposals come out, I think
every one who's been on that sometimes startup, I've asked
about the bitlicense thing because they are ready to have a
lot of attention. And I think it's a really, it
has in Crazy implications if one thinks through all them, at
least if it goes through the way, it's been drafted.
So I guess I'm sure you guys don't want to get a bit license.
So is your strategy to essentially a block American
users that for the moment is our strategy and I'll say we
definitely do not want to get a bit licenses.
It's currently proposed. The current bitlicense is
basically a free giveaway of the economy to the bank's.
You know they there's nothing in it that's that's really
reasonable for a Bitcoin business.
Certainly not a Bitcoin startup you know and as this is a very
new space we hope that there are many more startups and and much
more Innovation, that will continue to go on.
It shouldn't just stop at this point.
And if you don't have ten million dollars to spend on
licensing and compliance then, An Affleck get out of the
business. So yeah.
I mean we should think that the bitlicense is absolutely the
wrong direction to be going in. This technology is so new, no
one even knows what it's going to be used for in two years or
five years. So how can we make rules like
this for it? That are so incredibly
restrictive. You know, the use of blockchain
technology for messaging for contracts for completely non
monetary things is just starting to really take off.
And in this way New York is, is basically trying to just crush
it. That's the only reasonable
explanation I Can See For why they would propose something
like this. They have no real interest in
facilitating this technology and every interest in finding ways
to make it and unfeasible and unattractive.
The users. But do you guys think blocking
IP addresses enough? Because from my my understanding
it probably is not know what you mean.
Enough is enough legally. Yeah.
Because in the end if let's say a New York user mentioned was
using the Lock Service while they're not in u.s. so with
different IP address. So let's say the user some kind
of proxy. See a Pian.
Yeah, we've he and I think that probably wouldn't necessarily
protect you guys. That's that's not what we've
read and frankly. There's there's no, there's no
technologically feasible way to to make sure that somebody isn't
you know, trying to fool us and using a VPN or something like
that, all we can do is kind of our best efforts and that's
that's what we've done with this IP blocking and Similar stuff.
Now, this is just the general problem, this isn't a question
for us. It's a question for for been
loss key and those who would wish to regulate Bitcoin is.
Okay, you've got these rules now how are you going to enforce
them? You know how are you actually
going to? Well they're not going to force
them at all there. How are you going to ask
companies to enforce this to do all this?
What I considered dirty work on their own customers.
The Bitcoin network doesn't even provide a mechanism In most
cases, you know, for instance, someone sends you Bitcoin to pay
for some Goods at a retail store under the bit like this
proposal, you would be required to gather, you know, kyc
information on this user but the Bitcoin protocol doesn't provide
a mechanism for doing that. So it's really just the
unenforceable silly rule to quote, Steven pair the CTO of
bitpay. Why?
Don't they just put up a great firewall like China did.
If it's on them to enforce this, it's also worth saying that our
goal is to is to maximize access to our services and and, you
know, we are looking for ways to help the u.s. into our, you
know, help them access our product.
So it's hopefully this is just a temporary situation and then
we've got legal teams who are, you know, helping us navigate
sort of the tricky situation that The Regulators have put us
in really? Yeah and I completely agree with
with both of you guys. I mean so in my view and in my
understanding of the bill license film you know one of the
terms in there is that any company underbid?
License means to have a sort of a complete record of all the
parties of all the transactions but of course that is just
insane. Right?
Because the only way in my view to be truly Compliant with this.
If it goes through the way it's proposed is it is a if everybody
does kyc, even if you don't want to get a bit license, just to
exclude the people and just to exclude the New Yorker.
So you can say, I, you know, I don't have to get one and then
you'd also have to sort of It's prevent transactions from
unknown addresses because of course, if it's not known
address, that's let's say paying money into your wallet.
How do you know? It's not someone from New York
and then that's completely absurd, right.
It's literally impossible. But yeah.
Hopefully hopefully, they will sort of come around to something
at least a little bit more reasonable that.
Then would at least not put as much of a burden on the
companies that don't want to get a bit of license, but not to
mention the other customers. I mean, I'm surprised that there
hasn't been more International backlash against this, because
if you're a customer from Europe, for instance, that uses
a service that also does business in New York, all of a
sudden, it's your privacy. It's when you want to do a
transaction, the future, they're going to be asking for your
information. And so, you know, businesses are
really being faced with this. Tough choice to either start
treating all of their consumers everywhere in the world, all
their customers. Everywhere in the world like
just like a bank or even stricter than a bank would or
block New York and for us it's a very easy decision.
We don't want to treat our customers like that.
Yeah, absolutely. I mean I think if you look at it
but it license thing, the implications kind of our that
any company that's going to comply with the bitlicense
thing, you're going to have to make their product a lot more.
Attractive. So I mean, in my case, I seems
very likely that if this go to coinbase left, a starts doing
the license. Well, I probably will stop using
Conway's, right. So, it seems to me that even the
companies that would have to get one, should like a Lobby really
hard, not to you, not to do that.
And I think that even is true for companies that are like
really well funded and have lots of money and For Whom the legal
costs are not such an issue. I think that you're an
alcoholic. Alice is very logical, Brian,
but I don't have faith that all of these.
These companies are actually lobbying against it.
Unfortunately, I think some of them see the opportunity to cut
out competition by raising the barrier to entry.
Yeah. Unfortunately, I'm afraid you
may be right, you know? We certainly haven't seen a lot
of backlash from any of the big companies.
So actually let me repay. Let's briefly go into a topic
that you know, you've been dealing on Is kind of a in your
work for coin, a pole, which is the marketing of Bitcoin
products. Can you tell us a bit about
that? Yeah, sure, yeah, it's
interesting. It's, um, it's still an emerging
market. So there's a lot of audience
Discovery to do and, and coming from a previously working in
London for an advertising company in very well trodden.
Areas of marketing, the contrast is massive, you know, so it's
quite exciting. This is about finding where
people are who might be potential Bitcoin users and
reaching out to those who already are and you know, we've
come up against some hurdles as in, where is there to advertise
them in the Bitcoin Community still quite small and the number
of places to actually put advert suppan and yeah I mean it's it's
exciting stuff for me as I'm walking.
So what are some of those core differences between advertising
in an area? That's I guess,
well-established, versus something on bitcoin.
I mean, you mentioned, I guess lack of outlets media Outlets,
but what else is there? Well, I guess one of the big
differences is that you're not fighting a million companies to
for visibility as well, which is pretty nice.
So, you know, there's There's the potential to, you know get
seen by the people that matter very quickly and that's nice
too. Yeah I mean it's a lot of it is
I think social media marketing based because of the lack of
media outlets and you know I mean you must know with your
show your there's there's your podcast and a handful of other
podcasts that are sort of Lee facing and you know, it's kind
of like that across the board really in the different areas so
that the sort of the less plate, there's less places to be seen,
is a big challenge. Must also be to just figure out
how to communicate, you know, like how do you explain
something like locks because it's you know, it's noon.
Oh yeah absolutely. Yeah and we've you know, we've
had talks about how How to reach out about our products in and
get people to kind of understand what we're doing.
And yeah we're hoping to do a series of webinars so people can
people are interested but they perhaps don't quite understand
you know how it works. Then we can we're hoping to have
some one-to-one sessions with people and you know and get
people to kind of come along to a webinar and We can explain a
bit more. Yeah, that sounds great.
Although that being said, I think you guys actually have
done a really good job and I think it's really intuitive and
easy to use and you know, I didn't have a lot of
difficulties figuring out, you know, how to use the corner bolt
wallet and then including the locks thing.
So I think I think you've done a good job there.
Yeah, great, thank you. I mean we we did do a lot of
work before putting before going to launch to get the product
being really simple to use. Use it, you know, and Visually
really easy to navigate through, you know?
And and I definitely had some things to say about that coming
coming into the space as a non techie, you know, it was I think
it's quite helpful to have that perspective on things and say
you know this needs to be and we need really big clear buttons.
That was so one of my my favorite things and I go to
website and need to see big buttons but yeah I mean it's
it's all those things. You know, we didn't, we didn't
go to lunch until we were happy that our product was gonna, you
know, it was going to be usable for, for the general public
cool. Well, I think it was really cool
talking about the coin up old stuff and I really urge people
to check it out. So quintuple.com, and I think it
can be especially interesting, especially interesting if you
hold a lot of money in Bitcoin, know if you receive your salary
in Bitcoin, if you get paid in Bitcoin, if you sell things for
big, Coin then I think things like the locks been can be super
relevant so you know, urge anyone to check it out and you
know, give it a try. So before we kind of wrap up,
let's you guys have mentioned a really exciting project and and
I am super excited to talk about it, so it's called elected bit
drop. Can you give us a bit of
background on it? Yes.
Sweeping working on the bit drop for over a year.
Now, the basic idea is that we are going to send every single
person in an island nation, some Bitcoin all at once.
So when we're done there, Tens of thousands.
At the end of that day, there will be tens of thousands of new
Bitcoin users and it will instantly become the largest
highest density population of bitcoiners in the world.
We are going to do this in Q4. We are hoping in the next week
or maybe two weeks to announce the the specific date and the
name of the islands. We are we're going to throw a
party at the same time on the islands, where we'll have
educational materials Bitcoin ATMs, we're talking to local
vendors, to get them, to come out, and sell drinks and snacks,
and things like that. And we're just hoping that it'll
be a big Smash. And that these people that are
mostly unbanked will find some use for it and what kind of what
amount will be given to the people.
We are just starting to fundraise.
So really, it depends on how much the community is willing to
send to us. If you go to let the beat
drop.com, there's a donation address.
And if you donate more than like one Bitcoins then we'll enter
you into a raffle and you can actually win tickets to come
down and enjoy the party on our beautiful Caribbean islands that
the because it's been so so long in the making, we haven't really
set a final budget yet, you know, we kind of figured that
whatever the community is willing to give will will
distribute that to the Islanders, with some some amount
set aside for making the For the educational materials for
getting that ATMs and all that stuff down there, and just kind
of operations for the party. I think one interesting scenario
for should be right side, like you giving out this money to the
Islanders. And let's say it ends up being,
you know, three dollars per person.
You know then the question is what's going to happen with
that, right? Is this, that mean people are
going to start using it. And then they have to use Use it
as a sort of to give it a value for it actually to be using
transactions, you know, is that something you guys have thought
about? Whether you may have like
totally different exchange rate in that Locale?
And I guess that, I guess I would only happen unless you
have a liquid Market or if the local currency to bitcoin,
that's very fascinating, you're weird.
Just curious, I guess as to how people are going to use this.
You know, most of these people don't have any access to
financial services right now. So it may be so for and that it
takes a while to really spread the knowledge of how to use it
and what the potential is to spread amongst the people, but
we do think they're going to be a core of people who do get it.
Maybe some of the business owners that were reaching out
to. Now, we'll continue to support
it. You know, we're leaving ATMs on
the island so it will be A relatively liquid Market, it
can't trade too far outside of the global range or else.
The ATM operators will pull pull the islands Market back towards
the kind of international standard.
But really, yeah, we don't, we don't know no one, I don't think
anybody knows because there hasn't been there hadn't.
Been this kind of Outreach to the unbanked communities, yet,
with Bitcoin. And so far, we've what we've
seen with Bitcoin is technically Savvy.
Wealthy people and how they use it and they may think, oh, do I
want to pay with Visa today, or do I want to pay with Bitcoin?
But that simply isn't isn't even an option for for these people?
So we're just looking forward to watching and observing and you
the drop is plan to happen this the end of towards the end of
this year, right? Or yes, in q 4 q for cool.
I mean, I think this would be super fascinating to see what
comes out of that. Like, I really, I can't wait.
I think it's like an amazing experiment.
I think that the MIT thing is a bit similar, right?
Of course, it's totally different audience.
So it's great that, you know, to similar so kind of like Drop
projects are happening at a similar time.
Everyone is your targeting, some of the best educated.
Well off, most technologically savvy intelligent people.
And then you have another project that targeting really
like, low-tech, poor and unbanked people the bassoon.
So cool to see, you know, how we're kind of different uses
will see you a Bitcoin. I'm excited to see what how this
will be different from that in terms of because the government
have got behind it. The local governments, you know,
whether the fact that they will be sending out educational
materials to the pop the people whether that will have an impact
at you know the impact differently on how the public
kind of take to bitcoin. That for me is to come out a
fascinating thing to to wait and watch.
Yeah, absolutely. Yeah, it's cool that you guys
managed to kind of get the government behind that.
That's I think of course that makes it easier.
Also the like the smaller the place it go right.
The more effusive I think you will have less of a kind of
influence of Banks and the paranoia that perhaps makes this
difficult in other places. Absolutely.
And the government's been very very nice to us.
You know, I think in addition The smaller, the government's
and the smaller the place, the more open, they are to
Innovation and trying new things.
And that's kind of what we're seeing here.
You know, this is a relatively poor country and they are
willing to try new things, to improve the economic conditions
that they have. And and frankly, I think that
they're going to succeed. Cool.
Well, I'm super. So if people want to check this
out and if they want to participate, It what are the
best ways they can do that? At the moment?
We're still working out some of the finer details.
So the best way to participate is to go to let the bit drop.com
you can there donate and watch for more details.
You can follow us on Twitter. Our Twitter handle is the bit
drop. And, as I mentioned earlier, in
the next couple of weeks will be coming out with much more
details, about the Project's, the name of the islands, the
date, Hopefully some of our musical guests and things like
that, that are going to be attending the party.
So yeah, just follow us on Twitter, check out our website,
let the bit drop.com and we'll keep you up to date.
Cool. Well, thanks so much for joining
us today guys. Perhaps before we wrap up,
Freya, do you want to talk a little bit about tell us a bit
more about the podcast you've been doing?
Yeah, I can't do so. Yeah, I've just been running a
podcast for about four months now and I was, I got into
Bitcoin listening to podcasts that we're coming out of the USA
and and and they really got me fired fired up and excited about
Bitcoin. And so, you know, I just I
thought perhaps would be good to have different voices in the
mix. So yeah.
So I thought doing my podcast, which is a Bitcoin UK podcast
and would be a good idea to kind of, yeah.
Just to expand, you know, the number of places where people
can go to get information and, and that, you know, focus on
what's happening in the UK as well.
It's a lot of good stuff going down, you know.
Absolutely. And I think those are very huge
podcast in Europe and And there's, you know, mean assembly
both in Europe and this year's. I don't know if there are any
other. Well, notice there's some
Moore's. This one nostril and there's
another one in Germany. I know, at least but they say,
yeah, this definitely not as much as in u.s.
So I think it's great to see another European focused podcast
as well. Absolutely.
And then there's room for even still.
Yeah, absolutely. Well, and thanks so much for
joining us today, guys. You know, we speak great to talk
about the corner pole talk about regulations, and let the beat
drop a project. So yeah, thanks so much for
joining. Thanks for having us, Brian.
Yeah, and of course, what's the thanks for listening to the
show. If you want to support us, you
can do so by donating and you can either the Epson a
Bitcoin.com tips. And also follow us on Twitter at
Epsom Derby. He see.
And if you what's also very helpful, This leaving us in
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