interviews
Crypto For The Cash Economy
by Daniel Polotsky
January 22, 2020
Daniel Polotsky is the CEO of CoinFlip, the leading Bitcoin ATM Operator in the US.
frank | How did you get into crypto?
DP | It was around 2013 that I found out about Bitcoin for the first time. It kept popping up in news articles. I wanted to buy some after it appeared on my feed for the fifth or sixth time. I thought, "I've read about Bitcoin, it seems like a cool thing, like a cool alternative money investment that's not issued by the government, decentralized, something that's never been done before," so I decided to purchase them.
I went to the first Bitcoin ATM in Chicago, it was at an empanada place called Cassava. I put in cash, received a coin, but I didn't like the process. The bills kept going in and out – it took a really long time to get the bitcoin. I didn't want to do it again when I bought it again. Instead, I went on a site called locabitcoins.com which back in the day, had these listings where you could meet people in person to purchase Bitcoin.
We met at a Starbucks. I'd put down cash and she would send me the Bitcoin. We kind of got to talking and eventually decided even though the Bitcoin ATM I had used back in the day wasn't super user friendly, it's still in theory a better idea than meeting people in person because it's not safe. It's not really scalable. A single person can't meet with 23,000 people a day. There's a limit.
So we decided to work on the ATM thing. I was a sophomore in college, I was 20 years old, I was at Northwestern and I kept working on it. By the time I was 22 and ready to start a full time job, the opportunity at CoinFlip was too good to pass up. We had just under 20 ATMs – that was two, three years ago.
Fast forward to today, we're the largest Bitcoin ATM company in the world by volume, with 420 locations across the United States. Obviously we're growing and I hope to be able to get Bitcoin in the hands of as many people as possible.
This is different from the other conversations we’ve had about Bitcoin so far, in that most people aren’t treating it like a currency but rather a stock, or investment. But a Bitcoin ATM is tangible, immediate, more cash oriented. Do you find that because there's a physical component to what you're doing it's easier to explain to people?
What you were saying about currency versus investment, I don't know if I agree with that. I think Bitcoin can be used as a currency eventually, but in first world countries like the United States, it is still more of an investment or means tool.
I definitely agree that the physical element makes it very easy to explain to somebody. Its familiar. Essentially all you're saying is, "Okay get some cash. You already have a phone number, download a Bitcoin wallet, you're going to put the cash in, you're will see the exchange rates, you're going to input your QR code which is that black and white square, and then you're going to receive the Bitcoin instantly."
That sense of instant gratification and the physical component definitely makes it accessible. Because the ATM is something in a convenience store that you see in real life. They're not just moving imaginary money around.
How do you interact with something like Coinbase?
Coinbase is an online exchange where the exchange actually holds your money. You wire money from your bank, they hold it, and then you trade on the exchange, using the dollars that you have on the account. We don't hold customer accounts.
So for example, we don't have an account where you can deposit money and then hold it and then trade it. You insert the cash, we immediately do a conversion of the Bitcoin and then you receive the Bitcoin, it's on your phone. You own it, we are not the custodians.
You're not a custodian or a wallet at all?
We are working on expanding into a wallet, but no, we are more like a currency exchange. You go to a currency exchange, you get quotes for an exchange rate that tells you, “it's this many euros for this many dollars.” That's more similar to the model I see us as, as opposed to a company with a mechanism that people use to trade and speculate with continuously on.
Other than speed, why would I do this in person and not online?
Not everyone has a bank account. It's 30 million people that can't afford bank accounts, don't trust banks, don't have banks, think banks are inconvenient, or say they don't want to use bank accounts. They might want to use cash. There's a bunch of workers that get paid in cash.
There's a whole cash economy and you can't use cash at Coinbase.
They only take a bank wire transfer or a ACH. So you literally cannot use cash there. It’s a quick, easy and convenient way to use a different payment method to get it.
Does it work in reverse? Can I cash in my cryptocurrency for U.S. Dollars?
It actually does. We have around 30, 40 units where you can do exactly that. You send us the Bitcoin. Once we get network confirmation, you scan your ticket at the ATM and then cash will come out. It does go both ways.
Do you have competitors? Are there other ATM options?
Yes, there are other Bitcoin ATM companies. None of them have the volume and the low fees that we do, but they do exist. Like I said, we're the number one Bitcoin ATM company by volume in the world, but we do have competitors and they tend to be in the United States, but there are probably in the world 5 to 6,000 Bitcoin ATMs.
Are most of them in the U.S?
A pretty big chunk are in the United States. That's typical. The United States is often a leader in emerging technologies because we have systems in place where people are entrepreneurial and whatnot. Plus we have a large cash economy.
What is the sale for the convenience store? Why would they want them?
The convenience store gets the best deal of anyone. I mean, they get a check, our ATMs are really small. They're probably one and a half or two square feet by five feet. So it's really easy to place them inside a convenience store. The convenience store is not going to be able to monetize that square foot any meaningful way other than receiving rent from us, and we also give them the option for a profit share. In addition, we bring in around 1,500 people a year to any given location. So it's absolutely free advertising for them. It's not like you just see a Bitcoin ATM and you use it. You're literally searching for it and then you go to where it is. So we drive traffic specifically to that store and they can always buy something when they are in there, chips, soda, whatever it is. So there's absolutely no drawback for the convenience store.
What excites you about Bitcoin?
The thing I like a lot about Bitcoin is, you know it's deflationary, right? I love Bitcoin because of that. The U.S. dollar loses 1% to 2% of its value per year because of inflation and the government printing more. Bitcoin itself is limited in numbers, so it's a better way to keep your money long term. The blockchain it's built on is fraud proof. It's public, everyone sees it, it's fast. You can send money halfway across the world in 10 to 15 minutes, it's borderless, it's cheap. The average fee to send is probably $2 to $3. What's cool is that there's no one single issuer.
So you can't turn off the coin.
You can't sue Bitcoin. There's no company responsible for Bitcoin. It’s all around the world. It's very resistant to being able to be stopped. It's kind of like digital gold I would say. That's what I like to say about Bitcoin, it combines characteristics of a commodity and a currency. It’s something that's never been done before. And I think it's very important to keep the centralized entities like banks and governments in check. If they ever go haywire, which they have in the past, there has to be some alternative. Some digital alternative that isn't as cumbersome as gold to obtain that the average person can get.
This decentralized economy is what I’m excited about. My goal with CoinFlip is to get Bitcoin into the hands of as many people as possible so that people see what is really so cool about this Bitcoin and why it really is the future.
Not that it's going to replace Fiat currency and replace dollars, but it's an alternative and it's always important to have an alternative.
Is your prediction that this becomes a widely used and accepted form of currency in the US?
Yeah, I could always see it in unstable countries, it could even be the number one currency. In stable countries, it might be number two currency or it could just be used as an investment vehicle. But I do see it as being perhaps the global reserve currency, within 10 to 20 years as people build trust on it. It makes sense for the countries of the world to not want the global reserve currency to be issued by one country. It used to be the pound, now it's the dollar, it makes sense for it to be decentralized and not one entity responsible for it. It makes a lot of sense in my opinion.
If it does go that direction what policy will come form around it or do you think it can exist as free as it is now?
I think it's actually one of the biggest myths that Bitcoin is not regulated. That's what everyone loves to say, but it's not true. Pretty much every applicable brand in the U.S. Government has come up with regulations regarding Bitcoin. The IRS came up with guidance for how to pay taxes on it. The SEC declared it as not a security and also declared guidance on how to determine whether or not projects that are Coinbase, like blockchain-based are securities or not. The CFTC has also regulated Bitcoin as a commodity and FinCEN, which is our regulator, is the financial crimes enforcement network and we're definitely heavily regulated by them. We're treated as a financial institution.
We have anti money laundering in our customer policy, so there are rules for Bitcoin.
It's a great system and I think that it's come far from it's early days. But now I think that you still need some regulation, some basic rules to follow, even if it is a borderless, permissionless system and there are those in place in the United States.
I want to get Bitcoin again into the hands of as many people as possible and lead the financial revolution. I want to place 1,000 ATMs by the end of this year and hopefully 3,000 at the end of the next year. In addition, we're working on having an OTC desk. That would allow us to actually trade Bitcoin and other cryptocurrencies in exchange for wire transfers and vice versa, so that's something I want to expand into. And we're also working on a wallet and an app.
What is the app?
The wallet is the main component of the app but it's basically going to be an easier version of our website. You know, just the main parts, probably the map, customer service, or awards program, and obviously the wallet. So we're going to have our own wallet where people can purchase Bitcoin and that's something that's really cool because it's an additional service we can offer to our customers, an additional way we can communicate with them.
Amazing.
interviews
Daan Roosegaarde on his practice and Earth's future.
by Daan Roosegaarde
May 15, 2018
This interview with Daan Roosegaarde, the founder of Studio Roosegaarde, was conducted and condensed by frank news.
Studio Roosegaarde is the social design lab of Dutch artist and innovator Daan Roosegaarde. Together with his team of designers and engineers Roosegaarde creates landscapes of the future for a better world. The studio connects people, technology and space to improve daily life in urban environments and spark imagination.
Image via Studio Roosegaarde. Poland.
Thank you for taking the time, I appreciate it.
My pleasure.
I’m curious how you move between planning, performance art, public art, and design.
I'm a hybrid. I remember when I was 16 my parents asked me what I wanted to do. I said, I want to do art, I want to do science, I want to travel, I want to be entrepreneur, I want to make things. Everybody got really confused and a bit worried. For two weeks they had me do interviews and tests with teachers, a psychological person, and other students. The conclusion after two weeks was what I wanted did not exist. I was sad for one day, and the second day was like, I'll just do it myself. That mentality, that kind of curiosity, always remained.
I look outside my window and see traffic jams, air pollution, CO2 levels rising, and don’t understand the world.
It’s definitely about connecting all the different sectors you mentioned.
How do you conceptualize such large scale projects?
It starts with the statement. The global challenges, the rising sea level, the air pollution, the CO2 emissions. They're bad design, that we created as human beings. We can do two things: cry and be sad in a corner, and blame other people. Or, we can say, we created it, let’s engineer, and design our way out of it. A lot of the projects have a practical attitude, as well as a poetic approach. The Earth is our playground. It’s our canvas.
Does permanence mean something to you?
It’s about impact. We’ve done Waterlicht, the blue light show about the rising sea level, in different locations. At the United Nations in New York, or Museumplein Square in Amsterdam. I think people are still talking about it, even though it was only three nights. I don’t see a different value in permanent or temporary. But we definitely do both.
Image via Studio Roosegaarde. United Nations Headquarters, New York City.
Can you tell me about the Smog Free project? Are you looking to expand them?
Image via Studio Roosegaarde. Beijing.
Yeah that’s a project that we initiated in the studio — self commissioned. Fighting for this dream of clean air. And again, correcting reality.
It created a trigger where new smog free solutions are designed. Like the smog free bicycle, or smog free ring. We're also working on designs, not just correcting reality, but doing it right the first time. Like the energy harvesting kites [WINDVOGEL] which generate power through the push and pull of cables via the wind. At 100 kilowatts per hour, that’s enough to supply 200 households green energy. We can generate energy without polluting.
We’re infiltrating and correcting reality, and making proposals of how to do it right in a whole new way. The projects are definitely growing in terms of scale and cities.
How far does the Smog Free Tower reach?
You can clean 30,000 cubic meters per hour. A soccer stadium in a day and a half. The range depends on the type of pollution, wind, humidity, things like that. We know how much cubic air we clean, that’s a solid number. It’s really varied per city.
For example in Krakow, we really made an impact on the park scale. Making parks 27% cleaner than the rest of the city. These kinds of fine particles are 40 times smaller than your hair, they’re nano-particles. They’re really hard to measure. You don’t smell, feel, or taste them, but they’re there, and that’s why they get so deep into your body. We really have to do extensive scientific research to have the validation. We try to in every city.
How long did it take to develop?
Two years to build the first one. And then it really kicked off. The Chinese government got on board. Poland, the Netherlands, and we are developing in Mexico, Columbia, and India. For me, it’s a movement. It’s making clean air parks with the towers, clean air bicycles so you can bike without being polluted. You’ll see a whole new series of smog free solutions in the coming years. Of course, we workshop with universities who are experts in the field to say, hey, what do we need to do to make a whole city smog free? It’s a long term campaign. It’s not just the tower. One tower is never going to fix the problem.
Image via Studio Roosegaarde. Poland.
Are you optimistic about the future of our environment?
[Laughing] No! No, no, no. It’s a bleak world. Somehow we're very creative in finding ways to not adapt and not change. We’re spending 1.9 billion euro every day on war on planet earth. But somehow, we find excuses not to invest in new ideas. Out of mismanagement, or hesitation —
It feels like we’ve run out of time. I don’t think there’s a lack of money or technology in the world. There’s a lack of imagination and curiosity in how we can live a better life. And that’s a bit sad. Because we’ve created the problem, so we should also fix it.
And even worse, it’s not just Earth.
Our latest project, launching in October, is focused on space waste. 29 thousand particals, caused by us. Broken satellites, missiles, etc. If a particle hits an existing sattelite, because of the speed, 17,000 kilometers per second, the sattelite goes down. No more Facebook, no more website, no more banking.
And nobody knows how to fix it, ESA, NASA, Space X — nobody knows.
Then again, I think we have an obligation to persist and to be curious. And to be honest, I don’t know what else I should be doing with this life. I’m a voluntary prisoner of my own ideas in that way. A happy voluntary prisoner.
But the answer is no, to your question. I’m sure you expected a yes, but no. It’s problematic.
Do you find your work engages and incites a curiosity where we’re otherwise neglegent? Because it looks and feels like art.
Absolutley. It’s great to inspire people, but it’s also factual. The Energy Harvesting Kites can produce electricy. The Smog Free Tower creates clean air parks. So it’s inspiring, but it’s also making sure it works. The facts matter. The science matters. The poetic and inspiring part is as important as the pragmatic, make it happen attitude.
That might also be a Dutch thing. We live below sea level here. Without technology and without creative thinking we’d all drown. We’d all die. But somehow we stayed here and created a system of windmills, pumps, canals, and rivers. We could've easily moved to Germany to keep it safe. But we didn’t. We live with nature, we fight with nature.
Do you have scientists on staff?
Yeah. I’m the son of a math teacher. I was raised by scientists. I’m definitley more of the creative. I have a team of designers and engineers and they work on the idea that I have. To go from idea, to prototype, to pilot, to final product or project. On some projects we work with external experts.
With The Smog Free, we work with experts in smog. We have our own core team, Studio Roosegaarde, and then per project you want to work with the best.
Every week I learn a new word. It’s a good life. You’re always an amateur when you start something new. I'm learning every week, and that’s really fun. I’ve done all this stuff, but I’m still learning. It makes it fun for me. These are group processes, but I’m at the beginning and at the end.
Are your parents okay with how this all worked out?
Ha! I’ll tell you a personal story, it’s funny. They’re both teachers. And of course my work is always about art and architecture and design, but it was always a bit abstract for them. They see it’s going well. But a year ago I became a visiting professor at Tongji, in Shanghai. They called me to say, we’re so proud! That’s the world they understand. They come from education. A visiting professor, it’s like the highest goal. It’s just a title, I think I’ve done other things to make them proud. But everyone has their own world and way of appreciating.
They’re not worried anymore.
Congratulations!
Take a closer look at Daan & Studio Roosegaarde's work below.