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
An Interview with Jee Mee Kim, Principal at HR&A Advisors
by Jee Mee Kim
May 17, 2018
This interview with Jee Mee Kim, principal at HR&A Advisors, was conducted and condensed by frank news.
What is the role of an advisory firm in relation to government agencies, city planning, and architects? How do you fall in to that mix?
Our work is really focused on helping cities. Either at the level of a private developer or a land owner trying to figure out what they should build on their site or helping the mayor of the city determine how to create an economic revitalization strategy that will bring jobs and reinvigorate downtowns and position them for the next economy. So, it really varies.
We also have a lot of open space and transit projects. For open space projects in particular, we help clients think through creating a design that is respectful of the urban context and supports their vision and goals? We help clients think of ways to pay for upfront costs of construction and ongoing maintenance, often through real estate as a vehicle for funding.
We also help clients think through the political and community buy-in needed for a project of scale and impact . It boils down to bringing all of those different pieces and perspectives together to create and help shepherd a project along that both satisfies the public goals as well as private interest.
Which projects do you see as a passion?
I've been exposed to a lot of places that are not big cities. I've been a planner for almost 20 years and spent most of my time in New York. Recently I started to get projects in the Midwest. I've been spending a lot of time in Indiana which is having a bit of an economic boom. For example, Indianapolis is really thriving: Salesforce just located its second headquarters there.
There are so many small cities across the US that are thriving and doing really innovation, interesting things. And some of these cities are former Rust Belt cities that are reinventing themselves. As New Yorkers, big city dwellers, we tend to think we’re the center of the universe
These places that are in the middle of cornfields that have traditionally been very auto-centric. Maybe have a small Main Street, but these places are largely single detached homes with the yard and garage.
If they want to entice young people, professionals, and if they want to grow their population, they need to create places that are like the neighborhoods of New York.
As a consultant, I have the privilege of being able to travel across the country and see so many different types of projects. I love being able to share what I see and learn with my clients all over the country and even now in Saudi Arabia.
We keep hearing that young, expanding families are choosing to move out of New York to other cities, rather than to the suburbs.
I'm totally seeing that. I think places like Indianapolis and Pittsburgh, are realizing they have competitive edge because the quality of life is still pretty good. But the housing costs and the cost of living are so much lower.
They're trying to figure out, how do we create these amenitized communities that can really attract people who once lived in New York or Chicago or LA, and entice them to come to their cities? They're really making investments in their downtowns, parks, and waterfronts. That's really cool.
How do you see this playing out as a planner? What are your biggest concerns and hopes?
I think there's a running debate. I was just at a planning conference, and I was on a couple of panels talking about the future with autonomous vehicles.
The other scenario is that because you have broader and cheaper accessibility to AV technology, people will want to live even further out. We'll see greater sprawl. We'll see more cars and more driving.
Obviously, it's unknown right now. What I think is really positive is the move towards creating these downtowns. It's really heartening because a lot of these places, especially the Main Streets that we're looking at, those Main Street retailers have suffered over the past 30 years. The discussion you hear a lot is there's still a future for brick and mortar retail because people want to go to a store where they can have an experience. I think of Warby Parker, that revolutionized how you purchase glasses. I was in a Warby Parker and I said, "there's never a crowd like this at a LensCrafters."
I think that's what cities are embracing now, that they have assets they can take advantage of. I think on the optimistic side, with more people living in cities instead of living in these big sprawling suburbs, where you're driving everywhere, land value is tied to walkability. There are clear statistics that having access to transit, parks, and bikeable, pedestrian friendly streets, actually increases property values. It's this virtual cycle of what makes a great place.
That's heartening.
But the suburban revolution, is it really over? No, the suburbs are actually trying to figure out what to do now. How do we become relevant again?
What are your thoughts on loneliness? When you're driving your car alone there's loneliness, highways, loneliness, shopping online, loneliness. We're craving human interaction, and I wonder if this psychology factors into your work.
How people are experiencing technology is changing, social norms are changing, and so many people work from home. They work these off hours, and somebody could have made the case, well, we won't need offices anymore. But WeWork spaces and coworking spaces are so popular. People are willing to pay money to be surrounded by other people, even if they have nothing to do with the business that they're in. Maybe it is the loneliness. Being at home and working all day in your pajamas isn't all that interesting.
Secondly, people still thrive on the social interaction and the bumping into each other and sharing ideas and this notion of the agglomeration. There's a reason why institutions and hospitals are clustered together. Because of that bumping into each other.
As planners we always think about those spaces. There's a reason why public plazas are so popular. There's a reason why people are craving sidewalks, and bike lanes, and nice parks.
It's intrinsic to the human condition. Cars and the highway revolution took some of that away. There's still a place for it, I'm not going talk about it as someone who wants that one-acre lot with a yard. We should still provide options. I think if we can create better cities, it's going go a long way for everyone.
You're creating more vehicle miles, more travel - there's just more of an impact. Whereas you add a 10-story, 20-story tower in Manhattan, most of those people are going take transit or walk or bike.
In a past job, I worked on the Barclays Center Arena. People were freaking out. I worked on the transportation side and said, "well, you're putting an arena up. It's like Madison Square Garden on top of one of the best served transit hubs in the city." It's probably unprecedented to have an arena so well-served by transit. Would you rather have it here, over in some less dense location, where you're going have to create all this economic activity? We can guarantee a lot of people who come are not going to come by car.
Where does community come into that?
Well, that's the thing about planners, and this is where we can get more on the fuzzy side because so much of the work we do has to do with community engagement. In some cases, it's not just about notifying people that some project is happening. I would say 80% of the projects I do, there is some form of robust community engagement where you're getting people's feedback. I think the multidisciplinary folks I work with, generally are very attuned to recognizing the history of the community and recognizing the different tensions and dynamics of a place. What you're getting at is how do you deal when a neighborhood changes? When a neighborhood increases in value? Are you displacing people? What happens to the folks who can no longer afford to live there?
We've been spending more time in recent years, really thinking about how you do inclusive development and inclusive planning. How do you create more opportunities for affordable housing? How do you mitigate the impacts of just creating a place and only thinking about space? You have to think about the people. That is part and parcel of all of the projects we work on. How do you make sure that the economic and social benefits of a new investment, of a new project, of a new building, don't just serve one group? Especially in many communities, you have these historical neighborhoods that have always been underserved. How do you make sure those benefits occur to those folks?
What's one piece of technology you're really excited about that you think it going have a big impact on city planning?
I've learned a lot about autonomous vehicles recently. I think transportation has informed the way our cities look, has informed the way our communities look. I think we take so much transportation related stuff for granted.
The way we move is so important. New York is such an exciting place because it's easy to get from point A to B, barring New York City traffic issues. With new transportation coming online, it's going to change the way our places look. It's going to change behaviors. It's going to change economy. There's a lot of talk about what happens when trucks become autonomous? What happens to all those truck drivers? It has this ripple effect, and I don't think we really figured that out.
How did you come to this profession? What's your background?
Some people are fascinated with their cities as children, that's what they do. I always liked to draw. I went to school, and I got a BFA in Painting. I painted landscapes. I loved that. And then I got an American Studies degree at the same time, and I did a lot of research on immigration and cities. And then, when I was an undergrad, I got tired of naval gazing. That's what I called it. I got tired of being an artist. I became really active doing community organizing work, mostly in New York's Chinatown, doing tenant organizing, vendor organizing, youth development.
As I was working on a volunteer basis and having other jobs, I thought I should go to planning school because that's going make me be a better organizer. I felt like there were certain things we wanted from the city, but I didn't understand how you get to the actual implementation. When I went to planning school, I was set in my ways. I'm going to be in the nonprofit grassroots sector forever, and I graduated and I needed a job. And there was a small company called Sam Schwartz Engineering, and I thought I would stay there for a year because I needed work.
They had a marketing position. I didn't know anything about the business of consulting. I didn't know what marking did. I didn't know what engineers did. I just took the job. And then about 14 years later, I decided to leave.
I did all sorts of work from doing land use approvals in the city, environmental review, transportation planning projects, to building up a great network of people around me. And then I came to HR&A. A firm I worked with a lot in the past. I was always fascinated by economic development and real estate, and more recently on issues of resilience and dealing with the impact of climate change. So, I ended up here. It's just an interesting career, because you really do get to do so many different things, meet so many different people, and go to so many different communities.
As a consultant, I would say consulting is not for everyone. It can be a little crazy, and also, it's really a business, right? There are some down cycles that you have to muddle through, but then there's also intense moments where you get 10 jobs at once. I find it exciting because I don't think I could work on the same project for four years. A lot of learning, and I really like that.