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
The Center for Urban Pedagogy
by CUP
May 22, 2018
This interview with the Center for Urban Pedagogy (CUP), was conducted and condensed by frank news.
What is CUP?
The Center for Urban Pedagogy, or CUP, is a non-profit organization that uses the power of design and art to increase meaningful civic engagement, particularly among underrepresented communities. There are many barriers to civic engagement, but the one we focus on is the barrier to how hard it is to understand the policy and planning issues that impact peoples' lives. In order to address that, we partner with community-based organizations. We're trying to reach people where they live, work, or go to school, and help create tools that break down those complex policy and planning issues so that they can have a voice in the decision making on the issues that impact their communities.
Can you talk about the Toolkits you make?
For most of our projects, community organizations apply to work with us, and they tell us what issues they’re having a hard time explaining to their constituents. What policy or planning process they're having a hard time explaining, and why that's creating injustice in their community.
For the Envisioning Development Toolkits, we were finding from our community partners that there were certain land-use processes that organizations were having to spend a long time explaining to their constituents. Every time they'd have a meeting to organize around a particular issue, they would have to go back and re-explain these complex issues, such as how affordable housing actually works, how zoning works, and so on.
They were looking for a tool that would help people understand those complex concepts so they didn't have to go back into it from the very beginning every time. That's what the toolkits grew out of. We spent a long time working with a steering committee of community-based organizations to work on land-use issues to understand what tools they needed, what concepts they needed to explain, and testing with them.
These are hands-on workshop-based tools. They're very interactive, and we spent a long time, at least a year of research, and developing the mechanics of how the workshop will work and extensive testing with those community organizations, with their constituents to make sure that the workshop is actually explaining information they need, and in an accessible way.
We also interview a lot of stakeholders and many decision makers to create an accompanying guidebook as part of the toolkits. The ULURP guidebook includes detailed information about the ULURP process, who is involved, case studies, and how to run workshops on your own.
Which particular communities are engaging with the toolkits?
All over New York City! Just a few of the organizations that we've worked with for quite a long time include Fifth Avenue Committee, which is based here in Gowanus. They do a lot of affordable housing development, and they've been a partner of ours for many years. They're actually going through a rezoning right now. The neighborhood is going through a rezoning, so we're also working with them on doing affordable housing, zoning, and ULURP because each piece of that is really critical to understanding rezoning overall and how they can be involved in the rezoning process.
Other organizations include Community Voices Heard in East Harlem and GOLES, which is an organization on Lower East Side, those are some of the organizations that are really on the ground on land-use issues.
What is ULURP?
ULURP is the main public review process that New York City has for major developments, rezoning, large scale land use changes. They have to go through this very specific process, and there are a variety of players throughout the city, and there is a very specific timeline. A lot of people find the process very hard to understand and intentionally or unintentionally opaque. This process really impacts people across the city, and most people don't know how to engage in it.
The interactive workshop lets people learn about the ULURP process, the different players involved, and the role they can play in decision-making. We actually use a sandwich metaphor for the workshop (instead of reviewing a decision about a building, players are reviewing a proposal for a new sandwich) and each participant plays the role of a different stakeholder or decision maker in the ULURP process, so they really learn the process by being a part of it.
Has it been tested with community members directly already? Are people able to engage with it in an effective way?
Yes. We've been testing it for over two years. Doing workshops with community organizations who are going through a ULURP process, communities that haven't gone through ULURP yet, but know that it is going to happen in their community at some point. But really just getting extensive feedback about what works and what doesn’t.
When we do the workshops, we do pre and post evaluations in terms of, do people know what ULURP is at the beginning of the workshop, how comfortable are they at talking about it, how comfortable are they about the concepts? And then, having them do a survey at the end of the workshop to really make sure they're feeling confident in understanding this very complex process and these concepts.
What are CUPs long-term goals? What else do we need to know about CUP as an organization?
People are dealing with this on a daily basis. No neighborhood is not going through something. We have had so much interest in these tools and making sure people have this information.
We’ve created other tools, including an online affordable housing map, so if you live in New York City, you can go online and look at the income levels for your neighborhood to see who really lives there and what is truly affordable for that neighborhood. As a companion for the Zoning Toolkit we did an online component called, "What is FAR" which stands for Floor Area Ratio. The online tool lets users build out a neighborhood and understand how buildings get built, the sizes of the lots, and their setbacks. It lets you understand how zoning shapes buildings and neighborhoods.
CUP works on all kinds of other issues too, from projects that explain the rights of immigrants to how to navigate complex processes in the legal system. People can learn more at welcometocup.org!
More information on What Is ULURP? can be found here!
The Center for Urban Pedagogy (CUP) officially launched their What Is ULURP? Toolkit on May 2nd, with a weeklong series of free workshops for community organizers, community board members, and neighborhood advocates.