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
BIGHT: COASTAL URBANISM
by Susannah Drake & Rafi Segal
May 26, 2018
This interview with Susannah Drake & Rafi Segal was conducted and condensed by frank news. Bight’s project team is Rafi Segal & DLANDstudio (Susannah Drake), Sarah Williams, Greg Lindsay, Brent Ryan, Benjamin Albrecht.
Susannah: My name is Susannah Drake, I'm an architect and landscape architect, and I'm the principal of DLANDstudio. Also, I've taught at various schools including the Cooper Union, which is where Rafi and I met, teaching an Urban Design Studio.
Rafi: I’m Rafi. I’m an architect. I run a practice under my name and I teach at MIT, primarily around the questions of the city, or the future city. I guess you can say I’m an urbanist. The courses bring architects and planners together, which hasn’t been the case in this country since the 1960’s.
How has it been working together?
Rafi: We know where to come together and where to split. This is how we cover ground: we converge and then split.
Susannah: It's respectful but not conciliatory.
Rafi: My work concentrates on urban architecture: the reading, or understanding of the city. How context informs project. Susannah has a broader scope of of dealing with landscape and the environment.
Susannah: The fabric of the city, but also the ecological systems that impact it. Infrastructure acknowledging geology, hydrology, or ecology - to integrate architectural and engineered systems with natural systems.
What is BIGHT?
Rafi: Have you ever heard the term “BIGHT” before?
No.
Rafi: No one has!
Susannah: It could be quite provocative! We should step back and talk about the Regional Plan Association (RPA) and the origins of all of this. The BIGHT project is a component of the Fourth Regional Plan for the future of the metropolitan region: Connecticut, New York, and New Jersey. The first plan was about concentric circles of development around Manhattan.
Rafi: This is in 1929.
Susannah: The fourth plan is a dramatic shift: from circles to corridors.
Rafi: The Bight is the waterfronts of Long Island, New York and New Jersey. The barrier islands, harbors, constructed and naturalized landscapes. It comes with a set of issues: climate change, sea level rise, flooding...
How long is it?
Rafi: 600 Miles or so. It’s very big. Let's backtrack for a second to give you a bigger picture. I mean, why do we need such an institution? Why does the RPA exist? The premise back then was, ok, NYC is growing and designing itself, but who's looking at the region? So RPA initially came in to fill the gap with research in urban planning.
Susannah: It’s a national competition, funded by the Rockefeller Foundation.
Rafi: The prompt was, how do you approach urban design of the future? What are the main issues? Who do you engage? What’s the narrative?
Bight City, Jamaica Bay 2067, view across lagoon: ‘wet city’ housing along the lagoon’s edges protects the ‘dry city’ behind it.
Susannah: They wanted to look at different scales of of issues happening in the region. So we looked at a little barrier island, a small community. The we looked at a second area, Jamaica Bay, which is very complex: multi-jurisdictional, also a national park, you know, just about as complex as you can get. And the third area is a post-war suburban community, on a waterfront, but not the same as affluent waterfront areas in Long Island.
THE SITES TODAY
Existing elevated rail, Rockaways, 2017 Sea Bright, New Jersey, 2017: a barrier island flooded from both ocean- and bay sides. The sea wall and elevated beach clubs will remain as the island disappears under water.
PROJECTED VULNERABILITY AND ADAPTATION PLAN
New Mastic, 2050: projected flooding (left), proposed plan for future development (right), densifying high, dry ground while permitting some homes to remain in wet areas as they evolve into a new elevated neighborhood built along docks.
What are the primary climate related issues happening to all of these areas?
Susannah: Sea level rise. They're all in vulnerable areas. Some of them are built on barrier islands, where there really should never have been any development.
It's a dynamic landscape that changes. That is influenced by winds, and currents, and the cycles in the environment, the shifting tides changing the water table. No one should ever build a house there that's permanent, but we have, for recreational purposes or for pleasure. Initially there was a more realistic relationship to the environment in these places. A summerhouse might have been a cottage. It wouldn't be used in the winter. A much lighter touch on the environment. But over time we've changed our relationship to the environment. As people we feel like we're much more invincible. We built hardened structures. But the nature of climate has gotten stronger as our architecture has gotten stronger. And nature's winning now.
Rafi: So we identify a pattern here: that we're building more and more along the coastline, in an area increasingly prone to risk.
How do we work with that and begin a process that requires change? Change is difficult for people to grasp. This was, in a sense, the challenge: not the planning itself, coming up with a smart plan is one thing, but finding a way to communicate and frame an issue is another.
Susannah: We tried to valorize or make positive the idea of retreat. The whole notion of retreat is seen as a pejorative term. It's seen as being fearful, or weak. But look at military strategy. There are times when you need to retreat so you can go back and fight again. You can look at it as poker, sometimes you fold to save resources. So you can keep playing and win.
We came up with a term for a project, a different RPA: receive, protect, adapt. To change the idea of retreat we say received. It’s a proactive development approach to attract people away from the water's edge.
Rafi: To identify areas that can grow, and then use them as anchors.
Sending and receiving blocks: a strategy of switching people and densities over time from high risk areas to dry ground.
Jamaica Bay: projected flooding proposed plan for future development. Flooded ground becomes parks and open water, while dry areas such as JFK are protected and intensified. The result: a new square-toothed “Bight City” comprised of waterside neighborhoods.
There are a lot of maps in the project...
Susannah:
One of the critical discoveries we made along the way happened through mapping. And a recognition of the things we draw and how we draw them.
For instance, Sarah Williams did a tremendous amount of GIS [geographic information system]. She overlaid these maps, and we discovered these development corridors on higher ground. Places with existing right of ways that we could build upon. That didn't get flooded. They were an existing strength... potentially expandable and valuable.
Densifying high ground for New Mastic.
We also mapped infrastructure systems. They were completely disconnected, highlighting the vulnerability of waterfront areas to periodic storm surge, or even longer-term issues like sea level rise. To show a vulnerability but also this opportunity we conceived receive, protect, adapt.
Rafi: There were areas that required protection in terms of the economy or jobs. It’s a very rational approach, also with many strategies.
Of course the communities are considered, but are they directly involved?
Rafi: On various scales. You wouldn’t bring in a community to do large-scale mapping. But you come to that point, and the plan strategies for that.
Susannah: The RPA reached out and engaged with the communities in advance. We had information but limited contact...we did end up giving presentations to some of the mayors.
Who can afford to leave a place like the Rockaways? Some people can’t afford it, and other people might not want to. Their homes are fairly valuable, but they might lose money if they leave. We mapped vulnerability social vulnerability to think about the true definition of afford. To locate housing projects, older people, and those who can’t escape another big storm.
Rafi: And there's only so much one can do on the community scale. Resolution is really at the scale of the city, or the region. When you have risk coming from the ocean, there must be lessons to learn from one town to another.
Who is to bringing all these voices, considerations, and issues together to project a path forward?
You asked what planners and architects do. The urban project is a very difficult one. What will be can really change the city without changing ourselves. We resist change. We are attached to our city our home in an irrational way. Even when risk is evident. It's right in front of our doorstep. You walk out and there’s water instead of land. Even at that point.
So a change in the narrative is key. This country developed from strong narratives. We work on the story now as we go to the future. Whether you believe in climate change or not, the ways we communicate, energy, transportation -- are all changing, and all impact how cities take shape.
Susannah: RPA prompted that Kennedy airport would be strengthened. Elevated and reinforced. An economic hub for the region. And our work should support that.
Rafi: It's a gateway to the country, it’s huge.
View of proposed Gateway Station from the ocean side.
Susannah: The nature and economics of being in the urban center or on the water’s edge have changed. Historically this region depended on trade by water, but the dynamics of trade shifted, and shipping and exchange moved from Lower Manhattan to the periphery.
We transform that line of the water’s edge-- which used to support a physical exchange of goods-- into a zone. Ecological exchange can’t operate along lines, they require these zones.
Gateway Station, Jamaica Bay 2050: a series of plazas and beaches form an intermodal station and recreation center built along the existing elevated rail of the Rockaways.
Rafi: History puts things in perspective. The city is in a constant crisis of change. Are we going to be smarter today then we were in the past? I don’t know.
Why does the average person who doesn’t deal with this every day need to know?
Rafi: That's a great question. You can say that people don't need to know, and government will decide. But that’s not going to happen. Knowing is our strongest ally in a way.
Susannah: It’s important to understand vulnerability but also a way out. To find opportunity in the complexity of retreat.
Is it the government's job to incentivize retreat?
Susannah: Not necessarily with buyouts. We designed an economic development zone. It's upland from of the waterfront zone. You rezone and start development there now, so that in the future city planning and government create incentive just through zoning and shifting development patterns.
“Elevation-Based Zoning” proposes different zoning- and building regulations based on grade elevation to address the risks of storm surges and flooding.
Rafi: In the end it’s our money. You say government, but it’s our money being spent to address issues of flooding.
Susannah: My feeling is that FEMA should be eliminated. FEMA was not intended to be a flood insurance program initially.
Rafi: It will continue like this until they go bankrupt. More hurricanes, more flooding.
It is what it is. But we shouldn’t accept all of these rules. How it always was, isn’t how it has to be.
Rafi: The systems are in place why change.
Susannah: Some of the systems shaped our country in positive ways, some not.
Look at the waterfront in 1982, when Reagan got the Coastal Waters Act signed. If you developed a greenfield on the waterfront, you would not be insured. But if you redevelop land that already has property on it, you got insured. The tax areas were already there.
The Clean Water Act, the Clean Air Act, both signed by Nixon, have been fundamental to the work I do on water quality and climate resilience. Go back further to 1965, when Lyndon B Johnson signed the Highway Beautification Act. It was meant to create more beautiful plantings, but also created better ecologies along those highways.
So this evolution in thinking and perception has actually been positive. But sometimes not particularly altruistic.
The Land Ordinance Grid was a big development scheme to run the country. Gridding completely transformed the American landscape in perpetuity.
To get them to go live in suburban developments. Look at the amount of money made in developing suburbs. They are political decisions that fueled engineering and construction companies.
It’s a big real estate scheme. You want the population to start producing children again, so you get women out of the way. And by the way you can make a shitload of money at the same time. And then...the antidepressant industry.
Bight is currently featured at the Venice Architecture Biennale in the exhibit “Time, Space, Existence,” at the Palazzo Mora.