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
In Conversation with Dalila Rodriguez of Children's Institute, Inc.
by Dalila Rodriguez
June 25, 2018
This interview with Dalila Rodriguez, the educational manager at CII, was conducted and condensed by frank news.
Would you start by introducing yourself?
I'm the education manager at CII. Once upon a time, I was a home visitor and then moved my way into a site supervisor position and was there for a couple of years. Now I'm the education manager. I have moved away from being the administrator over programs and getting that one-on-one face-to-face with families like I did back then. My role is to support staff development and to improve the quality of the services that we provide in all aspects, so curriculum and teaching instruction.
What are the services you provide and who are you serving?
We provide early childhood services educational programs for children and families, birth to five. We have a multitude of programs. One of them, for example, is our home-based program. Our home visitors go into the homes for families, we call that Early Head Start. We start with mothers that are pregnant and then up until three years old. So about 2.6, they transition into a center-based program.
Then we have our center-based programs, which we have from birth to five years of age. Those are called Early Head Start and Head Start center-based programs. We have also programs that are solely funded by the state of California. Those are pre-K programs. We serve about 2,000 children in the community approximately.
Within our Head Start framework, it's a comprehensive program. It's not just educational-based services, but rather it looks at the entire family unit. We know that at that early age, in early intervention programs we want to make sure that we're addressing the entire family. There's someone whose sole role is to work with the families to find out what their goals are as a family.
Then it's the family community partnership team's role and responsibility to build partnerships in the community where we can get resources that are going to support that family. We actually have parents that have finished school, finished their degrees, and work for our agency now, which is amazing to know that, wow, this parent started coming in and asking for help for their child but ended up getting support for themselves, too. We also have a health department. We have a registered nurse on staff as well as a consultant.
We also have our mental health managers. We have a mental health component and we have specialists that go out to the sites. The teacher identifies that there may be a concern with the child experiencing some type of stress or trauma, atypical behavior. They'll write out a referral, they'll send it out to the team. The team goes out and observes the child and then identifies if they qualify for early intervention or if it is a disability ... usually it's both. We all work together: education, disabilities, and mental health. We call it the dream team. All of them have a role in observing on different days and times to see the child's behavior and to make sure that from the education lens, the teacher doing everything they're supposed to be doing to make sure that this child has the environment and the experiences that they need to be successful in the classroom.
Wow. That's a lot. Let's take a step back, can you specific "community" and who you serve?
The Los Angeles population. We concentrate our services to the highest need communities, so for example, our highest concentration of Head Start programs from three to five are in the South Los Angeles area. Our main office is right on Figueroa and Florence. All of the schools, we have about 20+ schools that are within a five mile radius of that center. We have schools in our housing developments over at Nickerson Gardens, Imperial, Avalon.
Are you in Jordan Downs as well?
We're in Jordan Downs, Imperial Courts, Nickerson, Avalon. Yes, we're in all of them. We're also in the South Vermont Green Meadows area, so on the other side of the 110 Freeway. We go as far as Western. That's about as far as we go. The best way I could gauge it is about a five mile radius. We have services out in Compton as well.
What percentage of the kids you're working with are dealing with a parent who's incarcerated?
Percentage-wise, I wouldn't be able to tell you. I could ask our family community partnership specialist because during enrollment, those are some of the things that they may or may not disclose.
It's not something we really quantify where we're like, "Oh, this many children have this many parents incarcerated." It's not something we track to a certain extent.
How do you engage with children who are dealing with trauma?
It's very case-by-case. Basically the way it goes is if the teacher identifies or the home visitor identifies there's something happening here that's not typical, they'll reach out to their mental health specialist. The mental health specialist observes and then from there, we have to have consent. A lot of the barriers we find is obtaining consent.
That's one of the areas we're working on currently. Our mental health manager and FCP manager just got a grant to do some work with families around that. We just started that journey recently. Let's say they do sign the consent and we do get that acknowledgement from the parents, the mental health specialist and the education team that is working with that child go in to provide some early intervention support for the teacher in the classroom first. Step one will be to set up some classroom strategies that are going to help support that child. Right now what we're working on is in implementing a new social emotional curriculum. It's called Conscious Discipline, which is an adult first approach. Something we've noticed too is that teachers are not equipped.
When I went to school, no one told me this is something that you could potentially experience and here are the strategies for you to use in the situation. It's very much the education component and not as much like these are children that ... these are some of the common things you'll see when you see a child that is experiencing stress or trauma. You really learn as you go.
Part of the adult first model is really helping them cope first. Practicing relaxation exercises, how to breathe, how to channel some of your positive energy into that child, and then be able to understand also what is happening in that child's physiological state.
We've been learning a lot about brain development and what trauma causes to the brain. We call it QTIP, Quit Taking it Personal. It's not about you, it's about what's happening to this child. We're supporting teachers and learning how to first cope with that. Then what you transpire or what you're feeling, you're going to emanate. You're going to transfer that to the child. Our goal is to calm them, so how do we calm ourselves first and then approach?
We work on setting a plan with the family. The teacher, the family, the administration, the specialist all get together and have a multidisciplinary team meeting. We acknowledge the parent for whatever things that are happening in the home. Sometimes the home and the school can be very different. It could be that they're great at school and then at home, the parent is really not able to know how to work with the child, or vice versa.
There are times when we refer to our overall CII mental health program, which are more intensive therapies like Parent Child Interactive Therapy. PCIT. The Parent Child Interactive Therapy program is one of the ones that we refer to the most. Again, it's parent-centered, so it's focusing on the parent's role and how they interact with the child.
How does CII decide where there needs to be a physical presence?
The CII's overall mission has always been to work with children and families that have been impacted by some sort of trauma, violence, things that are happening in the community. We acquired the grants over in the Watts/South Los Angeles area about four years ago.
Head Start has very rigorous requirements that we have to follow. Sometimes agencies do not keep up to par with what the Office of Head Start requires.
What is the Office of Head Start?
The Office of Head Start is the grant that we acquire from the federal government. This is how we get the money to offer the services that we provide.
Is everything is government funded here?
Not everything, but mostly. Most of it comes from the Office of Head Start, which is a federally funded government program. That's a nationwide program. We also have state funding, which is the California Department of Ed. For example, this school is a state funded school. They're solely state funded.
Are the national and state guidelines different or at all contradictory?
They're not necessarily contradictory. They're different in the sense that they don't have the comprehensive component. Early Head Start and Head Start that come from the federal government require the comprehensive model.
And the state does not require that.
The state funded programs are more modeled towards families who are experiencing poverty, but are working and/or are going to school, so they qualify for these services. They're still families experiencing poverty. With Head Start, what we find, is that it's more intergenerational poverty where they are not coming out of that cycle. With State funded, we see that they're more young parents that are wanting to go to school but cannot afford childcare. There are immigrant families that have come here and are having trouble finding work, or they may work but they're not making very much. They're making minimum wage.
Are there guidelines where you are dealing with immigrant families?
No. At this point, we don't ask for immigration status. In terms of second language learners, for example, this population here Mid-Wilshire and Otis Booth, this location is highly Korean. They are also coming in with ESL, second language needs. They're also experiencing the same types of immigration issues and poverty issues that all of our Hispanic families are. It's just that we have to modify in terms of language and making sure that we have translation and things like that available for them.
One of the things that I know our family community partnership team has been working on is doing workshops and informationals at parent meetings regarding immigration.
We know our families are experiencing things that are beyond even our comprehension. When you hear the things that happen, it's just like, "Okay. Wow. Where do we start?" I know that's going to be one of the things we're going to see. I know from experience with knowing families that your automatic instinct is don't call the police. Don't go to certain events. Don't go to these things because then you just don't know. Now, with the whole separation of families, who knows what ... That's just an added layer of fear. Fortunately, I feel like we've built a good rapport with the community that we've been working with to support them in still coming to us. It seems like they're still bringing their children to school.
Part of the work that we're doing is trying to really let families know how much more we have to offer because of the type of funding that we have. That we're not just focused on the child's education, we're focused on the whole family's success as a family unit and getting them out of poverty and trying to support the steps that they need to do that. If they've experienced trauma, then getting them the tools and the resources that they need to be able to not only help their child but to help themselves to overcome.
What do you feel is CII's most urgent work?
One of the overall common trends amongst families is wanting the best for their child and wanting to learn how to support their child through the educational system or understanding development and milestones. For us, we have this window of opportunity to get the families in and build trust with them so that they know that we have their child's best interest in mind. While we will get to the educational pieces, we know coming in as an agency that understands trauma, that we're not going to get to the educational pieces now.
Part of the early childhood services side is really helping parents understand development and understand how the environment in the family impacts their child. We can't get them to write their name until we can help them self-regulate and sit in a chair. If your child is still running rampant in the classroom, they're not really ready to learn how to do one plus one, or know their shapes, or know their colors because there's something happening.
Educating the family is our highest priority in terms of really supporting them as educators and advocating for them to say, "Okay, I understand what is good for my child. I understand that learning in terms of academia will come when I have the foundational pieces in place."
Do you feel like CII is on the right path in the way you're working with these families?
Taking a look at our data is very important to us and really analyzing it and understanding what it's telling us so that we know whether or not we're on the right track and what different things we can do to approach it. We can make assumptions all we want, but at the end of the day, what type of data do we have to support that? As of now, it seems like we're on the right track.
Some work we're doing this year is really getting teachers more trauma informed-style trainings that are going to help them understand the process of trauma. What to look for and how to understand it and then build some empathy around it so that they can cope. Then they can do their best to support that child and their family. It's all around understanding the brain. They call it the survival state, the emotional state, and the executive state. They're all pieces of the brain and how they work and how they work when under stress, when under trauma. Then how do we get to the executive functioning? It's really interesting work. I love the adult first approach to it.