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
Eric Stoltz Is Determined To Bring El Paso Voices Back To City Hall.
by Eric Stoltz
July 18, 2018
This interivew with Eric Stoltz, a young native El Pasoan running for City Council in District 6, was conducted and condensed by frank news.
Eric Stoltz: My name is Eric Stoltz, I grew up in the Lower Valley in El Paso, raised there for my whole life, lived in the same place for 25 years. It's the outskirts of El Paso and it's a farm ranch area.
Tatti: What is the population like there?
Eric Stoltz: Very Spanish-speaking. El Paso is probably 80% Hispanic, but I think my areas about 93%. English is spoken but Spanish is a lot more common where I live.
Tatti: How does immigration policy affect your daily life?
Eric Stoltz: It's affected me with my neighbors, family, friends that I've known for a long time. I've had friends that had their parents deported when they were young. Even today I have a really close friend whose dad was deported. I think I've seen immigration in a complete context of people that were able to get papers or were able to get citizenship or residency, but then also saw people that had to live secretly and live in the shadows. My grandma actually owned a trailer park and a lot of her residents were people that didn't have documents, so she made sure they felt comfortable and that they knew she was okay with people that didn't have documents to live openly and live without fear.
When we talk about immigration people talk about border security. I think border security brings a militarized presence anywhere you go. Even if I am documented and I have papers I feel a little bit uncomfortable having to deal with being watched, you have a bunch of helicopters disturbing you. People also have an idea that immigration is like jumping over a border when in reality it's also people getting visas and crossing back and forth.
There's a lot of people from El Paso that work in El Paso and live in Juarez because of the cost of living. A lot of people go to school back and forth. The strict hard policy doesn't make sense, especially to someone living on the border, because you see that it's just one large city and one large interconnected area rather than a hard invisible line that people want to invent.
Tatti: Is there a tangible difference between presidents and policy?
Eric Stoltz: Not so much, not during my time. My parents saw a big difference with the building of the current wall.
Tatti: When was that?
Eric Stoltz: That was in 1996 I think, that was when they had Operation Hold The Line, when they put more Border Patrol in the cities and drove immigrants out to the desert, which made it more dangerous for people. Then they built the wall, which I think actually was in 2000. That was the only time I experienced something different like, whoa we had fences and now we have a wall. I was younger so I didn't really understand what it was or what the meaning of it was. Nothing is really different than from Obama and Bush to me in the presence of Border Patrol because you just see them everywhere, I'm just so used to seeing them everywhere. Not much has changed aside from like rhetoric and hateful things being said towards immigrants.
Tatti: Do you think it’s right to focus anger on this administration or do you think that negates years of other similar policy?
Eric Stoltz: I think that while Trump has terrible rhetoric and obviously he has no idea what he's talking about I think that it does go a lot further and back into past presidencies and the real root reason of issues that are happening.
It does go back further and I think that right now Trump is taking it to an extreme level and actually an even scarier level where he allows law enforcement to basically spread fear around our community. That's something that we haven't seen, a more fearful area, a more fearful time. I know people whose parents are very scared. But it does go back to years and years of neglect on immigration issues, but also ignoring the reasons why people are leaving their countries.
Tatti: What do you want to ask elected officials, in positions of power in Texas, about immigration?
Eric Stoltz: I would have two separate questions. One, do they support allowing all families to be together, would they continue to support a family migration and allow a quicker process for family migration.I have friends whose parents have been waiting for 12 years, 15 years. And I think when you don't have the ability to be with your family for 15 years it is contrary to a family value system for many. The second question of course would be the root of everything, can they ensure us that the United States is no longer in the game of toppling socialist or left-wing governments that are democratically elected.
Tatti: The argument we keep hearing is if you break the law as an American you’re sent to jail, why would it be any different for non Americans?
Eric Stoltz:
But to me, at the end of the day, we're all humans regardless of your ethnicity or citizenship. When you take humanity away from people, that’s when you start to lose a part of your humanity. When you look at El Paso, we are a city that has immigrants undocumented and with documents and we live a great life. We live as a community, we live as one, and we benefit from each other. We are not a crutch on each other, we are united as one and we progress with each other. I think that people don't understand and don't see people in their communities because every community has immigrants. They might not know, but I think when people start understanding that their neighbors, that their co-workers, that business owners are undocumented people and that they are also benefiting our economy and giving jobs and helping our country in a profound way, people will actually see and understand that immigration and undocumented people are not an enemy.
They are helping people, and they are helping U.S. citizens. A lot of people think that undocumented people don't pay taxes, undocumented people pay taxes and it goes straight to the government, and they don't receive that back. We need to think of everything as humanity before we get into ideas of citizenship.
Why do people leave their countries to begin with? I wouldn't want to leave my country but if I felt I had to, look, the law is not going to stop somebody. And at the moment, people are seeking legal asylum and being denied legal asylum at the border and are forced to go through other means which are illegal to get to the United States. There are people in this country that live 300 miles from the border who have never seen it, never visited it. They need to observe and actually learn from people at the border and ask us what we see and what our daily life is. I wouldn’t tell someone who lives by the ocean that I know everything about the currents when I’ve never been to an ocean before.
Tatti: How do you think the media has handled the immigration issue in the last couple of weeks?
Eric Stoltz: I'm happy that they’re a little more concerned about border issues and immigration issues. I do wish that they talked about it year round and really went in depth on these particular issues. When we have a population of the U.S. that is completely anti media I think that you, as the media, need to show the facts and use recent evidence about what’s happening, video and audio and images that are recent, from right now, because you have a whole segment of people demonizing the media, who don't believe the media. If you use an image that's two years old people are going to say that you’re lying.