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
A Vision for Art in the 22nd Century
by frank
October 6, 2018
Dustin Yellin is the Founder of Pioneer Works in Red Hook, Brooklyn and contemporary artist living in New York.
This interview was conducted and condensed by frank news at the Clocktower Studio.
frank: What does access mean for you, as far as this physical space and access to art in Brooklyn and around the world that you're providing?
Dustin: There is very much a proclivity in our society at the moment to modify learning, education and cultural production, so that's something that I think we are reacting to here. Pioneer Works is admission free, so all three floors of the building are completely free to the public. We expect about a million people to come through the doors in the next five years. 87% of our programming is free. I think that culture should be free. I think that the commons should still exist in our society and due to the modification of education and experience, as we've seen in so many different ways, that this ceasing to exist more and more in our country and so we want to fix that by creating a center for the sciences and for the arts that's accessible to everyone and building bridges into different parts of society that don't have that kind of access or exposure.
That's what Pioneer Works is – sort of a beta, a scalable 22nd century center for community anywhere. We'd like to build a micro Pioneer Works in shipping containers and put it down in refugee camps in Jordan and in townships in South Africa. We'd like to see Pioneer Works in Detroit, in Akron, in Oakland. We're looking at what does it take to build a new commons, a new center for community that could be in every neighborhood, a new place that's admission free and accessible everywhere. If you think about the future of cities and you're building a city from scratch, obviously you've got to build whatever the future version of a hospital is and a school is, but I also think that there should be the commons, there should be a place that everyone in the neighborhood can go, admission free, and get access to culture, to science, to learning if you will.
Is that the mission of Pioneer works then?
Dustin: The mission of Pioneer Works is to build community through arts and sciences to realize our human potential. We fulfill our mission at Pioneer Works by transcending disciplines and creating universal access to the arts and sciences to realize true social change.
And how does the internet play into this?
Dustin: We're building what I call responsible, digital echo, which is how you tear down the walls, the physical of what we're doing here and build. It took me a long time to come around to that because I love the analog, but how do you share, if you will, public brain trust of all these people that are coming through our campus with people around the world, so we're doing that by developing podcasts, music videos, digitizing the hundreds of articles that we publish, making it all available online.
Why do you want this, why are you doing this?
Dustin: I think that truly on our planet that socioeconomic inequality, geopolitical instability and division, religious division, division of humanity through these different schisms, is getting more and more amplified by our current political and economic structures. And I think that the antidote to that is art and science. I think the arts and sciences are the greatest agency we have, or glue, to bring people together. It's the one thing we have that gets everyone to a table unarmed. Whether they're Jewish and Palestinian, black and white, rich and poor; it doesn't make a difference. They're all gonna come around a fire, around a song, around a film, around a story. So how do we use storytelling to bring people together? That's why I'm doing this.
And how do we scale that storytelling and how, more importantly, perhaps, do we make that accessible to everyone? It shouldn't just be in a place that costs 25 dollars for entrance or two million dollars to buy a painting, or it shouldn't be about the fiscal piece, it should be about the learning and the curiosity and the wonder.
So, what's the greatest connectivity between the arts and the sciences? What's the greatest, best thread between the two?
Dustin: That's a hard question because I don't necessarily differentiate them. A lot of my friends who play music are also scientists or my friends who are scientists play music, or you know, there's different sort of philosophical discourse around scientific method and perhaps what we do when we make a painting or an experiment. But on a personal level, I just see nothing and something. I think that everything's invented, that civilization is an invention – that everything that we see, everything we experience, we've created. Therefore, it's hard for me to differentiate, if we're looking at mechanisms to make clean energy, or to build new types of buildings or to go to space, or under the ocean, or whatnot. I don't differentiate these things, I think they all inform each other.
So what are your greatest barriers to creating this?
Dustin: Unfortunately they're probably fiscal. It's that I have to run around like a crazy person and get the support we need to build the staff we need, to facilitate the programs that we're doing, so that for me is challenging cause I'd rather be writing or making art, or thinking, or, so you know, that amount of socialization of the ideas for support for the ideas opposed to the actual implementation of the programming, is challenging.
How do you think we can use art and science to better form the electorate?
Dustin: That's tough, probably because, well it'll inform it because our entire political system probably has to be reconstructed to a post-industrial, post-internet society and there hasn't really been an update to the operating system of our political structures. So, I would think that technology, science and the arts, as a storytelling tool, will help to build that new connective tissue; to rethink the way government works at this scale.
And you think, what specifically will help that? Besides a total breakdown in our system and a rebuilding.
Dustin: I always ask people, what are the three most pressing issues facing humanity. And I usually get the same three answers, which are: socioeconomic inequality, the ecological disaster that we are straight, smack at the beginning of and in the middle of, and then we can go out further, right, and we can talk about the nuclear issue, and we can talk about the potential of AI, and all these different scale problems facing humanity. But I actually think all those things are, that we can solve for all those things if we work together. But we can't work together as Americans and Chinese; we have to work together as a species, and so again the arts and sciences are maybe our greatest tool to humanize humanity again.
When we look at cycles of terror and violence, one of the first targets in those moments is art. Why?
Dustin: Because art is a tool to give voice to change, and therefore if there are systems of control and position, and therefore that can jeopardize those systems. I'm one of those folks that's just looking ahead, so I'm not gonna, yeah, we could you know...
So access is about the future, not about the past?
Dustin: I think we learn from the past, to tell stories that will inform the future.