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
Evaluating Debates From Experience
by David Vincent Kimel
March 13, 2019
This interview with David Vincent Kimel was conducted and condensed by frank news.
Mr. Kimel is a Yale Graduate Student in Roman History, Debate Coach Emeritus of the Yale Debate Association, two-time winner of Harvard's Coolidge Debating Prize, and Founder of the Transhumanist Society.
How has your history as an experienced debater informed your opinion on the subject?
I was privileged to be a member of the top ranked debate team in the country as an undergraduate at Harvard and the coach of the Yale Debate Association for six years. I also did some interviews with CNN and the Washington Post concerning political debates and served as an advisor for several campaigns. Insofar as this is true, I perhaps tend to watch and evaluate debates differently than many others do; for example, I am sensitive to tactics like dropping points, pivoting away from the questions at hand, delivering talking points instead of clear answers, etc. Unfortunately these all tend to be hallmarks of public political debates.
Why is debate as a medium so important?
Debate as a medium is important because at its best, it compels participants to see the world through the eyes of those who feel differently about the world than they do; at least this is true in competitive debate, where you can find yourself arguing any side of an issue in spite of your personal beliefs. In the realm of politics, debates compel candidates to try to articulate answers to difficult questions and to defend their perspectives using hard evidence, which is one indicator of what kind of a leader they might be if elected. Academically, the ability to debate respectfully is essential to progress in the arts and sciences, since debates can poke holes in existing theories and force advocates to diligently defend their beliefs and intuitions.
Do you think public debate should have a larger role in our national discourse?
I certainly believe that debate should have a larger role in our national discourse; when I turn on the news, depending on the channel I choose, I often feel like the priest is preaching to the choir; when I surf online, I can find “evidence” to support any cockamamie theory out there; when I visit Facebook, I see an avalanche of posts affirming my intuitions, and I disagree with my friends at the risk of losing them.
Debate fosters tolerance for difference of opinion, and this is too often sorely lacking in our current political climate. Of course, however, certain issues should not be debatable, and there are limits to the usefulness of arguments divorced from consensus building.
Do you believe debate is crucial to democracy?
At its best, debate is crucial to democracy because it empowers voters to make up their minds after hearing the most articulate arguments for and against various positions rather than going to the ballot box inspired by one sided narratives and propaganda for your favorite candidate. People treat politics like team sports when they should really approach it more like a jury-trial.
How would you adjust or change the current political debate format?
Insofar as this is true, certain steps can be taken to improve the quality of discourse. For example, I see no need for rowdy television audiences distracting viewers from the candidates’ ideas. There should be written debates instead of just oral ones, allowing for deeper levels of analysis. Moderators should be able to stop candidates when they veer into talking points. At the same time, politicians should be challenged more thoroughly on where they disagree with their party’s common platform. There should be more specific situational debates (what would you do if...) rather than just generalizing queries. Candidates should sometimes be asked to judge debates and evaluate expert opinions rather than just arguing among themselves. In some debates, candidates should engage with experts in the field rather than bickering with their opponents. There should be topical debates on issues like climate change and tax policy, and with great frequency too; this would be better than lumping every issue together in three or four events. Finally, perhaps there should be impartial judges who grade the candidates according to various metrics (poise, truthfulness, originality, etc), at least sometimes. Otherwise there’s no accountability for what’s said.
Who is the ideal moderator and what is the moderators role?
The ideal moderator should be a respected and impartial figure. However, much depends on the format. For example, in a debate about specialized topics, I’d like to see experts weigh in with their opinions and even debate the candidates. I’d also like to see more panels of moderators representing not only centrist positions, but a range of political intuitions. The problem now is that our formats for debates are not diverse enough. Sometimes, for example, the candidates themselves should be the moderators and be asked to synthesize and evaluate the opinions of others; we might learn more from how they judge debates than how they participate in them.
You coach collegiate debate – what makes for an effective debater?
There are great qualities which both effective collegiate and political debaters share in common: poise, eloquence, confidence, warmth, and truthfulness. Unfortunately, good college debaters are also experts at flattering judges into voting for them by playing up to their intuitions and exaggerating the flaws of the other side, and effective political debaters can preach to their base and drum up support by avoiding controversy instead of seeking truth.
There also needs to be more questions about compromise and consensus building and how candidates differ from cookie cutter stereotypes of their party’s common platforms.
How can we move beyond argument and bickering towards more effective debate?
For debate to be more than bickering, there needs to be a process after the debate takes place for a judge or jury to weigh arguments instead of pitting them against each other. This is one reason why I think candidates should sometimes be asked to judge debates instead of only participating in them. To democratize debate, there can be formats in which viewers from home can tell their stories and participate, etc.