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
Pain Is The Price of Consciousness
by Max Moinian
September 17, 2019
This interview with Max Moinian was conducted and condensed by frank news. Max was the co-editor of our May 2018 issue on Urban Planning.
frank: Hi! Tell us about yourself and Future Earth.
Max: I am Max Moinian, I have a Master's in Urban Design from MIT, and Future Earth is a climate change education platform, right now just on Instagram. It’s a newborn baby I had with Steph Shepherd, who is a total social media and marketing genius. We think our combined brains are good parenting. Good information that is enticing and digestible.
This all happened because mutual friends told us we were both climate change crazy ladies. We met and finished each other’s sentences. She convinced me that more celebrities would engage in environmentalism if the cause was packaged for them. So we tried a rebranding exercise. Make it cool and sexy. Do for the treehugger what Gloria Steinem did for feminism, if you will. But also survey what’s out there and fill in the gaps.
What are the gaps?
I’m not mad at that, plastics are a gateway drug to environmentalism, but let’s take it a step further and talk about petrochemicals and how the same shit making those bottles is in your activewear and household products, and powering your car and house.
Basically what we're doing is trying to visually represent information we're reading, and make it enticing and clear for Instagram. I'll do the heavy lifting and read through the dense reports, make three-step guides, and report back on Instagram. Everything from science lessons, to consumer and lifestyle tips, ways you can get involved, and movies to watch. It’s imperative to me that we reflect on the psychological, personal aspect about learning about climate change. My own journey was so emotional and I found it hard to find a shoulder to lean on and people to have those conversations with.
How did you end up focusing on climate issues?
It's crazy to think that years of Ivy League education, undergrad at Barnard, Master's at MIT, and you know, private school before that – all of it – never touched on the very rudimentary and basic information about climate change that everyone needs to know. It was never presented to us, I read headlines but they never stuck, and somehow I got away with ignoring it all of those years.
via Max Moinian
Then there I was at MIT – the grand narrative is how do we design and protect cities from the coming environmental perils? So, sea level rise, temperature rise, extreme weather, pollution, deforestation…. All of it from a policy and design standpoint. I focused on design, so, seawalls and engineering systems to address the consequences of global warming. But what about the causes? Why can’t we start there? Why aren’t we talking about it?
In design studios, we were tasked to protect cities by building things.
It really bothered me. I felt like this world of mobilized urban designers and architects are at the end of a line that starts with the science, goes through technology and policy, and leaves us with a very limited, pathetic toolkit. Real innovation doesn’t happen at the end of the line, you know?
We're still that client-based discipline where you just have to do whatever the client says and not necessarily what you stand for. I busted my ass to get an internship at BIG because I wanted to work on the BIG U. I got disenchanted in three seconds. I remember one night I called my advisor and told him I was morally conflicted.
To be fair, the opportunities the firm had were completely restricted by policy and bureaucratic nonsense. But I wanted no part in it. He told me I had to make the choice of working within the system to change it, or go full radical. And I guess I’ve been testing the outlaw territory ever since.
via Max Moinian
What's the best way to a) begin your personal education in climate change, and b) retain information without feeling constantly overwhelmed and emotionally drained?
I know better than anyone how hard it is to commit time in your life to this topic. I didn’t do it until I had six months to research and write a thesis. I thought, I'm going to devote to learning about climate change now because when else can I do this? I wasn’t worried that climate science had no clear place in urban design. I knew I’d figure out a way to get away with it.
I spent most of those days making a matcha latte, getting back in bed, and reading a book for the morning. Then writing and drawing in the afternoon. It was a glorious time of ultimate brain activation. I loved being isolated in my little academic bubble. Not everyone can do that, not everyone wants to do that, no one has the time. So here’s a cheat sheet:
Step one: start with the basic facts. How does climate change and what does that mean for the future? But also, how do we get data and make projections? What are the main causes? What are our options? Your resource is the IPCC. Don't listen to what anyone else has to say except the IPCC and climate scientists. And don’t be ashamed if you need a refresh on middle school science. There's a textbook version of IPCC reports for young adults that I reference constantly.
Step two: a brief history of how climate science has been politicized. Seeing how the proof and solutions have been muzzled by Big Oil and politics is mindblowing.
It also made me hyper-skeptical but in a good way. I love Naomi Oreskes and Naomi Klein, two badass women who write clearly but also have documentaries and interviews you can watch.
Step three: take care of yourself. It took a few breakdowns for me to admit that I wasn’t invincible and this was seriously heavy shit. It’s emotional, and most people connect emotionally. I've read the facts, I know the projections. But it never registered for me. You know, but at the same time you don’t know.
This is the equivalent of the atom bomb. This is the environmental narrative of our time, and it's really hard to do anything when you know that the problem is so far beyond your little self, your community, your country. It's the entire world, with no silver-bullet solution, and no end in sight, and that's fucking scary.
Yes, it really is.
One time, when I was in the depths of knowing too much, like borderline depression, I was sitting with a professor who will probably never know how much she means to me. As I was talking I think she could just tell something was not right, and she put her arm on my shoulder and said, "Honey, you need to read some Rebecca Solnit." So I bought this book Hope in the Dark and I've gone back to it maybe five times already. It was the hug that I needed. I needed to know that there are people that know more than me and they are still fighting. And I needed to see that they had happy normal lives, or at least appeared to.
Another game-changing book is Living In Denial by Kari Norgaard. The psychology of inaction. She says,
No one wants to feel like that. Everyone has a threshold, a cap to how much of those kind of feelings you can harbor. And we're all maxing out on our personal issues, our family, our life. You know, millennial burnout or whatever.
Who wants to willingly experience that much pain?
Right.
To exist is painful enough.
Sometimes I get pissed off watching people go about their day, nonchalant, like parked with the engine running, A/C blasting with the windows down, watching TV on their iPhone. And I feel like this person doesn't care. And I’m almost jealous at how simple life seems to be in their mind, so guilt free and chill. But to Norgaard that's actually really difficult to do: “Apathy is the mask of suffering.” It's really hard to suppress all those existential thoughts and feelings, but because it's so much harder to actually deal with them, we lean towards denial.
Being hyper-aware is a massive burden. I've never sought out therapy in my life – I just started seeing a psychologist who specializes in climate anxiety. Being an activist and educator means I’m committing to VIP care for my mental health. Because that is my MVP!