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 Colonel Dillon, Operation Inherent Resolve
by Colonel Ryan Dillon
April 2, 2018
This interview with Colonel Ryan Dillon, the official Spokesman of Operation Inherent Resolve, was conducted and condensed by frank news. It took place December 15, 2017. This is part one of an ongoing conversation between frank and Colonel Dillon.
[Colonel Dillon] Hello!
[frank] Hi how are you?
I’m doing well, and yourself?
Good, thank you. Thank you so much for taking the time to talk to me I really appreciate it.
My pleasure.
Well, I can just jump right in. You guys have had a lot of news in the last week or so.
Yeah. It’s been pretty sporty out here. You know when I first came into this, it was very busy, and things have been, at least in military operations, have slowed down a little bit. At least as far as air strikes in Iraq go. Less in Syria. There’s still plenty of fighting in Syria that is happening right now.
Before we go into what's happening right now, I want to take a step back. Could you explain the mission of Inherent Resolve as it started.
Okay, so we’ll go back. It's pretty well documented, and I don't know if you've been to our site Inherent Resolve, but you know, it was about three years ago when the Islamic State really came onto the scene as an organized army if you will. Meaning that they were largely in small groups that were able to conduct spectacular attacks in cities and on roads, sow fear amongst the citizenry. And then they started to take territory. And it was as they started showing up with vehicles, and armored vehicles, after every place that they were able to take, where there's any kind of military presence, the military then dissolved. Iraqis aren’t very proud of that, but they acknowledge that in many cases they just dissolved and just ran away. And so every place that that had happen, all the weapons — they started to grab them, the vehicles. And so their army if you will, just continued to grow, and grow, and grow.
And it wasn’t really until they were about 20 kilometers north of Baghdad that the Coalition stepped in. Quickly thereafter many nations started to jump on it, and recognize that the Islamic State was very much a global threat. The coalition continued to grow, and grow, and grow until it’s where it is right now. 70 nations. 4 partner organizations. To defeat Daesh. Not all of those nations are military contributing members, but many of them play roles in other facets of the campaign, overall to the United States. That's counter propaganda, working in centers throughout the world, or going after their finances, or formed terrorist networks.
The Iraqi Prime Minister, Haider al-Abadi, recently declared that Iraq is now free from ISIS control. Control over territory is one thing, but what about their ideology and intellectual presence? What’s the strategy moving forward?
The Prime Minister did say all areas have been liberated. However, he did make it very clear that we must still pursue ISIS relics and any other terrorist organizations, or any kind of terrorism that exists in Iraq. Any that does is counter to the way that we want to live in a won Iraq. So we must unify and continue our pursuit of any of these elements. We, as a coalition, assess in Iraq and Syria, that there are less than 3,000 fighters that remain in Iraq and Syria. So spread out in small areas in Syria. They still have territory. There’s still territory that we have not cleared, our partners at the SDF, have not cleared.
Back to Iraq, the Iraqi security forces know full well that ISIS still exists, both their ideology, and in small groups, and in cells that are throughout the country. And we know that for a fact because every single day the Iraqi security forces, all elements of it, the federal police, the Iraqi army, the counterterrorism service — they conduct patrols and are continuing to find these small cells. They continue to have engagements, small, but continue to fight ISIS elements. To include fighting and detaining foreign fighters that are trying to move throughout the area, trying to escape and get out of the country. So we know that there are pockets of ISIS.
There's also just you know, tons of explosives, and IEDs, mortars, and other materials that can be used for future attacks. And that's another thing the Iraqi security forces are doing. They’re going out and identifying all these caches, finding these tunnels that are, in some places, very intricate, and finding these hiding places where where they still exist.
Does a reduced number of ISIS fighters change your day to day drastically?
It does. So the way that we have conducted this campaign from the very beginning is through a strategy called By, With, and Through. And that is both in Iraq and in Syria. So in Iraq, By, With and Through means through our Iraqi Security Force partners. They are the ones that are doing the planning and the operations. They're the ones that are really fighting. They're the ones on the front lines.
We have provided support to the Iraqis really through five different ways. One is through intelligence, surveillance and reconnaissance. Those are our drones and other intelligence collecting means and ways to identify ISIS fighters. Number two is by providing advisors, and our advisors were largely on the ground with the battalion and brigade elements while they were conducting these operations. These operations are when we talk about Mosul, when we talk about Tel Afar, Hawija, Akashat. So these are major combat operations. The fact that there are now very few combat operations that are underway, at the same scale that we have done over the last three years, those advisers are shrinking. Meaning that they are less required. So that's number two.
Number three is training and equipping. We have trained more than 125,000 Iraqi security forces across all facets of their military. That includes, the majority are Iraqi army, 44,000 Iraqi army. I think it’s about 25,000 Iraqi police — that includes local police, the Federal Police, Counterterrorism service, Border Guard Force, and tribal mobilization forces, and the Peshmerga, the Kurdish fighters in Northern Iraq. So training. And then precision strikes, both ground artillery and air strikes.
So the strikes, you know, after all these major combat operations have gone down significantly. In September our totals were about 1,500. Then October was about 700. November down to just under 300.
I believe November 26 there were zero.
Correct. That was the first time in the three years of our campaign that we have not had a strike in either Iraq or Syria. And then it was about three weeks ago, almost a month now, that we announced that there were going be about 400 Marines in Syria that were going to redeploy, back to United States, and they would not be getting replaced. So the number of strikes continue to tailer off quite a bit. We still are very much into the training aspects, a lot of that training has shifted and adjusted accordingly now that the these major combat operations are finished. We're now transitioning to wide area security and the threat is less so of an army, if you will, the conventional type of threat, and more of an insurgent terrorist type threat. So they have adjusted accordingly in training. We will say that it is very much our intent to continue to encourage, and to provide trainers to do conventional type fighting.
If you rewind to 2014 that was really the issue. The problem was you had a lot of these Iraqi security forces that were in static positions and as soon as this conventional threat arrived, they just dissolved. So we see very much a necessity in training them on some of the conventional and combined arms type fighting that we’ve done for the last three years.
What’s your current assessment then on ISIS’s ability to project power from Iraq or Syria?
Very little. Number one, they are on the run. It makes it awfully difficult to manage and direct a global network when you are in pursuit at the rate that we are going after ISIS right now. There's no question that their twin capitals of Mosul and Raqqa were very much hubs for them both. They were, you name it, for many of the variety of different things that ISIS was doing, and they were organized, they were very adaptable. They're savvy. So we very much recognize that, and we don't want to see things like their research develop, their external operations, these branding efforts to conduct attacks in, you know, anywhere outside of Iraq and Syria. As we all know, all of these attacks that we've seen over the course the last three years, many of them emanated from planning in Raqqa and in Mosul. They were planned there. They were resourced there. They were launched from these locations. We don't want them to hold any territory or have any sanctuary. Because the other thing is, and I’ve read some really good articles recently that really dig into it, is their ability to manufacture and build weapons at an industrial level. And you can tell how nefarious — their intent. You’re talking about the type of weapons they’re trying to put together. They’re trying to mix chemicals. Thankfully they have not been very successful at that. But we don't want to give them time and space and resources to be able to get there.
Is there a laid out timeline for U.S. presence?
In Syria there’s still plenty of work to be done. We're training these local Internal Security Forces.
In Iraq, what gives you confidence that the areas that were so difficult to regain over the last three years, as you mentioned, won’t revert once you withdraw?
We've already seen the Iraqi Security Forces, in a couple different instances, show that they are very much capable of fending off attacks. About three months ago, there was an attack in Ramadi. There were about three simultaneous explosions happening at the same time, with several different ISIS fighters. Three years ago, the Iraqi Security Forces would have just said, uh oh, and ran away. In this case they very much stopped the attacks and nearly ran to the seams. And then, not only did they stop the attack, and kill those that were that were immediately there, but they went and put guys on helicopters, pursued them, and went after them as well. That's just one small indicator to show that they are very much in a better place than they were three years ago. I think the other thing is most people who have lived under Daesh do not want to live that that way again.
Do you consider Iraq a success right now? Should Americans?
It should be positive. You know, we’re talking very much about a military success. But that success does not equal full success. There's more that is required by the civilian efforts. I mean Mosul, east Mosul is great. People that were once displaced are all back here. University is back, it's open. Students are in there full time. It’s west Mosul that was just devastated by the amount of damage that happened from face-to-face fighting. So there are stabilization efforts that are required. In many cases immediately following a lot of these battles. You have to get the security taken care of. Because as we've seen, as we still see Mosul, in Ramadi, in Fallujah, and in Raqqa, the sheer level of explosives that ISIS has implanted and left in each location is mind boggling. I mean in Raqqa, the estimate right now is more than 8000 IEDs and booby traps left behind. Strictly and solely for the case of damaging, and hurting, and killing civilians who are going to come back. If you put these mines and booby traps in ovens, in dresser drawers, in kids toys, that goes beyond military necessity.