CoinGeek Conversations

James Belding was an electrical engineer, working in the oil and gas industries in Australia when cryptocurrency caught his attention back in 2013. He was hooked - but it was only last year that he decided to devote himself full time to understanding how crypto works and to try to “add something to it, to make it better”.

He wanted to start a business to help people to set up smart contracts. But he found there wasn’t an easy way to add contracts to the blockchain: “I was getting a bit frustrated, thinking ‘surely someone’s going to come up with this’ … but no-one did. So I started designing it myself”.  

James assembled a group of four colleagues with a wide range of skills, from the technical to the legal. The team, spread around Australia and Singapore, have worked together to create Tokenized, which he believes can become “a sort of a commercial Internet on which all commerce is done”. 

”Tokenized offers protocols for over 40 separate kinds of contract, with all the necessary legal parameters specified. That’s meant he and his team have had to study commercial law, and have lawyers combing through their work, making sure it’s all watertight. 

But Tokenized is not just for big financial or legal contracts: it could be something as ordinary as selling movie tickets. It’s a “structured template so that everyone involved in tokenized transactions knows what to expect.” It guides you to fill in the information that’s required in order for a contract to be valid. “I want to make it easy enough that anyone can do it and anyone can benefit from it.”

After the recent Bitcoin SV network upgrade which allows more data to be carried in an individual transaction, the Tokenised team have been upgrading their protocol to use the extra space to improve the legal and financial protocols that Tokenized will include. He says they’re “creating what we hope will be the backbone of a new global financial system, one that has no barriers to entry and is ultra-convenient and low-cost.” 

And, using that extra space for data, a single token transaction can now involve different assets and different parties. This means, for instance, that you’ll be able to buy or sell shares or bonds on the blockchain, even if you’re nervous about converting fiat to crypto – because you’ll be able to trade with stablecoins, which are tied one to one with fiat currencies.

Tokenized will be releasing the documentation for the upgraded version of the protocol in the next couple weeks. And meanwhile they’re continuing to work on their commercial platform and will be announcing a release date soon.

Michael Hudson says he founded Bitstocks in 2014 to help the “everyday investor” understand cryptocurrencies. That meant trying to “get rid of all these nerdy, geeky terms” and offering advice to people who want to gain access to crypto markets. 

This year he’s launching Gravity, Bitstocks’ own “holistic ecosystem”, which is the company’s next step in making the crypto world easy to use for experts and non-specialists alike. Gravity is “a modern interpretation of what banking should look like in a new Bitcoin world.”

Michael has thought deeply about the theory of money - the intellectual framework through which the power of crypto can be explained: “money is just a measure of someone’s time and their skill. The more skill someone has, the less time it takes to perform a task. The more money you have, the more people you can hire with the skill, reducing the time. Money is a time measurement: the more you have, the more you condense time”.

Having been in crypto for five years - an eternity! - Bitstocks has experienced the rollercoaster ride of successive bull and bear markets. But Michael admits that the current downturn, stretching all the way back to the start of 2018, is different. 

That’s because for the first time, there’s a level of “regulatory oversight” that’s never been part of the crypto world before. With more than 4000 cryptocurrencies out there, Michael predicts that “99 per cent of them are going to fall on the wrong side of regulation. So we see this as massively clearing up the market”.

In fact, Michael thinks that when it comes to the various competing cryptocurrencies, eventually “it’s inevitable that there’s only going to be one” - and Michael believes that will be Bitcoin SV (BSV). Success for BSV is all about encouraging more transactions, or “building density” in order to strengthen the network. BSV’s commitment to a stable protocol makes it the best candidate for that leading role: “you have to lock down the foundation, and then I’ll build my house on it”. All the other blockchains are “built on quicksand”. 

Michael’s hopes for cryptocurrency extend way beyond London’s financial sector, and into the developing world: “Africa is a huge agenda for us here at Bitstocks”. Despite Western preconceptions, Michael says, African countries already have “the necessary prerequisites that allow them to step into modern banking”. For instance, with smartphones, you have “the hive mind of the world in the palm of your hand”.  

The unique value of crypto as the basis of an economy is that “in crypto, there’s nobody to distort the value.” That’s partly because of the limited supply, for instance on the Bitcoin blockchain. That means that “as long as I’m measuring and weighting my time and skill in Bitcoin, over time, I know I’m always going to get a better return - because the value that I took initially, will be worth more four years down the road”.

In a wide-ranging conversation, Jimmy Nguyen, President of the Bitcoin Association and and Chair of the Strategic Advisory Board for nChain, discusses Bitcoin SV, nChain's business model - including the role of the many hundreds of patent applications it has filed - and the how things work between the "unlikely trio" of senior figures behind Bitcoin SV - himself, Calvin Ayre and Craig Wright. Finally, Jimmy gives his view on the endlessly fascinating question of Craig Wright being Satoshi Nakamoto. 

 

Converting the fiat world to crypto isn't easy. This week's podcast shares the experience of four people from different businesses about what worked and what didn't in their dealings with a wide range of sectors. 

Elizabeth White of the luxury retailer The White Company in New York established her business with sales of Lamborghinis and other high priced items to customers who already had crypto. For her, the challenge was to persuade retailers to accept it. 

Heidi Patmore from the South African wallet company Centbee says you need to be aware of the priorities and concerns of large and small retailers, which are often very different.

Ina Samovich of Coppay, the Belarus-based payment gateway, says they'd found it takes an average of an hour for their sales rep to convince a store owner to accept Bitcoin. 

And Martin Dempster of the Scottish drinks business, Brewdog has had direct experience on the front line from his company's opening of a new bar in London's Canary Wharf, where bar staff were trained to accept crypto from a Centbee wallet. 

All four were speaking at the last CoinGeek Week conference in London, on a panel hosted by Jimmy Nguyen, President of the Bitcoin Association. 

Dale Dickins is a Bitcoin evangelist: "I'm always encouraging people to use it". Women in particular understand, she says, that "when something is used it increases in value". 

Dale discovered cryptocurrency through working with the open source community in Melbourne, Australia. But she was happy to move on from open source because she says that when she tried to put on events to bring open source people together, she found they were too shy and introverted to invite their friends along. 

Since 2012, she's been running courses to introduce people to crypto, setting up each participant with a wallet and converting some fiat to crypto for them to 'play with' during a workshop.

Dale says she has lots of women on her courses and that they're mostly interested in learning how to use crypto in ordinary situations, like in a coffee shop.

When it comes to the subject of investing serious money in crypto, “I explain that it is extremely volatile” But she also explains how other currencies decline in value of time, which means we have inflation. “The probability that Bitcoin will increase in value over the next ten years is much higher than that the Australian dollar will.”

Dale has noticed that the participants at her workshops are more informed today than they were when she started them, and that they’re no longer wanting to operate outside of the established financial system: 

“The questions are changing, in people wanting to be responsible around tax - whereas originally people [had] more the anarchist mentality, wanting to avoid banks”.  Dale admits that her own sentiments have also changed in the same way and she now believes that “having tax included in every payment ...would be a great way to keep in real time”.

Today, Dale is sure that “to have this work in the world, it has to integrate ...it has to conform”.

Aside from her courses, Dale is converting the waiters and waitresses of Melbourne to crypto by offering them tips in Bitcoin - on condition that they download a wallet to receive it in.

Dominic Frisby is fed up with people who say they don’t understand cryptocurrency. He calls them “no-coiners” and accuses them of  “deliberate recalcitrance”. He says they’re “just determined not to understand it, come what may.”

The problem starts when people insist on trying to get to grips with the code behind the currency, but Dominic says they don’t need to take an interest in that. With ordinary money, “nobody understands how money gets created, nobody understands quantitative easing”. Similarly, everyone is happy to use the Internet without getting stuck because couldn’t explain the finer points of HTML.

Frisby wrote his book, Bitcoin: the Future of Money, way back in 2014. It’s part history, part technology and part his personal story of exploration. Since then he’s followed the sector and appears at conferences (and the Edinburgh Festival) with his very own financial gameshow. Alongside that, he writes about money and - this is the unusual part - continues his career as a voiceover artist, which he’s been ever since leaving drama school.

His concern about the tech scene today is around how we give our personal data to the tech giants: “I just don’t think ordinary people realise how much of their privacy they have already given away.” When awareness of the problem reaches a critical stage, change will happen. Whether that hits the existing tech businesses or boosts the crypto and blockchain sector, “I’m pretty sure that the narrative that’s going to drive the next bull market in technology is privacy.”

As for his own complicated portfolio of skills and expertise, Dominic says it isn’t necessarily an advantage. In terms of marketability, “it often pays to do just one thing”.

There’s general recognition in the cryptocurrency world that if crypto is to achieve its potential, it needs to work closely with regulators. One of those trying to make regulation useful to crypto and crypto acceptable to regulators is Hans Henrik Hoffmeyer, COO of the Copenhagen fintech company Coinify.

Hans is bullish about his discussions with EU officials and politicians. “Most of the regulators I meet nowadays are keenly aware that this is actually a paradigm shift,” he says. There is “a profound understanding of this technology, and the implications and potential.”

That level of engagement and comprehension is new: “it has completely changed, and I have been surprised by the speed.” Hans says the EU is “keenly aware that if they apply a regulatory framework which is very hostile, then the business will in principle just move elsewhere.”

For instance, the EU has agreed to update its existing anti money laundering directive to include virtual currencies and cryptocurrencies. And companies like Coinify will now be registered with their national financial services authority. That’s “hugely important for the industry,” Hans says. 

Coinify is a payment gateway, working with payment service providers to act as “the bridge between the traditional financial world and the new, emerging world of virtual currencies.” It specialises in helping people from the financial industry to get involved in cryptocurrencies and likes to think of itself as a “Mastercard for virtual currencies”. In other words, it acts as an intermediary between a customer and a retailer, allowing transactions to take place in different currencies - just as a credit card holder may have their account in pounds sterling or euros but is still able to use the card in the USA, to pay for something in dollars.

Currently Coinify accepts around 15 different cryptocurrencies, and offers transactions online, where Hans says the company has “very good traction”. It’s now also working with prototype systems to test ways of offering its services in physical stores. 

For bigger merchants, Coinify offers a simple interface, a bit like Worldpay’s. But the majority of merchants work with Coinify through their existing payment service providers, which makes it simple for the merchant to add virtual currencies to their existing payment methods.

Hans says there have never been so many ways to pay for something - which may be good news for the likes of Coinify, allowing it to play a useful role in simplifying a complex range of choices for merchants and customers. Part of what Coinify offers is to take the risk associated with accepting volatile currencies on behalf of the merchant and the payment service provider. 

Now Coinify is adding Bitcoin SV (BSV) to the cryptocurrencies it supports - although Han stresses that the business is “blockchain agnostic”. But with BSV “the attention that is given to the regulatory compliance side and to ensure transparency is something that we appreciate.”

Coinify doesn’t actually hold any currency - which makes it different from an exchange, which would be required to hold currency in order to carry out its business. Indeed, in its transactions, Coinify finds the best price by comparing between different exchanges to optimise deals for its customers. 

Another part of Coinify’s business is closer to the end user. It gives wallet providers the chance to offer cryptocurrencies to their users without leaving the wallet. It’s called “in-wallet buy and sell”. It’s all part of Coinify’s efforts to make life simpler for its customers, many of whom may not be familiar with the new world of virtual and cryptocurrencies: “unless we help everybody from the past to be onboarded,” says Hans, “then we will fail”.

This is cool industry to be in, says Jack Liu of the crypto finance company Circle: “even fintech that’s not Bitcoin or not blockchain is not cool any more”. People who once dismissed the sector as a scam or a fraud, may say they’re still not ready to use crypto, but they now recognise that “this must be the future”.

Jack graduated from his Canadian university in 2010 and started working for Barclays Capital in Hong Kong. He liked wearing a suit every day and “the money was pretty good too”.  But while the rest of his life was full of new technology, he says he found himself in a financial world that hadn’t changed much from the Wall Street described in Michael Lewis’ Liar’s Poker in the 1980s: “structurally, something was off in finance”. 

He decided to quit his job and move to Silicon Valley and “see what was going on in the fintech world”. And that’s how he discovered Bitcoin, in 2013.

At the time, almost everyone in Bitcoin was from a technical, not a financial background. Jack wasn’t even sure he’d be able to get a job. But he started a blog to share his ideas about crypto. 

One feature of crypto compared to other Silicon Valley sectors, is that it was global from day one. Jack’s international experience led to a job as director of strategy at the crypto exchange Kraken. At the time, it wasn’t clear how you could make money in crypto. There were really only two ideas, Jack said: “there was mining and there was exchange”. 

Today, that’s all changed and Jack’s vision for the potential of the sector has increased dramatically: “money is just a representation of value”. Once you have money that can move instantly across borders and be transferred using microtransactions, “that can underpin an entirely different economic structure for all of humanity”. 

And it’s not just the practicalities: Jack believes that the crypto revolution will be so profound that it will “improve the quality of living for every single person on the planet. It will do that even for people who don’t even know what Bitcoin is and will never own a Bitcoin.”

But how? Well, it would do that by allowing everyone to fulfill their potential by reducing the risks associated with pursuing the brilliant ideas that we all have, but mostly leave unexploited. Instead of having to give up your job to move onto a more interesting path, you’d “get paid every single minute” for making any kind of contribution - from flipping burgers to writing a brilliant book. And that’s because Bitcoin would provide an easy economic transaction path to every single person on the planet. 

“Work becomes a hobby,” says Jack, “because for anything you do, you’re going to be able to get the appropriate value for that contribution. There’ll be no frictions in the Bitcoin world.” It’ll be like “the gig economy on steroids”.

If that sounds like something you might not want, don’t worry: it’ll release creativity and allow us to escape from crude materialism. It’ll be like “a digital Renaissance”. And Jack goes further: “it’ll have the kind of effect of making earth seem like heaven”, and the way we live today “will be looked at by historians in the future, [and] seem like hell”.

And if you do, by some misfortune, find that you aren’t able to work, as long as you have previously worked in a Bitcoin economy, you’ll be OK because the Bitcoin you have already earned will be worth more and more as time goes on.  

Kristy-Leigh Minehan was into Bitcoin before most people had heard of it. She was getting paid in Bitcoin for developer work, and was pleased to be able to convert her first payment into enough dollars to buy one of Apple’s fancy new iPads. She loved her iPad. But perhaps not so much that she would have chosen it over the more than $200 million that those Bitcoins would be worth now.

Today, as Chief Technical Officer of Core Scientific in Seattle, Washington, Kristy-Leigh is still working in cryptocurrency and blockchain and is confident they’re going to be widely adopted. That will create opportunities for experts to build new kinds of servicing businesses that will integrate blockchain solutions, themselves getting paid with micropayments for each transaction.

“You’d go to a business, and you’d say ‘listen, I’ll build all of this out for you on a smart contract. And then every time that smart contract is processed, every time those rules are executed, I will take a very small per cent’ ...Multiply that by millions and millions of transactions per day - bingo! You’ve got a sustainable business.”

That’s just one example of a wider push that Kristy-Leigh would like to see towards “building infrastructure”. That means creating the kind of basic products that are taken for granted in other software areas. In blockchain and cryptocurrency, they would allow people to get involved more easily:

“We need to start building things like tools - debuggers, all of the basic stacks of software that traditional software development has. Build it from the ground up so that anyone - any teenager, any high schooler can jump in and start creating on the Bitcoin blockchain.”

Alongside the infrastructure, Kristy-Leigh wants the sector to work closely with regulators to build confidence with established public and private sector players: 

“If the governments are saying ‘hey, we need KYC [‘know your customer’ - processes to guard against money laundering and other regulatory issues], we need to come over to them and say ‘OK, great, what KYC standards do you need, that still protects customers’ privacy, but allows you to get enough information to know what the sources of these funds are, and are people paying their taxes?’”

That kind of protection would lead to greater adoption of cryptocurrency by banks and governments and lead to people “letting it into their lives”.

Long term, Kristy-Leigh has a vision for national currencies to be conducted on a blockchain. Just as each currency note now has its own serial number, each transaction would be traceable on the blockchain. The physical aspect of money is “clunky and it’s prone to errors and it’s prone to laundering”. Instead, there’ll be a “digital-backed system with asset IDs that are tracked”. 

It’s a big ambition because it would entail more discipline from governments: they wouldn’t be able to print more money to fix their problems. But Kristy-Leigh is bullish about the prospects: “all it takes is one country to adopt it and the rest will have to play catchup.”

Stephan Nilsson is working with fish farmers in his native Norway. He’s putting blockchain to use in a practical way - although his business sounds distinctly unworldly. It’s called UNISOT, which stands for Universal Source of Truth. Nilsson admits the name shows he’s “aiming high”. But then he insists he’s trying “to change the world” and believes he can “make a big difference”.

Nilsson’s background is in supply chain management. He worked for SAP, the German enterprise resource planning (ERP) business, as an integration consultant. Now he’s using that experience to revolutionise supply chains with blockchain technology.

Why blockchain? Well because it provides “immutable storage, where nobody can change things afterwards,” he says. “It’s more or less the only immutable system in the world.” And  a single integrated blockchain avoids the problems that often arise between different company systems. 

All suppliers who work together on the same system would still being able to set levels of privacy for their own data: “all the information that I put on the blockchain, I am still the owner of”. You can share the information with another company, but you still have the power to revoke access.

So how does this apply to the Norwegian fishing industry? Well, UNISOT is working with a company that offers a supply chain monitoring product using SAP. UNISOT is providing the blockchain functionality within that service. Integrating blockchain with SAP software is “actually very easy if you know what you’re doing,” Nilsson says. He laughs at his own confidence but adds that it’s only easy for him because he’s worked with SAP for 20 years.

So here’s what becomes possible with the UNISOT system: you can track a particular fish all the way from when it’s swimming around, to when it - or even just a small bit of it - appears on someone’s dinner plate. Using blockchain, all sorts of information, such as the precise history of a fish’s storage temperatures, can be uploaded, creating a kind of virtual fish whose every detail can be tracked. 

And it all starts when the salmon are directed down a pipe and photographed in a way that makes each one distinguishable from every other - using a kind of ‘facial recognition for fish’. You heard it here first!