Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Asher Tan & Levin Keller: CoinJar, Circle, German Bitcoin Sales Tax

Episode Date: May 27, 2014

For episode 21 we had Asher Tan on CEO of CoinJar, a very successful Australian Bitcoin startup that offers similar services to Coinbase. We talked about the plans with CoinJar, what we think of Circle’s new product and the recent price increase. Levin Keller, who is a board member of the German Bitcoin foundation, joined us to talk about a recent statement by the German Finance ministry on Bitcoin. He has been warning about a possible sales tax on Bitcoin for months and that seems to be happening now. We talked through what the recent announcement means for businesses and where we’re likely to go in the future. Episode links: CoinJar CoinJar Stories Circle Circle Product Video Bitstamp requiring proof of source before withdrawal Statement by Bundesverband Bitcoin on sales tax This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/021

Hello and welcome to Epcenter Bitcoin episode 21. Today is May 25th, 2014. I am Sebastian Kuchu. And I'm Brian Fulben-Kraing. And we have, I'm here sitting with Asher. And he is joining us from Australia. Well, he's actually visiting Germany at the moment. But he's the CEO of CoinJar, so we're really excited to have him on today. Hi, guys. Happy to be here.

And we're also joined by Levin Keller, who's a lot of, also sitting in Berlin. Although not at the same occasion. So Levin is a member of the board of the German Bitcoin Foundation. He's also started the Bitcoin meetup in Munich. And he's been running around scaring everyone with fears of VAT being charged on Bitcoin transactions for a few months. And it seems like there was something, some justification to his fear. So we'll have some time today to stop.

about that. Yeah, hey guys. Pleasure to be here. Thanks for joining us, guys. And so we've got lots to talk about today. Obviously, lots of topics to cover. First, like, Coinjar's announcements. Also, we'll be talking about, I'm sorry, not Coin Jar's announcement.

Circle's new product announcement. We'll also be talking about the price increase and the German VAT decision. And we'll get to talk about Coinjar a little bit with Asher and see how things are moving along with that project. Yeah, so maybe let's get started with that, Asher. I mean, it's a coin jar. I think it's really impressive. You know, you just told me before you guys started a year ago, and when one looks at where you guys are now, I think that's really impressive.

So maybe do you want to tell us a bit how you got started with Coinjar? Sure. We started through an incubator program about a year ago in Melbourne, Australia. me and my friend Ryan, who started a few Bitcoin companies before, decided to make a consumer platform for Bitcoin. So it was three months in the program. We spent some time in the States, came back to Australia, and it was just the right time to do something. And a service that consumers really needed to get started in Bitcoin. Your coin try reminds me a lot of coinbase in terms of what you guys offer.

Was that an inspiration or? I think we're both targeting consumer markets. So a lot of the decision making, we've heard like how they figured, came to the conclusions. I think it's a similar thought process. So I don't think so. We were so much inspired by them. But we were working in the same problem and we came to the similar solutions at the same time. Maybe you can talk a bit about what exactly coinjordals and what you guys offer.

Sure. So we've got, at the base of it is a consumer wallet. So it's how do I store my bitcoins, but we also found out that people needed to buy Bitcoin. So we added an exchange portion as well. So that's a market maker exchange or a fixed price exchange. And then we found out people wanted to spend your Bitcoin. So we also had to add some. merchant services. So it sounds like we're doing a lot of things, but at the core of it, it's just to get people started with Bitcoin. Cool. And I think you guys are leading in, is there any competition in Australia or you guys kind of the ones? Yeah, definitely there are some the smaller Bitcoin exchanges. Not everyone does the exact same thing we do. I think we're the only one who offers wallets at this time, but there are several smaller exchange platforms out there. And there are a few point-of-sale merchant platforms as well. Could you maybe talk a bit about the, I mean, we had the opportunity to talk about this

with Max K, but the scene in Australia and where coin jar fits in there? Sure. So it's an interesting place. It's really far away. it's got a, you know, relatively small population compared to, you know, the United States. So if you look at Europe as a whole or even like the UK as one. So I don't think we're early adopters, but I think Bitcoin is something that appeals to Australians on a value basis. Australians always, they like independence as a value. if you look at National Heroes, Ned Kelly, that sort of thing.

So I think Bitcoin makes a lot of sense and a bit of a libertarian independence sort of way. So to get people started on Bitcoin, when we started, there were a few exchanges charging very high fees, and it wasn't really intuitive. So me and my co-founder thought, hey, let's go for a consumer approach. It's a lot harder compared to B2B. but I think it's a market we really need to address.

Now, it's interesting what you're saying about the kind of maybe cultural, you know, tendencies towards Bitcoin or something like that. I think it would be interesting to see how that plays out in different countries. I think in Germany, for example, you can definitely feel that people have this almost hostility against volatility, which really affects. how people look at Bitcoin. And then I guess you say in Australia, there's this kind of libertarian

or being controlled on money trade. If you look at some consumer surveys in the UK, you can see something about 70% of the people surveyed were quite hostile toward Bitcoin. And I think it's all about image, education, and the brand name as well. So for us, we're trying to show what we've done in Australia and show that it's not all bad.

There are a lot of positives. And it's about telling the narrative that, hey, Bitcoin is really awesome. And you can do what we do as well. If you jump. So I would like to ask another question about exactly how coin jar works. If you guys offer an exchange service a bit like Coinbase, I presume you're going to have to plug into some exchange for the liquidity. How do you guys do that?

Do you use BitStamp? Yeah, we use BitStamped. There are quite a few other exchanges as well, which are on our radar and sort of fallbacks. Our books actually balance most of the time, so we really don't go to the major exchanges too much. The Bidson sells sort of equal, which are there out. So you have a bunch of money in Bidstamp,

and you just do buy and sell Bitcoin's to hedge the currency risk, and only you're going to have to do like, I don't know, one transfer day or something over there? Not that much, actually. As I say, the market sort of evens itself out in Australia. That's interesting. So is it because people trade along, you know, they buy and sell Bitcoin, or is it because people buy and spend their merchants? Do you know? I think it's people trading, so it does tend to even each of, you know, between us, the other exchanges.

and the larger ones, like BitSem, A&X, so it bit... You also talked about your new website. Do you want to talk about it in general, maybe about the plans for Coin Jar going forward? Sure. So, as I said before, it's all about the brand. As we're a consumer focus,

we want to build a strong brand and we want to tell a good narrative. There's a lot of focus on what Bitcoin as a technology can do. And I think it's amazing, but for most people, they want to hear stories about people. So that's where we've done CoinJah stories and tried to tell some stories of how we've tried to shape the Bitcoin landscape in Australia through stories of other people. So on the website, you'll find stories of a young entrepreneur. And she recently raised about 60,000 Australian quite a bit of it through Bitcoin to do some organic farming. and we had donations from all around the world with Bitcoin.

So stories like that, really positive. You probably don't hear it as much, but we wanted to show that, hey, it is possible. The stories are more important than maybe the technology for most people. Yeah, I really like how you're doing that. I mean, when you visit the website and you read these stories, it really kind of brings a more human perspective to Bitcoin where, you know, most of the time now where you hear,

about the technology we hear about money laundering or Mount Gox or kind of these stories, this really brings it down to a human level and, you know, it really shows kind of like the power of the technology and what it can do for small business and entrepreneurs. Yeah, I also looked at that, you know, before today, because I was checking out Coynja website a bit and, you know, it's really nice. I think also graphically, I think you guys are doing a great job with that. And just to those who want to check that out,

coin jar.com slash stories. Yeah, so we put a lot of time and effort into researching, design elements, how do we convey the story of Bitcoin better, and that's not just visual elements, that's language, words to use. I mean, words like blockchain, wallet, address. We sort of use that by default, but do we really have to use these words? I mean, what we're doing is building something entirely new, and I think it's wrong to assume that just because we've been saying wallet and blockchain all this time, we prefer to use coin jar, which is a bit more friendly, a bit more gender neutral. Yeah, that is interesting. I mean, I think that's especially interesting regarding a topic.

We're going to speak later, which is the Circle announcement, because they're doing a similar thing, right? They're kind of trying to change some of the language. Yeah, so it's brand. And how do you convey your brand through language and visuals? Yeah. So a lot of the research we've done that you see in the current website, it's going to flow on to our wallets. So the wallets are still sort of looks like our MVP, but we're trying to unify all the platforms, getting it, you know, on iPhone, Android, tablets. Yeah.

Now, did you have to get a chicken handler to keep that chicken still on the table there? or was that did the chicken abide by the photographer's requests to stay there while you're taking the picture? That's a great I mean that's just a great photo

when you think about it I mean we thought it's going to fly away so yeah you're talking about one of the stories when you see a chicken standing on a table so I think it's the first story if you go to that and then

yeah it does look pretty great Yeah, really great job on the website. And also it looks great on mobile. So Azure and I met at the conference. We were sitting across from each other at dinner, and we had the opportunity to talk about a whole bunch of stuff. And he showed me of this website on my mobile. And it's a great responsive website, super intuitive and easy to use

with a great experience on mobile and on tablet and desktop. So really great work. And so do you have any plans to start doing business internationally or are you going to stay in Australia? Yeah, so the Bitcoin 2014 conference is the start of my sort of Euro tour. And it's just about trying to learn about what everyone's doing, the community here, trying to find cultural differences, regulatory differences, business differences as well. So I was in Amsterdam for a week. I was in Munich a few days ago in Berlin now and hit it to London tomorrow for another two weeks.

So it's just about learning about regulation and what people want and people need in the Bitcoin space here. Great. And so are you thinking of starting to offer your service here as well? Maybe you have an office or banking relationships so people can do purchase Bitcoin. I mean, there's actually an interesting opportunity here because if we think in the US, we have a Coinbase that's been kind of covering that side of easy Bitcoin, like simply buying Bitcoins, but in Europe,

there's an opportunity. Nobody's doing that. Yeah, so for the last year in Australia, we've been quite fortunate because it's a smaller market to test a product, refining it a bit, increased security, research what users need. So on the technology side, we can scale a lot faster once we have those key banking relationships and we're a bit more ready to be a bit more aggressive in this market.

Yeah, cool. I think it would be very interesting to see where this goes because there will be a lot of competition. Maybe this is a good segue to kind of go into the Circle announcement, I would say. because I know Circle, you know, they've been in stealth for a long time, even though they raised a ton of money. So it's quite unusual if you think of startups. Usually, you know, you'll build some beta and then it works and then you raise money.

Circle they did the other way around. They raised a ton of money. Of course, the CEO has a, you know, track record. So that made that possible. And now at the Bitcoin 2014 conference, they have announced their product. And I think some people have gotten invites. I'm still waiting for an invite. I think I didn't get mine either.

Yeah, so I'm sad. Yeah, so am I. But there's a few features which we can talk about because I think they're really, really interesting. So number one is they're targeting something really similar to Coinbase. It's essentially a wallet. And it's a wallet, like Coin Jar too, right? It's a wallet.

And you can buy Bitcoin's in a simple way. it's not to make you like high frequency trading or something like that, but if it's a consumer you want to buy. And what they offer is they offer instant Bitcoin purchases, and you can use your credit card even, and they don't charge any fees. So, you know, Coinbase, we have 1%. I think you guys are also 1% and 2% there,

and they're doing it for free. Of course, you know, we also know why they raise so much money to afford not, not, targeting revenues right now, they're also going to offer you a $10 free worth of Bitcoin when you create a new account, which of course is going to make it very attractive for people to sign up. And I think the last one, which is interesting and important, is that they have free insurance. You know, we've started seeing some insured services. There's the elliptic guys in London, but they're charging 2% a year. And the examples guy,

to charge 0.1.2% and, you know, circles giving it to you for free. So it's, I think, a really, really competitive product. And if you compare that to Coinbase, you know, they do all the same things. And it seems like they're doing it for free and with more features. So it will be very interesting to see how this space develops. Yeah, I mean, it strikes me as a very interesting development. So obviously, we haven't seen this. We haven't been able to use it so as of yet since we're still waiting for invites, but they did publish a video which is circulating. It's like eight minutes long and Jeremy O'Learra talks about where they're going and shows off the website.

And for me, I think what's really interesting about this and what struck me as a very interesting point is that they're really focusing on the user experience. Like the sign up is super easy. You can add your credit card and a snap. Like they're doing all the, all the verification in the background. You sign up, you get your $10 immediately. So that really entices you to start using Bitcoin.

And, you know, not to mention all this is free, right? So I guess we'll see how they're going to make money later. But yeah, I mean, I think it really pushes the envelope and raises the bar in terms of what exchanges are going to have to now start offering in terms of services. So free transactions, free insurance, really high quality, secure storage. Like they said, that this is secure, multi-sig, cold storage wallets with armed guards. Absolutely. I think it is, it is, you know, it is extremely compelling. And if you talk about taking Bitcoin mainstream, which I think is kind of their motto, then I think this can be

a big step towards that, a big step towards making it, you know, a lot easier. Because we really have to realize that when it takes you a month or two weeks to get your account authorized, et cetera, maybe actually you guys have data on that, but I would imagine you probably lose 50% of people or something or more who just abandon the process because it's too annoying. Yeah, I think it's a really good thing they're doing as well. They have the benefit of operating in the States where funding's a lot stronger, and you can have really people with good backgrounds who are very accomplished working on projects like this.

So I think it's great for everyone that, you know, they help grow the pie of Bitcoin users. So I think we need all kinds of services. And for them to be so aggressive in this space, I think everyone will benefit. But again, we haven't seen the product myself. So I'm sort of wait and see. I'm sure it's going to be great. So Jeremy, if you're listening to this, I would love an invite. What's also interesting is how aggressive they seem to be about international expansion.

You know, they've already opened an office in Dublin. Like, you know, they did that before even releasing their first product. And, you know, if you compare that to. for example, Coinbase, then they still don't have an international office. You know, their merchant solution doesn't work in Europe,

or doesn't work for the Europe payouts at least. And so I think, you know, they will have to do some things to, you know, not to, you know, not to lose their competitive advantage.

Well, I think the pies can be significantly larger if you look at the number of Bitcoin users. It's still relatively small. True. It's based for different services. And even if Coinbase

were to stay in one market, I think it still can be a very successful company. We've seen companies try to look at the international market like Buttercoin, but again, still looking for the first product to come out. So it is quite difficult if you want to expand fast.

But again, Cycles well funded. They probably can pull it off. if anyone can. Yeah, exactly. I think that's the first thing you need is a lot of money. And they do have that. Levin, what's your view of circle as a whole? What do you say? Yeah, circle and this kind of development where we're going with this. So at the moment they're offering this free of charge insurance stuff. And I have to see how actually works out in the end.

So there was this insurance in I think the UK where actually you're insured as Bitcoins. value of the bitcoins when you deposited them at the insurance company then were insured for the value that they had at that moment and not anymore so when they rise in value they're not insured as a whole anymore i'll see well you kind of have to up your insurance then but yeah you're right the insurance is is a denominated in pound terms or dollar terms so yeah all i'm saying is that actually we have to see how a circle really implements this kind of insurance on the one hand And then the second thing is there's not such thing as a free insurance. So in the end, they'll have to make money somehow for this kind of service.

And we'll see how they actually get the money from their customers. There might be a phase where actually they try to just, I don't know, bomb the market and be the player. But in the end, they've got to make money somehow. And I'm not really sure how they'll do it in the end. But I think they'll charge the customers maybe through a bad exchange rate or something. No, I don't think they'll do that. I think I said they're not.

I mean, if you compare this to other areas, know, if you look at a company like Twitter, how long do it take for them to start even trying to make money? So I think... Are they making money? No, they do now. I mean, I don't know if they're profitable, but they do have advertising revenues, et cetera.

But, you know, I mean, I think they think the same way. You know, it's about like having a big user base, having an advantage. I think that's why they're on the cutting Coinbase and costs, et cetera. And then they said they would build services on top of that, which would, you know, and I don't know if they even know what those services are going to be, but I think right now it's about just growing fast. That's true for sure, but still they have a zero-risk business model more or less.

The worst thing that could happen is that their servers are going down or that any user account is hacked, but when you're handling Bitcoin, you have a much higher risk when you lose the customer's money. So I think that they will have to someone get money quicker at least than the money. and Twitter or somebody else, or they just will collapse whenever there's an issue with their security policy or their security implementation. Asher, what are your thoughts? On their monetization or what do you think? How do you think they might monetize in the future?

One of those, wait and see, let's see when they released a product and it comes out. But again, if you are a U.S.-based company with access to some of the best VCs. It's a whole different game where, I mean, we've raised a small round, but at the end of the day, if we're not earning money, we're not going to grow. So different places, different stories. I just, you know, time will tell how it plays out. Yeah, I totally agree. I mean, I think for them, the pressure to make money is not going to be so high, you know, it's not going to be so high in the near term. And if they can show good traction, you know, if they grow users in the kind of rate that they promised their VCs to do, I'm sure they'll be able to raise them.

another 40 million or something a year from now, or two years from now. So, but yeah, it will be interesting to see. And I think, sort of in summary, we can say it's a very positive thing. It's a positive thing in bringing new users into Bitcoin. And I just hope we're going to see similar offerings and similar services in Europe. Yeah, I think that this is, again, we don't have a timeline yet. but I don't think we know when this is coming out, like when they're coming out of beta?

You mean circle? Yeah. It is out. Yeah, but I mean, when it will be launched to the general public. I mean, I think the way it worked, right? So they allowed invites or you could request an invite, and then I don't know, maybe they had like a million people request an invite or something. And now they're slowly, I think they just want to scale their user base, like slowly because, you know,

they want to take but I think like you know maybe every day they invite a few thousand people or something like that I don't know right no what I was going what I was going to say is that I think that what's what I said this a while ago but I think what's really interesting about this is uh is that the level of of service and quality that it will kind of push the market towards so other Bitcoin exchanges are going to have to step up of the plate and start offering the same type of level of service and quality and incentives that Circle is offering if they want to stay in the game and remain relevant. Let's briefly come back to what Asher mentioned before, which was the kind of language

and branding thing, because that's one thing that they really, I think, emphasized in a few places is that they want to change that. So, you know, whereas in Coinbase, you exchange Bitcoin, so you buy, sell of bitcoins, and they call it, you know, you deposit funds there, and then you withdraw. So, I mean, essentially on the back end, of course, you are buying Bitcoins because, you know, you deposit, let's say, $1,000 on there, and then they give you a thousand dollars equivalent worth of Bitcoin. But they don't call this, you know, buying $1,000 for Bitcoin,

but, you know, you're depositing money in your, you know, wallet and then you can withdraw, which essentially is selling in the same way. It's interesting. I don't know if it really makes a difference, but they definitely thought about that, I guess similar to you guys.

and think that this is a more consumer-friendly language. Yeah, I'm sure they're focus groups and things like that, but you can only tell if it works if you'll get a data-driven approach, you know, six months, one month, one year later, how it really works. And then again, not all places might share the same language or nuances of, you know, does this really work for me? So coin jazz approaches, you know,

we'll just have to move a lot faster than everyone else. And, you know, if they have bigger research teams, it's a different thing. But I guess all of us have pretty starting from the same point, you know, everyone's sort of guessing what will work, what won't. So I think we're just got to see, you know, 12 months from now what people are, what words people are using to describe Bitcoin. Yeah.

I mean, I agree, right? I'm sure they did some research and, focus groups, et cetera. And they probably have some data. But, you know, they also probably don't have, you know, really the kind of solid data that's like, okay, this is really better. And we'll see. Yeah, so our creative director, Kate, he worked on Bitcoins.com for Mongox.

So he's had a bit of experience in the space, you know, trying to convey the Bitcoin message. So like for us, this is maybe round two or round three of trying to refine our message. Okay, cool. That's interesting. Yeah. I mean, in terms of mainstream adoption, I think that there is an important user experience component, which companies like Circle and also Coingjar also are trying to embrace, right? So the consumer side, like taking the tech out of it and just bringing a service. So I guess you could call it like the Gmail. If you're of

Bitcoin services where we're now entering an era where if we want to get mainstream adoption, we're going to have to start really talking to regular consumers and detaching ourselves from

the technical side of Bitcoin where even, you know, you talked about bitcoins.com, Asher, although it is very nice and it is kind of very user-friendly in terms of the language and in terms of like the visuals and how they try to explain it, it remains very technical, right? Whereas coin jar's approach and circles approach and perhaps some other Bitcoin companies are kind of starting to get this, the approach is completely different.

We're very much at a consumer level trying to talk to people and, you know, getting them to understand really what can be done with Bitcoin. How can you embrace it as a technology, but not really having to touch the technology, but just really having it as a service? But if I might object something, I think that we forget about the actual centralization we're writing through such services, which will maybe lead to a problem. So actually are against the idea of Bitcoin. So I hope that there will be, I don't know, multiple players in every jurisdiction. But if there's at the end some kind of, I don't know, PayPal for Bitcoin and we are using that, we're back to the centralization. that we have and people are kind of abusing this power already.

So if you follow the news, I think, on BitStamp, if you're selling Bitcoin in bulk and want to get your money out, you have to verify where you got the Bitcoin from. That's a new policy that they have. So it will be more against the anarchist point of view of Bitcoin if he get these convenience services out there all the time. Wait, can you say that again? If you want to sell Bitcoins on BitStamp, you need to verify.

find where they're from? Yeah, I kind of followed some discussion on Reddit. So I didn't have the experience myself, but that's what I read about, that when you are selling the large amount of Bitcoins on Bitsam, you want to get the money out, that they will ask you where actually the Bitcoins came from

so that you somehow, I don't know, proof that you bought them beforehand or something. Yeah. I mean, I think it's really good you bring that up, I mean, because that is certainly something important and something that people think about when you talk about services like Circle or Coinbase, etc., which are, of course, centralized.

And of course, as a user, you don't control your private keys. So, I mean, I can tell you my view of this is I'm not so scared about this centralization risk. Because it seems to me that Bitcoin will always be this open system where you can easily switch. like because you know they if you have PayPal right you're going to have to have something on on both sides right you can't just go from PayPal and pay some merchant that doesn't have PayPal um but with Bitcoin you can just send it to any address and does that belong to a merchant does it belong to you and some may a wallet that you control and they won't know that.

And so I think you will have that option of moving from a centralized system to a decentralized wallet that you control easily. Yeah. And there are services already that cater to people who worry about those things you mentioned. I mean, blockchain. info is, you know, Roger has said, you know, he's very strongly against the centralization aspect. So, you know, if that really concerns you, I think, you know, that's, you know, that the official client for yourself

or use blockchain. Info but you know, that's still not for everyone. Yeah, no, I totally agree right. And I think it's very important that we have something like blockchain and info and offerings like that. And I also wouldn't want to keep like, you know, if I had substantial amounts

of Bitcoin, you know, I would keep those controlled by yourself offline, etc. That's not so much about the technical part. I'd say it's more about the fungibility, you know, so that they made so there are gray bitcoins and white bitcoins, and I do need a receipt that I bought some bitcoins

actually attached to my bitcoins so that I can sell them or use them in a proper business. So maybe I'll have bitcoins that I use on my own with my friends, and these are these great bitcoins where nobody cares about where they come from. But as soon as I want to go into this, I don't know, circle and professional level, I have to somehow prove that I actually bought these bitcoins for this amount of money. This will really separate the bitcoins,

and the good and the bad bitcoins maybe and get so, I don't know, prevent this kind of fungibility that we all hope for. That's what I fear, not the technical part. So I understand these arguments very well. Yeah, no, Levin, I think that's, you know, we talked about us at length. You know, there was this coin validation idea, which exactly speaks to that. And I totally agree this is something to worry about. And that would be really, really bad for bitcoins in many ways.

I personally have quite some hopes in dark wallet project and technologies like that that hopefully they will just make it impossible to do something like that. But of course, you're right that this is a danger. And if things like that will be tried, they will try that using, you know, they will force services like Coinbase and Circle to cooperate and to basically enforce that kind of a separation and white listing and follow the trail thing. So I agree. It's an important topic.

Perhaps we should kind of use as a segue into the recent price increase, like not to talk about price too much, but I mean the price hasn't went up significantly over the past couple of days or a past week or so crossing the $500 mark and the 400 euro mark as of this morning, I think. So I just wanted to kind of get your thoughts on this. I mean, I think that actually almost almost $600. It's $5.70 now, yeah.

On Bitcoin average, yeah. I mean, just since this morning, since the show started, I checked it this morning. It was at $415 euros and now it's $422. So the price seems to be going up. Well, I mean, it is going up. I think we can point to some factors that are contributing to this. For one, I mean, the Bitcoin 2014 conference was a very successful conference, kind of renewed optimism around Bitcoin.

You know, these high-profile startups are becoming increasingly active and attractive, circle, BitPaid, raising $30 million in funding, for instance. There's also, we're kind of at the tail end of all this negative media buzz surrounding Mount Cox and like the Charlie Schremerests and all this other kind of stuff that's kind of falling to the background. So yeah, I mean, is this a bubble or are we really moving towards kind of a stabilized price or definitely not. Let's not start screaming over a bubble.

I think that's like that. Personally, I've got too many things to worry about, to worry about the price. Yeah. No, I agree, right. In the end, the price is going to follow adoption, usage, utility, how strong infrastructure is, et cetera. But it is interesting how those things kind of go in ways. In a sense, I do expect that the price will increase dramatically this year. I think if we do see financial institutions enter the space and, you know, there's lots of signs of that happening.

the crisis has to go up dramatically. I don't know if this is anything to do with it, if this is starting now, because I guess we won't know when it's starting, because nobody will tell us until after it's happened, at least. But yeah, I don't know. I definitely wouldn't call this a bubble. No, but I mean, some people might fear a bubble.

if things move very, very fast, if people start buying Bitcoin frantically and only to find out that, well, it was overhyped. I don't really think that's the thing. I mean, I think people are maybe, some people are probably thinking about that. I think that there's a growth in infrastructure,

a stable infrastructure. We're seeing these services appear and start offering their services. So I think that will cause some sort of a stabilization. I'm also kind of, so like recently we've heard news out of China where, well, Bitcoin has not been banned, but is not doing very well in China. Have we kind of like psychologically blocked out China and anything that's happening there? Because, you know, things are not going very well there and the price is still going up.

Whereas over the last few months, it has been the cause of the price going down. So, I mean, in my view, I really never understood by the China thing had such an effect on the price. I mean, I guess a lot of people are speculating there, but it really made no sense in the last few months when the trading volume had already gone down dramatically in China. And, you know, it was only maybe 15, 20 percent of that whole trading volume anymore. And yet some rumors that nobody know where it came from or if there was anything to it. seemed to have the power to get the Bitcoin price down by 10% in the day. I thought that was bizarre. So, I mean, if that's not happening anymore, then that seems logical to me.

And it does not surprise me in a sense. What are your thoughts, Stephen? I think that actually, after all these bad news from China, there wasn't any bad news more to come. So in the end, they just, yeah, they just prevent the Bitcoin from being used, from being bought, from being sold. And this is over now. And I think the rest of the market will still grow. And that's what we are seeing right now with the price rise.

And I think everybody was kind of in a freeze mode and waiting for what happens now. And once it broke out of these, you know, I'm not a fan of technical analysis, but I think that we broke a lot of these long-term, short-term channels and important cross-marks and stuff like that. And that's what also triggered the bots and the, yeah. the kind of, I don't know, amateur high-frequency traders that are out there. And, yeah, they just beat the bite to some degree. And that's what costs the price-wise, which is, I think, just coming back to normal somewhat, Bitcoin is worth more than that what we're paying right now. Yeah, I think you're right when you say, you know,

things are coming back to normal after quite a bit of turmoil over the last few months. And also, I think that maybe, I don't know, it is maybe a coincidence, but you know that the price rise actually at the same time as ripples being dumped on huge scale because of one of the co-founders actually selling his stash of a billion ripples or announcing that he will sell it

so I think it's nine billion I think he owns 9% of all the reports or also so yeah so but bless all ripples that are out there will be dumped on the market and the thing is so the volume volume cited or from the volume point of

it's not important for coin, but whatever actually flows out of ripple back in Bitcoin. But maybe it adds to people this kind of sense of trust in the gold standard of Bitcoin, and not so much as in the other cryptocurrencies. So maybe that's what people are also seeing, that they were thinking of where I'm going to invest, maybe in Bitcoin or Ripple or whatever coin there's out there. And now they see that actually Ripple is kind of being attacked very easily by one of the founders. and yeah, they think maybe that the Bitcoin is the thing to go and they decide that the investment will go into Bitcoin.

Maybe that's an idea. I don't know, but... But I think for Ripple, this is less of an issue than for other things. I mean, it can be a bit of an issue for Ripple the company because, of course, their whole business model essentially is that they own most of the Ripples and then they kind of continually sell it to finance or to make profit. So for that, it can be a problem, of course, when now this guy dumps all the ripples.

But in this, in the end, you know, ripple is primarily a network and the currency is to pay transaction fees. So it's not as, I think it's not as, if you saw some other currency, light coin losing 90% of its value in a day, then you, you know, you probably were more than with ripple. But still people were investing in it. The value of ripples rising rather sharply in the beginning. And some people think that actually ripples are worth something. I think that they should be used and treated as protection as they were invented by the ripple founders. But still people, I think they're all looking for the next big thing in Bitcoin. So also this might have an impact on Ethereum and other projects.

We actually, you depend a little bit on the people that are behind the project, on actually delivering something and maybe people will get more cautious after that in investing in new Bitcoin derivatives. Well, let's move on to the VAT topic because I think that's super important

and we have you know, I think Labian you've spent more than most people in Germany. I mean, there's probably a few others who really looked into this topic but you really have. So do you want to give us

brief kind of summary of what happened? Yeah, sure. I'd like to do that. So first of all, I'd like to maybe not talk so much about VAT, but about sales tax, which is for me an easier concept to grasp. So whatever you make as a merchant, the revenue in Germany, you pay these 19% sales tax. So this is just going to the Ministry of Finance. And yeah, so that's about the rule.

And the question was now whether or not Bitcoin actually, is exempt from sales tax. So let's say that you sell a beer or something for Bitcoin, but you price it in euros. You sell the beer and you deduct the sales tax from the price of the beer that you actually declare in euros. And so then you get the bitcoins, maybe, I don't know, one euro and 20 cents worth and you derive about 20 cents of sales tax that you actually get away.

But the question is not these Bitcoin. is dishandled as money. So when I sell them, I'm going to again for euros as a merchant, am I just exchanging money and then I would be exempt from salesis. Or is it kind of a kind of a commodity that I'm actually selling again against euros?

And the German Ministry of Finance and their news response, they took the point of view that this is actually selling a commodity against euros, that you have to have a fleet factor for that so that you pay VAT on that transaction again. This would

essentially this whole this would kill Bitcoin in Germany as a payment system in the easiest way to use it to just take Bitcoin and sell them again as a merchant also maybe use them to buy new goods like your Plata is doing in his pub. He's actually buying his beer for Bitcoin so he has

some kind of circulation of Bitcoin in there. All this would be prevented by this kind of ruling if it holds to be true. basis for that is actually the guideline from the EU so it's the same in the same rules should apply in the UK for example where they actually they think that it's exempt from VAT so we'll see in the end who wins this argument and whether or not in Europe VAT will apply or not but this is not something that

the actual countries decide but we decide as a whole union so what's the legal status of this thing is this binding in Germany or does that mean now everyone filing a tax declaration businesses, you know, they'll have to redo that? What does that mean? It is not a final decision and not also legally speaking, not actually a real ruling. So it was a response to a request from a member of the amendment in Germany. He asked formally at the industry of finance how they would see this Bitcoin transaction

and whether or not they think that it is exempt from VAT. and they just responded to it. So it's not a final ruling. They also give out these kind of letters to the local bureaus of their ministry, which are binding in that way that actually, so the IRS offices, so what we would call the IRS in Germany, they actually are bound to proceed in this way that they're doing. And we are waiting for the next letter to come out.

And we try to actually avoid a letter coming out that things that Bitcoin, that sales tax applies. And that's also why we're actually promoting this new answer just to make people sensitive about the fact that they actually are treating something that could be crucial for a new branch of economy to grow. Yeah. And this will be the next step. And after that, then whenever you're actually doing your own tax reports as a merchant, you should somewhere, to some degree declare how you're actually thinking that these transactions are treated. And you would say maybe I think they're VAT exempt. And then you'll have the IRS office that thinks the opposite.

And then you have to meet in court in the end. That's the way to go. And it's very inconvenient for somebody who's actually just accepting Bitcoin. I don't know for a hundred euros worth a month. Just because you think it's fun. And after that he has a lawsuit ahead. That's also where we need to help the small. merchants that actually accepted Bitcoin in the past.

And probably is if it were like that, then it would apply two transactions that happened in the past. So if you had a revenue of, let's say, 20,000 euros last year, then you would be forced to pay 4,000 euros of sales tax now. And that's really a bad thing. This sounds very similar to what's going on in Australia. I can't say too much because the tax office has made me sign a bunch of NDAs. but there is, you know, this uncertainty and, you know,

there have been things said, but nothing set in stone yet. And I guess as Bitcoin users, Bitcoin entrepreneurs, you know, we've just got to make ourselves heard, show the flaws in that sort of thinking and, you know, educate the other side as much as possible because, you know, what else can we do? Yeah, absolutely. Levin, I'm curious. So what would this mean, for example,

room 77? So if it applied, I'd say, so I just checked and they have one address that they're using all the time. So I just checked how much revenue they had and with the current value of Bitcoin, they have around $20,000 euros of revenue in

I think last six months. And so you would have to deduct actually how much they were worth whenever they bought them. But as I understand it, York Plaza usually, he sells the Bitcoin to himself. So whenever I'm paying with Bitcoin at the room 77.

In this moment, there's a transaction made virtually in the bookkeeping that actually the shop owner bought the bitcoins from the shop and put back the money into the cashier. And so that's that's about what York is doing there. And yeah, so what I see is that these actually, if it applies, he's due 4,000 euros of VAT. I'm sorry, York, if he's listening to spill out the beans here, but this public knowledge, it's on the blockchain. and yeah so this will be be sometimes wouldn't wouldn't this mean also going back to 2011 when he started yeah that should apply that's true the question is whether or not the the authorities are following up on this with this kind of um so so yeah that would apply until 2011 when he started first he can avoid this by using bit pay that's some that's that's a loophole it depends a little bit on how actually

Bitcoin is treating the contracts that they are making with the merchants. At the moment, I think that Bitcoin just sells the Bitcoin for the merchant. So the merchant actually is owner of the Bitcoin. They need to change that to say that they are actually just selling the bitcoins themselves and wiring money to the merchant. And then the merchant can accept Bitcoin payments, which are converter euros, without paying VAT. So that would be maybe a way to go for York as well. But then that might have new regulatory implications for a company like bid pay, you know?

It will happen. There will be a lot of interesting decisions and discussions. And also something that I'd like to say also to what Aschus said. So we can educate, I don't know, people and the ministry and so on. But on the other end, we shouldn't forget what actually the VAT or sales tax is actually a very neat way to prevent alternative currencies from existing. If you're applying sales tax to any alternative currency, you'll always, so it's always possible to use it a small scale with your friends and stuff like, but as soon as you want to be professional, you have this sales tax issue which actually kills this kind of alternative currency. And silver as well, example, included in sales tax. So we cannot use silver as a means of payment.

And maybe somebody thought about that and actually likes the idea that we are forced to use the euro or the US dollar and they just don't want to exempt Bitcoin from. VAT. What's your strategy of going around this? If you think that education and GST is prohibitive, or VAT is prohibitive to the adoption of Bitcoin, and you don't think that education will do the trick. What's your overall strategy to combat this? No, I think that education will might do the trick,

but it's not as easy to just educate the government, but we need to educate actually people and tell them that it's about freedom of speech and not so much about money. So that's what I would say. So it's bigger than Bitcoin. Actually, we should get involved with civil rights movement and people like that to make them understand how important this is. How likely do you think this will be overturned or scrapped like we saw in the UK, for instance, the UK coming back on their decision to charge that on Bitcoin trading?

Problem is in Germany. The lobbyism for Bitcoin is not as professional as it might be in the UK. So I think that the leverage that we are having here is much smaller. That might be a problem as soon as this general ruling comes out to all the local offices, this Rundschrein, which is kind of, I don't know, a newsletter or something. We would like to prevent them from actually doing this quickly, but I think it will come out soon. And we don't have the people that actually talk to these kind of ministry workers.

and that's a problem that actually is not comparable to the UK where there are large-scale startups already talking to the policy makers there. And yeah, maybe we're too slow in Germany to really go on about that. No, I think it's just a question of culture of lobbying in the UK and the US and the European Union that we don't have at national level. Like, for instance, in France also, the lobbying is not as developed as, across the channel.

So let me jump in here again. And so Levin, what's your view of since asked about Room 77? What's your view of Bitcoin DE? Would they? So Bitcoin De is, you know,

in exchange, but it's kind of a peer-to-peer exchange. So it works a bit like local bit like local bitcoins when you use their online trading function. So, you know, you can, you buy directly when a person,

send the money over. do you think there's going to be consequences for that? So talking about this either, so there are two parts to that. There's the guy who's actually running Bitcoin De, Oliver Flask camper, with his company and whether or not they pay VAT or not or sales tax, but this only applies to their margin that they're actually charging all the trades. The other question is whether or not when I buy and sell Bitcoin, whether maybe VAT or sales tax applies.

applies and that could very well happen on local bitcoins it depends always how much money actually you're turning around and how professionally you're working there so i don't know if you're advertising your stuff and so on then you might be considered a professional trader and this could also maybe happen on bitcoin d which is not a usual uh usual marketplace but you're actually wiring the money directly from one person to another so that's something that will be interesting to see whether or not there will be traders on Bitcoin De or local Bitcoins that are actually seen as professional traders and sales take reply to their business and this is really something this would be the worst case scenario because you know if you're just exchanging Bitcoin

all the time and maybe I don't know making a thousand dollars or two thousand dollars profit over a year you still because of the revenue you could be charged and no half a million in sales tax this this this this would be possible i hope it's that doesn't apply at all but but people should be very well that on the other hand whoever trades professionally with bitcoin germany needs a license from the uh baffin which is kind of fincen in germany so they are already kind of out of law already so i think they may be also try to evade the taxation there so these people they usually i think they know what they're doing but they're doing something which is very uh kind of of dangerous to to trade large scale in Germany, not on exchanges like BitSem, but using something like vocal Bitcoins or

Bitcoin in E. So I take it what we need is that somebody is going to challenge that. I mean, if it really comes through, so it would need to have maybe someone like your plots of Room 77 taking them to court. Is that correct? That would be a way to go in the end, but we could try to avoid there. to actually, yeah, prevent us from going to court with that. And I think the problem is that even if we're going to court,

it could turn out that we need to pay sales tax and what is to be gained from that. So maybe it would be easier to convince policy to make a step away from actually insisting on this sales taxation and to try to work out another way. Does Germany have an association body similar to the Bitcoin Foundation? Yeah, of course, with the Bundeshaban Bitcoin, which is the German Bitcoin Association. I'd say we're also an affiliate captain of the Bitcoin Foundation from the US, and I'm a board member there. So we're working on that stuff, and we're working with a huge effort on it. But, as I said, we're a little limited from the industrial side, so there are not as many huge Bitcoin startups that actually are also, I don't know, channeling money into this kind of lobbyism.

But we're trying our best. Sounds good. Yeah, I mean, I think this is, yes, it's such an important area. And it's very dangerous what could happen here. I, there's a few ways of thinking about that. But I guess one way to approach it too is just to hope that Bitcoin scales so fast that by the time it comes to actually making. regulations and taking some official stance on that,

by that time we will have momentum, the user base and the support by companies, etc., that it will be favorable, and hopefully this will be overturned. Yeah, I've recently seen a document made by the Reserve Bank of Australia and it was done in May 2013, and it's just been released through Freedom of Information Request and it said Bitcoin can be a threat to Australian monetary policy, but it's not adopted in a big way yet in Australia. There are no Australian exchanges.

There are not many merchants or users in Australia who use Bitcoin, and this was 12 months ago. And right now we're probably about four or five exchanges in Australia. And, you know, we've got a few industry bodies and, you know, hundreds of merchants who accept Bitcoin. So even in that space of 12 months where it wasn't on their radar, and they thought no one used it, you know, a lot can happen in 12 months. Yeah, exactly. And then if you talk about, you know, in the U.S., we have now companies like Overstock or Tiger Direct or those companies.

And then we start having things like that enter Bitcoin or you start having Wall Street hedge funds, et cetera, putting money in Bitcoin. You know, those people have a lot more power and a lot more connected already with the whole lobbying, senators, et cetera. So when you have that, then you have a much, a very different. leverage on a question like this. Unfortunately, I think in Germany that hasn't happened at all so far. Well, I guess, is there something else you want to add to that topic living or maybe someone else? Yeah, I'd like to add the following. And also, Sebastian is based in France.

And I talked, when I was in Amsterdam, I talked to some bitcoins from Spain, from France as well. and they said that these VAT decisions are coming out there as well. So more or less from the local offices. So some are saying, okay, it is VAT taxable or sales taxable. Others say it isn't. I think that there needs to be a broader view in Europe and more organization between the Bitcoin associations and foundations of the local, of the individual countries. That's also something that I'd like to work on.

So if anybody's listening to this podcast as well, please try to contact me. me or the Bundeswaband to get things running there policy-wise. And I think that Germany and France will play huge roles in that as they are the economies, at least on the not on the islands in Europe. And yeah, that's the way maybe to go to think ahead and to be up to the challenge. So I went into Bitcoin because I'm interested in the technology. And now I'm always concerned about taxes and regulation, which is actually kind of annoying, but it could stop and at least defer Bitcoin for a while.

So I'd like to get around this head start. Just being here for a while, I've noticed, you know, you've done European Union elections having recently. Do you think any political party would come out in defense of Bitcoin? Yeah, so maybe the pirates might do that. So this is the only party that I think would do it. at the moment they tend to not

actually, so the pirates, maybe they know about Bitcoin and also they have a really tech, pro-tech boat ship, whatever you call it. But the others, I think they just don't think about Bitcoin at the moment. Actually, the actions are today as soon as this podcast over I'll go and vote.

For the Pirate Party. Yeah, I'll vote for the Pirate Party, yes. Okay. Is there something you want to add at our show? No, I'm just happy to be in a show. Looks like a lot of things are going on in Europe, you know, Germany, France, the UK. And I think everyone is looking to you guys to, you know, break some ground in the Bitcoin space because, you know, America has been slow and they have got so many issues there.

So I think the rest of the world is looking to the European Union and the UK to do something about Bitcoin. Yeah, no. I think it's very important what's going to happen in the next 12 months. And thanks so much for being on the show, first of all. Yeah, thanks, guys. Thanks for the work you're doing also in Australia. I think it's like, Concha looks really great. If you, you know, if you do need some help with getting set up in Europe, then of course, you know, let us know.

So, yeah, thanks to Lavin as well for joining us today and giving us your kind of some insights into what this means. That's my pleasure. Thanks so much. We'll be back next week. If you want to support the show, you can donate, and you can do that at Epicenter Bitcoin slash tips. You can also follow us on Twitter,

Epicenter BTC, or like us on Facebook. So we have kind of talked about this together, so me and Sebastian, and I think we will make some effort, you know, we'll be a lot more active, on a few of those platforms. We're also working on an overhaul of the website, logo, etc., etc.

So this will come in the coming weeks. And finally, you can subscribe to a newsletter, which goes out every Friday and kind of analysis of the most important news and developments. You can do that at epistentadocon.com slash newsletter. So thanks so much, and I'll see you soon. Thanks a lot, guys.