Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - David El Achkar: Bitcoin in the Middle East

Episode Date: May 12, 2014

For episode 19, we had David El Achkar on as our guest host. He is a Bitcoin entrepreneur in Beirut and the founder of the Bitcoin Lebanon group. We talked about the broken state of payments in the Middle East and David’s startup, Yellow Pay. Episode links: Yellow Pay Shu Bitcoin Dark Wallet Moolah Moolah Publishes Dogecoin Customer Funds Audit Amid USD Deposit Freeze (Coindesk) Proof that Moolah.io is a legitimate business (reddit) BitBay raises $30 million in funding Bitcoin 2014 Amsterdam Conference This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/019

Hello and welcome to Epistenter Bitcoin episode 19. Today is May 11th, 2014. My name is Sebastian Couture. I'm a user experience designer and developer based in Lille, France. I'm also the founder of Bitcoin Talks Lille. And I'm Brian Farman Crane. I'm a Berlin-based Bitcoin entrepreneur and the founder of Bitcoin Startup Szilian Group. And we have a guest with us today, which is David Ashkar.

It's kind of a fortunate encounter because I'm here at the... in Amsterdam and we were both at the quantified self-conference and I was kind of of course ran into another Bitcoin person there and we talked a lot so I asked be asking him to come on so I'm excited to have him here yeah thanks a lot I'm really happy to be here it's it's funny how how you get a lot of these random encounters these days there's a there's a lot of people getting into the Bitcoin space which I'm happy about yeah yeah totally so And of course, we'll also be at the Bitcoin conference next week here in Amsterdam, and maybe you're going to come to as well.

Yes, so I'll definitely be there. I'll be hopefully representing the Middle East. So maybe we can start off our conversation today, because I think there's a, you know, when we have a guest on, it's always interesting to talk about things they know a lot about. And Middle East is definitely an area that I don't know anything about. Bitcoin in the Middle East, Sebastian, I think you're not an expert on that. No, it's definitely not. So let's dive a bit into that.

Maybe can you tell us a bit about how adoption is there or what's going on? Yeah, yeah, yeah, definitely. So first off, I grew up in Lebanon. I left when I was 17 to study and work in North America. I was in Montreal, Toronto, and San Francisco. And that's where I started getting into the Bitcoin space. And now a couple months ago, I returned back to the region to actually focus on Bitcoin in the Middle East and try to get stuff started over there. So I myself started the Bitcoin Lebanon group, which is a meetup.

And then we have, of course, other online resources. but I'm also working with people in Jordan, in Dubai, and in other countries of the Middle East. So to be completely transparent, I think Bitcoin in the Middle East is still at the very, very early stages. Like a lot of developing countries right now, it's still a very new technology that you hear a lot about outside, but not so much inside. And we're working hard to change that. So, for example, the first Bitcoin-Lebanon meetup that we had had a good turnout of 60 people, and we had a very engaged discussion. Same thing happened in Jordan with even more people.

It hit above 100. And then we recently had a pretty big conference in Dubai over two days that targeted both the financial crowd and then the community. It was coin talks organized by the online project. So I'm curious, how do you do a lot of people, a lot of the people who came to the meetup, do they own Bitcoin? How did they buy Bitcoin? Is there, are they exchanges?

Is there local Bitcoin, active local Bitcoin traders? Yeah. No, no. The short answer is no, it's still very early, very early stage. So there are no big exchanges. There are no exchanges, period, yet. but there are a couple of people working on that. And in terms of local Bitcoin's activity, it's also just a handful.

I mean, I know in Lebanon, it's probably around five. Jordan has maybe double that. The UAE has triple that. But it's still, you know, it's still a small community. So, for example, when asking people at the events, at all of these events, who actually owned Bitcoins, I'd say you're talking about, 10% of attendees, 15% of attendees on Bitcoins. Yeah, I mean, yeah, just I wanted to interject something.

It kind of relates to that. And, you know, in Berlin, Berlin is considered by many to be sort of one of the leading Bitcoin communities in the world. And, you know, it was, it's probably the place where you have the most real world businesses where you can pay with Bitcoin. But that being said, I was giving a talk at a startup conference on Tuesday, which is all young people, well educated, you developers, entrepreneurs, et cetera, about Bitcoin. And I asked, too, in the audience, how many people here own Bitcoin. And it was, it was not a, you know, 30-ish, 40 people and two of Bitcoin in a startup place. I was quite, you know, it's shocking, even in a place like this. Yeah, so it's very surprising to hear that.

I guess another thing that's worthwhile mentioning is that officially that I know of, there are only two spaces that accept Bitcoin for payment. One in Dubai, a pizza restaurant, and a coffee shop in Jordan. Okay, yeah. I want to ask, so these. events that you that you've been organizing so how many meetings so you had so far so we've had two in Lebanon three I believe in Jordan a lot of smaller ones in Dubai but this larger this two-day larger event in in Dubai as well so so a decent amount for

a for a starting community and what did it take place what's your venue Mostly tech and startup spaces. Okay. And like so. So incubators, accelerators. So when, what's the, what are these look like? I mean, is it talks? Is it just people coming around to meet and talk about Bitcoin?

Do you have people from the community come and give talks about certain specific topics? Or is it mostly educational? Because, you know, Brian and I have been having this discussion also about our meetups is like, where our meetups are going, where when you, when you first start a meetup, you have this tendency to want to do like educational kind of stuff and talk about, you know, have talks about, you know, what is Bitcoin, how it works and stuff. And as you go on, you realize that, you know, people that that are in the community are not going to be interested in that. They'll be interested in more in-depth topics, but you still kind of need that educational content for newcomers.

So how did your meetup position itself in the kind of like educational or mostly more for the community? Yeah, so that's a great point. I can tell you about what we're doing, what we're trying to do and how we're addressing these questions. I'll tell you first what we've already done. So far it's been a mix of a lot of this stuff. Because we are at the very early stages, we're testing the waters with different approaches. So we've had Bitcoin 101 sessions where you have three speaker to talk about what is Bitcoin, why Bitcoin and how it works and so on.

We've had more of the communal type of events where you just bring people around a table and you just have a casual conversations. We've had panel type of discussions as well. So we've tried to, we're trying as much as we can to see what clicks with the community in the region. So to talk to doc a bit more broadly, there's a lot of us in the different countries are trying to collaborate as much as possible to, you know, kickstart the Bitcoin economy in the Middle East to educate. And so the different meetups are working together, the organizers. And one of the resources we're releasing soon is a website called shoobitcoin.com. Shoo is Arabic for what is, what is Bitcoin.

And so that's really to start creating content in the language and the perspective of the Middle East. So it's obviously going to be in Arabic, French and English, and it's going to bring up use cases that are more relevant to the Middle East rather than the more developed regions. So I'm curious about something. Because you lived in San Francisco and you know, you had, you know, good job in U.S., etc. or in Canada. And then, you know, you started on a Bitcoin startup in San Francisco, which seems to me, if you work on Bitcoin startup, it's probably the best place in the world.

Like, why on earth did you go to the Middle East? Yeah, I ask myself that sometimes. It's obviously, you know, it wasn't, it's tough to go back to that region when you're exposed to the level of innovation and ambition in North America and to go back to the Middle East. And there isn't that much in comparison, obviously, that much excitement. But that itself, I think, is an opportunity to start shaking things up. The Middle East has seen a lot of the effects of the brain drain, and so we need more people that are at the cutting edge to come back to the region. So as I was building my startup back in the Bay Area,

through a series of events, we just ended up stumbling on this opportunity in the Middle East. and we decided we couldn't pass this up, so we just made the leap. So I guess that's kind of a good segue into talking about your, maybe your startup and then why you think that fits well in the Middle East and there's an opportunity there. Yeah, yeah.

So our company, Yellow, is tackling the payment space in the Middle East. And let me talk a bit about payments in the Middle East, because that's definitely a very broken space. So one fun fact is that 80% or so, depending on countries of transactions, are done with cash. And I'm talking about transactions online as well. So when you order, let's say, a new pair of shoes online,

it's shipped, it's delivered to your door, hand delivered, and you pay cash on delivery, right? And so you have huge issues like 20 or 20, or 30% of orders that are just refused at the door because, you know what, I changed my mind, I don't want these shoes anymore. And so that adds a huge cost to the whole payment and retailing, retailing space in Lebanon. And then you have other issues like PayPal, for example, is not very widely accepted. It doesn't work in a lot of countries.

is the costs of payment processors is very high at an average of 5 to 10%. You're talking about, in some cases, a 10th of revenues that goes to payment processors. And so there's like this really huge need for fundamental disruption in the payment space. And a lot of people have tried to tackle that the conventional way, unfortunately, without much success. And so we're passionate about Bitcoin. And, you know, we've realized that there's this big problem in the Middle East. And so we're trying to combine these two together and try to solve these with a lot of the potential that Bitcoin brings. So why did the traditional attempts of solving this fail and why do you think it would be different with Bitcoin?

Yeah, that's a good question. So I'm not entirely sure why the traditional approach has, well, not failed, well, or just not being, not been very, very effective. I don't have an answer to that. I don't have an answer to that yet. I should, yeah. It might be interesting to look into the, you know, what's been. But I guess so basically your you know the business would be like let's say for example that shoe shop That you know sells shoes online and then they have pay

They have transaction costs of 10% and have 20% returns Yes, yeah it's like Maya that's insane that must I mean their returns will cost a lot so I mean they must add 50% on the top of the shoes just to pay for this stuff, you know? Yes. Yeah. Yeah. So the The markups on e-commerce are really high. Okay. So that's why, so there's this neat startup, also, that's trying to address this in a very different way

where you can actually order stuff on Amazon from Jordan through a gateway, and they take care of all the shipping and the processing for you and get it to your door, and add all the costs on top of that. And that still becomes a better option than the local ecosystem. Yeah, the local e-commerce options just because of all the overhead and the cost that's in the system. So these issues that you've been mentioning are very specific to Lebanon then? No, I'm talking about all of the Middle East.

I'm not talking about Lebanon specifically. Lebanon is a pretty small market, so it wouldn't really make sense to attack a single country. Now, I know I'm being very broad when I say the Middle East, and I know very well that each market is actually quite different. but as a whole, the payment space in the Middle East is broken. So the average across the region is going to be 5% to 10% for payment processing. So the way this would work, then, of course, you would need customers to have Bitcoin's, right? So somehow, like, let's say you can convince the shoe shop to accept Bitcoin payments,

which may not be very hard, given their miserable experiences of other methods. But then, you know, there needs to be a market on the other side or some opportunities. some possibility for them. What's your view there? Like, do you feel like you're just going to have to wait until the Bitcoin adoption is at a certain stage for that to work? Yeah. So, I mean, we'd love to, we'd love to address all of these questions at the same time, but obviously it's not realistic. So a couple points. I guess the first thing is we are working on with different startups that

are going to address that problem. So with the payment solution, we're going to address the demand side of kicking off a Bitcoin economy or marketplace by allowing it for that to be a demand for Bitcoins. But we're working with people that are also going to focus on providing that supply, either through an exchange, either through ATMs, as you've probably heard about Dubai or broker exchanges as well. So both of these will come in tandem and and help solve that. We also have a lot of ideas as to how we can help consumers get Bitcoins in order to make these purchases.

You can talk about vouchers, which is pretty popular in the Middle East and other similar approaches. So there's basically other companies as well that are working at this time in the Middle East on providing this kind of complementary services of easy Bitcoin. access and so there's there's a few yeah there's a few startups some of them are not public yet other are that are addressing this liquidity issue uh bit oasis that net that's not out yet there are these ATMs in Dubai that are coming out there are other people about those because I remember also seeing this a few months ago it's like 400 ATMs going to be in Dubai

his own pictures on Reddit it's like these people are crazy yeah yeah yeah well it's It's funny, you know, back then I didn't know the details. And so even though that sounded like very crazy, coming from Dubai, there's always a side of me that thinks, you know what? Maybe, maybe it's true because maybe someone sold 200 camels for 400 ATMs. Well, no, you look at Dubai and it has the tallest building in the world, the biggest mall in the world, one of the biggest indoor ski slopes. It has this extravagant nature to it. So 400 ATMs for Dubai is, you know, it's maybe pocket change for some of the people there. But no, so here's the latest update on this because I'm close friends with the guys that are running this.

I think it was a poorly initially coordinated media splash or whatever we want to call it. In fact, these are not ATMs per se. They are kiosks for mobile top-ups, for remittances, onto which this company, UmbrellaB has, built Bitcoin applications, if you want, that accept cash and give you Bitcoins. It's one-way Bitcoin kiosks. So the kiosks are already out there and they're functioning without the Bitcoin application. The Bitcoin application rollout is going to take a bit of time. I think they have only one Bitcoin functioning in a chaos functioning right now.

It's because they're trying to figure out the regulatory aspect, which turned out to be more complicated as expected. I'm actually curious on this point. What do you think is going to happen in terms of regulations in the Middle East? Do you think there's going to be a lot of pressure by governments or moves against it? I presume so far probably nothing has happened. Yeah, so Lebanon, Central Bank came with, you know, your average warning saying this is risky. We don't understand it. Be careful.

Jordan took a step further and said banks are not allowed to deal. with it. And these are the only two countries so far that have taken a formal stance, if you call that a stance. It's hard to predict what's going to come out. Some people say that because the UAE and Dubai specifically has been pretty progressive in trying to promote innovation over there, that they're going to take a more open stance. But it's true that in general, the Middle East and the Middle Eastern governments are generally more conservative and tend to follow the lead of other countries. So they're not going to be taking the lead.

But we'll see. I guess one concern, I don't know if that's going to come up, but I think it's feasible or is possible is that the U.S. is going to apply pressure. because I think we've seen that to some extent that they've cracked down a lot on remittance services because there's this paranoia in US like are these people funding terrorists what's like where is this money coming from

what about these $300 going to Somalia or coming from and I wonder if at some point we will see the US that they're trying to suppress Bitcoin usage in Middle East for years like that. So it's a great point you

bring up. Remittances in the Middle East are huge. It's one of the biggest inbound and outbound regions. I think we're talking about close to $100 billion annually. So it is a huge economy that

obviously can be disrupted by Bitcoin. So not only will countries like the U.S. have objections to, But I think a lot of local governments may be concerned about that or local mega remittance companies may be concerned about that. But what we're seeing right now is that Bitcoin is way too under the radar for anyone to be concerned about it yet. I want to ask you, like culturally speaking, how does how has it been perceived their, you know,

by people in Lebanon and Jordan and like in the Middle East generally. And how does like how does Bitcoin fall in, how is it perceived in, in relation to like the principles of Islamic banking, for instance, like, have you ever thought about this and how it may be perceived going forward in relationship to Islamic banking? So I'm not too familiar with Islamic banking to be honest.

Neither am I, so that's what I'm asking. Yeah, yeah. I'm not, but I don't think it would be especially problematic in that said, more so than in the conventional banking system. I mean, I could imagine it is even less problematic, because if you think of a Bitcoin economy in the future, it seems clear to me that it cannot be debt-based in the same way. Like you can't have big interest rates and all those things.

It just doesn't work if you have a deflation of currency. So I could even imagine that people would be more positive towards it. You might actually have to go more towards, you know, that instead of a bank giving a loan to a company that they take equity because it just makes more sense with currency. I don't know. Yeah. Yeah. So it's a good point.

And I know a couple of people in the Bitcoin community in the region that are pretty vocal in that sense, I think that it's actually a currency, a payment network that is much more suitable for Islamic banking than not. But to be honest, I'm not well-versed enough to have a strong opinion on it. And what about the media? I mean, like here in Europe, and also maybe in the U.S., like we've seen this kind of shift towards where the media is taking a more nuanced stance on Bitcoin, where before, It was very, very much like, you know, be careful about this new technology.

It's dangerous, money laundering and such. And now we're seeing this more nuanced dance where, okay, there's innovation, there's startups and such. Like, has that shift started happening already in the Middle East? Are we still kind of on the old, the old types of rhetorics? No, no. I think we, there hasn't been a ton of the old rhetoric in the media. Now, to be fair, Bitcoin is not as present in the media in the Middle East as it is in the U.S. or in some countries in Europe.

But we as a community have been working proactively with the media to try to get the right messages out there. So we've been contacting different media sources. Right now, we've had obviously much more response and interest from the tech-related news sources. But they've been very open to covering this in a much more objective way and trying to highlight also the growing community. That's really cool. And what about, I mean, like, so the things that you're doing and the Lemon On Bitcoin group, is that part of like, you know, your mission going forward is to be kind of the relay, you know, the voice of Bitcoin for the media? Yeah, yeah. So I'm excited about that role personally and as a company that is also one of the missions that we have. I think education and advocacy is going to be very important. The Middle East has generally had, has generally been a laggard when it comes to technology. It's only recently that e-commerce has started booming. And so there's, to me, I saw this opportunity to really try to get the Middle East into the Bitcoin economy as soon as possible to avoid being a laggard because I thought this was really an opportunity for us to move things forward faster.

And so advocacy is one of our primary goals. And so I've talked about different meetups that we're doing in the various countries. where I've talked about the media approaching. I've talked about the online resource shubitcoin.com that we're releasing. And we have other plans in mind to shake things up a bit. Larger conferences. We're hoping to invite people from international communities, big names to the region as well. So there's a lot of work to do.

And we're fortunate in, that we can look at countries like Berlin, cities like Berlin, countries like Germany, countries like the U.S. and Canada that have done things really well so far and get inspired by their work and try to create Middle East-specific versions of that advocacy work. I mean, I think it's just extremely exciting to see what you're working on. And it's extremely exciting that it's so, in a sense, it's so much ahead, no? Like there's so much that has to happen for this to work. Sometimes I feel like we're maybe a bit too early.

I mean, there's a lot of this happening there. There's a lot of Bitcoin businesses that are startups that are building things that, like even if they work perfectly well now, it doesn't work because they are not, the market's not there. There's not, their uses are there, right? Yeah. And I think it's like super like curators and cool and visionary. and of course also risky to like build those things now and then you know of course when the

community is there or when those things arise and the you know the marketplace liquidity will be there then it will be super useful and they're extremely well positioned but yeah it's it's i think it's cool this is happening and it's cool it's happening you know in so many different places like you know middle east and south america and different european countries so yeah no it's it's it's definitely super cool and I'm you know I'm really excited to wake up every day but you know every now and then I think it's important for for me and for all of us to pinch ourselves and realize even across the whole world we're only just a few million that that that and if that much really that that are in this this whole this whole community this system so there's there's

a lot of work to do and and you know we're excited but there's there's there's a long road ahead of us Maybe let me ask one more thing when we can think about the Middle East, etc. Do you think when it comes to adoption going forward, do you think that's going to happen because there's such a pain point in payment so people will say like, oh, I want to buy something online, there's a 30% discount from that site if I pay with Bitcoin or maybe I want to want to get some bitcoins or do you think there's also going to be because in in the west we've seen a lot a lot of people buy bitcoins to invest right to speculate really yeah yeah do you think that could also be a driver for bitcoin adoption there or has it been any of that so i think there's to me

there's two uh there's two very interesting use cases so you may or may not know but there's a lot of money in the in the in the middle east there are people that are uh very very wealthy and so There's that route where you have individual investors going to be interested in putting money into Bitcoin. And then the more interesting route, and this is really why we're tackling the payment space, is that everyone is hurting about this broken payment space. You have the e-commerce websites that can't, that are frustrated about these huge costs that they're paying. You've got the shipping and the logistics companies. that have to handle the whole complexity of a cash on delivery network.

Because logistic companies need to end up holding the money for their e-commerce websites. Okay. So I think what's interesting what you're touching on here with these like logistic costs and their returns, et cetera, is that there's such an incentive for people to use Bitcoin and for companies except Bitcoin. Because right now, if you talk about the U.S. or Europe, even if it maybe is a bit cheaper, you know, and then you have instead of 2.5% transaction fees, you have, you know, a 1% or something. And on the consumer side, usually that's like, it does make a difference because they don't pass the cost savings on or they give some sort of, you know, bonus point or something. But those costs, they don't, they're not an offer of incentive, for example, to go out and buy

bitcoins, right? And then often the costs you would pay in terms of an ATM fee or exchange fee, etc. or bank transfers, and they're going to be higher than even if you save something by paying with Bitcoin. But that's not going to be a case here. Like here, you really could be like, you know, you buy Bitcoin to save money on buying things online. which is really powerful.

Yeah, yeah, yeah, yeah. So there's one part of the equation. I'll get to that in second. I think there's one part of the equation that I forgot to mention so far is that even the option to use credit cards is quite difficult in the Middle East. A lot of financial institutions, for example,

are going to issue credit cards that by default don't work on the internet, which is surprising. What? Yeah, yeah, I know, which is surprising in our technologically advanced world, but you get a credit card that is not activated to work for online commerce.

You have to explicitly ask or get another card that works on the internet. Because there's been this bit of the perpetuation of the idea that the online is not safe. So anyways, as you can see, it's surprisingly broken in a shocking way. So back to what you were saying.

Yes, I agree that even for a consumer, there's going to be a great use case because we're going to be working with merchants to actually help them figure out the best way to get consumers on board as well. If you're saving 10, 5 to 10% on margins, that's something you can give a portion back to customers and actually incite them to get on board of that system. And there are other ways as well where you completely abstract away Bitcoin as a form of payment and we just end up using Bitcoin the protocol for transfer of value to facilitate, you know, consumer merchant transactions.

Yeah, I know. I think it's exciting. Yeah. And I guess it will be really interesting to see where you have these forest breakthroughs, you know. I mean, I guess people talk about remittances and maybe that's going to happen. I mean, it is going to happen, I think, but the question is when? Yes. And the question is, is it first going to be that?

Is it first going to be mainstream usage in the US because people make it so convenient through, you know, tying Bitcoin debit cards, the bank accounts, et cetera, that, you know, even if maybe the gain is not so huge, it's so convenient that you still do it, a lot of people do it, or is it going to be something like the Middle East where, you know, there's this broken payment system to fix. So I'm, you know, I have no clue what's going to be in order that's going to happen. What's going to be first where it's going to create this first real Bitcoin, you know, real Bitcoin usage, you know, where you have 30% of people use Bitcoin.

Something like that. Yeah. You talked about the payment situation. Can you talk about a bit about banking? Like how, how what's the percentage of people that actually have access to banking? use it? Is it quite high or are we still in a kind of archaic situation? No, so I'm really happy that you brought that up. I can't believe I forget, I forgot to mention that. That's also a huge thing in the Middle East. This is another fun fact that you're going to

want to know. The average financial inclusion, banking penetration, whatever you want to call it in the Middle East, it hovers around 80, 20%. So 80% of the adult population do not have access to banking services. And that's huge. That's huge, right? So you're talking about such a big part of the population that's forced to live in a cash-based society. And so that, that again is sort of like a no-brainer opportunity for Bitcoin to come

and shake things up a bit, right? What about smartphone penetration? Is that much higher than 20%? So the first side is mobile phone penetration is one of the highest in the world in the Middle East. You have in some countries upwards of 100%, multiple phones per individuals. So you put these two together as kind of a very simple equation of high mobile penetration, low banking penetration. Bitcoin as a mobile-based financial system comes to the rescue. And I guess that's a lot of smart phones.

that will be a lot of, a lot of those phones will be smartphones at least maybe two years down the line or maybe even now. Yeah, yeah, yeah, yeah, yeah. I mean, smartphones are becoming significantly cheaper. I don't have the breakdown of smartphone versus feature phone, but that's a neat number. I'll try to get that. But there's, even for feature phones, there are already people developing solutions for Bitcoin. Yeah, Bitcoin, no, it's 37.

I mean, we've had him on the podcast like you, uh, Johan. from 37 coins a few months ago. Yeah. So, yeah, no, that won't be a hurdle. It won't necessarily prevent Bitcoin usage. Yeah. Yeah. So, I mean, we talk about all these things, and it's this, you realize there's this,

so many use cases for Bitcoin to, to take off. And so that's why, on the one hand, it's super exciting. And, you know, I can't wait to see this grow. But even, even being at the, you know, quote unquote, forefront. of Bitcoin in the Middle East, which is not saying much, I have no clue how this is going to pan out, right? I mean, to be realistic, it may take a while. It may take a couple of years before Bitcoin takes off seriously in the Middle East, or it may take off overnight with one of the use case that we've just talked about that just clicks if someone builds the right solution.

Now, how are people buying Bitcoin in the Middle East? Are there exchanges that are established there? Is it mostly just local trading or? it's mostly local trading there are no exchanges there are a few companies that are going to release exchanges broker exchanges soon but it's mostly local trading and it's not a ton of it i don't have i don't have figures on it but if we go through to local bitcoins you know you can see how many people are in a region i think last time i checked in lebanon it was like five to ten same thing in jordan so it's pretty hard then to uh to get your hands on some bitcoin if you're in the middle east It is. It is. Now, the interesting thing is that, like myself, there's a lot of people in the Middle East that have lived abroad and come back or have studied abroad and come back.

And so a lot of people do have accounts outside, which makes it much easier for them to get Bitcoins. Cool. Well, I think it's going to be extremely exciting to see where Yellow goes. And if people want to check out, I think Yellow is not, there's no beta yet, right? Yeah, so we're talking to customers right now, and we're going to release the, we're going to work on a beta solution with these customers within a month or two, to hopefully. And then when that, when that proves to be successful, we'll release publicly. And we're going to have a, our website is going to go live soon under yellow pay.com. So yellow pay. So yellow pay.com.

And then the shoe. Shoo Bitcoin, that's S-H-U Bitcoin.com. And right now there are landing pages in the three languages, but we're in the background, we're building the whole, the full resource to release also in a couple of weeks. Okay, cool. So can people sign up there already? Yes. Yeah, okay.

So to be kind of up to date. Cool. Well, I think we'll definitely be following up with you and stay in touch, and then we can see where we are in six months time. Yeah. No, I'm excited to be, to give you. an update then cool well let's cover some of the news topics because there's also been um so actually i haven't had a lot of time to follow up the news because of the quantified self-confidence

here but one thing did happen that's you know pretty big i think or at least it looks like it which is that bit pay raised a new funding round of 30 million dollars which is the biggest so far of a bitcoin startup that's huge it's pretty huge there's a uh uh uh You can buy a lot of ergonomic chairs if that. But when you just think about, I mean, when we were in Berlin and we were talking to people there and investors there, and at that time, there was about $100 million in investment funding going towards Bitcoin startups. This is a third of that amount, about a third. So it just goes to show that investment in Bitcoin is really boosting in 2014. True. It's a good point because there was just the Coin desk report. And I remember the total number of VC funding in Bitcoin. So that was a few weeks ago or a month ago or something. And the total amount of Bitcoin funding at that time had been 150 million. So this, you know, increases it by 20%. Yeah. So it quite. Yeah. No, it's a big deal. Hopefully we have much more of this very soon.

And Richard Branson is investing. How much is a trip to the moon in Bitcoin? Or no, not the moon. To the starsphere. 200K, but that's not in Bitcoin. Okay. So that doesn't even, yeah, I think it's a couple of trips up there. I mean, it's also interesting because we've seen a lot of competitors in the space.

No, like the payment processing space is definitely very competitive. I'm also, it's also interesting to me to see how low the fees are. Because if you look at BitPay, they've processed something like $100 million. But if you look at their fee structure, like they cannot have made very much money there. I don't think it was ever higher than 1% at their fee. And then it's significantly lower if you're a big merchant. Plus, I could imagine they even do like no processing fees for, like, you know, like I don't know what overstock is paying, Coinbase, but you know, I'm sure it's quite little.

Because, you know, there must have been so much competition for landing this, this client. So it seems like the only way this is going to work is if it becomes huge, there's going to be like gigantic amounts of transactions. No, I think there's also another aspect to it is that they'll be developing new, new services and perhaps even hardware. And that'll also become part of their business. I mean, we were talking about Zappa a few weeks ago and how we're kind of questioning their business model. Well, what's their, what, how do they bring more people in is they add on layers of service? And I think for the most part now, Bitcoin payment processors are kind of securing the base structure of their business, the, the, the, which is the payment aspect. But then after they'll be bringing in a bunch of other services that will be tiered

service that you have to pay for or what have you. I don't know. I mean, with Bipay, they've been very focused. I mean, Coinbase, obviously, they make their money through exchange. That's like, I think it's a great business. And I don't think that's going to go away necessarily. And, you know, even if the fees go down there, that's still something you can make very substantial amounts of money with.

And I think they are. But Bipay is different. They've really focused on the payment processing. Of course, are you maybe true? Maybe they're going to pay sell terminals for merchants. I don't know. What else? Well, I don't think that are at a stage where they care much about making money.

They're growing really fast. They've raised a lot of money. Their focus right now is just on gaining market share. So, you know, being profitable is not an issue. And there's so much room to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, innovate on new products and services, as Sebastian was saying. Yeah, no, no, that's certainly, no, I think that's totally true. And I guess that's also why, you know, they raised $30 million,

so they don't have to worry about this stuff for a while. Yeah, that's true. So, Sebastian, you wanted to talk about something called Moulon. It sounds like a very bizarre name. I thought it must be something Middle Eastern too, but. No, it isn't. Not that I heard of. No, this was just an interesting story.

Well, mostly, you know, to follow up on everything that's been going on with Malk Gox, not that we want to bring that kind of the bag again. But Mula is, it's an online wallet. They're very small company. So basically what they offer is they provide you the opportunity to create a wallet online on their website. And you can create multiple wallets. But the cool thing about it is that they support. port quite a few light coins.

So basically you can go there. You can create an account. The accounts are free. You create wallets, which creates you an address. And you can basically just kind of store your coins there. Not that this is really best practice, I'd say. But if you want to do that, if you want to be able to store like Doskoin and light coin and maybe Aurora coin in one place, you can do that with Mula.

So then there was this Reddit post from about 10 days ago where people were kind of just not really worried, but they're just raising concerns about Mula where there were a few things that were kind of iffy about it, the CEO of Mula, his name is Alex Green. He wasn't didn't seem to be very present online. Nobody had ever seen him. Nobody in the community really knows who he is. The company was registered, well, is registered at this business, which is apparently some

sort of, well, like they say here, cheap and dirty business and corporations service that scammers seem to love. And so they were just kind of raising the concern about this company and requesting that the company releases their. their information in just kind of helping to alleviate these concerns. So what Wula did is they did sort of an internal audit and they published the ownership of $72,000 worth of Dogecoin on the blockchain confirming that they do in fact own and have access to those funds.

So this helped to alleviate some of those. concerns I think and this goes to kind of speak to what we were talking about earlier a few weeks ago but Mount Cox is where the industry is going to come forward and self-regulate and self-audit and I think this is really an interesting and a good initiative from a company to come forward with that information you know if it's requested or even you know on their own on their own so how did they actually do this

did they like tell people like these are the public keys that your funds are held in or did they publish all the public keys of their addresses or how does that work? I'm not sure actually

so they have a blog poster on their website where they explained how they did this and I think but so the main is the main point here I guess is about you know the communication is that for calming like yeah although I guess in the Mount Gogh's case it wouldn't help help very much because if they didn't have the the bitcoins in the first place then you know being transparent is not necessarily going to alleviate any that's true

Any pain or worries or anger? That's true. No, but I just think that this is an interesting example of a company that, well, very little was known about the company. And the community just kind of need to be reassured. And they came forward and came through with the request of the community, which is to prove that they do have access to those funds. Now, mind you, this was an internal audit. It wasn't performed by a third party, but I think they were saying that they wanted to bring in a third party to further secure their trust with the community. Cool.

Well, I don't know. Maybe very, very briefly, we can talk about one last thing, which is I've tried to talk about this with some other people and get some discussion going. and hasn't completely succeeded, so let me try it once again. There was an interesting article about a two-bit idiot, so Ryan, so he was writing about this dark wallet thing. Dark wallet, of course, was the wallet released very recently that, you know, puts privacy first, so through coin join and self-address, kind of tried to make a blockchain analysis impossible to trace payments.

And he was arguing that this could be terrible for Bitcoin because let's say Bitcoin really does become super used by the back market, etc. You know, then you have this kind of built by association. So now if you try to get positive regulations, well, now you, you know, if you talk about the bank lobbyists or anyone who's against it, you know, now it's a different case, right? you can point there and it is the thing enabling all kinds of illegal activities. Obviously, that's not happened yet. We don't know if it will happen. But it's an interesting scenario and it's interesting to think about, I think, how will that affect regulators responses towards cryptocurrencies in general?

And would this, could this actually create serious problems in that regulators will say this is enabling those things. There's no way to stop it. So we're going to make it much more difficult for regular Bitcoin startups, banking relationships, all those things. So I'm curious, what are you using this? So personally, I don't think this is any different

than the whole Silk Road fiasco. You know, Bitcoin has a new technology. People are afraid. You know what? it allows frictionless payment internationally without associated identities. We're going to have all of this market activities. The Silk Road rose. And people are saying, oh, Bitcoin is successful only because of the Silk Road.

Then they were guilty by association and all that stuff. And then the Silk Road got shut down and Bitcoin came out of it almost untouched. And I think it's going to be the same story where, you know what, there's a good chance. it is going to be used for illegal activities. But I see it as a bit futile to try to stop or prevent that from happening. I mean, if they don't release dark wallet today, someone else is going to, the technology has been invented and the same way Bitcoin cannot be invented, the technology behind dark wallet cannot be uninvented.

And so someone else will create a similar. dark wallet. So it's no, I totally agree with that. I don't think there's any way of stopping this and I don't know if it's desirable. I actually think it would be, I think I personally have a pretty positive view of dark wallet. I think it's really important that we do prevent a blockchain analysis. I think privacy is important. And I think so it would also actually be a way of attacking Bitcoin. You know, if a regulator says we really don't like Bitcoin. Now, If you can trace all the, you know, you can see who is, who is using Bitcoins large amounts. Of course, that makes it very, it weakens Bitcoin a lot, too.

It weakens the utility of it. You know, let's say we think of a country of dictatorship and then people start using Bitcoin. Well, if you can trace the Bitcoins to, you know, to people. Then, well, that makes it a lot less useful. Yeah. So I agree with you. I mean, I'm, I think this is a great. a great tool and it should exist.

And to bring this to a very practical and tangible example, let's think back to the target issue where people got really concerned when they figured out that target can, was able to predict when one of its customer got pregnant before the rest of her family got pregnant, right? And so that's the type of privacy we're giving away when we're using credit cards because identity is associated to payment. And so I think the idea that we're going to be able to separate our identity from

my payments is great and is really needed. And so if Bitcoin can bring it and Bitcoin can, I think it's a good solution fundamentally. Yeah, absolutely. I think a lot of this is going to depend on basically the speed of, of, Bitcoin growth and what's it well in relative domains. So I think we're going to see a very slow growth in a lot of sort of legal mainstream uses. But for some reason, a really fast growth in, you know, use like a dark market or those things, like a decentralized silk growth.

Then we could have a problem, I think. And a problem in the sense that regulars would be really. style against Bitcoin and I don't think it would kill Bitcoin, but it just could slow down thing a lot. But then, of course, if we have a lot of other use cases like remittances, like payments, etc., that grow much faster. And then there's also that like all the Silk Road, I don't think it would be so much of a problem, right?

Because then it's at the point where there's no going back. So I think there's a certain case where it could really play out that way. But in a sense, of course, you're totally right. is a rather academic discussion that doesn't have any. There's no action steps to take from here. Yeah. No, let's just speculate. Let's say that the dark wallet functionality had been built into Bitcoin from the beginning.

I think it's interesting to kind of think about what would have Bitcoin taken off as much as it did with that functionality not having been built in. or would have we had more pressure from regulators to try to stop it? Because I personally think that this should have been built into the protocol from the beginning. So it's completely private. What are your thoughts on this? Well, I think for one,

the Silk Road fiasco would have played out completely differently, right? We might be in a world where a Silk Road would have never actually be taken down if you had privacy. But that wasn't the reason, right? That was now they called him. Well, I'm sure a lot of the linking of the information was, well, I'm not sure. I'll take that back. But there must have been some of the linking of the information because of the lack of identity separation from payment. No, I don't think so.

I don't think so at all, actually. I mean, I've followed that pretty exactly back then. The case, like, how they called him, was ridiculous, really. I mean, because he, like, posted about, like, basically promoted Silk Road, like, with his real email address, like, before the site was even long. Fine, okay. And then somehow he took him two years to figure that out. Which is, like, also a mystery to me. Okay, that meant no one could have saved him from, from.

I mean, I've always wondered about that. Like, have there, you know, have there been people arrested because of, you know, people tracing the blockchain linking in Silk Road? I don't think it's happened. Like, I have never seen any case of that being mentioned. But I think, I know, the question you're raising is good. I could, I could definitely imagine that it would have been, maybe would have made the conversation a bit more hostile in terms of regulators. but at the same time, you know, in the end, this is necessary. It's necessary that you're able to transact Bitcoin anonymously that you don't have to worry about.

Is someone going to figure out my salary if I now pay this burger from this address? Because, you know, like it's going to come pull these inputs together. You know, there's no way people will be able to deal with that. So it needs to prevent that kind of thing. Well, you know what? I don't necessarily agree that it's that obvious, right? It requires a whole paradigm shift for everyone. Right now, we're perfectly comfortable sharing our identity every time we use our credit cards.

And it's becoming more and more great. With whom? With the merchant and some company. But then if you have to blockchain public and like anyone can go there. I mean, that's like a whole other level. Yeah. Yeah. No, no.

Yeah. In that sense, you're right. In that sense, this could, you know, as there's a lot of companies right now that are specializing in, in analytics on top of the blockchain. And so when these mature a bit more, I could definitely see this becoming a huge problem. You can do some pretty neat network analysis and clusters. I'm curious how they're gonna, yeah,

we should ask Jonathan at some point, like how are they gonna like of coin a metrics? So like how would they be affected by something like coin join being used widely? I don't know, but I could imagine that mess up some metrics they run on it. Yeah, it's true. There's a bit of a conflict of interest there.

Yeah. It's also pretty crazy how these, I mean, I think it's also interesting to point out that the lead the organizers of Dark Wallet, and notably Cody Wilson, who's the guy who did the 3D printed gun, he goes out and says, like, I want private means for black market transactions. That's what he says in his wire articles. He called it money laundering software like the article. I don't think it's the best PR move.

Yeah, it's not the best PR move. If you wanted to promote this in a way that's at least sensible and that people are and mostly like governments and regulars are going to accept, you should be saying it's like for protection of freedom of speech, for instance, or something like that. But that's not his goal. Right. That's our goal. That's not his goal.

Yeah, yeah. I mean, he's like a smart guy. Like, it's not an accident. You call it like that. I mean, I think the whole goal of this as well is to drive, you know, to make it impossible for people like the Bitcoin Foundation, et cetera, the lobby. And so if you can drive the separation in that, you know, Bitcoin really is more underground. I think that's actually what they want. Yeah.

So I feel, you know, I haven't looked into a ton of details here. but I feel like there's a bit of a political agenda behind this. Yeah, definitely is. Yeah, okay. So I just wanted to be, yeah. So to me, you know, I'm not, I would rather disassociate myself from all the political agendas and Bitcoin as a technology that has a lot of its advantages, one of them being privacy, right, and financial privacy.

So that to me is a great innovation without any political baggage behind it. Yeah, no, absolutely. So I think we're kind of covered the topics we have to cover today. I mean, it was really interesting to dive into this other world of the Middle East, which is the first person, I guess. We've met, no, I met a person from Dubai who wanted to put up an ATM there. Yes, one of the guys found the ATM? No, it was a girl. A girl.

Oh, so you met the Polish developer that wanted to say, yes. Oh, yeah, we met her in Berlin. Yeah, yeah. So I barely missed her because I was in Dubai as well, and I think she arrived as I was leaving. I never met her. I don't know if she's still going to do that. Yeah.

Because of that, you know, the 400 ATM thing. What was her name again? I think it was I. AI. I, yeah, or AI or something like that. It's not a real person. Yeah, yeah, that was her name. It was AI.

Yeah. Okay, well, thanks so much for, you know, for joining us. Yeah, no, I really, I really enjoy this. And, you know, I hope that soon enough the Middle East is going to be a recognized place for Bitcoin. And we're working towards that. I mean, I think a, you know, a large scale conference in the Middle East. That would be a fantastic thing. And we're working on that.

So on that note, I mean, in. In general, if anyone has thoughts on just Bitcoin in the Middle East, what you'd like to see, hey, if you'd like to help or whatever, please shoot me a note that David at yellow pay.com. Cool. Cool. Are you on Twitter? Twitter is at Dave Ashkar. So it's D-A-V-E-A-C-H-K-A-R.

Awesome. And so yellow is at yellow pay.com. YellowPay. CEO is the website. Cool. Awesome. And also your meetup is on meetup.com, right? Yeah.

So if you Google on meetup, meetup.com, Bitcoin, Lebanon, Jordan Bitcoin Group, or I think cryptocurrencies Dubai, you should get our meetups. Yeah. So for all our listeners out there in Beirut, you know now how to find that, you know, next local. Don't be laughing. We'll get you another thousand listeners from Beirut in one week. Okay.

Well, thanks so much for listening in. We'll be back in a week. And we'll also be producing some content at the Bitcoin Foundation, the conference in Amsterdam. So I think there will be quite a lot. Sean Jones, who was on the podcast a few weeks ago. She's going to be producing content. and we'll be producing some episodes with her interviews,

and I'm going to do some interviews. So I think there's going to be a lot, and maybe Sebastian is going to come over to, if you can. I am definitely going to try to come. Okay, cool. So, yeah, it would be great, and I think we'll have lots of additional content, kind of starting two weeks from now, I think.

And so thanks. So, I'm listening. If you want to follow us on Twitter, with Epistenter BTC. Yeah. And you can subscribe to your newsletter. It goes every Friday at Epistandobitcoin.com slash newsletter. And if you want to tip us, you can go to episodeurbitcoin.com slash tips.

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