Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Flavien Charlon: Coinprism – Colored Coins, Open Assets Protocol & Crypto Equity

Episode Date: September 8, 2014

Flavien Charlon is the founder of coloured coin wallet Coinprism. Colored coins allow people and organizations to securely issue and trade real-world assets like commodities, stocks and bonds on the bitcoin network. Coinprism recently won the global Startup Challenge hosted by the Bitcoin Foundation in May 2014. Other notable projects include Predictious, a Bitcoin-based prediction market. He has 8 years of experience in software engineering at Microsoft, building large scale distributed systems, and is a graduate of Ecole Centrale Lyon, where he received an Msc. in Engineering. For 10% off Inside Bitcoins London on September 15 and 16, use the discount code EPICIBC14 Episode links: Coinprism Colored Coins Open Assets Protocol Flavien Charlon speaking at CoinSummit San Fransisco This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/038

Hello and welcome to Epcenter Bitcoin, the show which talks about the technologies, projects, and startups driving decentralization and the global cryptocurrency revolution. My name is Sebastian Kutjew. And I'm Brian Fabin-Krain. Welcome to our 38th episode. Today, our guest is Flamian-Charlon. He's the founder of Colored Coin Wallet Coin Prism. So colored coins allow people and organizations to securely issue and trade real-world assets like commodity, stocks, bonds on the Bitcoin Network. If you think of the kind of new Ethereum, et cetera, protocols,

color coins was sort of the first instance of something like that. They recently won the Global Startup Challenge at the Bitcoin Foundation Conference in May, in Amsterdam. And he's also involved, or he's also the founder of the predictions, which is a Bitcoin-based prediction market. So he's eight years experience in software engineering and Microsoft, building large-scale distributed systems graduated of the Ecole Central Lyon, where he received in master's engineering.

So it's great to have you on, Flavian. Yeah, happy to be here. Thanks for joining us, Fabian. So you're in Dublin right now, right? Yeah, in Dublin in Ireland, yeah. So you've been based there for how long? For seven years, actually. Oh, cool.

It's about the time I got to France. So, yeah, we'll get to talk to Flavian in a few minutes about Colour Coins, Open Asset Protocol, CoinPRISM, all that stuff. First, we just want to mention a couple of things. So, first of all, we mentioned this last week. Our regulatory is first correspondent Sharon Jones. It's going to be at Inside Bitcoin's London on September 15th and 16th, doing some interviews for us there and recording some interesting talks.

That conference is taking place in London. And there are some very interesting talks there, centered around crypto laws. kind of Bitcoin 2.0, a lot of Bitcoin 2.0 focus stuff happening at the inside Bitcoin's London. And Flavien, you're going to be there as well. Yeah, I will be on the Altcoin panel. So I would be there. And if somebody wants to talk to me there or, you know, chat with me, you can contact me on Twitter at At CoinPrisom and we'll be happy to meet people. Cool. And so there, we have a 10% discount code and that discount code is Epic IBC 14. Epic IBC 14. If you want 10% off inside

Bitcoin's London, it'll also be on our SoundCloud page and on our show notes if you didn't get that. Also, I'm happy to announce that there is a the first francophone Bitcoin conference in Europe as far as I know happening in Paris on October 8th. It's called Eurobitcoin. You can find it at Eurobitcoin.org. It's organized by the French Bitcoin Association in coordination with the Belgian Bitcoin Association and the Swedish Bitcoin Association. And it's a one-day event, so it's happening October 8th at the very prestigious Bibliatee Nacional de France. And we have a 10% discount code as well for that. It's Epicenter. And there will be many talks there in French and in English. We've got some

guests, some speakers already confirmed, such as John Motonis, Gavin Andresen, but also some very famous French politicians, intellectuals, economists, and it should be a great event. And so again, there's a 10% discount code if you want to go to that, and if you're in Paris, it's epicenter. And you're moderating a panel, no? I am moderating. I'm going to be moderating a, you. VC panel, which is also going to have a startup showcase.

Cool. Right. Yeah. So there's also going to be some guys, the guys from Mesonjib Bitcoin will be there as well. And everybody from Paymium, like all the French Bitcoin startups will be there, as well as some Americans, Josh Metnik from the Chicago sometimes will be there as well. Who else? Gavin and Drison might be coming. Haven't confirmed that yet, but it should be coming.

And Flavillian will be there as well. Yes, it would be there, yeah. So, diving into colored coins. Flavian, can you give us a brief introduction as to what colored coins are? Yeah, so basically with Bitcoin, what you can do, you can send essentially cash from one point to another through the Bitcoin network. And that's very convenient for that. You have low fees and it's pseudonymous. And you don't have to go through any bank or any institution.

It's like peer to peer. And basically the concept behind Coin is to reuse this whole infrastructure to essentially send assets, like real world assets, through the same network. So instead of just being able to send cash or like Bitcoin,

you can send gold, you can send euros, you can send maybe shares, et cetera. So that's the whole concept behind Coin coins. And can you kind of dive into what are some of the types of applications that we can use colored coins for? Yeah, so there are quite a few actually because basically everything that has a value in

like in the real world can be represented as a colored coin. So I guess the first example is the the example of shares so like crypto equity. So if a business wants to do an IPO on the blockchain, they would basically just issue some shares represented by collard coins and they would sell those shares so like let's say they issue one million shares and sell every share for one dollar and that's a way to raise one million dollars and then that share is a token that you have on the blockchain it's in your bitcoin wallet and then you can send it to somebody across the world or you know just send it to your friends and you can do that very easily the same way you can send bitcoin so that's that's a very uh that's kind of the application that's uh very

popular at the moment because we see a number of IPOs. So the Colod Coin had a few IPOs so far, but I guess the biggest one are on different platforms like counterparty, but it's basically the same concept. And there are more use cases. So one very useful use case would be to have US dollars represented by collod coins. So let's say a company could, so yeah, for example, one thing that's happening in Africa is that with M-Pesa they you have you have a phone company which which is like with they have like like dollars that represented by phone credit and this fund credit is is being exchanged as a currency so this would be the same concept here so let's say you would have a company which would issue credit which

which represent dollars and then you would be able to use those tokens as real dollars because you can always spend it at that company company. So yeah, dollars, currencies, euros, et cetera. And also commodity like gold, silver, could be represented by colored coins. And yeah, going further, you could represent also a percentage of ownership of a house or, yeah, or like a property like that. It's called smart property. So I know colored coins has been around for a really long time. I think it's older than, right, all these other projects that we've now, you know, seen getting a lot of attention. Can you tell us a little bit about the history of color coins?

Like when did it first originate and how has it developed since then? Yeah, so I think it was described for the first time in a blog post in 2012. And originally, yeah, the concept was really what the name, I mean, what it sounds like with the name. So you take Satoshi or a few Satoshes. and you tag them so that you can track them through the blockchain. And so you basically color, not literally, but like you color some Satoshis and track them on the blockchain

and you can always recognize them. So after this blog post, I mean, there was a team or like a few people who came together and started to work on a client. The NGCCCCC was the name, next generation Corlod Coin client, which was later renamed in a Chrome wallet. And so it's basically a wallet that you download. So it's open source, you download it, and then you download the blockchain. And then it works of the blockchain.

But yeah, it was never really marketed very well. And it was never really also ready for production. So they never, they always recommended to just use it on TestNet. So I mean, people were and, you know, it takes, wasn't really ready for the end user so it was taking a lot of setup was complicated to set up so it didn't I guess at this point that's when it got overtaken by master coin initially before counterparty existed and yes so then more recently we founded coin to coin prism so we started working on that end of last

year 2013 and we took a different approach instead of going with a download wallets that you run on your own machine. We took the approach of building a web wallet. So the same model as blockchain.Info, so it's all web-based, but still we don't store the keys. The keys are encrypted with a password, and we don't have the password. So even if we get hacked, there is no, the keys are not leaked because it's the same model as blockchain.info. But the difference with blockchain. info is that we basically work with Connot Coins. So you can use CoinPresum to issue coins like Colod Coins. You can create your own Conot Coins and issue them. And you can send and receive the Conot Coins and store them as well.

So yeah, we released that in May this year. And then now we're adding more features. So we've added the dividends feature. So you can send dividends to sharehold, like to people who own a specific coin. And also a couple of weeks ago, or last week actually we released a new feature for crowd sales so it's it's a convenient way to run crowd sales so if you have you want to raise some money with a crowd sale you basically create a color address and then people send bitcoin to that address and then the feature on coin prism will automatically return uh colloid coin in exchange for the bitcoin you send so if you send one bitcoin and the colloid coins are 0.1 bitcoin per car

Conloid coin, let's say. That's the price of the share. Then you're going to get back 10 colloid coin automatically from that. So that's a way to run a crowd sale campaign. And also we've just released yesterday actually Color Core, which is a downloadable wallet, which is also open source. It's only common line and JSON at the moment, but it's very convenient for integrating with a server. So if you want to build an application that uses Conloid coin, then it's easy to integrate with that. And yeah, it's compatible with the open assets protocol. Now, can you kind of explain how a collard coin gets tagged as a colloquine on the Bitcoin blockchain? And perhaps that would be a good segue into how colloquines are different from other

projects like Brian mentioned, like counter priority master coin, etc. Yeah. So, I mean, so there are like more than one way to skin a cat. So there are many ways to implement collard coins. And the chroma wallet actually implements a different way. us so we have a more like a more recent more modern implementation which kind of solve some of the issues that the older implementations had and so now but basically the thing that they have in common all the implementations of collard coins is that they work at the output level so it's it's a very thin layer on top of Bitcoin you know with Bitcoin you have outputs and the every output has a value and then

And Colodcoin adds instead of just having a Bitcoin value, it also has an asset type and an asset value. So this is how Colod Coin works. And so that allows Colod Coin to work with unconfirmed transactions and, you know, SPV and all the nice things that come out of the box with Bitcoin. So on the other hand, counterparty MasterCoin take a different approach. so it's address based instead of being output based so when you send something it's it goes into an address but there's no output representing that necessarily so it's you basically have to parse the whole blockchain to see every transaction every counterparty transaction for example and because every single transaction could affect the whole the global state and i guess more more like another

important difference is the fact that master coin and counterparty they use an intermediate coin so xp with counterparty and ms.c with master coin and some of the features of the protocol requires this intermediate coin whereas with collot coin it's directly based on bitcoin so there is no there is no like potential for pump and dump because it's all based on bitcoin or at least yeah or we could pump and on bitcoin i guess but It's not really a, it's best that stage. So one of the things I find really interesting about a lot of these projects, you know, be it like a kind of party master coin, Ethereum or many others,

is that, you know, they create their own currency that's in use on that platform. And of course, the powerful thing is that you can turn this into some, a way to a monetization scheme, really, because the platform becomes used and the currency appreciates in value and that also has allowed projects like MasterCoin in Ethereum I guess not counterparty because they they burned the currency to issue it but others have raised money that way in order to finance the development and then people invest hoping it will succeed so I think this is a really

powerful dynamic and it seems color coins is a bit at a disadvantage they're not having that. Do you view that the same way or do you think there are also perhaps advantages to not having a currency? Well, I think the advantage is for the user because you have to please both the, so for like counterparty and Ethereum and all those alternatives, you have to please both the investor and the users. But at the same time, the money has to come from one side and go to the other one so you can see that with master coin you know there can there's kind of struggling to to to have the coin appreciate because you know the value has been going down for a long time and they're kind of making more and more

features not require any master coin to use so then the price is going down so I think it's kind of a it's kind of a like a cycle so I mean if it works it works but if it doesn't work it doesn't work it doesn't work And you know, MasterCoin is kind of showing that it may, it may not be actually such a good idea on the long term. Because, you know, it started very well. They raised a lot of money. The coin was very high. But then, you know, as the value was going down for one reason or another, the people started to, you know, abandon the protocol, you know, not use it anymore.

So they're basically just using it so that it gives a value to the protocol. to the coin, but if the coin loses its value, they just abandon the ship and stop using it altogether. But don't you think that may have other reasons? Maybe it just doesn't work as well, people abandon it and then the value decreases, in which case it's sort of, well, that's just an expression, perhaps, of the utility of Master coin and the prospects of it rather than being intimately tied to it declining, or do you think Mastercoin, having a coin actually contributed to it losing?

using some of its momentum. See, actually, so maybe, I know many people don't share that opinion, but what I think is that, I mean, it's kind of a fact that you can, you can fork MasterCoin or any of those projects, you can fork it. So there is kind of a there is kind of an end game where if it becomes very successful, somebody is going to fork it and make it just a little bit better in one way or another just because of the fact that it's not as expensive maybe and then people might just move like the new users are going to want to use the new the new protocol because it's just cheaper and it gives the same features so there is always this risk of forking and sooner or later if one of those protocols becomes very successful then it will

be forked and you can see that even with itarium actually that there is this ietherium thing coming up and using the bitcoin distribution for the and this is giving kind of well i i don't know if i I totally agree with you. So, I mean, I think one, one factor that's really important here is to what extent are their network effects. Because, you know, once there are a lot of, let's say, application services built on a certain platform, then maybe it's not so easy to leave. Because with Bitcoin, we really have the same situation, right?

I mean, you could say, well, all those Bitcoins are in the hand of a few. Why don't I just fork the project, distribute Bitcoin more widely? and then everybody should switch over to me. Well, but it doesn't work like that because Bitcoin has built up this mass and infrastructure and ecosystem. So it is almost, it's very difficult to get people

to switch over with something else, even if it may be slightly better. And I guess it's unclear. I mean, I totally agree the risk exists of that happening, but it may not, right? I think it's just sort of an unknown and we'll see. Yeah, I mean, you're absolutely right.

the network effect is basically what you're, is actually the actual value of the coin. So that's why Bitcoin is so is the best at the moment because it's the most used. And this is why Collotcoin actually has a good advantage on that side because it's using the whole network effect from Bitcoin. And you know, the other ones, they may not have such a strong network effect yet and it's, it's hard to tell. Can you explain how Collet Coins benefits from the network effect of Bitcoin? Yeah, so well basically it's using the Bitcoin blockchain.

So and if you want to to make a Connotcoin transaction, you have to pay the transaction fees in Bitcoin, which is like the normal mining fees. And anybody with Bitcoin can use Connotcoin. So it's kind of if you only have Bitcoin and that's the only thing you have and you, you know, there is a barrier to buying something else. Then the only thing you can use or the easiest thing you can use is Connot Coin because you don't have. have to buy anything you just make a transaction that's that's a little you know a little bit different but then you're using collot coin without having to buy any other coin okay so yeah you have a lower barriers to entry because you can you don't have to go through an intermediate currency yes now there's been some talk about different so there's different color corn wallets

there's a the chroma wallet there's also coin prism and and others and one of the criticisms has been that those wallets are not necessarily compatible with each other. And I think you may have mentioned this to me before when we met in London that the colored coins implementation that you use allows for essentially shares to be issues that aren't necessarily matched to a certain amount of Satoshi. So if one Satoshi could be worth X amount of shares, whereas other Colicorne implementations, one share is at least one Satoshi. And so that causes perhaps some problems moving forward to help this network effect of cul-de-corons becoming more and more used. Can you comment on that?

Yeah, so, yeah, basically we have this, we use a protocol called Open Asset. And so it's kind of building on, like building on what the previous implementations of cornered coins have been doing, but improving in some areas. So one of the areas is the one you're mentioning. And so with the previous implementation, it was like the color the asset value was linked to the Satoshi value so if you wanted to issue let's say 100 million shares you would at least have to have a hundred million Satoshes and this is one Bitcoin so it's it becomes

capital intensive at some point and you could also make the argument that if Conlod Coin become very very successful then you're gonna run out of Satoshi's at some point so what we did in the like instead of doing that, we're encoding the amounts directly in an OPE return output. So OPE return is a new feature that's supported since Bitcoin 0.9. So that's kind of news from this year. But using that, we can encode any number. So if you want to issue a trillion shares, then you can do that.

And you only need the minimum output value, which is 600 Satoshi. So regardless of the amount you want. So essentially you're attaching metadata to the transaction and that metadata is what represents the amount of shares. Yeah, regardless of how many Satoshis you're sending. Yeah, that's interesting because I always,

I think I explained color coins to people many times because it's sort of the easiest way to explain this Bitcoin 2.0 idea, right? Like, especially the shares idea, right? So you take some, some Bitcoin and then you say, oh, this represents a company now and all the inputs, all the money,

the outputs, in the future represent parts of the company you can go back through the blockchain and track that etc and I totally wasn't aware I'd always thought of it as this you know you take 50% of that original

the origin transaction or how do you call it? Genesis transaction yeah the Genesis transaction and then that's 50% of the companies I totally wasn't aware that people have moved away from that or that you have moved away from that Yeah, so I mean this is because you know the value the usefulness of so basically

yeah what Connought coins are it's like a paper money basically because you use something to represent something else so it's like a paper money and the utility of a paper money is increases with the as the the value of the medium decreases so this is why you know now we have banknotes because instead of coins you know we have less and less coins and more and more banknotes because because it's cheaper to manufacture the banknotes because the paper is cheap, whereas with the coin, the metal is more expensive. So, you know, the paper money becomes more useful when the paper becomes cheaper. So this is why we're doing that. So you always only need 600 Satoshis or the minimum that can be transacted.

And then you can put whatever value you want on it. So like the ratio, the efficiency increases a lot more. So I'm curious because we touched a bit on the differences between, you know, different protocols, counterparty master coin, et cetera, and colored coins. I'm curious, are there certain types of applications that can be built on colored coins that you think will be better on colored coins? And do you feel there are other types of things that perhaps would be better implemented on another type of platform?

So yeah, in terms of the applications, like everything is possible on every platform, but like the advantage that Colod Coins has compared to, let's say, counterparty. And MasterCoin would be that it's basically it can use everything that the Bitcoin Protocol can do out of the box. So things like SPV, you know, simple payment verification, Conlot Coim can do that. Also the payment microchannels. So this is, I think this was something that was first described by Jeff Garzik. But it's basically a way to have off-blockchain transactions, but still trustless. So you have between two peers. So you can have like you basically, let's say I sent, so Alice sent some Bitcoin to Bob,

and then Bob sends some money back to Alice and so on and so forth. and so forth. So you can use the payment microchannels to revise that balance very quickly, so many times per second, and it's always trustless. So if one of the party bails out, then the other party still has the money. They have the signed transaction to commit the money, but then it saves a lot of the fees because you only pay the fees once you want to commit the transaction into the blockchain. And also it allows you to revise the amount very quickly, so you don't have to wait 10 minutes. So this is the kind of things that you can do out of the box with collot coins because it's based on outputs.

And counterparty and master coin, they cannot do that because they're kind of rebuilding some of the architecture. So they only use Bitcoin as a time stamping mechanism, but there are many features that they sort of replace by using their own protocol. But yeah, so I mean, in terms of the applications, I think every application can be done on every platform, but then some platforms make it more convenient, make some, yeah, some things more convenient than the others. So, yeah. Okay, that makes sense to me, right? This micropayments channels where I guess you would have, I mean, I always was familiar with this in the example of, let's say, using a Wi-Fi network and you're paying by the kilobytes, right?

So you would keep sending the new updated transaction, and if at any time you're bought, the other person could send a transaction that includes your payment up to that point. And it makes sense to me, right? If you have a similar use case using color coins, then that would be better, I guess, on that platform. Are there other applications that you feel would be better on, let's say, Ethereum?

Because I guess one issue which Sebastian has kind of touched on is that maybe interoperability If like let's say now we have different color coins in implementations and do not compatible Do you think that could be a problem? So I guess they all fall under the colored coin name because it's kind of fitting the same model, but in the end there are still different implementations. So you could also say that counterparty in a way is Connot Coins and MasterCoin in a way is also Connot Coins. But it's all different implementations. So yeah, I mean, Connot Coin, I guess, is broad.

So it's kind of encompasses more than one implementation. But yeah, none of like all those implementations like Chroma Wallet, open assets, counterparty, master coin, they are not compatible. But I think eventually probably there's going to be probably one or two implementation that are going to stay, that they are going to attract all the liquidity, because you know, the liquidity tends to, you know, attract itself. So, you know, the more liquidity there is, the more liquidity comes. So is you hope that now other people are going to build colored coins applications as well using the same implementation you've used with CoinPRISM and

that then those applications will be interoperable and you know you can use the same colored coins on these different applications. Yes, exactly. So actually one of the design decisions, one of the design goals for open assets was to make it very simple to implement. And you know, if you look at the specification, it's six pages long. So everything is described, including some examples, take six pages. So it's very simple to implement.

Whereas if you look at MasterCoin, I think when I looked at it, there was I think 57 pages describing the protocol. So it's much more complex and it kind of makes it impossible pretty much to get to make your own implementation. And we are actually seeing, I mean, I was talking to other companies who were actually making their own implementation of open assets. So it's so simple that they can, in a few days of work, they can go and implement it in their own language, in their own programming language. So yeah, the goal is, was to make it very easy so that it's easy for people to integrate and to build their own service. And there's no dependency to another coin, so they don't take a risk. It's not like they're betting on a specific coin. The only thing they're betting on is Bitcoin, basically. And yeah, so that's the goal. We wanted to make

it easy for developers to integrate. And I think that's, that could be also an asset for, for open assets. And so what's the, I mean, you've obviously, You talked to other ColitCoin wallet implementations out there. Are they on board with your open asset protocol or not? What's the feedback you're getting from some of your competitors? Yeah, so, I mean, the team from Croma wallet, they said that they would look at making it compatible with open assets. and also there's the Eridis project which also is going to support open assets

so yeah it's I mean there's yeah I mean it's probably going to that direction at the moment it's hard to tell yet but yeah it's probably Are they contributing to the specification or for now you're either the only contributing to it? Well the specification actually now is

final so that's also one difference with counterparty and master coin where they have an always evolving specification whereas with open assets and collatcoin It's so simple that you can say, okay, now it's finished. We support everything we want to support, and we're not going to add any more features. That's what we need, because we kind of take the minimal approach.

So, yeah, they did contribute. I mean, there was like back and forth and, you know, a number of iterations on the protocol. If you look on GitHub at the history, I mean, there has been a lot of modifications and a lot of iterations on the protocol. But yeah, it's kind of, now it's kind of final. people can take a dependency on it and they can be sure that in the in two years or in five years it's going to be the same and you know the code that exists today is still going to work in five years whereas with counterparty for example they they have breaking changes like maybe every two three weeks so every two three weeks everybody has to update their wallets or they they kind of go out of consensus and they you know it doesn't work anymore so they that's also a lot of maintenance for people implementing counterparty and that's something we wanted to avoid.

Could this also be a problem though? Let's say there are some things that maybe aren't optimal in the current protocol. Would there be a way to change it in case some changes will make it more optimal? Yeah, we could create a new version so like a version two which would be different and would have different features and version one would continue existing so you know maybe the same way you can have HTML 4 on the web and HTML 5 at the same time and everything still works you would have the same so you would have some open assets version 1 transactions and some open assets version 2 which would coexist and that wouldn't really split the liquidity because you would still

everything is still based on Bitcoin so this is so you yeah you do have this ability whereas again with counterparty if you'd create a new version and want to keep the first version in existence then you split the liquidity into so yeah this is also something that's possible with open assets and colloquine in general. Cool. Perhaps we can move on to talk about CoinPRISM. Can you sort of give us a little bit of a history on how you got started, how you got involved with Colette Coins and your idea for CoinPrisome? Yeah, so my originally I had actually, so I was working on Predictus and then I had this idea that you could have

kind of options like American style options on predictions. And there would be a collateral paid in dollars. So then that simplifies a lot the counterpartial risk if you do that. But then that requires

people from depositing dollars into predictions. And we didn't want to touch Fiat money at all. We didn't want to accept bank deposits or PayPal or stuff like that. Because you know it's It becomes very complicated and there is a lot of risk associated to that. So then that's when we thought that colloquine would be a good way to achieve that.

So with collod coin, you would have collod coin that represents dollars and you would be able to deposit that on predictions and then you have a dollar balance and you can withdraw that onto your Bitcoin wallet. So everything remains in the crypto world on the Bitcoin blockchain, but still you have dollars on your account. But yeah, we were still far from that. there was the Chroma wallet implementation which was

progressing very slowly and yeah there was there was master coin at the time but it was also very yeah I mean I didn't like the fact

that you require a separate currency I didn't want to introduce yeah dependency to a separate currency just wanted to stay within the Bitcoin like strictly within the Bitcoin ecosystem I would say

so that's that's when I decided to, I figured that maybe there was something to be done with Colin Coin to make it more user friendly. And yeah, so basically that's how we got the idea to build a web wallet. And yeah, so it took a few months and then we released the beta in March, I think. So it was TestNet first and then we went Mainnet and then in May, actually, just the week of the Amsterdam conference we released the like the the final version so like the yeah the the live version onto main net and yeah so we launched at this point and then we had just uh we just had at the time the ability to issue and receive and send assets but then

we've added a bunch of new features since then so like i was talking about earlier the ability to send dividends and also the ability to um to run crowd sale campaigns. So is it just you working on the project or do you have a co-founder or other developers? Yeah, I have a co-founder. So we're two of us, just two of us. I'm the main developer though. Okay. And is there a business model behind CoinPRISM? Yeah, sure. So the idea is that CoinPRISM, the wallet itself will remain free and the tools that we're building like the, yeah, the blocked Explorer is also going to remain free. So we released a block explorer in August. But yeah, the business model is to build an exchange basically where people will be able to list their coins. So if I'm a

company, I want to raise some money, I can issue a million coins and list it on the exchange and sell and let's say put a sell order with a million coin, like sell a million coin for $1 each. And then people can come in and buy, let's say, two coins, three coins, coins and that that's a way to make an IPO and then at the same time after the IPO is finished people can still buy and sell the coins on the on the free market and then we would take a transaction fee for for for that service so the same way you pay a transaction fee to bid stamp when you go and buy bitcoin you would pay a transaction fee here so I guess this may be a good way or a good moment to dive into something very briefly I don't know to what

extent you thought about it but it's something I've been thinking about quite a lot recently which is the whole legal side to this now I know it makes a lot of sense to sort of say I'm going to issue my stocks on a blockchain and I can pay dividends and I can just IPO immediately I don't have to wait until I'm like a 500 million dollar company is cheap you can avoid the whole regulation but at this at the same time there just seems to be no way that this is going to be, that this is going to be accepted, right? Because it's just so obviously is against the current securities laws

and, you know, I think pretty much every country. So I'm wondering, what do you think is the use case for this? Who would actually do that? Because I have a hard time seeing, for example, regular startups taking advantage of something like that. So you're absolutely right. You cannot sell like equity like yeah, you cannot you cannot sell equity because that would be that would fall under the SEC regulations and you would probably be in big troubles if you did that. But one thing you can do is sort of go around that and not offer equity, but offer a token that gives access to a service.

So this is a bit like Kickstarter, you know, how they're doing. It's it's not actual equity that you're buying. But yeah, something like that. And this is actually something that Swarm was doing recently. They had an IPO where they sold Swarm coins, which give you access to more coins, basically. I mean, it's a more complicated model. But yeah, and then Madesafe also did that where you get coins,

which then you can use to access the Matesaf network. So as long as it's not equity, it's fine. So, you know, you basically have to, and this is, you know, Ethereum has been very careful in specifying that in their IPO saying that you're not buying any equity. Also, you need to make sure that you are not giving dividends because, yeah, dividends is, it's a legal term. So, you know, you can do revenue share, things like that. But, you know, if it's dividend, then, yeah, the word dividend actually has legal, actually a legal meaning. So you cannot call it really a dividend.

but you know if it's a revenue share or interest then that's fine so there are some ways to sort of go around it but yeah obviously you need to be careful and you need to check with the lawyer that that you're doing something that you're allowed to do are you aware of anyone basically creating or looking into creating legal entities that then would kind of issue some tokens that can be traded i guess that would be another sort of roundabout right, but that you would have them some sort of redeemable or perhaps the company would have an extra contract that would give certain rights to the owners of these crypto tokens. I mean, I presume this would also be very risky from a regulatory perspective.

But I'm curious if people are actually trying to do this. So you mean people trying to issue actual shares, yeah? Yeah, actually. So I guess another thing, another problem would be even if you say I'm going to IPO my company on colored coins. If there is no recognition of this in the court of law, of course, who stops the company then from just saying, I don't care anymore now. These are all worthless and the company is totally mine and anyone who bought those shares, they don't have any rights. So to have, first of all, I guess you would have to address the SEC problem or the problem of not selling securities. And the other thing is you'd have to somehow give people the ability to actually have similar rights that they have in their own chairs.

Yeah, you're right, actually. And I think those two come together. So the reason why it's not allowed is precisely because there's no protection against people investing. So I think if it becomes legal, then you would have at the same time legal protection. It kind of goes hand in hand. So you cannot have any expectation that when you buy your Maitsafe coin or ether's, that you will have a return on investment. And actually it's, yeah, it Ethereum actually was very good when defining that because, you know, they have this long prospectus. And they actually, you know, clearly say that you cannot have any expectation that the cost.

is going to be worth anything or that the software will even be released. And I think at the moment that's the only way to have a legal IPO, in quotes. That's by saying that, you know, there is no guarantee that this is going to be worth anything. It's more like... And of course, the Ethereum guys also, right, they define it as a product. So they said, well, we're pre-selling a product, which of course is somewhat... You know, I think the people who actually bought it, they didn't think of it as a product. They thought of it much more as a share-like thing.

But from a legal standpoint, of course, that's not, you can't sell that. So they phrase it as a product, as you correctly put it. And then they also say there's no guarantee. So yeah, it's interesting, I guess, how they found sort of a workaround. But of course, you totally right. It gives you zero protection. Yeah, I think in the future, well, it's, maybe in the next five, 10 years, when the regulator start to look into that, you know, slowly,

I'm sure that there will be some kind of framework. Now the question is whether it's going to be, you know, it's going to make it impossible to do completely or it's going to make it possible. But I think there is some possibility that in the future it becomes something that's possible to do. Okay, I'm going to stop you right there because we said that we were not going to talk about regulation today and legal matters. this is a topic that we've been covering great on i'm kidding but it's just regulation and legal matters always seem to come up in any discussion that we have with regards to this stuff so yeah yeah i mean

it's true right it is kind of an annoying topic at times it keeps coming back i feel this is though one area of the regulation that we haven't talked so much about and that i think is sort of still ahead of us in that they haven't been any statements and all really is the whole you know there's been all this discussion on on bitcoin as a currency but the whole idea of like crypto securities and all that that's really still ahead of us i'm sure i'm sure going to have lots of conversations in the future about the legal side of that but you know i agree that's that's going to be probably uh i don't think it's going to be that far down the line i think this is going to start pretty soon i mean people people know about this i've

And regular this, I'm sure we will see statements soon. I think we will see action taken against some projects as well. But, yeah, let's not dive into that now. Can you perhaps talk about some of the other aspects of coin prism? So I'm on the website right now. I just logged in. One thing that's interesting is how you're, handling the actual ownership of the keys.

So you'll notice when you log in that there is no actual, there's no like forgot your password link. That's because your password is the passphrase essentially which encrypts your wallet. Is it used as a seed or is it encrypting the keys that are then shared stored on your servers? Yeah, for now it's it's encrypting the keys that are stored on the server. So similar to blockchain. info. but yeah at some point we will support also HD wallets so it may be used as a seed in the future but yeah for now it's just encrypting the keys okay well I mean that's an interesting security

feature I think is I'm not a security expert but I think is a good alternative to using a seed which you know you may lose or you may not be able to remember to log in easily so some of the other features when you when you first get onto the wallet you have a main address and you have the ability to send coins and to obviously create your new color. The interface is really cool. I mean, I really like the user interface. It's quite simple to use.

And I notice also there's a block explorer. So can you tell us about the coinprism.info, which is a block explorer? Yeah, so we prelist that, I think, in August. I think the first week of August, so about a month ago. And this is a very straightforward block explorer. So the same as blockchain.info or blockr.io, except the difference is that it will show you the color coin transactions. So if you look up a transaction that was in addition to sending Bitcoin,

if it was also sending colloid coins, then you will see it on the page. So it will tell you so many gold coins have been sent. And same thing if you have an issuant. So if you issue like 10 shares, it's going to tell you so many shares have been issued. And there's also an asset directory where you can see the most popular assets on like most popular colored coins. So it gives you a list. And you can click on any assets and see the details about that asset. So like the definition, what's the name?

What's the contract? So the contract is kind of a. the text whereby the issuer explains what the coin is supposed to be worth. So if I'm issuing gold coins, I'm going to say, okay, this is gold that I store in my vault, and this is my company is that company, and this is my registration number. This is where you can find me, I'm located here. So this is basically how you make yourself trustworthy. And then you also have the ability to see all the owners of a coin.

So because it's all public on the on the blockchain. If you select any coin, you can go to to that page I'm talking about. So coin holders. And it shows you all the addresses and how many coins they own. So it's a way to see how many shareholders you have and what is the distribution of the coins. That's really cool. I hadn't noticed that you can actually go and look up the ownership. Now I would invite you all to go to coinpresum. info slash assets to see what the top coins are.

the second one is quite interesting. Yeah. So I'm also curious. I was playing around a little bit with CoinPrizen before and checking out the Explorer, et cetera. So when you click, for example, on the last block in the Explorer, it seems to show you all Bitcoin transactions. Is that correct? Yeah, it's all the transactions in that block. And if there was one transaction that was transacting assets, you would see it here as well.

But in that case, I guess the last block that was, or maybe there was, but it's in the later pages. You don't see it straight away. Oh, so you don't like filter this and only show the colored coins or the colored coins in top or something? No, we don't have this feature, although that's something we could add quite easily. Okay. For now, it just shows you everything for now. So when you do the original one, when you say I'm going to, I think it's called create a color, right? Does that involve making a transaction as well?

Yes, so first of all, the way it works in coin person is that you define the metadata. So the metadata will be the name, the description, and then you can also upload pictures. And that metadata obviously is going to be maybe one or two kilobyte, so it's too large to be stored on the blockchain. So it will be hosted on the web. and then when you do the actual so when you want to issue coins that's when you do an actual bitcoin transaction and that's a single transaction which has so it's defined in the protocol how it should be and it basically says okay i'm creating so many coins and i'm associating those coins with that definition and then the way you associate it is by putting the URL to that definition file now that

definition file if you use coin prism and you want to you know try it out it's going to host it on on our own servers on coin prism but obviously it's it's only an option so if you have your own servers and if you're serious about your coin you should host that file onto your own server and then put the link you have this you have a drop-down where you can put the link when you issue the coins in coin prism so you put that link and it's going to put your website in the blockchain so then I mean, it's going to put the link to your website into the blockchain.

So then clients, so yeah, and then the whole thing is that the client, like CoinPersam or any other client will see that in the blockchain. They will see the link and they will follow the link and see that file which describes the coin. So, yeah, so it's basically. Are you talking about the resource URL? Yes, yeah, the resource URL, correct. Okay, because I just created the Epicenter Bitcoin color coin and the resource URL feel. Oh, how is that possible? Yeah, and the resource URL doesn't seem to be an editable field.

So in that case, that's because you're editing it on CoinPrisom server. But when you issue, you can set, so when you issue you have a selection, you can either use the definition that's on CoinPrisom. In that case, it uses that resource URL, or you can also enter your own URL, which in that case, you can put whatever you want. But you select that at the point when you edit that resource URL. when you edit the, sorry, when you issue, when you do the issuance transaction. Okay. I see. So do you see a lot of, you know, are there people developing applications on top of colored coin or already using colored coins, issue through coin prism to power,

some kind of projects or crowd sales or I don't know what? Yeah, so far there has been a few crowdsales. So there was one, so it was called Clipped. So it's a hair salon in Australia. And they were, they are opening new locations, like new shops, I think in Melbourne and Sydney, so they wanted to raise some money. So then they sold some shares on CoinPrisom and you can see it in the asset, the asset directory, I think it's in the top 15 or something.

And you can see that they sold a few shares, so they raised, I think, a few thousands, not much. much because it was one of the first. And there was also a company who is doing vaporizers. So they also did an IPO using KodKo coins. And I think there was maybe one or two others. And so there are more coming in the next few weeks actually. But I cannot really talk about it right now because it's still confidential. But there are more coming because vaporizers are at the limit of legality, right?

Yeah, yeah. Vaporizers. They actually only make sales in Bitcoin. So that's why they don't even have a bank account. Oh, yeah, of course. But yeah, so yeah, more crowd sales coming. And also there's also a few other companies, which again, I cannot really talk about, but they're also building services on top of colored coins.

Yeah, I was just looking at this clipped thing. It's pretty cool. I like it. And I think it's especially great that you have some sort of brick and mortar, simple business like like that as one of the first projects yeah

well I think we've we're coming to the end of our show where can we where can we reach you so you can follow us on Twitter so at CoinPrisom and there we also have a blog where we post our updates

so blog.compism.com and yeah that's basically it and then if you want to check out coin prism it's goingprism.com awesome and I'll also link to the to the open assets protocol in the show notes and all the things that we talked about in today's show so if you want to find that you can find out on our website or on our SoundCloud page and yeah thanks very much for joining us today that was really interesting to talk about it and I think I must say I see some more some more benefits to

coin fism you know like as as opposed to the other protocols I guess it would be really interesting to see how this is going to turn out because there's so much competition in this space so much activity and yeah and it's exciting to see what you're doing yeah thanks and thank you for having me on the show okay well thanks so much for

for listening in we'll be back next week And if you want to support the show, what you can do is you can leave us an iTunes review that helps new people find the show and you can let us know how we're doing. You could also follow us on Twitter at Epicenter BTC. And of course, we very much appreciate donations in Bitcoin, light coin, dose coin. And so far, no colored coins. But perhaps if Sebastianac creates the episode of Bitcoin colored coin, then you can buy that and donate it back to us or something. Yeah, why not?

And you can do that at the episodeavikon.com. So thanks for much for listening and we'll be back next week.