Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Joel Dietz: Swarm – Crypto-Fundraising, Silk Road Sale, Google & Yahoo Track BTC

Episode Date: June 16, 2014

Guest Joel Dietz talks about his new company Swarm, a very exciting cryptocurrency-based fundraising platform. Their idea is to provide a more efficient, decentralized and versatile version of Kickstarter. In the future, they also hope to allow companies to sell shares or share-like coins to raise funding. Our conversation took place just a day before the start of the commencement of their own coin SwarmCoin, which will finance the development of the platform. Episode links: Swarm CounterWallet US Marshals Bitcoin Auction Google & Yahoo add Bitcoin prices CoinSummit This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/024

Hello, my name is Sebastian Kutjur. And I'm Brian Favampi and Crane. And welcome to Epicenter Bitcoin, the show which talks about the technologies, projects, and startup driving decentralization and the global cryptocurrency revolution. Today is June 8, 2014. And thank you so much for joining us on episode 23. Yeah, so on today's show, we have Eddie Trevea on. Eddie is a co-founder and chief startup officer at Seed Coin, which is a seed stage virtual incubator for Bitcoin startups. He also is the founder of the Bitcoin Institute, which is a platform to facilitate research.

into different aspects of cryptocurrencies, like trading, market making, and entrepreneurship. And Eddie, along with Seekcoin, also organized the first Bitcoin conference in Asia last November in Singapore. And he's joining us from Hong Kong today, where he's been for a few years. And I think in total, he's been in China for 10 years. So, hi, Eddie. Hi, hello, Brian and Sebastian. Thank you for having me here.

Thanks so much for joining us today. So we want to talk to Eddie today about the different things. things that he's working on specifically Seekcoin, his startup incubator. We'll also talk to him about some other things that are going on around him, for instance, the Bitcoin Institute, but we'll definitely get into a lot of things relating to investing and funding of startups. Also, we'll probably talk about crowdfunding and different types of models available today.

But first, we want to mention something quite interesting that happened this week and quite important, I think, for the ecosystem, which is that Apple has apparently backtracked on their recent position on Bitcoin, which was to disallow Bitcoin apps, particularly Bitcoin wallets in the App Store. So this news comes following the WWDC conference. So Apple has a yearly developer conference called the Worldwide Developer Conference. this year's conference was held on June 2nd, so earlier this week. And following that conference, Apple, after announcing iOS 8 and the new version of MacOSX,

Apple updated their review guidelines, their app review guidelines with a new section, which says apps may facilitate transmission of approved virtual currencies provided that they do so in compliance with all state and federal laws for the territories in which they function. So effectively, this opens the door potentially for Bitcoin wallets or apps that facilitate transmissions of agricultural currencies, so wallets, for instance. And so I think this is great news for the ecosystem, which potentially gives Apple device owners access to Bitcoin apps. as wallets. Yeah, so it's interesting because when that was kind of published, you know, people

were writing about WWDC and that update. I know there was a post, for example, on CoinDesk, where they were like, is this actually good news or not? And people were a bit confused about it. And I actually talked with Wendell Davis, who we had on recently and then, you know, who started was actually part of Seekcoin on Tuesday morning on Skype. And he was mentioning to me, oh, you know, the Cointra app is live. And, and, you know, the Coinjo app is live. And, and, you know, And so I downloaded it straight away. I tested it and the coin jar wallet was working. It was in the app store.

And it was interesting because afterwards, you know, I took like, I checked on Reddit. Like, is somebody writing about this? Is it like really happening? Are there other apps? And nobody had written anything online about this. And so I made a Reddit post of times like, hey, you know, it's working. Like, it's live. So it was pretty interesting.

And I think it wasn't live in all app stores. because my Apple account is registered in the UK. So it was live there. And I think it was live in some other countries. And I think now I've read it's been live in quite a few more. I think it's in like I read some people in Norway, Spain, Germany, I think in different countries in the US. I don't think yet it's live. So I think that was the first app to come in.

And of course, the question is now or the other one's going to follow. Yeah. I agree. It was interesting how. this kind of went under the radar. That morning, we were on Skype together and you said, oh, there's the Coinjar apps. So you sent me like, whatever, a couple middle bits. And that day, I was actually in Paris at the Paymium offices and they didn't know about it. So I told them, I said, like, you guys can download a wallet on your iPhones now. And that night, I was at

Maiso de Bitcoin and nobody knew about it. Like, I went up on stage and said, like, you know, you guys know you can download a wallet on your iPhones now. And everybody's like, really? Wow, this is amazing. Eddie, do you use an iPhone or an Android phone? I use Android, but I'm very happy for Coinjar. I mean, we have been in contact with Asher for about a year now. He's the founder of Coinjar with his co-founder is from China, Ryan Joe, and they're both in Australia.

And I believe now Coin Jar is a main exchange in Australia, so I think it's a great progress. Yeah, we had the moment. on actually two weeks ago or something on the podcast here. Very good, very good. So, yes, we, we, we've been in touch for a while and I know CoinJar is a great application and I'm sure there will be many more coming on the Apple App Store. I'm a fan of Apple from, you know, from a long time, for a long time.

I've been a fan of Apple. I was not happy when they started removing Bitcoin applications and wallets from their app store. I guess many people weren't as well. It's a good sign, yes, of course. I mean, it's a huge market. It has a huge market share in the world. Also, of course, very, very present in China and Hong Kong.

So, yeah, it's good news, definitely. Also, just briefly, if somebody wants to download the Coinger app and you can just go app store and search for it, if that doesn't work, I would recommend you change the address of your Apple ID to a different country. You know, you can just make up an address. And I think if you change it to the UK, it should work. I don't know if that's possible. I think you need to have, changing your Apple IDs country is actually something that's

a bit complicated. You have to contact Apple to do that and you have to have proof of a billing address in another country. Maybe you can make a new Apple account in a different country. Yeah. I don't know if, I don't know if it's that easy to change your Apple IDs country. I know that whenever I moved, it was quite a hassle. I had to contact them to change the country in which I was in.

Okay, yeah. But I guess, you know, try it or look into how difficult that is. Otherwise, I think the coinchow people did announce that it's going to be life in like a whole bunch of countries, especially European countries, I think, and some other ones. Not in the U.S. yet, I think. I'm not sure if it's life in the U.S. It is available in Canada, apparently. So right after they released it, I forget his name, Asher's co-founder.

Ryan or Cho Tong. He published a post on Reddit saying that it would be available in Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Italy, Ireland, Luxembourg, Netherlands, New Zealand, Norway, Poland, Singapore, Spain, Sweden, Switzerland, and the UK. So, yeah, not in the US yet. I don't know why that is. But I think I've seen some people on Reddit mentioned that they've used it. I don't know how they did that. Maybe it's now or maybe they change the country.

I'm not 100% sure what the stage is. But hopefully we will see, you know, a lot of Bitcoin apps on the iPhone. I also saw that Fred Ersum, you know, the co-friend of Coinbase, he gave an interview on CNBC. And I think they've been talking with Apple. And I think they were told,

by Apple that they will allow the Coinbase app on the App Store, but I think they have to disable the Fiat, Bitcoin, their exchange functionality, you know, because you can connect a bank account or maybe a credit card with Coinbase and then buy Bitcoin's that way. So you won't be able to do that, but, you know, you'll have a full wallet. You can send, receive Bitcoin, etc. So it sounds great, you know. So if you just speculate, like I was thinking about this earlier, in terms of what kind of apps Apple will allow. So so far, they've allowed a wallet, which essentially just allows sort of basic transactions of Bitcoin

between different parties on the blockchain. However, I'm not sure that we're going to start seeing, you know, some of the more, well, I don't think that we're going to see some of the things that perhaps might impede Apple's existing business model. like, for instance, Bitcoin payments, built in Bitcoin payments and apps, or like you said, you know, being able to buy and sell Bitcoin or actually trade Bitcoin. I'm kind of hesitant on that. And I think that for the time being, we're going to see, you know,

maybe a few wallet apps come in. But anybody that wants to do anything more complex than that or that might jeopardize Apple's revenue would definitely be not allowed. Yeah, it's very unclear where this is going to go. Maybe we should point out that this was part of a general, what seems like a general change in the way iOS is going to work in that it's going to become a bit more open. I think there's more interoperability between apps.

So it is becoming maybe a tiny bit more like Android. So perhaps one can also look at this change in the Bitcoin policy as part of a, you know, at least, a partial opening of iOS. Yeah, perhaps. I'm skeptical as to if Apple really wants to open up their operating system as much as Android is. Not as much. Not as much.

Of course, it's still going to be contained, but I think it would be easier, for example, for, you know, apps to communicate with other apps, you know,

and things like, there are quite a few. It sounds like very substantial changes from what I've understood to, the way iOS works. Of course, I don't know if the Bitcoin wallet decision or that decision is related to that. I also saw somewhere on Reddit

that I think someone submitted a Merchant app that all it did, you know, you could display QR codes and it would alert the merchant if the payment was received, so it didn't have any sending functionality. No private keys on that, I think. And that was declined.

and I think some people were saying on Reddit that he made it for everywhere he didn't limit to in what country it would be available so perhaps one should have done that so apparently that maybe gets like an automatic denial or something I'm not sure but it's still unclear I guess exactly what apps we're going to see what time frame but at least it's a very positive first sign

yeah this is very positive news and we'll definitely keep our eye on this as new apps get added to the App Store. But generally, I think it's really good news. I can't wait for companies like BitPay, for instance, or payment processors to start having their apps accepted in the App Store. I think that'll also open up the floodgates for merchants to start accepting Bitcoin, which is kind of difficult right now if you're using an Apple device.

Where we are doing the meetup here is a co-working space called Beto House. And I think they might be open actually to accepting Bigger. But the problem is they have everything on iPads. So, you know, there's no good way to doing that. So now when we have to meet up, and generally, you know, I would bring like an Android tablet, give it to them so they can pay with Bitcoin and then I buy it off of them in the end, which is, you know, a bit cumbersome. But yeah, hopefully if we're going to have good merchants up on the iPad,

that those kind of things could change. So one of our startup is a payment processor in the UK and they have shown me their app on the iPhone. It's just it doesn't go through the app store, that's all. So they have a way for the sales clerks in shops to accept Bitcoin on their iPhone using an application that they have designed. So I think there are ways. I also know coin of sale in Singapore.

They have a way which is device agnostic. You can have it on your iPad, on your iPhone. So I think there are a few companies and startups out there that have enabled payments with Bitcoin without necessarily the need for having the application really authorized by Apple, actually. I think it's important for a company. I think it's important to keep developing HTML5 apps because, you know, we never know when Apple could change course and decide that, no, we don't want to do this. Or that your app just simply doesn't get approved because for whatever reason, you know, Apple's approval guidelines are very much subject to, well, to subjective criteria when it comes to. to approval. So I think it's important also that

companies and startups keep developing also HTML5 apps to ensure that they can keep operating if ever Apple decides that they want to change their mind on things. Yeah, absolutely. Well, let's move on to Seacoin. Perhaps Eddie, can you tell us a bit how did you get started with Seekoin? So it's mainly

an introduction from Hakeem Amoni, who is my partner now in Citcoin and someone I've been working with in China when he was based on Chandu working on mobile applications and I was working in the investment environment

and I was helping him to raise funds and also to negotiate a few deals with some Chinese partners. So we met in China now maybe six years ago, something like that and he introduced me to Bitcoin. I think

he first mentioned it in end of 2012, I didn't really get it at first, and then mentioned it again, and then I saw the news related to Cyprus, which I think was an eye-opener for many people involved in Bitcoin. And my background being in investment, I've been working in investment in China for now 10 years. I realized for me that the most exciting opportunity was a potential wave of entrepreneurs looking at this and deciding to develop applications,

services and products in that field. So really the meeting between Nye and one of the first projects we had was to actually create a conference in Singapore with our other partner, Alexis Nicosia in Singapore. And actually our first project that we started really working into was a conference. And then through the summer 2013 and of June

we really focused then on the incubator aspect. The idea to do it virtual was because we felt that there was no central location for Bitcoin startups at the moment. I guess there still isn't. And we feel that there is a high level of compatibility between virtual incubation and Bitcoin startups, since a lot of them are decentralized as a, a company structure as well. A lot of them have developers all around the world.

So we felt that it was a good combination and also enables us to invest and to help companies develop around the world. We're not limited to a single country or a single region. So we have startups in a multitude of countries at the moment in Mexico, in Singapore, in the UK, in Hong Kong. So it's a very diverse, diverse environment for us. So I wanted to ask you, the virtual incubator model is interesting to me. Is this something that's typical for non-bitcoin startup incubators to have this sort of virtual incubation?

It has been tried before, I guess, in the high-tech area as well. They are, you know, like many models, you know, there are pros and cones. obviously when you are not physically present there are let's say there could be less interaction between the companies which is usually a positive element of the incubators I would say

the difference between what happened before in some virtual incubators with high-tech startups and what could happen now with Bitcoin is that obviously there is a different relationship I mean today the networking tools the networking group work, the way to work has basically changed

and has been transformed into really this kind of delocalized, decentralized system. So I think it can work today better than it did in the past. Also, usually Bitcoin startups seem to be a little less capital intensive at first. And at the same time, you know, not having to worry about real estate or rent can help them in the short term. So we feel that in this specific instance, virtual incubation can actually work. That doesn't mean that we wouldn't be looking in the future

for partners which have a physical presence. But for the moment, given our size and the way we work, so for example, we have mentors. Most incubators have mentors. Now, the difference with us is that since we are not physically present next to our startups, next to our entrepreneurs, having mentors who are physically closer to them, that's quite helpful.

For example, we have three mentors in the UK, we have two in the US, we have one in Africa, who is actually helping a project in Kenya with a company we want to help develop as well on the Eastern Africa remittance market. So basically the mentors are a bit more essential maybe in our case than in the case of the traditional incubators. So I'm, I'm curious how you, because you mentioned the sort of a work flows or how, you know, how today you can more work together in a distributed way. I'm curious, how do you guys do that?

Do you have like a, I don't know, a Skype channel where all the startups that are part of the program are on or do you have like regular meetings? So can you tell us a bit about how that works? Yes. So we do have channel. I'm also talking to the entrepreneurs, I would say, almost daily. For example, Gabriel, who's in Mexico and he's building their M-E-XBT, which should be very soon the number one exchange, Bitcoin Exchange in Mexico.

We talk very regularly. I even did an interview with a Mexican TV channel a couple of days ago. Well, it was the middle of the night for me. But, you know, I'm used to now, work kind of around the clock or at least trying to accommodate all the time zones we're working with. So yes, it's a lot of Skype. We also have, actually, with all the conferences that have been taking place, I've actually met the entrepreneurs more than I thought. You know, for example, last time we're in Amsterdam at the Bitcoin 2014 conference.

So Nikos from CoinSimple, Gabriel was there a few days before I met. Joe from BTC.SX. So basically all the conferences, there is one coming up in Hong Kong at the end of June, on June 24 and 25th in Hong Kong inside Bitcoins. We're sponsoring it and we are expecting several entrepreneurs as well to come along and exhibit there. So yes, actually, we have all the networking tools. We have all the Skype, you know, groups, etc. but at the same time we end up meeting a little bit more than than expected. Well, perhaps we can talk a bit about how you guys raised the fund.

Because if I remember correctly, you did that through Havelock. Is that correct? Yes, yes, correct. Yes. So the way it happened is we talked to Havelock. So quite soon, actually, last year in the summer, soon after creating Citcoin, after setting up Citcoin, we talked to Havelock because for me it was a very innovative very new way of raising funds.

Before that, I was looking at crowdfunding. So Havlock, in a way, it's a bit of a combination of both crowdfunding and listing stocks, I guess. So we talked to them and we tried it with Dealcoin. Dealcoin is Hakeem's own company. And it is also incubated by Citcoin. So we did that and it worked very well. It was in September 2013, Dealcoin raised 500 Bitcoin. coin in about six minutes. So that was great. We felt that it was a, we may have even

underestimated the demand for that company. So we, we decided that we would like to raise a fund. So I, you know, I have to explain this because some people ask me this by this question by email sometimes. Citcoin itself is not listed on Havelock. What is listed on Havelock is actually a fund, which is a channel directly to the shares of the, it's just, channel to a fund which is holding the shares of the Sidcoin startups, six of them actually. And so we decided to try that. Unfortunately, at the time, there were some issues with the whole Bitcoin denominated exchanges. A couple of them shut down.

So we had to wait a little longer than expected. So we started basically doing the fundraise in December, December 12, 2013. And we still managed to raise 2,000. coin by the middle of January. So it worked out quite well, yes. So can you walk us through, like, how these seed rounds go? And like, how does a startup get into your program? We have an application form for startups to apply online.

It links to a website called F6S.com, which is dealing with many startups and many incubator or accelerator programs. We also accepting applications on angel.orgio.com, Angel list. And we also receive a spontaneous email of people who want to work with us or apply for funding. It's a straightforward process. I mean, we basically contact back the entrepreneurs, the startups that we feel are interesting for us. we have received a lot of applications we received

currently applications daily so when we chose the originally the seven startups for Citcoin we had about a I think about 100 applications or nearly 100 application at the time and wow that's a lot

yes yes yes it's a lot it's a good sign as well for the whole ecosystem I mean it's very active and we we're getting more and more applications as the number of projects and number of initiatives in the sector is growing. And so how do you filter through all those applications and what's the criteria that you go by to essentially accept startups in your program? Well, we have, we usually, so the first screening is about, you know, some companies kind of missed.

the point about Citcoin and send us sometimes business plans that are not really fully cryptocurrency-centric. They are maybe doing another kind of business and they are accepting Bitcoin, for example, which is kind of not what we're looking for. We're really looking for actors which are very active in building the ecosystem and providing essential services. So once we do that kind of first screening, then we look at the type of services that they're offering. Of course, we look at the team itself. Where are the entrepreneurs from? What I mean

from? I don't mean the country, obviously. I mean the background. What have they done? Have they built companies before? Have they worked in sectors that are relevant to Bitcoin, which could be, which is not only IT, of course, can be finance, it can be financial services in general that can be applied to cryptocurrencies. So we're really looking at the profile. And we spend a lot of time talking to them, you know, once we have a kind of a short list, we talk to all of them. For the sitcom startups that we initially funded, we actually met all of them. If I haven't met them, then my partners or at least one mentor has met them. So we have this policy that even if it's a virtual incubator, we try to meet the people we

work with before, you know, before accepting them into the program. And we talk to them a lot on Skype. basically it's a very personal relationship in a way. You know, it's not very large yet. So we have the time to actually spend it talking to them, discussing about their plans. Sometimes we kind of guide them a little bit. So for example, Gabriel in Mexico was an entrepreneur, which was already accepted the year before in a very competitive startup program called Wira, which had, you know, thousands

of applications and it was selected by them. But when he contacted us, although he had a very good knowledge of Bitcoin, he was still unclear about what he could do in Mexico. And that was in August last year. We told him, look, in Mexico, there is no main exchange yet. So I think it would be good to develop it. So it took some time to find the right partners and build the right team. But still, I'm very positive about what, for example,

this specific startup will achieve very soon. Now, you seem to be very interested in, at least in the first round of funding, the companies that you funded seem to be very much sort of infrastructure startups. So exchanges, payment processors, wallets, like high, for instance. Is that a conscious decision or is that something that, I mean, is that something that's important for you to build the infrastructure first and then after to build a more consumer-oriented services on top of that? Yes, yes. But it was also a natural choice. I mean, if you looked at the startup environment last year at the end of summer, it was much easier to find entrepreneurs building exchanges, payment processors,

or trading platforms than other more, let's say, further away services that you could add on on the whole environment. Because, of course, at the same time, Bitcoin was less mature than it is today. There were less users. So basically you needed the, you know, the ramps, the pipelines to go on and off from Bitcoin into Fiat and vice versa. You needed the payment processor. So I think it was a bit conscious, but also a very natural choice for us at the time. So is this changing now?

Do you see fewer of this type of applications, but more perhaps more applications that build on top of Bitcoin? Yes, definitely. So when we have been discussing with a new group of startups and actually, so it depends on the region. So for example, UK, we still talk to entrepreneurs trying to build an exchange because there is a very limited choice. It's not so easy to buy Bitcoin from Pound. Actually, crypto pay has launched this service. but the environment, let's say the number of exchanges still limited. So, so, but yes, in general, we have now less people contacting us for this kind of services.

Also, naturally, because the early entrance have achieved, you know, a big market share and some entrepreneurs may feel well, you know, the market is maybe a little bit crowded or is already taken by big players. So let's go in and find the new niche service that's going to, be successful in the in the cryptocurrency world so that's why yes now we're talking to people for example you know doing new new kinds of services so what do you think the most i guess promising interesting field uh in the next two year what's that going to be personally so i like everything related to blockchain um we are talking to a company in the ukk uh trying to help them uh develop and

and raise funds, which is in the area of exploring the blockchain, doing some kind of data mining on the blockchain, and at the same time connecting with a multitude of exchanges. I think now the market is large enough for people to go into market making or arbitrage opportunities in a very successful way. I think we're still interested in trading. I think trading as a bright future as well. So these are the area. as we've been looking at.

We've been looking at, for example, the Bitcoin ATM, but it seems that it's a market that is getting fragmented quite quickly. But it's also interesting. So we're talking to an entrepreneur in Mexico as well, but is American. And he's looking at, for example, the leasing of the leasing service around ATM. So they are services still out there that seem very, you know, very, potentially very successful in the future. So let's talk a bit about, I guess, well, let me take a step back.

So if we look at Bitcoin, it's called, you know, decentralized cryptocurrencies. So the idea of decentralization, you know, is very much to the core, you know, a core principle of Bitcoin, you know, the idea that you have peer transvers, et cetera. Now, it seems to me if you look at very successful companies, if you look at big, startups, they live from centralization. You know, like Facebook is a centralized, a big centralized platform, Google, et cetera. These are all, in a sense, centralized monopolies. So I'm really curious where this is going to go in the future because it seems there is this kind of inherent conflict that you have between wanting to build a big business and needing to have some sort of advantage, monopoly, position, and this tendency and also desire of a lot of Bitcoin people

to decentralize everything. So I'm curious, how do you think about that? Do you think that's an accurate description? Yes, yeah, I think you're right. I think the conflict is there. The conflict is there also because, well, there are different ways to look at it. We could look at it in a transitional way. So, for example, we could say, well, you know, you're not going to erase kind of centuries of business.

You know, I mean, business has been for a very long time associated to ownership of something. It can be ownership of a tangible or an intangible asset, but it has always been associated to people sharing ownership or one person having control over something, some form of asset, being intellectual asset or being a physical asset. So I'm a fan of obviously of the decentralization, and I'm also a fan of the blockchain smart contracts and the whole set of applications that hopefully will come out of the startups looking at blockchain and building great things on top of that and all the efficiencies that's going to bring in the society. But in my opinion, there is this transition period

where you cannot erase in a few years the heritage of the way people are used to do business. There is also, of course, a legal aspect of it. I mean, I know there are lawyers, talented lawyers, looking at the legal implications of working with smart contracts and in a kind of a trustless environment, like the blockchain enables us to do, which is great as well. There are new solutions related to either,

Mastercoin, for example, or colored coin or counterparty, all this block or Ethereum, which is also a very great, seems like a great problem. There's going to be this transition period whereby we have to coexist, you know, in between centralized, decentralized. For me, the first applications of decentralization could be, frankly, in the public sector. I've been speaking with someone working for the UK Parliament and looking at explaining

hopefully to the UK Parliament what cryptocurrencies is all about and one thing that I try to insist on is the fact that if people really if the public sector really looks at the blockchain and all the cost efficiencies it could bring I mean it's much bigger than IT, it's much bigger than internet so I would hope that

at least in the public sector there are some, you know, real-world applications of decentralization that could come in. In terms of private companies, well, we have to find a balance in their structure. I mean, we're helping startups to get funded. And we know that when investors get shares, they want their own share of the profits, and they want their own shares of the intellectual property, the own shares of the assets. So it's not, if it can be done in a very efficient way decentralized, that will work fine, but maybe we're not there just yet, and there still need a bit of work in terms of

legally. Yeah, I think it's an interesting point you bring up. So, but the question is, right, if what you say is right, that those, like, maybe centralized services are more a symptom of a transition period, and we are going to a world and a crypto world where services are delivered in a decentralized way, I mean, that has a very serious implication. of course for you as an investor, because then let's say you look at something like Coinbase and you say, well, you know,

Coinbase may be an interesting company at this stage, but this is something that's, you know, that's going to change, right? And that doesn't have a future. So do you think that is the case so that basically companies like Coinbase maybe even BitPay are in a position that you know, they will be fragmented. They will lose that advantage.

Okay, so you mean fragmented in the sense that they won't be able to enjoy, for example, their market share because it will be decentralized kind of free services coming along. Is that what you mean? Yeah, exactly, right? Yes, I mean, yeah, it's an interesting issue because you're right. As an investor, you want to keep some of that value. and even if ideologically you are all for decentralized, let's see, you know, you have to understand that we're looking at it

for the moment in a way, in almost like an experimental way. But I really would doubt that the investors in BitPay, which are actually quite famous investors, funds, etc., or the investors in Coinbase, which are also funds and VCs, would let these companies, you know, kind of dilute whatever achievements they have reached so far. You know, for example, Coinbase seems to me and BitPay both seem to me to have a great brand name and kind of a high goodwill in terms of their brand value.

So obviously if somebody comes along and says, what I'm going to do, everything they do, decentralized and they're not going to be really a brand value because it's going to be free or it's going to be almost free and extremely efficient. that would be an interesting case to see how that works. I mean, I don't really have a clear answer. I think it's a type of situation that has to occur before people can really draw conclusions and see and see how it works. But I would really doubt that the investors of these companies would kind of let go.

No, of course not, right? I mean, Coinbase is, Coinbase, they're not going to get, you know, they're not going to decentralize themselves. The question is, you know, if somebody does enter the space and tries to decentralize it, what's going to happen, you know, which wins out. And, yeah, I don't know. We have, you know, it's, you know, it's, yeah. Oh, sorry.

I was going to say, we have some examples sometimes of exchanges. So, for example, you have a decentralized exchange, which is, in theory, a very good thing, especially after what we saw with Mongox, et cetera. But at the same time for the moment, people are, let's say, voting with their bitcoins in a way and they're putting them in centralized exchanges. So there is always the fact that it all goes into the trust area.

The trustless feature of the blockchain is a very interesting feature. But at the same time, as human beings, especially as human beings, let's say, of the last century, even the newer generation may be a little bit less. but we have been used to trust institutions or to trust people. So, of course, there was a big disenchantment with banks, and people are trusting banks less and less. But nevertheless, we have moved to a quite centralized system again in cryptocurrencies in a way with exchanges.

So, of course, if you don't trust the exchange, then you wouldn't really like to go and put 100 or 10 Bitcoin in one exchange. But for the moment, people are still doing it. There's trusting wallets with the keys. trusting exchanges with their Bitcoin, they are still trusting, in a way, centralized institutions. Yeah, I mean, personally, I actually think some services are difficult to decentralize. Like, let's say we take something like Coinbase, it makes sense to me why, I mean, I don't see how that could be decentralized, for example, you know, because if you do Fiat to Bitcoin exchange,

you know that that's not just something somebody can come in and decentralize i mean you can do it on a peer-to-peer level but it's not going to have the same efficiency and it's not going to have the same ease of use as same with bit pay i think you know if they if they do the the exchange the payment processing that's something where you have economies of scale so the bigger you are i think the cheaper you should be able to do it although you can probably in the future do it really cheaply uh even as a small player if you know if they're changes are cheap and liquid. But yeah, it's interesting.

I guess I don't know where this is going to go. David Johnston famously said that everything that could be decentralized will is the Johnston law. I don't know if you heard about it, but it's I think in theory, everything

or most of the services that we know today can be decentralized. But of course, you need people to actually use them. And you need people to let's say to come to it in a way so I think it's you know again I'm going back a little bit to my transition theory that you know it will take some time but eventually a lot of decentralized applications and organizations will come up and if people start using them that that will work but yes we're still in the period where we still rely on trusting organizations for the moment yeah

Now, as it relates to decentralized companies, what are your thoughts on that? Like, how is that going to evolve? I mean, for the time being, even Bitcoin-only businesses, there's an, even for Bitcoin-only businesses, there's a need to incorporate, for instance. But more and more Bitcoin companies are choosing to deal only in Bitcoin, for instance, like not having a bank account. Yes, correct. How do you see that evolving?

like what are the requirements now? I mean, of course, you know, I said it's a good idea to incorporate, but moving forward, are we going to see companies that are completely centralized, have no attachment to any kind of country or state, and simply live on the blockchain? It's a possibility, I guess. I mean, let's say it's feasible. I mean, I guess you can issue shares on the blockchain using, for example,

color coin or other tokens. you can survive without a bank account. Like famously some companies are doing and, you know. Yeah, like blockchain, for instance, or others. I think there are others out there. Is that something that you would recommend now? Well, if you don't need it, I guess, why not? That's fine.

I mean, if you don't need a bank account, if you pay everybody in crypto. We believe, of course, in the full crypto ecosystem. I mean, we try also to pay as many of our expenses and our, service providers, lawyers and suppliers, et cetera, with Bitcoin as much as we can. And we don't, you know, we don't use that much in the fiat. But let's say the legal part is a bit more complicated, I would say, because for the moment, there is no way to really be outside of a territory entirely. I mean, at the same time, you have to see that if you are completely on the blockchain,

why not? But then it means that you kind of also limit your funding solutions. I mean, if a company is only on the blockchain, I don't see any major investor we see coming up and say, well, okay, let's go and I'm going to own 50% of your company. It's not that easy in the sense that for a future funding, fundraise, etc., it could limit the options there as well. And legally, well, if we talk to our lawyer,

then he's going to say that, even if you're on the blockchain or even if you use cryptocurrencies, you're still in a legal system somewhere. Now, just touching on the legality, so you're based in Hong Kong. A lot of Bitcoin companies have been registering in places like the British Virgin Islands. What are some of the advantages for Bitcoin businesses in those places? And what are some of the most advantageous places for Bitcoin businesses to register or incorporate? and why? Well, for example, the BVI has always been used by, let's say, companies investing, for example.

I mean, offshore jurisdictions are quite interesting for investments, for funds. So that's quite a natural choice. In terms of the Bitcoin startups, well, it all depends also on their market and all their legal requirements. So, for example, if you're an exchange, and obviously you start opening, if you're an exchange and you're doing fiat business in any kind or if you're a payment processor and you need a bank account, a fiat bank account,

then obviously you have to open a company in the country where you want to open a bank account. So that's quite simple. We have, there could be other licensing requirements or other compliance or legal requirements, and therefore you have to choose a jurisdiction in that sense. I think today people are choosing the jurisdiction

where it is, of course, cost-efficient, tax-efficient, where there are some resources as well. You know, tax is only one of the components. I think, you know, there are some resources there. So, for example, Hong Kong is a great place to do business in general. You know, of course, it's not a highly taxed jurisdiction, but at the same time, it's a very convenient place to do business. You register a company very quickly.

It's really not cumbersome at all, and you have a lot of quality service providers around you. It's a great, you know, geographically it's a great hub, you know, very good transportation. system, et cetera. So it depends a little bit of what you're looking for. The Bitcoin startups are usually divided a little bit in terms of legal requirements from, let's say, exchanges, which is usually the trickiest part. Keeping bank accounts for Bitcoin exchange is difficult. So they have to be in a jurisdiction where banks are open to the idea and are

supportive. So for the moment, Hong Kong is okay. Exchanges in Hong Kong have been able to maintain their bank accounts. Singapore seems okay. as well for the moment. Exchanges we know there have bank accounts, payment processors we know also have bank accounts in Hong Kong. In other jurisdictions it's more difficult

more difficult. So yes, you really need to look at what is your business, what kind of service you need to provide to your clients or to your stakeholders and find the best jurisdiction in that sense. So, you know, we're starting to see a lot of

companies that are they are kind of built as protocols you know when that and that issue their own token yes so for example I guess swarm is an example I guess let's talk Bitcoin is to an extent

an example if they're LTV coin and I think there are starting to be a lot of things that go in that direction would you with Seekoin also consider purchasing part of the money supply of a startup as a means of investing in it?

Yeah, we haven't really looked at it in that way because we could also look at it the other way, meaning buying shares of a startup, which actually, after we do that issues tokens, that's another way to look at it. But yes, buying tokens, so we haven't done.

It could be that there's no company at all, right? That the only thing they do is, I mean, like, let's look at something like Ethereum, right? You could perhaps as an investment investor by ether, but there's not really a company. I mean, perhaps it is a company, but it won't own the protocol. I think there is, I mean, there is an Ethereum company and they will, and there will be one. I think for most of these companies, I mean, look at Nadesafe with MasterCoin.

There is a company. There is a, there is a company doesn't, you know, it's not because you're issuing tokens over the blockchain that you don't need a company to actually manage the, you know, the process of the operations of that. company. But I understand what you mean. So would we be ready to invest in the tokens? So yes, sure, definitely we will be. We were not doing it at the moment because it hasn't really come up. And also we haven't funds for that purpose. But yeah, we will be open to do it if it gives us, let's say, an economic interest in one of these startups. Yeah, sure. So to do this,

you need to raise funds in a different way, I presume, or are you prohibited from doing that? No, we would need to use it in a different way. It's just that we have actually, we are kind of using the funds the way we have introduced it to the investors on Havlock when we did it. So it depends on how we introduce it the next time. You know, next time we raise funds, it could be again on Havlog or it could be another way, but then we would have to explain that, for example, buying tokens or buying specific coins issued by a company. company is one way we will invest here I think it would be better to be to be warning the investors first yeah absolutely so perhaps we can what's what's a view

of swarm yes I'm not extremely familiar with it I know it's has been developed by is it Joel right Joel Dean's is that correct yeah Joel leads yeah no I haven't I haven't seen it I haven't seen the the application is it really related to color coin? Is that my understanding? So basically the way it works, it's like a crypto, what he calls a crypto equity crowdfunding platform. So they're going to sell coins, which is called Swarm Coins.

And then those coins kind of give you ownership of that, let's say, platform. And afterwards, they build tools for a startup to basically issue their own tokens through that Swarm platform. and as a way to raise money, essentially issuing an equity-like thing, even if it's legally different. And if you own swarm coins, then you're basically entitled to a small percentage

of every issue that happens to the platform. So I guess the way I would compare it with is like, let's say Kickstarter had financed their original development by issuing Kickstarter coin. And afterwards, owning Kickstarter coin would give you an entitlement to, you know, to share of perhaps all their revenues Kickstarter generous later, you know, through charging 5% to, you know, every project that goes through the platform.

Well, I've heard good comments about it. I know I know people who have seen it and they said it was looked very good, but I haven't seen it myself. One platform that's a little bit similar that I know of because I attended the startup competition in Amsterdam and I also know Flavian from other projects before is a coin prism coin prism is a color coin wallet that enables you also to issue shares via the color coin system the color coin uh yes that's interesting I hadn't looked at that before I I'm but I'll check it out I was just curious about the swarm thing because we'll have him on next week I think so

I was like curious if you'd looked into it and had some views about this It looks promising. That's all I can say. But I don't know it well enough to really tell you more, I guess. Now, could you perhaps talk about the Bitcoin Institute, which is an organization that you founded? Yes, sure. I founded this organization also at the same time as Citcoin. I must say I've been a bit more active on Citcoin than on Bitcoin Institute. But at the same time, the pace of work on Bitcoin Institute is a different pace because I'm really looking at research. and I was trying to gather experts in different areas. For example, one expert in microstructure and markets, financial markets, experts in market making and trading. And we're trying to do some research or to sponsor some papers in that field.

I'm going to be more active on it. I'm talking to experts at the moment as well. from academics and trying to trigger some interest for them to look at cryptocurrencies that way. So the idea is basically to sponsor some research in these areas that can eventually help entrepreneurs or traders or market makers to reach more efficiency or to go into some markets they hadn't seen before, for example. So this research that the Bitcoin institution is sponsoring is it, most academic research or

or is it done at a corporate level? It's going to be a combination. It's going to be a combination. It's going to be a group of experts from different backgrounds, so both academic and corporate. But we're really looking at, you know, real life applications. So it's a little bit more corporate in that sense,

more corporate application in that sense, yes. So you mentioned market making. Can you talk about this? What does that mean, research into market making? Well, market making is traditionally done in equities, for example,

or in other areas like for an foreign exchange. It has come naturally to the Bitcoin world. I mean, exchanges have always are usually

happy to have market makers on their platform because they bring liquidity. And they bring liquidity to the platform. And at the same time, they can also help in stabilizing prices across different exchanges because market makers, what they do is they bring liquidity. And often they also take positions in arbitrage, meaning that they're going to see arbitrage opportunities.

And that's still very much the case with Bitcoin and other cryptocurrencies today over across various exchanges. So that's one aspect that we. have been looking at. Why would this be, I mean, it makes, I understand this. It makes sense to me, like I'd say somebody would start a company doing this kind of thing. But why is this an area of research? Well, it's not, you know, it's an area of research because, because it's a new, it's a new

territory, you know, it's, it's, it's an area that actually goes a lot into IT. There is a lot of, uh, very talented IT people. that are developing these tools. It's also an area that looks into economics. And for example, Forex and foreign exchange trading is also a big component of that is the strategy, the geopolitical strategy, et cetera. So, of course, in the Bitcoin cryptocurrency case,

it's a different kind of approach. So we're just trying to see what are the new challenges and the new ways to develop market making. So yes, I would say maybe not consider as a traditionally, let's say, academic type of research, but it's more of a market research in a sense, yes. But there are many research projects related to the markets in finance, in traditional equities, in traditional Forex markets. So we're trying to kind of replicate that in the cryptocurrency.

work. No, okay, that makes sense. Yeah. I know I could see that being quite different, you know, when you start having to interact with Bitcoin exchanges, the blockchain, maybe it, you'll have to rebuild a lot of that infrastructure that you'd use in maybe traditional exchanges. Yes, you need new tools and you need new approaches to new technical analysis of the of the markets, yes. And they are, I mean, they are startups that we are been looking at and are actually developing these tools and, you know, like data feed and market news feeds and market insights and blockchain exploration, et cetera.

So I think there is going to be a great environment for that, for the whole cryptocurrency trading getting built and being built at the moment. okay well great thanks so much for for joining us today you know it's great talking about your projects if people want to check out some of the things you work on i guess a seed coin that's uh seedco dot in right yes correct sitcoe dot so seed coin with the dots between the o and the i and then there is a bitcoin institute what's that the URL uh bitcoin institute dot org org bitcoin institute dot org bitcoin institute dot org Bitcoin Institute.org.

Yes. Great. So thanks so much for joining us. You know, I'll hope that the new batch or Sikono is going to be successful. Hopefully we'll see some great companies coming out of that. Yes. Thank you. Thank you for the interview.

And I wish you the best with your show. No, thanks so much. Thanks very much. And you're on Twitter at Startup Eddie. Yeah, that's my Twitter. Startup Eddie. Sitcoin is on Twitter at Sidcoin HK, Hong Kong. And so it's that Seedcoin HK?

Cipcoin XK. And Bitcoin Institute is without the E at the end. For Bitcoin Institute, no E. Okay. Okay, great. So we'll be back next week. But if you listen to this, if you like our show, you can help us by writing a review. You know, review helps us a lot, help people find the show.

So that would be a tremendous help. You can also follow us on Twitter. We are Episandot, BT. you can tip us episodebidcoin.com slash tips. I'd also like to let you guys know that I'm going to be in New York next week. Actually, when this show is coming out, I'm probably going to be on the plane. So if you want to meet up, if you're in York, I'm going to try to meet up with a lot of Bitcoin people.

So, you know, I would love to get in, you know, please get in touch and, you know, perhaps we can do something. And if you're, you can also sign up for a newsletter, which goes out every Friday. day, you know, it analyzes kind of the most important events have been going on. So you can sign up for that at episode of bitcoin.com slash newsletter. So thanks so much for listening and we'll look forward to being back next week. There will also be an episode coming out, another episode from the Bitcoin 2014 conference. I think we've got some great content and I think we have some great content coming up there.

So thanks for listening and I look forward to being back.