Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Levin Keller: Coyno – Bitcoin Bookkeeping, Filing Taxes, Building a Bitcoin Startup in Europe

Episode Date: February 16, 2015

Levin Keller is known to many in Berlin as the man who warned everyone about the dark scenario where buying Bitcoins in Europe would be subject to VAT. As with the VAT issue, Levin was also concerned with the complexity of filing tax returns. For merchants and companies dealing in Bitcoin, keeping track of gains and losses makes proper accounting a messy ordeal. His startup, Coyno, hopes to solve that by providing standalone, read-only bookkeeping for your existing wallets. Coyno allows you to import the public seed from your HD wallet and keeps track of transactions. The service, currently in beta, reads your wallets’ public addresses and stores bookkeeping information whenever a transaction occurs. By recording the exchange rate at the time of transaction, Coyno can generate reports of taxable events, allowing users to more easily file their taxes. By allowing Coyno to read all your wallets, it’s able to differentiate incoming and outgoing transaction from funds being moved within your organization, a feature lacking from other reporting tools. Levin also talks about his journey of being incubated at the Axel Springer Plug and Play Accelerator in Berlin. He also weighs in on some of the challenges of building a Bitcoin startup and attracting investors in Europe. Episode links: Coyno Beta Coyno announcement Axel Springer Plug and Play This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/066

This episode of Epicenter Bitcoin is brought to you by Shapeshift.I.O. With no account or sign up required, it's the easiest way to buy and sell light coin, doge coin, dark coin, and other leading cryptocurrencies. Go to shapeshift.io to instantly convert all coins and to discover the future of cryptocurrency exchanges. Hello, welcome to Epicenter Bitcoin, the show which talks about the technologies, projects, and startups driving decentralization and the global cryptocurrency revolution. My name is Sebastian Quichua. And my name is Brian Permanh,

We're here today with Levin Keller. I've known Levin for quite a while, and I know him fairly well. We've also had him on the show before. That was quite a long time ago, together with Asher of Coinjar. At the time, he sort of jumped in to talk about the VAT question, Bitcoin VAT question, which was sort of a hot topic back then. But now we're back, and we're going to have more time today to dive into what he's been up to, in particular the startup he's working on called koino and i've kind of you know witnessed the

birth of this child from the very start so you know it's a it's a great pleasure that we we can talk about it there and i think it's a very interesting product and sort of a product that's you know a little bit building for the future which i guess many of us are doing in the space but i think this exemplifies it you know better than most products so thanks for coming on today levin My pleasure, my pleasure, very much. Yeah, thanks for coming on. And just so people understand, so you guys are in the same city, you guys are both in Berlin. You're not working out of the same co-working space, are you?

No, currently not, but we are thinking about moving there. And the two of us were also members of the Bitcoin Center here in Berlin, which now moved into the Ethereum office. It's very, very interesting place to be too. So you're working out of the Ethereum office now? Not at the moment. So we were working in the same office at the sort of previous location of the Bitcoin Center. But then Levin went to the accelerator.

And we can talk a little bit about that later. And we moved over to the Ethereum offices. Now, Levin is still at the accelerator. But maybe he's going to come back here to the Bitcoin Center. Cool. Awesome. Also, I should mention this is kind of funny. when when labin first came to berlin you know he was this little bearded guy and he was running around warning everyone of this like dark dark scenario with the vat and nobody took him seriously

everybody was like what what is this uh what is up what is up with him but but it did turn out to be quite uh quite visionary i think he was right there that there was a real problem where i you know realized that all a bit later, but it was quite interesting. He was very obsessed with this topic, and I think probably knows more about this than, I don't know, maybe anyone else in Germany or... I mean, I hate to be right about stuff sometimes. I usually tend to do so, but yeah, this is unfortunate, but yeah, we all know that the ECG high-court decision is very interesting.

We'll come up soon, but, yeah, of course... Just need to wait for that. So we won't talk about this topic today, but the basic... issue is if you sell bitcoins to someone, do you have to charge VAT on that? And it's sort of for the Americans, it's a little bit like sales

tax. Of course, that's, it's quite of a, it's, it would be absolutely terrible for Bitcoin if that actually came to pass and it's still in limbo. We don't know which way it's going to go. Any idea? I wonder we're going to find out what the

verdict is on that? No, we'll take it over some time. Like, like people tell you, like like one and a half or two years, even we will see about that. But this can take quite some time. There are news coming out of it, going into it, but it's nothing, nothing has been decided. So talking about Coino, can you tell us a bit why did you start Coino? So, yeah, of course. As I was concerned with the VAT issue, I also dug into the question of how to actually tax your income.

How would you use Bitcoin as a professional in like a shopper zone except Bitcoins and spend them again? And then you pretty soon learn that it's very difficult to keep track of all your Bitcoins, incoming, outgoing. So yeah, this was the biggest issue that I had and then I saw. And I thought, why is there a product that's automating all this? And this is what we did. We built a Coino, the Bitcoin Bookkeeper. What we want to do is we want to provide people tools to use the very same software they have been using all. time like Electrum or Bitcoin wallet or Armory or whatever but just have on the side a

read-only bookkeeper that's keeping track of the payments it's keeping track of all the metadata attached to the payments so they can easily put a text report on file if they need to do so so it keeps up of the payments so you would use the old software and then whenever a payment comes in or goes out of your books we can just store the the bookkeeping information that you need like what's what's the invoice number what is the amount that has been sent, what is the value at the time, and then you can do a tax report very easy at the end of the year. Yeah, I mean, I must say, so it's kind of, you know, we understand,

we know that, you know, we bought Bitcoin as a certain price, right? And now you spent the Bitcoin, so the price has changed, well, this is a taxable event. I mean, I think this is pretty clear to everyone. Now, in Germany, I think, you know, if you wait longer than 12 months, you know, wouldn't have to pay taxes on that. But this becomes like it quite frankly scares me the idea that at some point I will have to actually account for like everything that has happened here. It's it's quite a nightmareish scenario and very, very, very difficult to do. And for us, you know, with episode of Bitcoin, we try or like we are basically a Bitcoin only company. And

we are not, we're not a complicated company, right? Like we don't have a lot of transactions. But still, it gets kind of messy very, very quickly. So it's, I mean, I think there's a, there's a big need to have someone to like make this kind of smooth and easy because otherwise this is just not going to happen, right? Like, I mean, I think, um, otherwise I think the only, the only option for a merchant is just that they say, we're going to use spit. pay, we're going to get fiat currency and we won't ever hold Bitcoins himself.

But as soon as you start holding Bitcoins, it gets very, very, it gets very hairy very quickly. Yeah, and even more so if you're a private person, and you have this rule that up there you can sell your Bitcoin without paying any tax for it, which is the case in Germany and other jurisdictions sometimes too. The problem is how do you prove that you have the Bitcoins for more than you? Right. Let's say you made out of 1,000 years, you made a million and buy a nice house. You need to kind of like prove that you actually had the bitcoins for more than a year.

So to be able to sell them tax-free. And this becomes also an issue. This is something that we want to solve. We're also, of course, reading and working ourselves into the jurisdiction concerning these tax issues. But on the other hand, if you want to do all these bookkeeping events, it's pretty easy to do it automatically. If you have a nice software tool to do it, to do it by hand is, of course, a nightmare. But if you're running a shop, like let's say you have an online. shop and people are purchasing stuff for Bitcoin on your side and you're buying stuff

from your Chinese subcontractor or for your Chinese supplier and pay him in Bitcoins too. Then actually all these events can be tracked rather easily and you just need to check the Fiat values to match them and so on. And today the solution for that for many people is to use some kind of centralized service like CoinBerrys or so where actually also the keys are stored for the Bitcoin wallets that the user is handling and using. We just want to solve this or remove this headache as a security concern. I want to leave the user with the private keys,

but just use the public keys to track the payments and to make all the necessary keeping point. So I want to say, you said something that's very important there, is the same way from centralized services. So I think what this allows people to do, and what it's really valuable about it, is if anybody wants to not use one solution or perhaps they're satisfied with one component of coin,

but they're not satisfied with their invoicing and their bookkeeping services, which I'm not particularly fond the way they do invoicing, for instance. You can use a solution like this that's really specialized at doing one thing. And, you know, that thing is, you know, record keeping. And you guys certainly have like jurisdiction-specific stuff as well in there, which Coinbase might not, right? And also we're building like we want to see the whole picture. I mean, people, they don't just use Coinbase, but Coinbase kind of assumes it.

So you can get, if you're using Coinbase, you can get, we just talked to someone who did this, you can get some kind of tax report for them. But the fun part is that they actually consider every withdrawal of Bitcoins from your account as a sell. So they'll market as a sell in the text event. But it's actually not the case because you just move the Bitcoins, which is your right, to a secure location like you called storage. And then sometime later, you put it back on there and sold it or so. So you need to kind of like separate transfers that actually went out of your kind of

of system of all the wallets that you control. And these transfers went inside of it because if it was inside, then it's not a taxable event. And this is where Coinbase currently lacks a feature. And also we want to provide tools to import old wallets like the Electrum, for example. You didn't start using Bitcoin and thought maybe this will become a business that I at some point want to do a Paxi port for. So you need to import all the historical data. And this is, there's currently as far as we know, no service out there that does this, who supports as many wallets as we do for this kind of like broad picture that is given.

And we also want to support Coinbase in the idea of getting like everything that's open to us. Coinbase has an API so we can get the data out for our users too. Now, I'm curious for a company like us that has been keeping our books, I mean, we've been using multiple wallets since we first started billing and getting revenue. We've used multiple wallets. We're not really sure where the transactions are. We have Excel sheets and other ways of keeping our books. Do you plan on integrating some features that would allow people that don't necessarily have all the wallet transactions

like on the blockchain to show for, to import those into a system like this, and from there, start like a clean wallet seed and then go from there. You understand what I mean? Yeah, of course, you can pick a time and then you just give us, like, in the amount that you had at the time being and later.

I mean, this is not yet implemented. We are still beta and evolving our product. But on the other hand, usually if you track all these kind of payments, you should be able to go back. You should be able to say, oh, there's a payment coming into one of my wallets from this other address and then you say like, okay, I have a matching event in my Excel sheet

which shows that this amount was actually incoming from another wallet of mine, then you can do like a forensic and put also this address into your wallet and say, okay, this is also an internal transfer. And then we'll work on from that. So whenever you use that wallet in another scenario, then we also show it as one of your wallets and an internal transfer if money left this wallet to another of your wallet. If you start mixing your private wallets and your professional wallets, then you might have some issues, of course, then it gets rather complicated. And then also we need to think of a clever way how you can like highlight certain

transactions as being private and the others as professional. But it's actually also an unprofessional way to use a professional account mixed with the private one. And of course, a core, a core sort of design aspect and I guess philosophy aspect of coin as well, I think is that you guys don't hold private keys, right? That you only do public keys and your watch only. So yes, this is a very important fact. We want to be a watch-only solution for several reasons.

I want to sleep tight over the night and I couldn't if I was like putting the valve of or the wall being of a lot of my customers at risk because I have a centralized service that could be hacked like any other and then lose bitcoins, even Coinbase is not completely secure to these kind of attacks as we have seen. So yeah, this is something that we definitely never want to do, hold our customers sole private keys. We might be looking into some part of stuff like co-signing or so so that we only hold part of the private keys that are needed to release funds for the customers. And yeah, we also think that this idea of just watching the blockchain and just being a layer

and drop and not being the sole service that you rely on. So you might use one service for your security and the other one for bookkeeping. This is kind of what Bitcoin is about to keep the stuff separated and not having everything in one point so that also all the data is gathered at some point and clearly so yeah this is why why we chose to do only the watch only thing so are you planning on also do offering for example invoicing in the future and and things like that so what people are doing is they they store their public root seat data with us and with that following like this upload we can track all the payments that are coming into this

wallet and going out of this wallet and we can also generate keys and in the future we will provide a feature that you can just have a link or a profile page where people can come to you we deliver a new freshly generated public key for this payment and the payment goes not to us but directly to your wallet for that of course still we need to up the security because we might get attacked and people might replace the public keys which which people think are yours but with with others so that the payment gets redirected so there's a little like like still a gap security wise but it's

it's more convenient and also for your privacy, much better if you use a new key for every payment instead of pasting it on your website or so. And we're definitely looking into this. This is definitely a feature that we plan on doing and also automate all this so that you can use it in your web store, for example, if you're accepting Bitcoin payments and just store one public key with us,

and then we notify you when the payment has been settled and then you can ship the product that you sold, for example. So how would that work in the case? If you're generating a new public key every time and the wallet might also be generating a public key. How do you make sure that you're not generating the same key for perhaps two payments? So this is actually done through subchains. So we didn't really decide on which subchain to use, but usually you, so you get this note,

it's a starting note for the public seat data, and then you use one chain that goes from there. This chain zero is for the external addresses. So addresses that you would go about, two third parties, and so on. This is what it usually does. Then there is the chain number one, like the second one, but of course you start counting at zero. And then you would generate addresses there that are only used for internal reasons. For example, change. So whenever you send some bitcoins off, the rest that has been on the address goes to another address and this is one of the internals.

So we could have used, for example, chain number two. And then we would just follow another chain as the wallet itself. So we need to check out the standards for that. We're currently working on. This is still work in progress, also Bitcoin-wise. But you could just use other paths that come from the same source so that you don't collide in any circumstances. I wasn't even aware that you could do multiple subchains from an HD wallet.

You can an arbitrary amount of them if you want. This is the all idea. It's like it's a tree that it's branching out. indefinitely if you want. But usually only two of these chains are used and you can use as many as you want to provide additional services. Right now, right, if merchants accept Bitcoin, I think for the most part, especially if they're larger merchants, they work with payment processes like Coinbase or BitPay and for the most part they convert to Fiat. This obviously is the sort of solution that will be for those who keep holding Bitcoin. Now, what?

What kind of timeline do you see? Do you see this happening anytime soon? Because one topic we've been talking about a lot is the volatility issue. Obviously, that is a huge barrier when it comes to companies starting to hold Bitcoin's on their book. But how do you see that playing out? So there are the two possible scenarios. I mean, like, okay, Bitcoin can become stable. This is my personal idea probable, but maybe also it will go up quite a while before that happens.

So right now Bitcoin is rather stable, but not really reliable. Nobody thinks that the KDs like 200 euros, $230 will hold indefinitely or so. But right now I would feel rather comfortable as a merchant to accept Bitcoins. And we also see merchants to accept Bitcoins. I mean, like you in Berlin, you have this bar room 77. They're accepting Bitcoins and holding on to them. you have overstocked, they also keep the portion of the Bitcoins. And there was a BitPay, like a Bitcoin representative, who recently said that I think more than 50% of the Bitcoin users,

BitPay users are holding on to at least a portion of the Bitcoins. So, I mean, like a lot of people who are especially new to Bitcoin are afraid of the volatility, but a big part of the Bitcoin users also is keeping at least part of it as Bitcoins and also on their holding. Of course, all the traders, they also keep on with the Bitcoins. And I think, like, in a year or so, we will see whether people consider Bitcoin to becoming stable or whether people understand that this is finally a flaw in the Bitcoin Protocol. We need to do something about it to change the, like, maybe the money supply or something alike, and that we need to find some kind of mechanism that is actually stabilizing the price.

And I'm not talking about a central bank here, but more about a self-adopting algorithm, like the difficulty that gets adjusted to the amount of Bitcoins that are released over time. I don't know yet how this can be implemented. Maybe this is something that Ethereum will do, so monitor multiple exchanges and finding rapid movements in the price and then doing automatic countermeasurements. But I think if this really becomes a problem, it stays a problem, the volatility of Bitcoin,

then this is just some issue that we need to solve in a new version of Bitcoin or maybe in a hard fork. Yeah, I mean, to those who are interested in this topic, we had a whole episode with Robert Sam's who's written a proposal for a currency that works exactly that way. Well, it's a proposal, right? So there's no working implementation and it's pretty complex from a technical perspective. And we were talking about this with Adam back as well. And those guys, and I think that's a good point where sort of skeptical, even though they weren't familiar with the pros in detail, they were very skeptical that it would actually be possible

to do this in a secure way. But yeah, I think we'll see where it plays out. Personally, I'm very skeptical that I don't believe Bitcoin's going to become stable, the value of Bitcoin is going to become stable anytime soon, not in the next 10 years. So, yeah, we'll see. I mean, I think, I guess you guys will have the flexibility

as well to implement other solutions, implement other currencies, maybe integrate some sort of hedging tools. The hedging I don't know about, but of course we will support other cryptocurrencies. The big thing with Bitcoin is that there are a lot of good libraries out there already. Like a lot of open source stuff, we're also contributing to it. But we're relying also on a lot of open source library, especially JavaScript node libraries. They are not there for any alt-coin already. the same quality as they are for Bitcoin. So this is why Bitcoin was really easy or very easy for us to implement in the first place.

We don't have to build everything from scratch, but it doesn't hold as much for, let's say, Dogecoin or something like more exotic, like more narrower. So there you would have to build a lot of the tools yourself and this doesn't make really sense for us right now. But I mean, as the currency grows, like as an art coin grows, I think also the ecosystem goes, the technology grows and the libraries grow around it and then we will be very happy to integrate it to. So what has your experience been with building a product that feels quite far for the future? Like how do people respond to that in the Bitcoin space and maybe also outside the Bitcoin space? They're calling me like on a weekly basis and asking when it's done.

So it's actually not far in the future. So a lot of people have a need for this. Maybe not the hundreds of thousands users that we need to do, to push this product and to get like the huge traction that we're looking for. But they're already out there. So people are in need of the tax reports today. And these are people that are using it as a tool as soon as we release it. And then they're on it and say, like,

I need this service to be added and that one and then I can use it. But I see also with the growth of Bitcoin, I see more and more users to be using it. And they're like big companies who say, let's use Bitcoin. And then they ask their bookkeeping department, what should we do about it? And bookkeeping says, like, please don't do it. There's no tool for it. As soon as we have these tools, we are also enabling the ecosystem and the space to just adopt Bitcoin. Also the big companies and so on.

This is what I see as a future. for this. So who are you targeting there? Are you targeting small companies like small merchants or local restaurants and the local businesses or are you targeting more like larger enterprise or both like what's your target market? We're doing both at the same time to a certain degree. So we have this frontend user faced product that is on our website, beta.com.

Everybody can use it already with limited functionality as it's a beta. But what we are also, we are also in talks with banks, with larger companies who want to use Bitcoin on scale and think about shipping wide-level solutions to them and not them having them rely on our web service, but building something on the side, maybe a little adjusted to their personal needs. But this is what we're looking into. So we want to tackle the small and medium businesses, make it easy for them to use a kind of like ready product and which is out of the box.

then we have these more specialized, adopted versions for larger companies. So are you planning on integrating with bookkeeping software like, I don't know, QuickBooks, Sage or others? Yes. So QuickBooks is definitely the first one that we want to do. In Germany we're doing Dataf, which is a German version of like also for small and medium companies, very widely used. We're just picking the ones of the biggest market penetration.

and then going to the next one. And also we hope that they all have some kind of API that we can actually use and put our data in. We won't rely on them building Coyneau into their apps, that's for sure. But usually they have some kind of API or some kind of standard formula where we can just give a report and then it can be imported easily. Okay, well, I mean, there's lots more to talk about. We want to cover some issues regarding security

and also talk about the Bitcoin scene, I guess, in Europe. You've got lots to say about that. But before we do that, let's talk about our sponsor, ShapeShift. Of course, you know, Shapeshift is a fast and easy way to buy and sell alt coins. We'll exchange alt coins for one another. And, well, we've been doing this new thing since last episode. We thought it'd be interesting to use Shapeshift to tip someone or some service of our choice. And Levin, you said that you wanted to tip Andreas Schiltback.

Can you explain why? Yeah, so we depend heavily on people being, yeah, people need to be able to send us the data, the public key data. And before it was very difficult, and Andreas was actually the first one to implement it in a very easy convenient way. So you can just tip a button and then you say, like, export my public key, and then you send it to yourself and put it into Kino. So when we, when we opened our project, it's the beta, he immediately released this new feature too. and now people are very easily able to connect it and my C-Dem is also coming to the market and so this is why I would love to contribute to this completely open source free time project of Andreas Schilbach and I really like the Android app Bitcoin wallet and that's why I think that we should

give some yeah some love to him yeah okay well I just sent them some those coin using using ShapeShift. So he had a Bitcoin address on his website. I used the Dogecoin that I had in my wallet to send him about a dollar and a half. And so that's taking about a couple, it's taking a few seconds to do that. And so the nice thing about Shapeshift is that they support about a dozen cryptocurrencies as of now. They're adding new coins all the time.

And they don't require that you create an account to use it. So you basically go to the website, Shapeshift. They've got their currency conversion tool there, which looks a lot like Google Translate for cryptocurrencies. And you select the currency you want to convert and the currency you want to convert to. And just as you see here on the screen, you send the currency that you have to the cure code they display. And then in just a few seconds, they exchange that and send it to the address.

So it doesn't have to be your address. As demonstrated here, it can also be, you know, somebody else's tip address. It could be a merchant, for example. You could be spending Dogecoin to buy something with Bitcoin, for example. So, you know, there was lots of different possibilities for this. And Brian U.S. also mentioned perhaps using it for hedging in some cases. So I cannot really vet these currencies, but there are two that are meant to be pegged to the U.S. dollar. One is new bits and one is bit USD.

So, you know, in principle, right, like we've talked about volatility, let's say you get, receive payment of let's say a thousand euros and and you know you have and have some expenses a month down the line and you don't want to be exposed to volatility well shapeshift would be a way that you can you can exchange it for one of those stable coins and and then exchange you back at the end of it and you'd be sort of you know you wouldn't be exposed to volatility but again I'm actually I don't know how these we haven't looked into these work yet, so I cannot necessarily endorse new bits or BitUSD. But in terms of all, this works, yeah, works very easily.

And of course, one could imagine if you could maybe automatic integration into some services. So you can do this in the back. So coming back to Quino, so tell us about some of the different, like, there seems to be some issues with this regarding privacy, because you do have to hand over. all of your public keys. It is very secure from the perspective that you don't hold private keys, but you do have to hand over your public keys.

And that means that you guys have access essentially to a company's entire transaction history and their financial information. Why should people trust you with that? So right now they need to trust us like they trust the bank. I mean, they would just assume that we kind of like protect the data in every possible means. Of course, as a bitcoiner, this is not really like the satisfying answer that one would expect. So in the long run, we're currently working on more ideas like encrypting the data client side. It's difficult right now to do it.

There are others trying in and also not succeeding until now because of the issue with the or the feature that you want to provide the user with the usage of HD seeds. On the other end, a company usually doesn't care as much about the privacy of their financial data as maybe someone who's a private person. I mean, to a certain degree, they also might at some point provide transparency. So they could do that very easy within HD seat and say, he'll look at all the transactions that went to the seed and see our balance sheet or something. So it depends always on the case. It doesn't mean that we should lose the data. We need to protect it as good as we can and take care of, for example, if somebody, requires a deletion of his account that we really delete all the data and don't keep copies on track.

That's something that we want to provide in a very profound way on our end. But on the other side, a lot of people use services such as Coinbase. And there I have to say, first of all, you need all to do all the KYC and AML stuff. You provide them with all your details and then you also connect all your Bitcoin transactions to it. And we can't be as good as you using your own wallet and all of you. doing face-to-face transactions to get your bitcoins. Of course, there is a risk that at some point some data is leaked, but it's still much better than some central service,

such as, for example, Coinbase or another exchange, if you use it as a wallet, because then they see all your transactions, have access to your keys, and also you need to connect your complete identity. With us, you can give us a fake email if we want. We don't care about it, all about that. So tell us a bit about what has your experience been like

starting a Bitcoin startup in Berlin so coincidentally as we started went pretty well because we found this accelerator program Axel Springer Plug and Play. It's a joint venture from

Axel Springer which is a very big media publisher and plug and play the US based incubator or accelerator program and they were actively looking for Bitcoin companies when we thought about joining in and then we applied and they took us in.

So we got a little cash for some shares and we were supervised by them. We got like hands-on workshops and also we got a lot of exposure to people, influential people as well as investors and so on. So this has been very good, a very good experience accelerated wise, but after that it kind of like started dragging a little because to our experience here in Germany, the investor's scene is not as Bitcoin eager as it is maybe in the US or in the UK. So there is where we see a little gap between this accelerator and now the additional investment. And also there are very few Bitcoin-related investments in startups in Germany overall.

You can count in them on one hand, I think, especially the ones that go beyond 50 to 100K, which were just, I mean like the real business just begins to start. So the Bitcoin scene in Germany, as far as I can tell, is rather timid. And people like investors are also very hesitant to put money onto the table. So have you also tried to get in touch with investors from the US or from other places that may be more open? Yeah, we are just currently expanding. The unfortunate situation is, of course, for a German company that we are too small yet to attract the interest of a very large receipt.

And the question is, so the question is whether or not we can make them actually hand the money over the ocean. So usually a very large investor wants to only invest, if he either invest in a small company, if he has a tight grip on the company and can see that the founders are actually using the funds in the best way that they can, that they should do it. Or if the company becomes larger and a lot of other investors are already in there, he can just leverage these other investors to make sure that the company, is like keeping the right records and everything. So we were thinking about moving maybe to the US

to get an additional funding there at the current situation, but actually we still hope for finding some angels in Germany and then move on maybe and get the attraction of a US investor for a bigger round after that. So you would actually try to move the company as a legal entity or actually also operational there to the US? It's more about the operational part than about the legal. We might also move the legal end, but the operational part sometimes is more

important. So the investor wants you to stay half a year or so in the US. We will see about that. This is just an option. Actually, we like Berlin, Berlin is a very good place for a startup because it's really cheap to live. And also for a Bitcoin startup, like data protection wise and so on, it's much better than in the US. So I would rather have my customer data here than in the US where the NSA could just knock down the door and I wouldn't be able to tell anyone about it. Now before we restart the show we were talking about you know of course we all live in Europe

and we've seen the investor the investor numbers in the latest coin desk say Bitcoin report regarding the amount of investment money VC money that has gone into European startups versus American startups and you know the

the gap there is actually quite staggering I believe it's something about 95% well no I think it was it's not that high at least according to the CoinDess report. But it's a bit tricky, right? Because I think some companies like blockchain on info or other companies are counted as European, where's not so clear. But there is quite a large gap between the investment money that is going into

US companies and the investment money that is coming to European companies. I guess that's probably that could also be said for other sectors as well, could be said for the tech sector as well. What are your thoughts on that? Why do you think that is and what do you think needs to happen in order for that to change? I mean, to certainly agree, this is, of course, connected to the usual difference between the U.S. and Europe. In Europe, iron restos are not as detective, not as adventurous, usually as they are in the U.S. On the other hand, I mean, like Europe has a track record, especially zooming or building up very large, very resistant, very successful companies,

such as all the car companies in Germany. But these are more businesses that the investor can understand. They usually do bootstrapping, and they're kind of like importing the very idea of building startups and then pushing them and then just like fast-tracking them to something. Xuner is an example for that that had actually like a real funding run. But besides from these some examples, usually in Germany or in Europe,

especially on the on the France and Germany I'd say the business is done in another way than in the US with Bitcoin this of course adds up to net next layer because you usually can provide enough traction today enough revenue today to to I mean like to make to satisfy any kind of request from the from the investor for this investment I mean like I have a look at change tip they got like when they got the investment I don't know of three and a half million I think They had like 70,000 US dollar total revenue ever over their service. So, I mean, this is not something that you usually would base such an investment on, but it's projection.

And this is what US investors have. They have vision. They think Bitcoin is the next big thing. And in Germany, people just ask me, yeah, I read about this Bitcoin. I thought it's bankrupt now. What's the point about that? This is the usual conversation I have with an investor, unfortunately. I mean, to a certain degree, politicians make the economy here too in Europe and in Germany.

So they kind of decide what is good technology, what not, and then they pay all the stuff for that. For example, like all the green energy that we have over here. It's not only for tax reductions, but also like really serious money getting into it, being pushed into it, which leads to a lot of crops and so on in Germany just built to be burned or turned into gas or such, which becomes a problem somewhere. So, I mean, like we have this kind of like more, maybe the government has a stronger hand. here in planning the economy than it has in the US and this of course leads to only secure ideas or conventional ideas because I don't think that a politician will risk his next election on the

basis that he kind of like pushed a Bitcoin startup to build up something that then in the end didn't really work out the way he tended to do yeah so I think that the lack of private investors and that it's not so common that you solely rely on a private investor I mean a lot of people tell us, yeah, there's this state program and the other one. You can get a very cheap loan here and this is the way you build up your company. You should do some contracting first and so on. There's a general different approach to this kind of investment and building up a company. And it is coming also from the government. You're right about that. Brian, I'm curious. What are your thoughts on this?

Yeah, I mean, I think I agree with Flaving and it's pretty obvious, you know, there is that discrepancy. I mean, I think if you look at tech investment in general, like the US is something like 10 times as high, I think, as like the startup space, then Europe. Now, if you look at that coinette's before, there is some outliers, you know, like some mining companies. But for the most part, you know, it is very nascent, right? Like there's just not that much going on.

And I think another thing besides the investor side is that this kind of attitude also carries over to actually, you know, entrepreneurs, and people in the startup space. So I think it's not just them, but it's also people, people try to start say things, right? To try to start things that are sort of like true and tested.

And Bitcoin isn't like really one of them. And I think in Germany there may also be a certain like, like almost emotional resistance to award something like Bitcoin. It's like, oh, this is like speculative or like somehow not a good thing, right? I mean, I do think there's a, people aren't as open to it. And, you know, this is one thing that I've definitely noticed,

you know, running the meetup here and I would love to change a bit is that just have more startup people, like, be interested in Bitcoin, like look at starting Bitcoin companies. And I think it's changing a little bit. Like, I mean, I have gotten like quite a few requests, for example, to give talks at, at regular tech events, not Bitcoin-focused events about Bitcoin, like in the next month.

So I think it's maybe slowly changing. But, you know, that being said, it's definitely a big problem. And of course, you know, Berlin especially is well known for companies like Rocket Internet. So if people haven't heard of it, you know, they kind of became famous by just copying a successful American startup models. you say like, oh, it works, right? Like, obviously this is a model that works. You just do the same thing in Germany and build it up as fast as possible and then try to sell it. You know, so not very original approach, like an approach like 100% focused on execution,

not on ideas, not on being innovative necessarily. And that's very, very popular here. There are a lot of people doing that. There's like rocket internet who've spun up hundreds of companies by now. There are people again copying that. And so I think it's, yeah, it's not the best environment for Bitcoin, Bitcoin startups, that's for sure. And I guess a lot of it will also sort of depend on how the regulatory situation is going

in the future. And then that one is very hard to predict. So I, you know, it's hard to predict that as a bit licensed thing turns out. So that could change things again. And maybe that would make Europe a more attractive place than the US, but hard to tell. And also, I have to say that from the experience that I have from the accelerator, I mean, we're meeting with people who are not really involved with such small companies and their, like, decision-maker lobbyists and so on, like bankers where they're frequently even some tech ministers

from some countries in India or whatever. And so we talk to these people, and a lot of them, they can't, like a lot of them heard Bitcoin for the first time and said, like, okay, this is very interesting. But also some others, they really listen into it. and they're really thrilled about it. So we had all kinds of reactions, like people saying, okay, now I finally understand Bitcoin,

we need to do something against it. And we had people like, yeah, this is really the next big thing, like even people coming from banks and something, we're really thrilled about it and you want to do something with it because they understand that this has potential. So, I mean, this is, of course, what the Bitcoin ecosystem needs to do, education, education, education.

And of course, also helpful to have all these examples from the US. Like there has been huge investment into it. I mean, we always tell people this because then they see, okay, this must be something about the whole Bitcoin thing. It's not just these two weirdos here talking about it, but there's actually really serious money flowing into it. So, of course, we can leverage the US part and in Europe also people are awakening and are seeing the potentials of the technology. And one thing to take into account here as well is that, you know, a startup is always a speculative thing, right? Like you're always taking big risks and there's always a high rate of failure. But now, of course, with Bitcoin, it feels definitely to someone who isn't convinced Bitcoin's going to be the thing.

And, you know, maybe this is slightly different for us. But it definitely feels like, like you're stacking the risk here. Like, first of all, there's the Bitcoin risk. Like, so that may work or that may fail. And if it fails, it's pretty clear your startup is going to fail. And then if it works, then there's still your startup risk, right? So you kind of have more risk. I think that there's no question that if you do something.

like Bitcoin than if you do like pizza delivery startup or something. Yeah, but the potential outcome is also like like much, much higher, first of all. I mean like this question is also like maybe like us for every Bitcoin sort of. And the other thing is that I think a lot of people, especially large hedge funds and so on, they need to start hedging the risk. I mean if Bitcoin becomes like like the thing that we all envision it becoming, then maybe some other stocks that they have with large banks and so on, they will go to dust. So just for this risk, if they like measuring, like, measuring it's like, measuring it's becoming, then maybe some other stocks that they have with large banks and so on, they will go to dust.

So just for this risk, if they like, like 1% chance that Bitcoin takes off, they should put 1% of their money into Bitcoin-related stuff, which is usually a Bitcoin startup or Bitcoin companies. Or Bitcoin itself? Yeah, Bitcoin itself. I don't know. Actually, I don't think that this is a very valuable investment for an organization that is investing money, because right now this is a huge risk that one is taking, that Bitcoin has a flaw that it will be formed at some point and then be replaced by an alt-coin.

So if you invest in some company that's building up on the technology, you're just betting on technology and not on Bitcoin itself. So I mean, these people, they think maybe that Bitcoin at some points might be outlawed or banned or so, and then some kind of like the Euro coin issued by the Central Bank will take its place, but use the same technology, but have some kind of control mechanisms or so. This is the way I think that some institutional investors think. And for that, they still can use the same company that has been done. doing stuff with Bitcoin for this new coin as long as it's also using blockchain technology.

So guys, I'm curious. We talked about this before, you know, the sort of seeming gap between the tech startup scene in Berlin and the Bitcoin startup scene in Berlin, which, I mean, arguably in Europe is probably one of the most, I mean, one of the cities where there are of the most startups, say from London, perhaps, in terms of, you know, Bitcoin startups. Have you noticed that those two scenes are starting to come together and synergies happening there? Yeah, personally, I feel for the most part that hasn't happened yet. I don't know how you feel about that or think about that, Levin. We're currently exploring to London.

We're going there soon in two weeks or so. There was another Bitcoin startup, Satoshi Pay, in the very same accelerator as us, and even in the same batch. So we could share experiences with them. And mine art from this company, he went to the UK. He was very well received there. talked about this product, everybody is very thrilled about Bitcoin, so I think that London is far ahead. And you also had some visitors here, as you can remember, maybe from the chronometrics guys.

They stayed a couple of weeks or days at least in the Bitcoin Center here in Berlin. And on some occasions people came over here, but it has a little slowed down. And I think all this is also due to the price, of course. Right now, I think the whole Bitcoin seems a little hibernating. Might also be easier to raise funds when the Bitcoin is going through the roof, to the moon and what has just crashed another 30% over the last two weeks. So I think that people will like right now I see everywhere people like laying low a little bit about Bitcoin. But last year the scenes were connected to a certain degree and I think this

will go on further. We should do more about France actually than England. I think I think the fact that people are laying low is definitely also true here. the Bitcoin Association here is not really doing much. I mean, we haven't had any board meetings or anything like that. I mean, since I came on the association. So, I mean, there's not much happening in terms of activity at the association level. I think the price probably has a lot to do with that. No, they know of Bitcoin to buy a dinner at the board meeting.

Perhaps. Now, you know, some of the echoes that I've been hearing from Paris, of course, I'm not in Paris, so I'm not like right in the middle of it. But, you know, I heard things that La Mention de Bitcoin was not attracting as many startups as they wanted to. So they're now like kind of rethinking their strategy and the like their idea to have some sort of accelerator thing. Yeah, yeah. So I think they've sort of rearranged that space to now work on their own projects, one of which is the ledger wallet. It's a smart card wallet that was released not too long ago and that they're now selling. So I guess that's one project that has come out of there and that has some potential. Other projects that came out of there have sort of disappeared. Then there's Paymium, of course, that has announced that in Genico, the credit card terminal company is going to be integrating Bitcoin payments in all of the terminals starting next. next year. So that's like really interesting, really good news, I guess. But it's focused

around one or two companies. And, you know, other than that, there's not a whole lot of activity that I'm aware of. And also one shouldn't forget that just because Bitcoin, you don't build as easy a successful company. It's still a hard job to do. You'll work a lot. You have your ops, you have your downs, and in the end, it's, yeah, what you say is on the sprinting marathon. And I think people, a lot of people in Bitcoin sphere, they made some money on their Bitcoin investment. And I think that being an entrepreneur and building a company is as easy as that. And it's actually not. So I think that this is also something that we should keep in mind.

For example, this accelerator I'm talking about, I have a little insight about the applications that they get right now. And I mean, they had two Bitcoin startups in their last batch. They got some exposure for that. So it should be, I think people should apply internationally. Everybody can apply for this accelerator. And they got like two or three Bitcoin applications, which were really like dubious to a certain degree, or at least one of them that I thought. So my point is that there's also lack of good business ideas in the Bitcoin scene.

So it's not so easy. So I'd like to come back just before. we wrap up to Coino tell us about your team yeah so we're currently are three people so here in Berlin it's Erasmus my co-founder and me and we have a very very good engineering in Brazil who did a lot of the stuff the plumbing in the background build up the scaling and no jess application with us and that's leopoldo and yeah so so this is this is what we are We have three people and want to expand the team as soon as possible. Would you mind walking us through a demo?

No, no. It will be my pleasure. Yeah, so this is actually already with some data in there. So this is a test-test account of mine. As you can see in the upper right corner, it's at www.com. And you can go to the, on the left side you have a navigation bar and you could click on the wallet symbol maybe first. And this is actually where you end up when you start using the service. Usually you start with zero wallets, so you would need to add one.

So you can click on the button to add a wallet. And there you see that the wallets that we support. We're currently still working on the little, yeah, like foreign and stuff. You know, like this is not really beautiful, but we're polishing this right now. And I can only see it in a small window right now. Okay, I can take you. So yeah, Bitcoin wallet, this is the other wallet that we support currently. We're planning on supporting also the other ones that are currently blocked as soon as possible.

Some of them we are in negotiations to a certain degree also to make them share the public seat data that for example the bread wallet on iPhone I would really love the availability of the feature too as soon as possible. Because a lot of wallets don't actually share that data with their users. Yes, you can't export it as easily from the wallet. It's not something that people envisioned to be shared in the first place, but we find that it's a very good idea to do so, but something that's a very good idea to do so, but some people think that this is data you shouldn't share and then they want to prevent you from it.

It's kind of like on your device, on your app. People should ask for these kind of features if they want to use it. So when I first came in here and added my website, HDC, like what do you want my seat? I thought he said he didn't use the private keys. Then I realized that that's actually the XPUB or the public key seed, which allows you to just have to see the public keys. Yeah.

So this is exactly it. So we have guides for all. the wallets how you get out the data it's usually rather easy we walk you through it and especially i just keep attention that you always only share your public key with us i mean if you would put in your private key i'm not really sure about the former but usually we shouldn't even accept it so you wouldn't just show it and now there are some added like some already added wallets um there are three of them here um these are just demo accounts there's on an electron electron wallet which could be an electron cold storage wallet where you keep some funds secure

Then there's on the right side there's a Bitcoin wallet, this is a mobile phone what I use on the mobile phone, and then I have another wallet in my Cilium app also on the same phone, but it's for business affairs. And currently if you click on the, if you now go to the transfers panel, so we're working on the responsiveness of that, but this is what Coino does for the users,

so we start making sense out of the transactions. So beforehand, you couldn't, separate a transaction that went from your phone out of there, whether it went to another of your wallets or to an external party, whether you paid for a pizza with it or whether you just transferred money to your cold storage account. I mean, you could just match the Bitcoin letters from one wallet to the other, but this, of course, makes it very painful for you to do by hand. So we can connect this. We can see that the money actually went from your phone to the cold storage and then show it to you. Okay, so just so we understand here, so this green part here, this is money

coming into the wallet and then this is an extra this is a transaction coming out of the wallet yeah okay so but but when you say out of the wall this is a this is something coming into your pool of this is coming into your possession right so it's not really the wallet it's what you own it's your your your net worth so your network is increasing by point one bitcoins here and it's decreasing by uh 0.01 bitcoins over here and so these are the transfers within the system exactly and for example if you wanted to do a tax report not right now these weren't taxable events the others were like you get bitcoins in you kind of buy them for whatever you did and then when you sent the bitcoins you sell them for the service that you're receiving so both of them are taxable events but these ones in the middle the

internal transfers are not and so what's interesting also is to just to look at these values on the side so you get the dollar value at the moment where the transfer happened when the transfer happened so this is a very this is the crucial information i mean a lot of wallets show all or for example, blockchain. Info, shows you the valuation today, but what uses is if you see a transfer over a year ago. So this is what we think is more valuable to the users, show the value of the Bitcoins at the time that were transferred. We pull this data from CoinDesk currently from their API.

We want to provide some kind of average pricing method there. But in the end, people should also be able to just change the amount if they know that they pay for something that costs $8, ahead like they transferred $8 worth of Bitcoin but we actually think it's like $7.95, then they should be able to adjust this amount too for the tax report. So some of the features that you mentioned you would be adding to this is the ability to label transactions? Yeah, to label transactions, to label recipients and senders. So you say like, yeah, okay, this is external right now, but actually I know it's coming from my mother. These were like payments from my mother or from my employer

or something and then on the other side you'd say like this is the this is the burger joint where I just had this great night so and then you can also check like we want to do a little bit like mint.com for Bitcoin too so that you can you can see like what budget was I on what where did I spend my bitcoins this is what we want to provide for our users. Awesome. What other what other type of features can we expect than the actual release when your beta period is over? So the beta is more for getting stable. and adding more features to it. We want to support as many wallets as we can

and also online services such as Coinbase, blockchain. Info, all the major exchanges. So people can also track the Bitcoins when they are on there. We're currently looking also into Ripple. So some people use Ripple to transfer money from one exchange to the other. This is more difficult than just adding the exchanges.

Also, some exchanges have the problem that when we call the API and ask for the user's transactions, they tell us that Bitcoins have been withdrawn, but they don't tell us where they went to. So we need to kind of like find out ourselves where the recipient address was, was it one of the wallets, we need to like connect these transfers and this is what we're working on to ease and automate the process as much as possible.

And once we're done with that, we should be out of beta and then we should be able to provide tax reports, which is the main first feature that we think that people will use, get all your data from all the exchanges, from your wallets in and then just, yeah, get the report out. And when's the beta period over? Yeah, for like one or two months, I think. This is something that people should not expect the beta to change completely with the final release. Once the beta is kind of done, then we just switch it to a final release. So everybody's happy to use it already today.

And if you find any issues, if you have any recommendations, just keep in touch and send us a message on Twitter or wherever. Cool. Well, I can't wait to use this for our own bookkeeping. Yeah, yeah, yeah. And tax is coming up at some point. We'll need to do that sometimes. Yeah, no, I think that's definitely a product. I will have to look at that time. Now, one thing I think that would be valuable in here as well is, you know, the

influencing part. Because that's something that I think few payment processors and merchant processors do right now is like actual invoicing, like proper invoice. like proper invoicing where you can add items line per line and with price and stuff. I mean, Coinbase is just horrible. Like, I think BitPay does something. Like there's CoinSimple also that seems to be okay, but they're missing some components there.

So I think that's one thing that you guys could also probably get right. Yes, we will definitely work on that. Well, Levin, thanks so much for joining us today to talk about Coinaw. We'll have links to Coinor in the show notes so people can check out. the service can download it, give you guys feedback. You know, I hope you guys are going to be successful, like raising. Well, I guess also like you guys, there are fundraising at the moment. So if any investors are listening to that, I think it's definitely an interesting,

an interesting startup. And I think, I guess it's one that has a lot of potential, at least in my view. So, yeah, thanks so much for joining us today. We appreciate you coming on. And thanks to our listener. for listening to the show this week. If you have any questions, comments, just get in touch. You can tweet at us with Epicenter BTC.

You can also follow us on or subscribe to a YouTube channel so you can get the latest videos. Or, you know, give us a tip. You can do that too at epcentivebicon.com slash tips. And you can use ShapeShift to tip us with your whatever coin. so thanks so much and we look forward to being back next week