Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - The Bitcoin ATM Wave Reaches US Shores

Episode Date: February 24, 2014

On today’s show we talk about: Topics covered in this episode: Last weekend’s ‘Berlin, Texas Bitcoin Hackathon’ here in Berlin. The continued MtGox-journey of disaster. The arrival of the Bitcoin ATM wave to US shores. TigerDirect’s Bitcoin offer & Balanced’s Bitcoin integration. This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/008

Hi there, today's February 24th, 2014, and this is Episode 8. The Bitcoin ATM wave reaches U.S. shores. On today's show, we're talking about the Bitcoin hackathon that took place in Berlin this weekend. We're also talking about the continuation of the Mount Gawks disaster. We're talking about how the Bitcoin ATM wave has finally reached the U.S. And we're talking about Tiger Direct. the Bitcoin integration of balanced a payment API. If you like the work we're doing and you'd like to support the show,

please go to Epicenterbitcoin.com slash tips for our tipping address. Hello and welcome to Epicenter Bitcoin, episode 8, a weekly podcast about Bitcoin and cryptocurrencies. My name is Sebast Sincutur. I'm a U.X designer based in Lid, France, and also the founder of Bitcoin Talks Lille. And I'm Brian Fabian Crane. I'm the founder of the Bitcoin Startup's Billing Group and kind of involved in a variety of Bitcoin projects here. How are you doing, Brian? Yeah, I'm good.

We just finished a hackathon here. We had a Bitcoin hackathon here this weekend. It was called Berlin, Texas, because there's this Bitcoin conference in Texas in about two weeks, I think. Okay. So they're doing a hackathon there, and we did one here. And the winners of this hackathon basically got their a trip paid to go to Texas, go to the conference and join the hackathon there. Didn't we mean the guy who was putting on that conference in Berlin?

You mean the one in Texas? Yeah, no, we did talk to him. Yeah, his name was Raphael Rodriguez. Right, right, right. Although there was another one. We should actually play this. I mean, he's helping to organize it, but the main guy, his name is Paul Snow, and he sent us this video that he was recording in Texas, so this is a hello in Berlin.

It was hilarious. It was like, he has this cowboy hat. He's sitting there, and it's like, hello. I hope when you make, I hope when you make it out, we'll have some time for some barbecue and some Texas beer. It could have been out of some Texas sitcom. I got to say your Texas accent is immaculate. I don't know.

So tell me about the hackdown. Yeah, it was good. It was a really cool location. It was at C-Base. C-Base is this really old hacker space. It's almost 20 years old, and I think the chaos computer cop, they have their meetings there.

and Wikipedia our brilliant group and the pirate party Germany was founded there so it has a lot of history and if you're inside it looks like a spaceship it literally looks like

the set of alien or something nice yeah there's some pictures on Wikipedia if you look like C-based Wikipedia so it's a really cool space and so it was from Friday night until today this afternoon and there was some really cool

projects. So maybe just explain what a hackathon is or maybe those who don't know what it is. Yeah, so the idea of a hackathon is that you get people together and generally programmers to work on some project for a brief period of time, you know, usually between 24 hours. This was 48 hours and you kind of like go all in and work as hard as you can on it. And hopefully in the end you'll come out with something great or you finish something good. So, you know, something functional at least. Yeah. It's kind of a startup weekend, I guess, right?

Yeah, yeah, very similar to start a weekend, exactly. Just that it's more technically. Yeah. Because at the end, you pitch, right? Yeah, at the end, you demo. I mean, you know, some people did, it was kind of varied, you know, not everyone did a programming project.

Some people also didn't finish it or, you know, somehow didn't get to where they wanted to be. Some people introduced more of a conceptual thing in the end. But yeah, so it was very. And do does the winner have

like other investors there? Yes. So the guy's sponsoring this his name is Thomas Hessler or the company, his company is sponsoring it was called UFO Start. Okay, Thomas, we met him at the conference. Yeah, we have an

exactly, we have an interview, a short interview coming up with him in the episode of the Inside Berlin conference, we interviewed him there. And so he has you know kind of like a

fund the startup fund so it's actually it was really an amazing opportunity I would say

for I would say a Bitcoin program to participate in that because one four people got their

trip pay to Texas so that's out of you know maybe 20 people who actually finished a project

that's a pretty good including hotels and conference there and etc and then he also said he wants to invest

10,000 euros in three startups. I mean, I don't know if that actually happens. I guess depends on whether they want to pursue it, etc. But at least the possibility did exist. And let me just briefly tell you about my two favorite projects and those were also the winner and the runner-up. And my favorite project, which is also the one that won, was

by Felix Weiss And we have an interview with him In the last episode Because he was a room 77 Yeah And I would briefly talk to him He's doing He's working on the

On the Bidello project Multi-Sign TV Yeah Yeah that's right And he was working with one I actually don't know his last name But his name is Dennis Something

So Dennis was doing the front end He actually did a tremendous Excellent job as well It was really quite amazing What they put together in two days So, but the project is called CoinSwap, and CoinSwap, actually if you Google it, I Google it, if you Google Coin Swap, you get something else, which is not related. So there's, I think it will be on GitHub, but you can't find it online yet. So CoinSwap, the idea is, let's say you have some Dogecoin and I have some Bitcoin and we want to trade and we agree on some price.

So I don't know, I have no clue what the exchange rate is, but, you know, let's say, you know, you want to pay me a hundred dose coin for a Bitcoin. Then the question is, of course, how do you do that securely? So do I send you the Bitcoins and then I have to trust you to send me the doge coins? So there is obviously a difficulty in achieving that securely. Now, what you could do is you could put an exchange in between, but then you have to trust the exchange. So coin swap really kind of gets rid of that. So they're using multi-signature wallets.

So it would be a three out of two wallet. And coin swap, they have one private key. And so maybe briefly about three out of two wallets. Basically, that means you need two signatures out of three signatures in order to make the transaction. So the way we'll work here would be, you know, I sent the Bitcoins in this multi-signature address. You sent the Doge coins in this multi-signature address. Now we have two signatures and it gets executed. I get you doge coins, you get my Bitcoins.

CoinSwap isn't really involved except for providing the website. They can't do anything. They can't steal the money if they want to. But what happens if I pay in the Bitcoins and you somehow stop, you don't pay in the Doge coins? Now then I basically, Coin Stop is going to do an automatic refund after two hours. And I'm going to get it back because they have the second key. So if I sign it already, they sign it, then I can get it back. So it's great.

I think it's a really cool, really cool project. and they got it to a super impressive level of a standard two in these two days. So I'm really excited about this. I hope they continue this and make it implement it. And so what's the business model? They would charge you like sort of an escrow fee? Yeah, that's a good question. I was asking him about that too.

They didn't want to charge a fee. Actually, I think charging a fee would not actually not even be possible. with this model because if you want to charge a fee then you have to do something else because here if it goes according to plan then really we are just

I'm sending you money you're sending me money coins swap is not involved so if you want to pay them a fee we'd have to introduce some additional transactions right yeah so I think donations

obviously. Another option would be that he could get paid by coins to be added to the coin swap. So, you know, he would have, he would support certain coins. And then, you know, if you want your,

I don't know, pot coin on there or God knows what, you could pay him like 0.1 Bitcoin or something for him to add it. You could do advertisement. I think. You know, I mean, if you look at blockchain or the info, they do pretty well with advertisement. But it's true.

It's a good point. I mean, I think in terms of a business model, it's not exactly obvious. And it might not actually be possible to monetize this in a great way. But I think it is a very valuable service. Yeah. It seems to me, I mean, Felix is already working on his other project. This is probably just like a side project, right? I presume so, yeah.

Yeah. But I don't know. I mean, I think he does want to pursue it. And then the other one, which was really cool, was called Supporter. It's a very simple project. And in terms of execution, it wasn't quite on the level, but as a concept, I think it's great. So this is an Android app. And you would choose a monthly donation level.

So I would say I want to donate five millibitcoin a month to charities, for example. And then I could just add different charities there. So let's say I could say I want to donate some money to epicenter Bitcoin, some money to the Red Cross or God knows what. I mean, I guess you have to accept Bitcoin, but to some other organizations. And they then execute a month. monthly recurring payment. So they would take the 5-Mibbik coin and basically split it up over all the charities you want to support. And you can give stars, so you could give like one star, two star, three stars to give them more weight.

So if I gave three stars to one project and one star to another project, and I only had these two projects, then, you know, 75% would go to the three-star project, 25% to the one-star project. in terms of in terms of execution level development level it wasn't quite there because I think what they did that they actually generated

transaction and then you somehow had to it was provided to you to execute them in local bitcoin some sort of hacky way like that but of course you could integrate it with a web wallet that has an API let's say Coinbase or blockchain

or something or they could do their own wallet. So I think once they do that, this is really cool. Sounds like it was a good hackathon. Yeah, it was. Were you up all weekend? No, I wasn't up all weekend. Organizers get to sleep a little bit.

Yeah. I was working a bit on some things. I tried to set up Ethereum. There's a test client, so I set up, the Go. They have a Go client, so I set that up and it was mining, although I didn't really know what to do with it then. Actually, that's another thing.

There was some other guys, and they were working on Ethereum 2. I think they also spent the whole weekend setting it up because they used a C++ client, which apparently is the one you need to use if you want to do something because the Go is not really there. And they're planning to start an Ethereum meetup, I think. So that would be great here. Cool.

I got to move to Berlin, man. Yeah. I can see how this stuff is happening there. Yeah, we have the next meet up on Tuesday, so I got them to give a talk next Tuesday on Ethereum. So they're going to talk a bit more about the contracts, you know, on a much, I mean, I understand Ethereum on a sort of a high level, but these guys are developers, so they understand much better also on a technical level.

All right, so just before we get into the stories, I just wanted to get something out of the way. we're going to be moving our content from, well, our podcast content from the solution we were working with, which is Podbean, and we're moving all that content to SoundCloud. So to our listeners who are subscribed to iTunes, in iTunes, you shouldn't see this happen. It should happen normally. The redirections should work fine. But I'm just putting it out there. If you don't see any new episodes coming this week, it's because you're subscribed to the old feed. What you'll need to do then is go to podcast. com. EpiCenterBitcoin.com slash feed.

So again, that's podcast. Dot epicenterbitcoin.com slash feed. And that redirects you to the SoundCloud feed, which is much longer URL. So if you're subscribed through, if you subscribe manually through, I don't know, some podcatcher like PocketCast or something like that.

If you don't see the episodes as of next week or even like all the content we're releasing this week from the conference, just add that URL manually and everything should be fine. But anyway, just as a heads up, everything should be fine. The redirection should get done automatically. So you shouldn't see any problems. All right. So we should probably get started with the stories.

Yeah. So this week, once again, one of our main stories is Mount Cox. They have been raised up because for a few weeks now. and so far they haven't made no, show no signs of leaving us behind. They are getting a lot of publicity from this thing. Yes, definitely, yes. So if you do believe the saying that any publicity is good publicity, then things are going fantastic from Mount calls.

But I'm not sure if this is quite accurate in this case. So they're still not processing withdrawals. it's kind of as it was before, but there are some interesting updates to the story. So they released a new statement on Monday. The statement was, you know, they said, thank you for a patient this week. So they're moving their offices now because of security problems. Now, nobody knows what exactly the security problems are. Perhaps it is that guy who's sitting in front of the building with the carport sign.

that he wants his bitcoins back. And Mr. Mark Carpillus, you know, didn't feel his Capricino or Frapricino was safe enough. We don't know, but they have moved their offices. And some people followed up and checked, you know, what's this new address? And supposedly whether now this is kind of a building that holds, it's like a virtual office, right?

People have kind of a mailbox there and there's maybe reception, et cetera. But I don't think they're not actually going to work there. Yeah. So this is, of course, a bit of a worrying sign. If they disappear with their offices, what's going on? So we don't know what exactly is up there. How many people work at Mount Gavs? Do you know?

I don't know. But I have seen that in that building they're in, they rent perhaps half the building. So they have several floors there. So I presume, I don't know. I have no idea. Right. But probably above 20 or I would think. But I don't know.

So there are some other news. Well, they also claim they're still working on fixing the box, but no progress there. There was an interesting chat discussion where Gregory Maxwell, who's one of the core developers of Bitcoin mentioned that he thinks that Bitcoin was doing sort of automatic reissues if they couldn't find the, I guess, in the transaction military bill, you know, if someone made a withdrawal and then they looked up the withdrawal by the transaction ID and they couldn't find it, which was what this whole thing was about, because the person withdrawing it altered the transaction hash.

and the transaction ID that way. So this Gregor pointed out that it seems from what his impression is that they were doing automatic reissues. So I guess in that case, the person doing that didn't even have to go back to Mount Gox

and saying, hey, I didn't get it, please reissue me again, but they were doing it automatically. And of course, if that was the case, then that's a bit worrying because perhaps they did this on like a larger scale. And the question here is...

Okay, so what would have happened, just so we get this straight, is an automatic, so let's just say how this would work. Like an automatic system would check to see if the transaction went through by checking the transaction ID, perhaps sometime after the initial transaction, and

if it didn't see the transaction ID, it would just reissue that, those bitcoins. Yeah, that's right. But of course, if they pay paid out several times to some user, well, then they are short on Bitcoin somehow. Yeah, yeah. So the real question here is, how many Bitcoins did they lose?

Because if this happened on a large scale and they lost, I have no idea, but if they lost 50,000 Bitcoin's this way, you know, they might be insolvent or they probably are insolvent. But maybe it was, maybe it was a much smaller amount. Nobody knows. But what Gary Maxwell pointed out here is that from his view, and because they were apparently doing it this way, it kind of indicates that there might be a significant amount that they lost. But we don't know. So this is all speculation.

But tied to this, there are now some lawsuits going on against Bitcoin. Some guy is... You mean against Moncox? Against Moncox, yeah. So some guy hired a Japanese law firm and he said anyone can join this kind of a class action lawsuit. So if you have more than $10,000 in Mount Cox, you can join his lawsuit. And, you know, if they get the money back, then the law firm gets a cut and you get the rest. Now, what's also interesting here is because if you look at the Bitcoin price on Mount Cox,

it's much lower than the Bitcoin price in other exchanges. And of course, you can ask the question, why is this? Because we know it's impossible to get Bitcoins out of Mount Cox, but I think it's also impossible to get money out of Mount Cox, like field withdrawals. Yeah. Well, they called it all field withdrawals. Yeah, exactly.

So why, in a sense, it doesn't follow that, for that reason, the Bitcoin price should follow MacGox. It is absolutely not like that. I mean, we really don't know what that should do to the Bitcoin price. Yes, because what you're saying is if you can't take the money out, you can't sell them, then. But I guess you could probably, within the Mount Cox Exchange, you could sell your Bitcoin for Fiat within Mount Cox. Sure, but then you still have the money there, right? Yeah, yeah, yeah, but this is where you're getting the price, right?

Yeah, sure, but then in a sense, like, why is there the seller of a Bitcoin to Mount Cox? If you can't get either out in a sense, like, what do you prefer having? Well, who knows? But the point, the lawsuit point is interesting because this guy was talking to his lawyer and he says, you know, they're going to sue and you should really have dollars. You should have a dollar balance in Mount Cox when they sue because if you sued for Bitcoins, then first of all, you're going to have to go to. the court, et cetera, and the judges like, what's the Bitcoin? What is this? So that can be a problem. So that's one thing. And another thing is, if they owe you dollars and they, for example, they don't have the dollars, then I think you have an entitlement to the Bitcoins, for example,

or their office furniture, things like that. But if they offer you, if they owe you Bitcoins, then you might not be entitled to, for example, their dollar balances if they don't have any bitcoins anymore. Does that make sense? Well, if you, I mean, say you had a substantial amount of Bitcoin in Mount Cox and then you sold them, you sold them for Fiat within Mount Cox. You'd be at a significant loss. Yeah, that's true. I think the point here is that if in case of a lawsuit and in case of the court stepping in and somehow seizing Mount Cox's assets, then it might actually be very much preferable to have a dollar balance there as opposed to a Bitcoin balance.

I suppose also on the legal framework in which in which Bitcoin falls in Japan. Yeah, exactly. But I don't think there is much of a legal framework. from what I understand. Then, of course, for Judge, it's quite simple in the case of dollars, right? You had some dollar accounts there, and they're not giving you the dollars. You know, Judge knows what to do. But what if it's Bitcoin's.

So I think this may be, I don't know, but it could be that this is one of the reasons why the Mount Cox Bitcoin price is so low, is that these are people who are in the process of suing Mount Cox. And that's why they've basically converted their Bitcoin balances into dollars. So it's possible. I don't know. It's pure speculation, but it could be the case. But the price went down before this lawsuit story.

Yeah, but, I mean, first of all, you don't know when, I mean, this is, this was the Reddit and Bitcoin talk announcement, but you don't know when they initiated this lawsuit. That's one thing. And the other thing is that this guy who made a post, he says, He thinks that there are other people, Sam, also in the process of doing kind of large-scale lawsuits against Mount Cox. And, of course, if you were in that position, you would probably sell before you make the announcement now. I don't know if I buy that, though, because, I mean, just think of the amount of customers that are in Monkawks, right? What's the proportion of those customers that are pursuing this lawsuit route? Well, but actually a week ago or something, there was some discussion inside the trading is going,

I think actually before one of the last announcement when the price really crashed was going on to Mount Cox. And there was huge sales there, you know, when people were saying like thousands of Bitcoin. And it was probably one person or one party that told these large amounts. So also if you think of a lawsuit, you know, small Bitcoin holders are not going to pursue that. you have $10,000 in there or a few thousand dollars, you know, maybe you'll join. I mean, actually, the limit, the lower limit is 10,000 to join this even. But this is really something that people will pursue who have large amounts in there. So I think it's totally possible.

You know, I mean, if someone has, I don't know, a few million dollars in there in accounts, then those are the people who are going to hire a lawyer and et cetera. And those are also the people who will have a huge effect on the price if they sell all their bitcoins. So, yeah, I don't know. We'll see what comes out of that. It's certainly interesting. It does make for interesting arbitrage. Yeah, so that's another thing we can briefly talk about.

You mentioned before, too. There's this new website, which is called Bitcoin Builder. Actually, I think it existed before, but it wasn't used for what it's used now. and on Bitcoin Builders, it's basically in exchange, and you can trade Mount Cox Bitcoins for, you know, quote unquote, real bitcoins. So Mount Cox, of course, if you have Bitcoins in Mount Cox, they're locked.

So in a sense, they're worth less than a real Bitcoin where you have to pry the key and you can do whatever you want with it and nobody can take it from you. So there's an interesting idea is, well, why don't you trade those? So let's say I would give you one real Bitcoin that you control and you give me perhaps two Mount Cox Bitcoins. So a Bitcoin builder enables that.

And so this is very interesting because it also gives you an impression or it gives a reflection of how likely people think that Mount Cox is essentially going to default and not pay out the Bitcoins. right because if people say okay i'm only going to give you uh 0.1 bitcoin for one mount gox bitcoin then you'd know they think there's a 90% chance mount gox is not going to pay out those bitcoins and so at the moment it's about 50%. so you can you can buy a mount gox bitcoin for for half a real bitcoin it was lower a few days ago it was about 30%.

Yeah. So how does this work exactly? I was reading about this. So you give money to somebody who's got Bitcoin in Mount Gox and they transfer. Because the problem is right now you can't, it's mostly for U.S. customers because you can't buy, you can't send U.S. dollars to Mount Gox right now. If you want to, like if you want to buy Bitcoins right now and from the U.S., you couldn't do that because you could. didn't send US dollars to it. You can't send euros, apparently, from what you were telling me.

So the problem is that you can't get money into Mount Cox to buy those Gox coins. Well, apparently, the way Bitcoin Builder works, let's talk about this first, is a Bitcoin Builder, you know, I would take a Bitcoin. I would create an account with Bitcoin Builder. I think you also have to do some verification actually. Yeah, you do. So then I would send one Bitcoin to Bitcoin Builder. Let's say you have Bitcoin in Mount Gawks, and you want to sell them,

so you would also create an account with Bitcoin Builder. Then, you know, if you would say trade, I would send you the Bitcoin in your Bitcoin Builder account, and I think Bitcoin Builder would give you a Mount Gawks account that you would send your Mount Gawks Bitcoin to. And then I would basically be in control of that Mount Gawks account. I think that's how it works. And then you have to wait until Mount Gawks,

reenables with drugs. Yeah, that's right. That's right. I'm actually not 100% sure if Bitcoin really creates a Mongox account for you. No, I was reading my FAQ

and I think you have to have one and it has to be verified. They won't deal with you if you don't have a verified account. Okay, okay. That makes sense. Yeah. So there's no,

it doesn't seem like there's a way to get those coins out right now. Like, at first I thought that they were holding Bitcoin, Bitcoin and that they they were betting on the fact that Mount Gox would eventually turn withdrawals back on again? I mean, Bitcoin Builder, they just take 2%. Yeah. They're basically in exchange.

They just take a 2% transaction fee. But of course, if I say I'm going to buy some Mount Cox Bitcoin's and I'm going to give you real Bitcoin's, then, of course, I'm speculating that they will enable. we'll reenable with referrals and then it can be a huge profit of course. Let's say I take 10 Bitcoins and I buy 20 Mount Cox Bitcoin. Say, reneable withdrawals, I can take 20 Bitcoins out. Well, that's fantastic. I made 100% profit.

Yeah. Just so there's no difference between Mount Gox Bitcoins and real Bitcoins. Like when they say these Gox coins on Bitcoin, they're not talking about another type of coin. They're just talking about bitcoins that are stuck in Mount Cox and that are devalued. Well, who did that? this. No, no, no, the one is a Bitcoin, right? You have a Bitcoin balance, you have the private key, et cetera. The other thing is really, it's a number, you know, it's like a credit on a balance

in Mount Cox, but in a sense, you're not sure if that Bitcoin really exists. You're not sure if that balance really exists. Perhaps it doesn't anymore. Maybe they lost some gigantic amount of money, nobody know, you know, we don't know, and it's not really there. That's totally possible. So in a sense, it's not the same as a Bitcoin where you can look it up on the blockchain. You say, okay, this is it. And I have the private key. And I know I can control this and do what I want.

It's not the same thing. You said you knew somebody who was doing this? Well, so I was actually talking to someone today. And I was quite surprised by that. But he said he's been doing, he did a transfer, like bank transfer. bank wire transfers into Mount Gogh now. So apparently you can still deposit separate payments or the European payments into Mount Gogx

is even pretty quick, like three days or something, and it's there. And so you can do that and you can buy Bitcoin there. So that's basically another way of accomplishing the same thing in terms of buying, you know, quote-unquote Mount Gog's Bitcoin's. But I think it's cheaper that way. because Bitcoin Builder, they actually have a, let's say, a worse rate for Gox Bitcoins than if you have cash in among Cox.

Yeah. But again, you're vetting on those. Again, you're taking the risk that Mount Gox will not. Not necessarily, because I think he is actually interested in doing something different. So he's interested in transferring euros. to Mount Gog's. Then with those euros in Mount Gogs, he buys, you know, Mount Goghs, and then he would go to Bitcoin Builder, and he would sell those for real Bitcoins.

And then you could, let's say, sell those for euros and start that cycle again. And because there's a premium on Mount Cox, Bitcoin on Bitcoin Builder, versus, you know, the actual exchange rate on Mount Cox, he can make, you know, you can make some money with that. But of course it's an arbitrage opportunity, and arbitrage opportunities always decrease the more people use it. And if he makes that bank transfer now and it arrives in three days, it's totally possible it will be gone in three days. Yeah, but I mean, in any case, you're still buying Bitcoin's a much lower price. Yeah, that's true, yeah. But then you also have to sell them at a lower price because you have to sell them on Bitcoin.

people pay half, right? But yeah, no, it's interesting. And it's definitely very interesting how this business was created out of this, you know, like kind of disastrous situation and blocked in there. And it makes a total sense, of course, to give people the opportunity to trade that way and to really take bets in this way on, you know, is Bangkok's going to survive? are they going to be enabled Bitcoin withdrawals or not? So this is cool and it's interesting and it's very innovative.

So yeah. Yeah, and the guy who did this is Josh Jones. He's the founder of Dreamhost. Yeah, so he does seem to be a legitimate guy. And I think he's also very open about his identity. So people kind of trust it. Is there anything you want to add about the story? No, I mean, I'm sure we'll come back to this.

next week. I'm sure for a few weeks we will, no, I mean, we will, right?

This is not over and this is not going to be over any time soon, I think. Even if they enable withdrawals, you know,

I think we will see some kind of run on Bitcoin. People will try to get their bitcoins out as soon as possible. And then the question

will be, will there be enough for everyone to take them out or not? And so I, This story is going to be with us for a while. I don't think this Mount Gawkes story is going to sort of wrap up within the next few weeks.

Or not next few days. It will take a few weeks at the very least. It just seems like there's so much, so many. I would love it if there's so many more interesting things to talk about. Yeah, no, absolutely. Some better news than, you know, this company is just a disaster. I mean, I think we talked about it. We mentioned this last week.

One thing for me that just really illustrates is that there's such a huge need for high quality, high performance, reliable, secure, well-regulated Bitcoin exchanges that have solid bank relationships and, you know, that trustworthy, etc. Because this is just a big problem. And it's about scaling Bitcoin's really reaching mass adoption, becoming as kind of a competitive payment system to credit cards, etc. This is extremely needed. It's so important.

And it's really important this happens soon. It's very important. We get the U.S. exchange too. I think it's a huge barrier at the moment, that there's no real functioning, large U.S. exchange. Yeah. So, yeah. Absolutely.

But we do have a second story, you know, and that's a much more positive story than the amount of us. It sounds a bit more interesting, yeah. Yeah. So maybe I can, we can start this off. So the second story is about Bitcoin ATMs. We've talked about ICON ATMs numerous times. And this week, some really exciting developments have happened.

You know, if we remember back, the first Bitcoin ATM was set up in Vancouver at the end of October. And it was a huge success. They did, I think, more than a million dollars in transactions in the first month. also if you think about it as a you know as a business enterprise this was very profitable for the people operating the ATM and after that not much happened i think it was more than a month until the next one popped up somewhere and they've kind of slowly been popping up in different places and i would say it's been accelerating a bit and more and more places we've had one in berlin now for a bit and more and more places they've been popping up but so far not in US. Of course, US is complicated with all their regulations

and money transmitter requirements. But this week, the first ones popped up and then the next day, another one, and the next day, another one.

So it's quite incredible after all these months of people working on it within one week, three you've popped up. Yeah, that's really good. Yeah, it's really exciting. So maybe you can talk a bit

about the different the different launches we've seen. So the first one was in Albuquerque, New Mexico, and it's in a Lamassou machine. So that's the kind of machine that looks a bit like an old Mac. Very nice, very good design. We saw in Berlin, too. There's a Lamassi two.

And it's a one way, so you can only buy it because you can sell it. It's in a cigar lounge called imbibe. I actually know the guy who operates it pretty well. I made him at the Amsterdam, Big Conference last year. We had dinner twice together. He's a really cool guy. Eric Stromberg, his name. And I think he set it up in New Mexico because it's one of three states that doesn't require money-transmitted lessons.

So it's much easier to do it there than in other places. So, yeah, this is really cool. Yeah, I've got to say, too, like the Lomason Machine, it's just, I haven't tried any other ones, but it's just so easy. I mean, it takes, what, like 20 seconds? You just scan your QR code, put your money in and accept and that's it. Yeah. I think this is just so much for overall acceptance and a Bitcoin, you know. For people to just be able to walk up to it in 10 seconds, pop 50 euros and whatever.

But, but, but not so easy. not so easy there not so easy in the US this is what we would want right we would want something to be this is what we want so easy yeah yeah exactly I mean

technically this is so smooth and easy and super convenient but the problem of course is anti-money laundering rules and KYC regulations yeah so what Eric has to do

appearing at the moment he's actually sitting next to that machine and he has to, he, like, manually writes down the address and the phone number of the people. I think he checks your ID, I guess. Talk about your customer. Yeah. And, of course, the idea is you have to monitor, like, quote, suspicious activity. So the idea is if you have this unattended and someone comes and puts in, like, $10,000 over and over or something like that, you know, you want to prevent money laundering, and that's why you need to do it.

Of course, in a sense, it's so preposterous. Could let's say you actually wanted to loan the money. Like, using a Bitcoin ATM at this point in time would be the worst idea ever. It would be so terrible. So there's so much attention on these things, so much of it. It's, of course, completely absurd. But, yeah, that's the rules. So I don't know how he's going to scale that, though.

He does want to scale it, I think. And obviously he doesn't want to spend all his time. He doesn't want to keep sitting next to that machine. So, yeah, we'll see. But, yeah, so that's the first one. He's charging 7%. He's charging 7%. It's actually, I think.

It's pretty high. It's pretty high. But, you know, again, if you have someone who is, like, sitting next to the machine. You know, the guy. Yes. I mean, actually, the one in Vancouver, they have one sitting, the person sitting, sitting there like all day long, I think. Although I think in Vancouver, it's not because of any multi-learning, et cetera,

but it's because there's problems if the machine often or, you know, the machine would pay out the money to the user's address, so send the bitcoins to the user's address, but then for some reason, because I think they make an exchange withdrawal, so then the exchange is too slow and the people are, where is my Bitcoin? Right, right. So then it's to be someone there who tells them, no, everything, okay, you'll get your Bitcoin's like BitStamp is down at the moment or some problem.

So you actually need to have someone to help them or to kind of manage through these problems that come out. So in Canada, it's not because of the regulations, I think, to have someone. So there's some other ones, too. There's one in Boston that opened up in the Boston. Yeah, that's right. So in Boston, just a day after, yeah, and some South Station apparently the largest train station in Boston by some company called Liberty Teller I tried to read first of all

what transaction fees they charge I couldn't find anything so I don't know and I also tried to find out what about the K-Y-C and AML thing and they do supposedly but I couldn't find very good information

supposedly they only require an ID if it's above $500. But then again, what's to stop you from doing multiple transactions, you know? Because they're there, I mean, they're the standing there too. And so in a sense, they see you. Like a fake mustache and a hat. Yeah, that's right.

But, yeah, no, of course, you can like keep dressing up in different ways and come back and do $480 or something. something like that. I doubt that's going to be the most efficient way to launder your drug hotel money. And then the next one, interesting too, because, so the Boston one is also a Lomassie machine. And then the third one was the day after, so within three days, three machines is in Austin, Texas, and that's a Robocoin. Now, Robicoin is the same as Vancouver in October.

So you can both buy and sell bitcoins. It's really big and bulky and, you know, not too good looking. And of course, the interesting thing is the llamas, they're really built in a very different, I would say, mindset. The Lama Sue machine is built with, you know, how do I make the smoothest process? I mean, you saw it in Berlin. It's just smooth and this is how it should be. and then you have the problem, but there's all these regulatory AML requirements, and then you have to have someone sit next to it.

The Robocoon machine, on the other hand, is sort of built to comply. So they really built it around all these compliance measurements. So that's why it's apparently quite a pain to use, but I don't think they'll have to have someone sitting next to it. Yeah, so this is the machine that scans your... your palm and yeah that's right yeah

asked you to put in your driver's license so so there was yeah there was some user on reddit who was kind of angry I think he didn't manage to complete this but you wanted to buy you know it's like oh here's this bitcoin ATM let me buy $20 worth of Bitcoin

so is that and then so he does he goes there the ATM asks for cell phone number he gives him uh he gives the ATM the cell phone number then he gets an SMS with a verification code then he has to enter the verification code.

Then he had to provide a palm scan. He had to show his driver's license. I think that gets scanned. I think they take a picture of his face and compare it to the picture on the driver's license. And this all happens manually somewhere in the background. I mean, the machine just takes... No, no, this is automatically.

Oh, yeah, really? This is automatic. But then... So we're at this point now. And then it tells him wait five minutes and while they approved the account. So I think at that point, there's some sort of automatic process that's supposed to improve the account. But then he got a message that apparently couldn't be approved automatically, so he has to wait longer. So I guess for whatever reason, it wasn't automatically approved, so then they get someone manually to do that.

And so I think he was sort of enervated, angry, and then just left and posted on Reddit that this is messed up. And some other guy on Reddit said that he lost his driver's license in the machine. He put it in through the wrong slot. That was hilarious. Apparently several people complained that, you know, you have to put your driver's license in so they can scan it, I guess. And apparently there's several sloths and it doesn't say which one. So some guy put it in there, then it disappeared inside. I don't know.

This is kind of clearly kind of irritating and doesn't help us go in the right direction, I guess. Yeah, but again, if you think about it, right? So if we have these people sitting next to the machine manually, obviously this is not, you can't do that. It means just. Yeah. So this, it makes sense what they're doing because if you want to have this scale, if you want to have this work on, a broad scale, then you just do need to have this automatic. And if the requirements are such a nightmare, then I guess you have to do these tedious, complicated

processes. Of course, it's not smooth, right? I mean, here you get account message, text verification message. You have to wait, and then palm scan, and then you get an account and you go there again. Actually, if you go there again, too, I mean, I think the purchase process again has some of this in there. So, yeah. So these ATMs, the people that are running these,

they have to have liquidity in Bitcoin in order to be able to sell them. So in addition to buying the ATM, they have to purchase some Bitcoins otherwise, unless they're working directly with an exchange, but this is not the case with Lom-Su machines. Yeah. So, yeah, go ahead. They especially need to have money in an exchange. change. So they need to have, you know, I actually read somewhere that for the Canadian machine,

they need something like $300,000 to operate that machine in money. So that's primarily money in the bank account. And then some of it in Bitcoins. So someone comes there, he buys Bitcoins. They send him some of the Bitcoins they hold. And then with the money in the bank account, they buy the same amount of Bitcoins again. So they do this kind of. process. Okay. No, I wanted to talk about that because I was talking to Yorik at Room 77, and so he explained how he's doing it.

So people come and they sell their bitcoins for cash to the machine, and then those Bitcoin's get sold back. Yeah, so the idea, of course, in room 77 here, they put off. one of these lawmases as well. But if you want to operate a Bitcoin ATM here sort of, you know, in the standard way, I would say, or standard way, there's no standard way. But, you know, if you want to operate it as a, you know, as a proper business, I would say, you have to basically get this equivalent kind of money services license, which is a pain.

He didn't want to do that. And he also didn't care about making money. So the idea of their ATM here is that anyone can put on, or kind of deposit their bitcoins on the ATM. And then they will be sold through the ATM and then you can go there later and collect your money, your euros. And the advantage there, a decent principle, is that room 77 they're not engaging in a money you know they're not providing a financial service

but this is i think this is more what he wants to this is not how it works right now but i find this very interesting because it just really takes that burden off of whoever's holding the the ATM and allows for you know trading to occur on more like a local level i mean even though it's going through an ATM, it turns a local Bitcoin model into sort of a more automated model where you can put that responsibility onto the ATM. Yeah, that's right. And what he was telling me to, he told me about something else that I thought really interesting. I don't know if he talked to you about this, but he wants to take it a step further. So right now, whoever puts their bitcoins on the ATM, they have to come back, you know, like once a week and collect their cash.

he wants to build this other thing where he's got like lockers and in order to unlock so he so the money the cash would be put into these kind of like lockers or little safes and the safes would be unlocked by sending like one Satoshi from from a special address I thought this was mind-blowing yeah I mean but this isn't I mean I think it's more sort of a

conceptual idea Yeah, but it's really cool. No one's... For a small business or a bar or whoever, you know, that has a Bitcoin ATM and just wants to sell locally within their community, this is all, like, really interesting stuff I find we need to be working on. Yeah, absolutely. I think he's doing...

I think he has, he's chosen kind of a good approach to doing this and, you know, possibly circumventing the law a bit. But what's important to point out here as well is that even if there's... works the way room 77 and york wants this to work and he's not providing a financial service somebody is you know so if i'm putting my bitcoin on there and it's sold through that machine then in the sense i am providing that financial service so this doesn't really get rid of the problem it just passes it on it passes on that responsibility so the issue then i think is going to be at some point it's very possible um the financial

So, you know, regulators are going to come and they're going to say, we need to have records of all the people who sold Bitcoin's through this machine because we need to check if any of them were doing this sort of as a business. So that's going to depend on the volume. So if you do this a lot, if you sell it in significant quantities, it's a business, you have to get regulated, et cetera. If you do it in small quantities, it's okay. So it's very possible they're going to come and then they're going to want to see people and make sure that people are not doing this commercial way. It doesn't completely get rid of their problem. It just passes it on and diffuses it for the time being.

But who knows what's going to happen with that? Yeah, but I think diffusing the problem is also important. And, you know, if we're able to take that burden, and put it onto somebody who's willing to take it because some people are, they're willing to take that risk for ideological purposes or political reasons or whatever, you know, whatever those might be.

Well, it's up to them, right? And also, if there's many people, it's harder to go after, like, one person. No, that's true. No, I absolutely agree. And I think it's just great to have that machine there and it's just such a nice thing and it's really valuable. What's also great, of course, is that you can just use it.

You don't have to use an ID and all these things. That's, you know, that's nice. So, yeah, I'm very happy about it, and I absolutely hope it's going to work out that way and it's going to stay and he'll be able to operate it this way without having to do some crazy, you know, getting people's palm scans, etc. I think, I mean, I met him very briefly, but I think that the, take that happens, he's going to throw a fit. Oh, he's not going to do that.

There's just no way he's going to do that. So, yeah. He's a really interesting character. I would love him on the show of, actually. Yeah, we can do that sometime, yeah. Actually, there was another ATM story that I forgot to put in the show notes, which is kind of related to what we were talking to, is that the local bitcoins, and Dave,

started producing their own ATM now. Yeah. Yeah. And... Yeah. So... Yeah. So, do you want to talk about it briefly?

Well, I mean, there's not much to say other than that they're going to be producing ATMs that are low-priced. So they're at about $2,000 and they're able to perform two-away transactions. And these ATMs are actually pretty cool because they would also enable... So when we're at room 77, actually, at one point, the internet went out. and we couldn't buy Bitcoins anymore. So their ATM would allow you to, would allow that machine to even work offline.

So you would go to it, like say the internet's out and they don't have a connection. You would get a voucher for your, so you put your money in, you'd get a voucher and then you could go to local bitcoins.com and redeem your Bitcoins through with this voucher. Yeah, so there's a few things. I mean, first of all, the machine is so ugly.

Yeah. It looks terrific. But it's $2,000. So it is cheap. I personally don't like that local Bitcoin's integration. You know, I mean, they really, you can't use the machine without using local bitcoins. And, I mean, if I buy Bitcoins, I'd much rather just put my QR score, get it to my wallet.

So I personally am not such a fan of the way they structured this. but yeah I mean I think it's just another another player in this market and there's so many now so many new companies that are building ATMs I mean we've talked about robocoon and lamasu but there are many more and there are many more that are coming slowly and I think we will see you know who knows how this market is going to look like but it's very possible that we will see very different companies in six months that are putting up you know hundreds of ATMs and all over the world. Maybe DiBold will start making ATMs.

What's that? Maybe DiBold will start making ATMs. DiBold is a company that makes regular ATMs for banks. Ah, okay. Yeah, I mean, that's certainly possible. I actually know. That would be very... I've heard of some ATM companies that are looking into this.

I was being ironic when I said that because DiBold also made the horrible voting machines that caused all the kerfuffle about voting fraud in the US a few years ago. Oh, yeah. They don't have a positive track record. I don't think so. No, I don't think it would be a good thing

if they start making ATMs. Yeah, I mean, it will be interesting next weeks to see, or the next month, what this does to Bitcoin adoption in US. You know, hopefully that will really kind of have a positive impact. It's certainly always a great media story, you know, because it's just, you can go there as a journalist,

you take a picture of an ATM and it's... Yeah. Well, we discussed this many times, you know, but I really think that ATMs are aware we're going, is what's going to take adoption to the next level. Yeah, I absolutely agree. I think it's going to be an extremely, extremely important and extremely big.

So our last story is, we talked about this a few episodes back, about Tiger Direct, started accepting Bitcoin payments. So we just wanted to kind of get back to merchant adoption and talk about two stories related to that. So Tiger Direct started accepting Bitcoin in late January. And so they're doing kind of a sale this week from February 19th to 26th.

6th, so that means until 123rd, until Wednesday, I think, yeah. And they're offering $20 off on any purchase above $100, so effectively if you buy $100 worth of stuff on Target Direct, you get

20% off. So the sale, from what I can understand, is sponsored by chip manufacturers like Intel or MD Sandisk, and I don't know if it works on all products or if it only works on their products. But what's interesting about this is that, well...

We should also dislaim we are not sponsored by Tiger. No. Absolutely. Although that would be nice. Maybe we get new mics and computers and things like that. So what's interesting about this is I think this is probably just a marketing move or whatever, a promotion to try to boost sales in some sort. I don't think that the reason behind this is to make up for the transaction fees that

they're not paying with Bitcoin. Well, but let's say they do save, you know, let's say they do save a dollar or 80 cents or something per hundred per hundred dollars of revenues. on Bitcoin transactions. And, you know, if you assume that the people are going to, the Bitcoin buyers, they're going to start using Target and they're going to keep using that, you know, then this can really make sense for them. So, I mean, I suspect it is related. Do you think so? I think so, yeah.

I mean, it very well could be. I mean, one thing I thought was kind of interesting is, you know, perhaps, like, even though, So, let's say, like, $20 off $100, that's a lot of money. That's probably even more than what you're making in margins. Oh, it's way more. Yeah, so. Probably. Depending on the products, of course.

But if you're buying, like, I don't know, a tablet here, there's not $20 worth of margin on a $100 tablet. But what's interesting is perhaps they're thinking, well, you know, we sell these products. We make these sales at, with, you know, accepting Bitcoin. Right now, the price is kind of low. As the price will go back up, which is certainly, most certainly will, we're going to be making all that money back, and we'll have Bitcoins and be able to sell them and have that as gains. I doubt that.

I think that's very unlikely. But think about it, I mean, if they make all these Bitcoins, because they've been selling quite a bit through Bitcoin. Yeah. I think that's, I personally think that's extremely unlikely. I mean, I think Tiger Direct is a publicly traded company, you know? Yeah. Like this kind of thing for a publicly traded company, you know, that's going to, I think that's, I'm like 98% sure that they're not doing that.

I mean, I think they also said, you know, they are doing what most merchants are doing, which is they're using payment processes, they get Bitcoin, and then they're immediately sold on. and, you know, they only get deposited U.S. dollars. Now, to hold Bitcoins on their books to speculate on, you know, on currency gain, that's very risky, you know, because if that goes wrong as a CEO, you're going to have to pack off. And you might even be sued by the shareholder. This, I mean, I think this is something someone can do for their own company. You know, if you own the company, you say, okay, I want to take that risk. you can do that.

But a company where you're managing for shareholders, it's very risky, and I don't think they'll do that. But it opens up the opportunity for maybe perhaps smaller or not publicly trade companies. Yeah, absolutely. Totally. No, no, I think, no, I totally agree with you. I mean, I think economically this makes sense. It's just the question about the blame.

The question is like, what's the chance if it goes, wrong and what's going to happen if it goes wrong. So the chance of going wrong is pretty high. And if it goes wrong, someone's going to be blamed. And if you kind of do what everyone else does and things go wrong with everyone else, then, you know, you don't stand out. But if you stand out this way and it goes wrong, then, you know, there will be one person to blame and that's you. You know, that's the person making that decision. So. But yeah, totally. I think for a small company or, you know, If you're the only person that's economically affected by the outcome of your business, you know, I would do it, yeah.

Yeah. So, also another interesting kind of story in this payment space, there's a payment processor called Balance, and they're like a payment processor, so if you have an e-commerce website and you want to accept visa, for instance, There's several ways you can do that, and some payment companies, some companies exist to facilitate that. So they allow you to effectively add credit card fields to your website, and that data goes through their servers, and then they collect the money,

and they transfer the money back to your bank account. So they're an online payment processor. And they've, so basically they work with e-commerce sites. they have about 450 customers. And they've started rolling out Bitcoin payments through their platform. So essentially, if you're an e-commerce merchant, or, I mean, a site that has payments, you can choose to accept Visa, MasterCard, or American Express, or what have you, and now you can also accept Bitcoin through balance.

So they've tested this. They're doing a test right now with two other customers. and they're using corn base. What's interesting about this is they're really trying to push it as a cheaper alternative to credit card transactions. So what they charge for credit card transactions to the merchant. So if you're a merchant and you sell something through your balanced account on your website, you pay 2.9% of that transactions, value plus 30 cents. So if you sell something for $100, you'd have to pay $290 plus 30. So

320. With Bitcoin, they're only charging 1% fee. So they're really trying to push this as the angle for selling this to merchants. And since they're using Cornbase, that merchant will be able to immediately converted to fiat. Are they not automatically converting to fiat? Or I guess they, or you're going to have to set it up separately with coinbase, I guess. I don't. I'm not sure.

They're using coin base, so I suppose that would be possible. Yeah, it's cool. Yeah, what's interesting about this company, it was just to be pointed out that they were funded by Andrewson Horowitz. So, it was very favorable to Bitcoin. Yeah, that is interesting. Because I was actually looking at Andrew Easton Horowitz's website a while ago. And it said on there, in Mark Andreessen's blog post,

it said that they've invested $50 million in Bitcoin startups. And only the Coinbase one is public, I think. And that's much less. So if it was like, who else have that investment? So I guess that's one of them. Yeah. Well, I don't know if this is a Bitcoin startup per se. I mean, it's a payment startup.

Yeah, you're right. You're right. They invested $2 million in a round of seed funding last year. Yeah, okay. I guess they won't be coming in here. Yeah. So this is interesting because this is a way that Bitcoin payments can reach a lot of people, is that when payment processors like balance,

or for instance, like Square or even PayPal, start accepting Bitcoin payments. Because effectively, then you're kind of rolling out that functionality to all of your customers. This is the same thing for Etsy or Shopify or any of those other platforms that allow you to sell stuff or accept payments. I think Etsy, I know Shopify, they're already allowing it. They have an integration. and I feel like Etsy is possible too. I'm not 100% sure there. I think so.

So, you know, there's been talk of also PayPal starting accepting Bitcoin and this is not a bad thing for Bitcoin. This really, even though these are kind of B2B solutions, these payment processors, they end up being used by consumers. and this is where the consumer will end up seeing Bitcoin payments being possible on their purchase. Yeah, no, it's cool, cool, and hopefully a lot of their customers will integrate it and we'll see Bitcoin payments being accepted everywhere soon. Yeah. I mean, the next one, the next payment processor that should accept really would be square. They've got such a large customer base.

Yeah. Okay, so that's it for this week, I guess. It's kind of a short show we're doing. We're recording kind of late. We usually record on Sunday mornings, but we're recording late on Sunday night, so we're going to cut this one short, and plus there's not much news this week. Yeah, no, so thanks so much for listening. Yeah, I just wanted to point out that we're going to be releasing a lot of content.

I hope you guys listen to the Room 77 episode as much. and enjoyed it as much as we enjoyed recording it and also listening to it. And we'll be releasing all of the content from the conference within, we'll start releasing it this week. Probably we'll release one by Wednesday or something like that. And how many episodes are we doing, Brian, five? Yeah, five, maybe six, something like that, yeah. And so that'll show up in the feed.

along with the regular episodes we do every week. Yeah, so thanks so much for listening. If you'd like to sign up for a newsletter, please go to eBicentadcom slash newsletter, send out every Friday with kind of an analysis of what's been going on. We also, of course, appreciate donations to support the show so you can do that on eBitcentobitcoin.com slash tips. Yeah, I mean, how many,

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