LETS TALK BITCOIN

Episode 130 The Other Shoe

Participants:

Adam B. Levine (ABL) Host
John - Bitwage.co, a payroll solution for bitcoin employers.
JC (JC) - Bitwage.co, a payroll solution for bitcoin employers.
Marc Hochstein (MH) - editor-in-chief of American Banker
Rob Banagale (RB) - CEO of gli.ph, a secure messaging app with Bitcoin baked in

Today is the July 26
th
2014 and this is Episode130.
This program is intended for informational and educational purposes only. Cryptocurrency is
a new field of study. Consult your local futurist, lawyer and investment advisor before
making any decisions whatsoever for yourself.

ABL: Welcome to Lets Talk Bitcoin, a twice weekly show about the ideas, people and projects
building the digital economy and the future of money. My name is Adam B. Levine and today
were all over the place. Recently, I spoke with Mark Hochstein, editor-in-chief over at
American Banker, we talk their upcoming conference and the proposed New York regulations,
their analogs, upsides and some possible equal and opposite reactions. Then, I caught up with
Robin Banagale, CEO of gli.ph, for whats become our twice yearly sit down, we talk life as a
startup, the rise and fall of the Apple-bitcoin ban and the next generation of gli.ph, an
encrypted messaging app with bitcoin integration built right in. But first, as bitcoin becomes
more normal, more normal things kind of just have to happen. Recently, I spoke with the guys
over at Bitwage.co, a new startup aimed at making it easy to get paid in bitcoin.
ABL: Today on Lets Talk Bitcoin were joined by John and JC, the founders over at Bitwage. Hey
guys, howre you doing?
John: Good, thanks for having us.
JC: Yea, doing well, Thank you.
ABL: Tell me about Bitwage, were starting to get near hiring people and we have hired people
in the past, thats been kind of difficult thing for us, your services is kind of interesting.
John: We do Bitcoin payroll, so our goal is to make it easy for you to pay your employees in
bitcoin and in general, just to payroll easier than it has been able to do before.
JC: Right now we are about to come out with our first release, after release, sort of designed for
startups in mind, we made the process just so, an employer can easily get all preferences of
other employees, click a button to do the payments for all of them and we figure out all the rest
for you guys. We are going to be developing this platform to get more and more complicated.
At first, we are just working on a 1099 basis, working with workers who are doing 1099s or if
you are working with W2 employees, you would wanna do your payroll tax calculation
somewhere else, before using us, but we are planning on implementing more features come
your end.
ABL: Tell me about the type of user that would find your service to be useful.
John: Right now, we are getting a lot of interest from Bitcoin startups for one and also
traditional companies that wanna pay workers internationally. At the time theres demand for
developers, but also other types of jobs and the people are located in other countries like
London or Argentina or Hong Kong and that challenges paying them easily, and so with bitcoin,
now theyre exploring, paying their workers through bitcoin, so our platform is basically gonna
make that easier, so that you dont have to send like PGP encrypted emails or something with
your wallets, you dont have to do I guess other challenges related to doing that process.
JC: On this international worker project, right now were enabling the payments of bitcoin to
your international workers, but we are actually, right now working on, building the
relationships that will pay us in US dollars or bitcoins or pay us in their fiat currency in bitcoins
and they want pay their international employees and well send it on the other side, either as
bitcoins or their fiat currency. Right now there is sort of a lot of headache caused to business
owners, who are paying international worker, especially in the US and they have to go through
several loops, sending money through the banking system, which means that it has to go
through several different banks, which each take their own cut and at the end they have to,
convert that into the employees fiat currency, so a lot of money gets taken out of the process.
We talked with like a Bolivian company a while back and they said that, through this process
when they are paying international worker, the payment is reduced by 30% and so what we are
sort of planning on doing is, we are going to use bitcoin technology, as sort of the method by
which we convert fiat currency of the employer into bitcoin, send that out to some exchange on
the other side, turn that into a fiat currency, so on the other side, the worker could pick it up.
Thereby exposing a new class of people, new audience to bitcoins without them even knowing
too much about it or have usage.
ABL: Lets say, right now, I am a Bitcoin company and I want to legally pay somebody a payroll,
thats the primary service that youre providing, right? Its not, I am somebody who is in the
conventional sector and is dealing with US dollars normally, but I would like to convert some of
that into bitcoin and pay it to my employees, be they want to percentage, so it sounds like you
have a lot of use cases that youre looking at expanding into, the core one that youre offering
right now, as you said is just the 1099s service, so that is basically anybody who has a
contractor or anybody who is paid as a contractor, they effectively can use your service, right?
John: Yes, exactly.
ABL: Do you work with the employer or the employee??
John: We work with the employer, employer comes in and they create an account and then
they can add employees and then employees get an email, to get into the service, but as an
employee you can have multiple employers, especially if you are a contractor and as an
employer, obviously you can have multiple employees, if you want to do payroll, you would add
in the employees for that payroll and then you put in the amounts and then, we already know
their wallet, because theyll feed it in and they just click send and you just send us, on the back
backside. Right now, I think its gonna be wire, although we may also be able to do a stage for,
that you would send it via one of those two methods to us, to our bank and then we would
send it all out with bitcoin, as wanted by the employees and employer.
ABL: What stage is BitWage at this point, sounds like you guys are fairly early in the process, are
you hiring, are you looking for capital?
John: Yes, we are ready for the launch in around 20 days, but we have around, I guess 3,4,5
employees, but 3 of them are full-time and then we have some people helping, I guess more
part-time and yea, as far as funding, we are currently self-funded, were seeking around later in
the year. Especially, going from the 1099s service towards the, I guess what you called W-2 or
tax calculation withholding service.
JC: And also in terms of our early-stage product thats coming out on the 21
st
, initially what
well be offering, you send us an amount in bitcoins or dollars, and we send bitcoins out to the
1099 employees, but very, very shortly afterwards, think within weeks, we will be able to offer
accepting the bitcoins and then the sending out of bitcoins and US dollars based on that.
ABL: Well, very cool guys, so if somebody wants to learn more or wants to get involved, where
should they go.
John: Our website bitwage.co, they can email us info@bitwage.co or beta@bitwage.co.

ABL: Today on Lets Talk Bitcoin, were joined by Marc Hochstein, editor-in-chief over at
American Banker. Mark, how are you?
MH: Doing good, Adam.
ABL: Weve seen some interesting news come out of New York, recently and Ive been talking
with a couple people about it, I kind of want to get your perspective, because you have an
interesting viewpoint here, weve seen the first versions of the BitLicense proposal and from my
perspective it seems pretty draconian. Im curious for your, kind of initial reaction; we havent
had much time to process this, so maybe you dont have too much. What do you think about
this generally?
MH: I was a little surprised by some of it as well, I havent had as much time as I would like to
study the proposal and I am gonna be doing that in the next couple days. One thing I do think is
important to keep in mind, is that it is a proposal at this point. The Department of Financial
Service is soliciting public feedback, Ben Lawsky actually went on reddit of all places to sort of
put the proposal out there and ask for feedback from the cryptocurrency community, now that
doesnt guarantee you that its gonna get revised, but its not set in stone just yet. Thats one
important point, one optimistic reading of it from the perspective of the cryptocurrency
community is that, perhaps he is throwing all these things out there, not all of which he, might
necessarily expect to be in the finalized version. If he can point to really getting the negative
feedback and that gives a regular perhaps a little bit covered to say, a public input indicating
this should be a counterproductive measure and so weve modified this part of the proposal.
Thats a possibility, now I do know that some people are upset, but its, I think its only a 45 day
comment period, something along those lines. The records of all parties to a transaction, thats
what I keep reading is a real issue, both parties to every transaction and particularly thats
gonna cover apparently wallet providers, right?
ABL: Right, its very, very broad, I mean the best analogy that I can apply is, this is like looking at
every website on the internet in the early 90s as if, every website is a business right. From the
prospective of an outside regulator, it actually kind of looks like that because they have
vendors, which are bandwidth providers, they have infrastructure: servers, they customers :
users, but of course they dont really operate like that, a user isnt really a customer in the same
sense. But, of course we actually have a solution for that too. You could be a non-profit
business, so kind of what I see this as, is this is like, the New York regulator has said, All
websites are businesses and all businesses must have a New York business license and
permission if they're going operate in New York and so again the downside about that, of
course is that not all websites really are businesses and that's kind of what I seek here is that,
not all tokens are money and yet the standards of money and the behaviors of money and the
regulation of money are basically being applied to them, because we just have this incredibly
broad and general view, that's frankly wrong about a lot of things.
MH: I have always thought that, it might have been better, if instead of calling it Bitcoin, Satoshi
Nakamoto had called his invention Disc ledger, which unfortunately is not as catching, but it
gets a cause the concept of it a little bit more accurate. You think about a company like
Blockchain, which doesn't handle fiat at all, they just basically store your bitcoins for you, they
dont spent it, in an accurate way of saying, its just purely operate on bitcoin. My
understanding is that, they would be subject to this, if they have customers in New York.
Blockchain is one of the places where you can set up a wallet, without giving your name or
addresses or other personal identifying details, which I think is fine, obviously anonymity is a
dirty word in the world that I live in it right now. That would be overreach I think to, its one
thing to say like in the stringent guidelines, if the exchange in fiat currency for digital currency,
that are some KYC, AML requirements, I think weve all sort of adjusted to that, over the last
year and a half, that's the reality, saying that the exchanger has to keep records in case they get
screened by law enforcement, thats one thing, but to say that a wallet provider is subjected to
these things, if theyre only storing the digital tokens for you, that's a bit of a stretch of what we
are used to. Theoretically Blockchain, if they were concerned about this, about been subject
and I dont mean to single them out, I just think of them because they are successful company
in this space, that hasnt had any issues to date.
ABL: Putting on my wide-eyed a libertarian stance. This really, really seems that, it is trying to
raise the barrier to entry in New York and essentially that this is the status quo as it were
insulating itself from competition and essentially creating a firewall around New York where if
you have the money and the permission and the connections in order to get that license, you
probably could make a good business, actually enabling other people who don't want to jump
through hoop. The LTBcoin rewards program that we do, this is basically a non-monetary thing,
we give it to people for free, based on reading articles and listening show and things like that. If
the choice is for us, do we have to pay even $10,000 in compliance and licensing costs or do we
just simply block New York IP addresses from using that portion of our offering, than it seems
pretty obvious to me which one we are gonna pick. Is there more to this then, just let's own it
all, let's create a ring Wall and try to just control New York, since it's hard to control this thing in
other areas.
MH: We cant read regulators mind, I mean a lot of regulation inside and outside the financial
sector does, certainly have that affect, quite possibly in many cases that intent and it certainly
will have that effect in this case. And that came up during the hearings too, theres a lot of
discussion among some of the more sophisticated panelist that was, they were talking about,
why cant you do this on all around, company that can't really afford some of that compliances
at startup cost, but as they acquire customers and they cross some threshold, may be subject
them then to licensing requirements, but don't just mix them in the buff. It would certainly
have that effect, whether or not that's the intent, thats a good point you made about IP
addresses too, I was talking about Blockchain. Blockchain could, in theory, they didnt want to
be subject to the long arm of New York, and they could just block any IP addresses that are in
New York. Suppose you could get around that, through a custom division, to get around that
using a VPN or maybe Tor. Can you tell someone is using a Tor or VPN?
ABL: No, essentially well, it sort of doesnt matter from my prospective. What we can do is, we
can make a best effort and do everything in our power to actually stop this and it will stop the
majority of users, from using these features, because most users arent gonna jump through
those hoops for something like what we are talking. Thats the path of least resistance as I see
it, I understand the urge to look at these things like money, but it really does come back to that
All websites are not businesses and all tokens are not money.
MH: The other thing is that theres money and then theres MONEY, when they are handling
small amounts, its not the same thing as a bank. Its one thing, if you are holding money for
someone and you are holding their life savings and thats all they have, thats money in the
bank. Its one thing to subject that kind of institution to a high standard, but if someones .. I
think careful bitcoin users will hold only small amounts with the third party anyway. Best
practice as I have learned from listening to your show and from other sources is put your
saving, if you have into a paper wallet or some form of cold storage, a wallet from service like
Coinbase or Blockchain, you wouldnt put all your bitcoins in there, any more then you walk
around the street with your lifesavings, right?
ABL: Right.
MH: So, now requiring a 100% reserve, I know theres been some negative reaction to that in
some corners, I actually dont even think its such a bad, I mean thats standard for money
transactors, in general. I think if you tell your customers, you are holding 10 bitcoins that they
have, you should actually have 10 bitcoin, you are ready to produce whenever they want to
take them out, and that part isnt as bad. I think a lot of the record keeping requirements that
have come under a lot of negative reaction, those are little bit more problematic, because
again I have to read the document itself that, I am at this post by Patrick Merck. Patrick Merck
from the bitcoin foundation put up on bitcointalk saying it require names, account numbers and
physical addresses for both parties to able to do transaction, infeasible in fact for any wallet
provider, further in fact that they have to pass through a multi-party in it and hes got a fair
point about the practicality and then theres also this the privacy quest and I think this is comes
back this whole feeling of worlds collide right, because we have a financial services industry
and anonymity is a bad way, where anti-money-laundering laws and suspicious activity reports
have been the norm for closed to a generation. Its sort of taken as a given that you live in the
fish fall these days, as far as the right to your financial life. On the other hand in the Bitcoin
world, we know that bitcoin is not fully incorporated in this, but that was one of the early
selling points, that its going to be the privacy that it gave you. On the one hand you have Dark
Wallet and he is in zero coin and he efforts to nearly make digital money a lot more cash, in the
idea thats untraceable and that really is counter to, increasing, just to the expectations that
regulators have or the financial institution in general. I think that law specks to his credit seems
during the BitLicense hearings to have a somewhat more new laws taken, then the regulators
would have. I interviewed him, I brought up the issue of privacy and he admitted that it would
be nice for people who are shopping on Amazon or whatever to have a way to make purchases
online without exposing their information in such a way that they are gonna get spammed by
marketers for example. The phrase that he used in that interview that always comes back is, as
long as someone knows who you are, I guess thats it.
ABL: Thats an interesting points, let me ask you this, you talked about the dark market side and
the areas that are pushing on anonymity, it seems to me that the incentives being set up by a
system like this, because as Patrick Merck said, as you mentioned, its kind of infeasible the
amount of compliance and reporting that they are asking for, given the way this system works
is kind of incompatible and so bitcoin and all these cryptocurrencies are open source. Doesnt it
make sense if this is gonna be the rule in a decent sized market like New York, that were simply
gonna start seeing crypto currencies that do comply with these, that are like these hybrid things
that have the desirable features, but dont have the features that make it difficult to work with.
MH: Its definitely possible, its so in other words like altcoins or corporate coins, just like that.
ABL: Right, just like compliance coins, is really what Im thinking, is coins where, seriously go
down the list of the compliance of what they actually want you to do in order to qualify for this,
you just associate names and Social Security numbers on the backend, so that somebody knows
but its not public, I mean like it could totally be done and now it really feels like, this is a big
enough incentive, if this goes through and is in change substantial. Thats the other thing of
course is that, youre probably right is gonna be walked back, a good amount on, as far as these
proposed BitLicense are concerned, by the time they actually hit law, but they still are going to
be meaningful and they will still be in, so by starting at this extreme point you give yourself a lot
of room to kind of negotiate and walk back to a middle point, that still what you wanted it
anyways.
MH: One could get comfortable as civil libertarian gets the idea of as long as someone knows
who you are in this sense that, but you have to trust that someone, to respect your
confidentiality, except when its really necessary to that they compromise, but right now all
that really would take, if the regular law enforcement wanted to know who is the customer,
who is the person that control this address. I suppose thats not as good as a warrant, right? By
the way when I say warrant I would let you know, it would nicer to have a warrant, it would be
even nicer to be a warrant signed in an actually, like a real court, not the physo court, right, not
some shadowy cat fast tribunal, but we have the third party document. The third party
document is the legal concept that says that records that are, first stored into the third party
have no reasonable expectation of privacy and I believe that actually originated in the bank is
case that in late 70s or 80s. Thats why we have money this anti-money-laundering regime to
start with. Thats why banks are expected to the file suspicious activity reports, on their
customers, without telling that customer. Suspicious is a sort of subjective technically, I was
having a conversation with a former regulator, a couple of weeks ago, I asked him Whats the
penalty for filling too many SARS and he kind of laughed, he said There is none and there is
this practice known as defensive filing better to be safe than sorry and file a SAR and then have
someone come back to you later on, then say why didnt you file the SAR when this happened.
ABL: SAR is the suspicious activity report.
MH: Yes, suspicious activity report, they are being kept in a database somewhere in
Washington, I dont even know if they ever got purged, its actually a good question to look
into, they could be sitting there for long time, very personal details about the bank customers
transaction. There are bad people in this world and there are dangers people in this world, I
dont deny that, aside from the privacy quests, its a cost, its a big cost for this financial
institutions, they have to keep the records, they have to all this, due diligence, we all pay for
that indirectly one way or the other. Its gonna have to be worked out one way or the other,
but increasing the expectation of financial institutions is to, kind of be even more and more like
cops and I think that, the Operation Chokepoint is a good example in that. Operation
Chokepoint, an important thing to distinguish between what its trying to do and affect its had,
they talk about it as a way to stop fraudsters. Some of these businesses are and there are
fraudulent businesses and a lot of them services. Fair enough let try to stop fraud, but its
sort of been associated with this document from FDIC from 2011 that was included in the
Operation Chokepoint PowerPoint presentation that the Jay put together. When, you hear
about chronograph being on this list of risky industries and lifetime guarantees and all those
things, thats all from that. That list actually predates Operation Chokepoint by several years
and its from this memo that the FDI seek it out in 2011, it did not say dont do business with
these industries, but it did say that these are high-risk industries that you have to be extra
careful about doing business with. I think that list being reproduced in the context of Operation
Chokepoint has really made a lot banks to decide, you know what I dont even want to have
anything to do with some of these industries, so thats why, you see these reports about people
working in these industries have their personal accounts blocked, not just business account but
their personal accounts. We have heard about some of these stories, recorded, someone said
hundreds, I dont think thats true, but I think there were handful people who work with that
industry around the same time reported that their bank accounts have been closed, unilaterally
by the banks with no explanation or with conflicting explanation based on who they talked to,
its why they been that as a result, Operation Chokepoint, again I dont think anyone is actually
telling about you cant do, you have to close accounts, no ones formally said that, but I think
that some of these banks are just, decided anything that has any taint of risk or if they think
that account gonna require extra work, just to monitor the risk, its not worth the risk and
return profile, if that makes any sense.
ABL: Right, that definitely makes sense, and again thats really what it is, is that while this is
small they're just isnt a reason, since the compliance, the burden in so much and this is true
not just in bitcoin, its true of really anything, any anything that isnt actually a large portion of
the business, but puts the whole business at risk, is not necessarily a good decision, but its just
unfortunate that, thats kind of the environment thatll be exist right now. On Tuesday the 29
th
,
you actually are putting on, American Bankers putting on a conference in New York on digital
currencies talking about these exact issues.
MH: Its an interesting mix of people, the one of the speakers is going to be Lester Joseph, who
is the head of AML compliance at Wells Fargo and I was very excited that he has agreed to
speak, he is gonna be one of them. On the requisite regulatory panel are some of the other
people who used to seeing that type of
ABL: What type of user would be going to this particular conference?
MH: Anyones welcome to attend, but this is really aimed at hardcore audience, people who
read American Banker and printed source, who are curious about cryptocurrency, curious about
the new digital money, they have missed the flight by it, and they want to get handle on. This is
our companys first event in this space, we set pretty modest goals for it, I think we are looking
to get about somewhere between 50 and a 100 attendees, which is just to kind of a toe in the
water and see what kind of demand is, we got at least as many people as we conservatively
estimated we would get. Its just really to explains it and explain why this stuff matters and how
this could overtime affect their business and that the opportunity are. Obviously regulation
thing is worry in this, we had a just a regular typical banking conference out in LA, a few weeks
ago, may be even a month ago, I did a panel that is just on cryptocurrency based, a lot people
who work at banks said, wed like to back some of these startups, but we arent gonna have
compliance people comfortable with. They really feel like there is recently a mandate for them
to kind of stick their nose into others transactions, they not only want to know your customer,
they want to know your customers customer. I am curious as to what the Wells Fargo guys
gonna say at the show, because I think we know that a months ago they had this top meeting of
sort of, with cryptocurrency community, I think they had one in the California and one in New
York, where they just invited people from the industry to speak and they were just listening to
them, what does it sounds like, they didnt commit one way or the other, so are they gonna
willing to do this, so in fact they are showing up is interesting. And I am very curious about
what hes gonna say about what he learned.
ABL: Yea, absolutely, so Im looking at the lineup and I see Jeremy Allaire doing the keynote,
and I see Chris Larson giving a talk about foreign exchange, the internet archive federal credit
union, so this looks like a combination of regulation, also theres lot of VC mixed in here to.
HM: Although when you scroll down to the bottom, the finales, so to speak, Charlie Shrem
reached out and I was very happy to have him as far as part of the agenda as well. The title of
his talk is going to be Bitcoin Pitfalls and how to avoid them. Charlie Shrem as you know is no
longer under house arrest, its cool that hes been doing some work up there as a business
development consultant for Payza, which is a payment I think they are based on. , but they
are interested in bitcoin space, so hes been able to do some work for them, so I mean its good
, hes been able to rebuild to through all the troubles hes been through.
ABL: Doesnt seem kind of the guy to stay down.
HM: I think its good to have that voice in the mix as well, one of the early adopters, one of the
earliest entrepreneurs, someone who is a lot more beloved in the community then say Jeremy
Allaire, to say nothing of the others.
ABL: Somebody is interested in picking up a ticket and attending the event, where should they
go?
HM: You go to Americanbanker.com/conferences/digitalcurrencies, so
Americanbanker.com/conferences/digitalcurrencies that should take you to sign up page
ABL: Ok! Before we close up this interview, Mark we have been talking now, we havent talked
recently, but we have talking for about a year, I am curious what really stands out to the thing
that is different now, then when we start taking about this a year ago?
HM: People take it a lot more seriously, I think thats a good thing I went from being the crack
entrepreneur , who talks about bitcoin, people would laugh, roll their eyes and make jokes and
.. I wouldnt say that its main stream any more, but its defiantly taken a lot more seriously. If
you asked me a year ago, American Banker would be doing a cryptocurrency conference, I
wouldnt have said yes, Im surprised that its made this fast as it has and Im surprised that its
gained some of the acceptance that it has. Even though when Ben Lawsky talks about it, he
recognize a lot of the merits of this technology, so i think he understands that, some things that
the digital currency is capable of, that is not being provided by the status quo.
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ABL: Today on Lets Talk Bitcoin were joined by Rob Banagale, founder and CEO over at Gli.ph,
a secure encrypted messaging application available on the IOS devices, android devices and a
couple of other things, right. Hey Rob, howre you doing?
RB: Hey, I am doing well, how are you doing Adam?
ABL: Its been a while since we have caught up, I think that we have done more interviews with
you on the show, than actually anybody else, this is our third. We have done them, just about
every six months, right?
RB: I think thats just because we are so old schooled, because we are belong in any tooth and
its class.
ABL: Gli.ph is a secure messaging app, that was one of the first ones to build in bitcoin support
and then it didnt have bitcoin support for a while, what happened?
RB: Yeah, well so thats right, so Gli.ph was the first to really integrate with Coinbase and
Blockchain and combine the ability to use web wallet with this ability, easy way to send bitcoin,
which is to avoid using wallet addresses directly and instead think about the person youre
sending bitcoin to, the amount and why, instead of messing with the technical details and so
we kind of built this really awesome solution for that, specifically on both Android and iPhone
and what happened was, around Thanksgiving of last year, we got this phone call from
Cupertino and they basically asked for us to please remove the ability to send bitcoin in the
app.
ABL: So
RB: It caused the fair amount of controversy actually, because everybody was looking to see
bitcoin becoming more mainstream and obviously Apple is a important factor for a lot of people
in their day-to-day use of computers, they use iPhones and iPads and to not be able to use
bitcoin on that platform was a really big bummer for a lot of people, that really, that became a
bigger story, when we published a blog entry. We published a blog entry that outlined the
current practices of Google play and the app store and what they were allowing in and in
addition to that we published our letter to Apple, which was unusual, no one else was willing to
do that in the bitcoin ecosystem, we think it actually ended up being quite effective in helping
change Apples mind and thats kind of exciting part was that, very recently I think about 5-6
weeks ago, with the introduction of IOS eight, they released the announcement of it, at WWDC
for not only added language to handle virtual currencies and app store rules, but soon after we
started seeing the very first submissions that included bitcoin startups getting allowed through
about. And today, the day that this podcast is airing, Gli.ph is returning to the app store with
bitcoin sending.
ABL: You said that most people didnt want to publish their letters, and again this is because
Apple basically just kind of has control and so even if its not really against the rules to
necessarily do stuff, you dont want to do things that make them mad, because they might not
let your user service.
TB: What they said officially, is in the, i think in the app store review guidelines, is they actually,
specifically say, if you have a rejection or something like that, language they use is that, if you
go running to the press, it wont help things, I think is what they say, something along those
lines and we actually, we didnt go running to the press, but what we did do, was just be very
transparent and very positive about it. I think it was easy for a lot of folks to try to say that
Apple was trying to compete against bitcoin, to suggest that they were going to do their own
payment solution and that bitcoin was interfering with their strategy and so theyre trying to
squash that, which was speculation for sure and I think thats clearly been disproven now and I
felt like it was really important to just be positive to suggest, instead of pointing fingers at
competition, to raise awareness of the fact that Apple as a technology leader and as the
technology giant and also a front runner in innovation in mobile, to be participatory with
bitcoin. To be an enabler of bitcoin and to help foster the creation of bitcoin, particularly
because IOS is such a mainstream device, it is the easy to use, non-techie way to use the
computers on the go, I am really happy with the result.
ABL: Usernames and bitcoin are an ideas that I didnt actually use to get that much and then i
started using it with Gli.ph and there have been a couple of other services that have popped up
and we actually at Lets Talk Bitcoin, in order to do our LTBcoin rewards program, built kind of a
system where users associate a particular bitcoin address with their account and then we can
distribute counterparty blockchain type assets to just those usernames and its all handled back
and of course our system is quite expensive because we are actually making bitcoin
transactions, whereas you are using when we talked about this before, really what youre
sending of bitcoin is more like integration with different types of exchanges and core
merchants, does that right?
RB: Exactly so, it is important to make this experience really easy and so far operating your own
wallet has been mostly, we feel like the domain of more advanced or expert users, hosting your
own wallet is not the kind of thing that youre, a newcomer who is not already a technology
professional is necessary up to and what we are seeing is a lot of these people going to
Coinbase or going to Blockchain and using their web wallets because they dont wanna protect
anything more than their password, they dont wanna handle their private keys or be
responsible for their wallet they just wanna be able to access this stuff. What Gli.ph did was
integrate with those two services, using their API so basically, if you have an account on either
one, you can really easily attach your wallet and what that means is, its your Gli.ph identity,
who you are on Gli.ph is just kind of bitcoin enabled all of a sudden, so anyone else youre
connected to, who is also sort of bitcoin enabled, you can easily handle transaction with and
complete these transactions.
ABL: It Sound to me that the type of user that youre really talking about with this, is one where
youre looking for someone who wants use a transactionally without having to maintain the
infrastructure of their own wallet, so what type of user is this not for? Are there downsides to
the approach that youve taken with this, or there are users who you think, would just be better
off with a full type of wallet?
RB: Yes, certainly I think we are still in the Bitcoiner phase in some respects, in the sense that i
think the most active members of the bitcoin ecosystem today, are people who are technical,
who enjoy cryptography and learning about cryptography, who follow the announcement of
the mining pools, with regard to the 51% concern and pay attention to these types of things, for
those people I think, a lot of them want to hold their private keys, they want to administer their
own wallet, they want to take bitcoin off-line on their own, they dont want that being done,
for example by somebody else on their behalf, even if its being said it being done, they want to
know and for those kind of folks, i think that having your own wallet, operating it from your PC
or even from an app that supports the local wallet is better solution.
ABL: Gli.ph is a chat application, with this type of functionally enabled. I want to send you some
bitcoin, how does this work?
RB: Gli.ph as a secure chat application is pretty simple, once you catch your wallet you, as I
mentioned you have a bitcoin enabled Gli.ph account, you just go to a conversation with
someone, so I could go to my conversation with you on glyph and then Ill just tap the attach
coins button and just like you attach a photo and then you say the amount you wanna send and
hit Send. Its that easy and then you can go to the wallet view and see the transactions pending,
so we have a, that status of the transaction shown and then once its confirm, youll see
confirmed, thats as easy as gets.
ABL: Since we last spoke about the actual technology, youve rolled out I guess a desktop
version, you show this to me, I guess about two months ago, kind of an early preview version
and I havent had too much of a chance to take a look at the one you sent me last night, can
you kind of tell us what types of features are we looking at, that have been integrated or whats
different about the software base now, than it was six months ago?
RB: It is a way stronger platforms, so like the back end, the things that make Gli.ph tick are just,
weve really strengthen the technologies, so we can do a lot more cool stuff with the Gli.ph
platform, thats not something youll see, but the main thing that you just mentioned thats
desktop web app, you definitely saw a very early version of it, two month ago, but the one that
we are releasing today, so I mean the date air of this podcast is a brand-new desktop web
application, basically hardly anyone has seen this thing before. Using your browser on any
computer, or your tablet, you can access this really killer interface for connecting with other
Gli.ph users, holding secure conversation and we have introduced group messaging so secured
group messaging. Something weve gotten feedback about, was people who use glyph
professionally, so we have like lawyers, even some human rights workers who use Gli.ph to
communicate, is it that, they are doing it throughout the day and they are not just doing it from
their phone, they are using Gli.ph from their computer and so previously we only had this kind
of little mobile web, it wasnt very awesome, but this new desktop web application is just really
cool. I think it also makes the use of bitcoin the attaching of your wallet to the bitcoin platform,
like more visual and easier to understand for a lot of people, so thats pretty neat. Also, today
were releasing a major update to the Android, so Ive actually got a message from somebody
on the support glyph, asking if the Android app was like, really just kind of being marginalized
compared to the iPhone app and what was the story there and frankly, it is challenging as a
start-up, I think to support so many different clients, its very hard but weve managed to
update the android app with this release, so it is actually, basically at parity with the iPhone
app, so really great functionality it has, you can set profile photos in it, you can have secure
group conversations, create groups and you can obviously send bitcoin, as you previously could,
but now weve also added the QR code scanner to the Android app as well, so really fully
featured on iOS and android and then we have got this killer new desktop web application.
ABL: Tell me about be a desktop web application, because one of the things that I found myself
over the last six months I guess, doing a lot of, is participating in Skype group text chats, these
are text chats that are generally topic specific for a project or another and they can be quite
large and they have become kind of the primary way it seems, like a lot of the more innovative
projects are communicating and organizing people, so Ive, Skype isnt an ideal platform to do
anything like that. I am curious you know is this something, that you think could be used with
the desktop app.
RB: Yea, absolutely so Skype replacement for Skype group messaging has some advantages
over Skype, for example like we have really strong feelings about offering data privacy on Gli.ph
and part of that privacy aspect of our platform is that, we allow anybody to delete a message
they send with another user and in group conversations, the admin can delete or clear the
entire conversation and it removes messages from the server and from all the other clients as
well, who are participate, these are permanently deleted and so allows for really strong degree
of privacy, particularly if youre having business discussions and this is not the kind of thing you
get on Skype unfortunately, you may be able to delete something locally, so it doesnt show to
you anymore, but you cant recall or otherwise kind of alter messaging on the other person
side.
ABL: Is there a maximum size limit, to the size of one these group text chats?
RB: We havent hit it yet, I would be curious to find out if ..
ABL: There might be a technical limit, but you actually have, youve never scale at that large?
RB: Weve never had a conversation that big yet.
ABL: What about the security? Can you talk a little bit about the encryption and how that
works? Can the platform see first off and secondly in the type of group environment, how
exactly does that work?
RB: These are very foundational aspects of what Gli.ph is, is that we offer privacy and we offer
data security. This is a really hot topic and its good to elaborate a little bit on how this works.
First of all, what can Gli.ph see? The app encrypts everything between the users, the server
manages the private keys, so thats important to note, on the other hand Gli.ph does offer
something similar to what Lawabit offered, which is the ability to turn of password reset and
weve done that, your communication and your personal data is encrypted, using a key
generated your password and so if you lose your password, we cannot recover your account for
you, you cant, theres no password reset capability. Thats important to note, that a feature we
call lockdown privacy, and we have that for a while now, that works still in the group
messaging, the key is for each person, participating in the group to have lockdown enabled or
to have turned off password reset, so long as the case no one other than you and your group
members and their passwords can read those messages. Now we obviously dont read, just
because you dont have lockdown enabled, doesnt mean that we are viewing or have direct
access in any way to looking at peoples conversations and as a policy which we have written
down, our privacy policy, We do not do that, so thats a really clear thing, that we make clear,
we dont have interest in that and its just not, we wouldnt want that for ourselves and so we
dont operate something that would do that.
ABL: Following the Lawabit example, I do have a question. We live in kind of a weird world right
now, where rules are sort of odd and sometimes you can get a letter from somebody that
youre not legally allowed to tell anybody about, so since the kind of Lawabit, we cant talk
about this thing happened, we have seen some companies that have this sort of privacy
concerned use, what are called Augusta, its a Canary something, basically the idea is that you
publish a piece of information that, if you ever did receive something that would compromise
the security you would not be able to say anymore, basically and so you its more like a
disclosure by omission, so youre not technically breaking the rules, I mean like do you guys
have any policies like that, in place or is this even a concern for you? Would you have access, if
somebody like the NSA wanted this information?
RB: Well there is not just about a security enforcement agency of some type, its also about
hackers, because if a service is to become compromised, its important that the database itself
protected and so its really not just about a Cepena here, its about any third party, who might
gain access to the system, so thats just to outline that, thats why security is in place. The
Canary think you mentioned, Ive heard feedback on and I have seen some services have done
that, when have considered it, we havent done it yet, really mostly my reasoning and the
reason is because, if you screw that up and you dont tweet at the right time, not because, you
got an actual request or something along those lines, but because either your system didnt
automatically do, what its suppose to or you dismiss that reminder or something you could,
accidentally, basically suggested that theres been an issue and I can do it and thats I think,
thats probably more likely and dangerous right now, for falsely alarm, people who use Gli.ph
then to offer this, but I can say as Canary right now, is that we had not, had any of those types
of requests, thats really positive.
ABL: Well, another use for these interviews then, so on the desktop client, so weve got group
chat now and you have the ability to use bitcoin again.
RB: Gli.ph is essentially now, probably the best way to use bitcoin on iOS, if use either Coinbase
or Blockchain, its essentially kind of like a Swiss Army Knife now, because you can send to QR
now and you can send, its the easiest way to send back and forth, so I wanted to mentioned
that, make sure that people realize that, if you trying to get somebody going on bitcoin, Gli.ph is
an incredible way to do for sure. Hopefully the thrust of this, I think, its just a more fun and
easier to use app these days, I think in think episode 47 when we last checked in, we talked a
little bit about the symbol-based usernames that Gli.ph had, we still use this as a way to offer
pseudonymity to our users that are very base level, its part of our privacy, thats built into what
we have done here, but weve also got a lot of feedback, that its kind of hard to always know
who is who in Gli.ph, so we made a lot of attempts to make sure people are having easy way to
identify themselves, that they have the option, a clear option to make a pseudonym or first
name public, so that its easy for other people who are talking with them to see. Oh! Ok thats
Adam, thats not just his Gli.ph I cant remember, in addition to that we added profile photos,
which we encrypt when in their private that just the way we do phone numbers or names, so
you got, like a basically, Ambiently easier to use and more fun service as a result those changes.
I wanted to talk to you about LTBcoin, because Ive been so focused and heads down on the
release, Ive been falling behind on my Lets Talk Bitcoin. It was a really interesting way to get
the coin out and make it a part of the show and to have the, I head the secret word, the special
magic words and as you know I like to do kind of something a little bit fun and different when I
come on your show. I was wondering, if it was possible, if I could potentially say secret word for
the show today.
ABL: Oh! I think that could definitely be arranged, you know me and Rob, we are always looking
to outsource as much of my work as possible.
RB: Maybe be it would be helpful, since use can helpfully for me, to remind people, that if you
take this secret word, I am gonna say and you go to letstalkbitcoin.com and you log into your
account and you can scroll down and enter the secret word and I believe that, then you can
redeem that for LTBcoin, is that correct?
ABL: Thats Correct! What it does is, it gives you essentially a listening credit and we value
listening credits at about five times the rate that we value people visiting like articles on the
site, because they actually having to come back and do this. Rob thats really a good idea, lets
do that.
RB: Now is the time for the awesome secret word segment of Lets Talk Bitcoin and Im very
pleased to bring Gli.ph into it, so here I am thats not the secret word, the secret word is
BUTTERCUP, the secret word is BUTTERCUP.
ABL: BUTTERCUP, one word.
RB: Do you know, I was thinking about this last night Adam, because I was like I got to do that
secret word bit and I was like what will the secret word be and for some reason that reminded
me of this episode of this sitcom from the 90s Urkel from Family Matters?
ABL: Okay!!
RB: There is this episode where Urkel build an atomic bomb, in the basement, theres a secret
word to arm the bomb, hes accidentally down there with this unrequited love Laura and he say
that secret word which is his nickname for her, which is Buttercup and it causes all this, and it
starts to go off, so this actually a reference to Family Matters episode and I had find it on
Google, I could only find like a small reference to this.
ABL: We appreciate certainly; you did the research for this wonderful magic word this time,
Rob.
RB: Go and enter it on the website.
ABL: Well, Rob thanks for being on the show again. People would like to learn more get
involved, I mean where are you guys right now? Youre are into being a funded startup, are you
still hiring, are you just looking for as many users as possible?
RB: We did start our funding round very beginning of early this year and since weve closed our
angel round and weve moved out the product for a lot, since then, for people I think the key is
that to check out the product, I mean go to GLI.PH, try out the desktop web app, if you
Coinbase or Blockchain, try connecting your wallet and sending some bitcoin around. I believe
were really on the very cutting edge of what user experiences, how good it can be to use
bitcoin, so I just appreciate people here from the podcast, who are listening to the podcast, just
check it out, give it a try and give us a feedback. If you really like the work we are doing, we
have like a group of people, we call them advocates, who kind of we give a heads up, theyve
been testing it, I actually should thank all of them, right now, some of them are your listeners,
who have put tons of work into testing iOS, Android and desktop app over the past couple of
months to get it ready for today. You can, if you are really interested, more than welcome to
reach out to me, using the support at Gli.ph or you can send me a note at support@gli.ph and
Id be happy to meet with you, usually few of your listeners will say hello after, each time the
podcast airs, so thats, feel free to say hi, Ill definitely reply to your note.
Credits
Thanks for listening to episode 130 of Lets Talk Bitcoin. Content for todays show was provided
by Adam, Marc, Rob, John, and JC
This episode was edited by Denise Levine.
Music for todays show was provided by Jared Rubens and TheNewTime. Head over to
letstalkbitcoin.com and click the big button at the top marked community to get involved
today.
Thanks for listening and see you there.