By Mark Norton: Editor @ BitcoinWarrior.net 08/27/2014
There is always a lot of discussion about what Bitcoin’s ‘killer app’ is going to be and when it’s going to appear on the scene. For the last couple of years, it’s seemed that the Bitcoin space has been full of big ideas and big promises, but little enough has actually appeared. ‘Over-promised and under-delivered’ is the theme for a lot of Bitcoin companies.
This is to be expected, really. The problems that Bitcoin was created to solve are hard, and it’s still in its infancy with a tremendous amount of infrastructure needed to be built. Who can blame the entrepreneurs and developers whose eyes were just a little too wide? (Well, a lot of people, really, but that’s another story). In fact, now is an incredibly exciting period for Bitcoin. It’s that moment just before the technology fully blooms when all things seem possible. Later, it will become a mundane part of our everyday lives; right now, it’s a wonder.
It’s for this reason that I am always excited to find something new and innovative and that just seems to work. I sat down with Matt Branton, the creator of CoinLock and SenderDefender, to find out what he’s doing in the Bitcoin space and to get his opinion on a number of related topics. Enjoy the read:
It seems like you have a pretty serious work history in both tech and finance. What especially interested me is your experience in high-frequency trading which you also wrote about in one of the posts on your blog, Brantonbits.com. There is always a lot of speculation that the big Bitcoin exchanges are being manipulated. What’s your take on the health of the exchanges and how do you think they are going to develop?
Bitcoin exchanges are technically and otherwise many years behind commercial exchange technology in the United States. Even the most advanced exchanges offer little functionality, and we haven’t seen much in the way of options, futures and other derivative contracts.
I personally believe that Bitcoin will be regulated as a commodity in the Unites States and fall under the prevue of the Chicago Mercantile Exchange which will end up buying one of the US exchanges to integrate their technology and absorb the structural components necessary to facilitate Bitcoin trading. This isn’t necessarily a bad thing for Bitcoin and could lead to much higher levels of adoption in industry and finance.
The international scene will continue to be a mixed bag of good and bad actors, but I generally think things will get better. People need to use discretion when investing their money in unknown and unregulated exchanges. Mt. Gox was such an obvious mess; I kept that opinion mostly to myself, but should have been screaming it from the roof tops.
In the same post you explained how arbitrage keeps the price on different exchanges relatively consistent. I understand how that can work in the legacy economy, but I’m far less clear about it in Bitcoin. There are so many challenges to exchanging to fiat, exchanging between currencies, regulatory hassles in the different venues where the exchanges are located, etc. How do you think arbitrage works with Bitcoin?
Arbitrage works exactly the same way everywhere. Price discrepancies between markets are taken advantage of by participants and that leads to price convergence. The major difficulty with Bitcoin trading revolves around fiat related transfer, but in all other ways it is similar to existing forex markets. I’m actually very surprised that we haven’t seen existing local and international forex exchanges (most of which are unregulated) adopt Bitcoin and digital currencies in addition to their fiat pairs.
You also seem to have a lively interest in the altcoins. At Bitcoin Warrior, we agree with Andreas Antonopoulos that Bitcoin has already become big enough that none of the altcoins really have a chance of catching it at this point. What role do you think the altcoins are going to play in cryptocurrency adoption?
Alt coins are all about experimentation with new ideas. I think they will continue to be important in that regard. I also think people will continue to speculate like crazy on them, because gambling is fun. We have on the side lines the most perfect penny stock roulette game ever created. I don’t expect that to go away; the temptation is just too great. I do agree with Andreas though in that the Bitcoin network is now of the scale necessary to support much wider financial operations, and has cemented itself as a long-term player.
You’re from Tampa, Florida. What’s the Bitcoin scene like there?
I’m actually from New York originally, a native of Manhattan. I’ve lived the last few years in Tampa though, and I think I have been instrumental in defining a Bitcoin scene down here. I run one of the local Meetups, and generally try to bring people into the community. That being said, Florida has a number of early cryptocurrency players, including Luke-Jr and Big Vern of Cryptsy fame. There are far more people down here with heavy involvement than one would think.
There was actually a guy arrested for buying drugs with Bitcoin in Tampa. This article from the International Business Times uses that arrest as a chance to claim that Bitcoin facilitates crime. Our own position is that although Bitcoin has and will continue to be used for crime, fiat currency is used in far more criminal enterprises. Even further, Bitcoin will help stem the large-scale crime we see perpetrated by too-big-to-fail banks and governments. Do you know anything about this person’s case and what do you think about the claims that Bitcoin encourages crime?
I am not familiar with Brian. I don’t think he was really a member of the community down here.
Several people have used Bitcoin for illegal purposes, but I think the same thing could be said for any store of value. Realistically there is no currency on earth that has been party to more criminal enterprise than the US Dollar. The idea that a currency or value transfer mechanism encourages crime is absolutely ridiculous and a good example of the type of fear, uncertainty, and doubt that is used to discourage the use of new technologies. I remember similar things being said about the Internet, but now we have integrated it into our daily social interactions.
What was your Bitcoin conversion moment? How did you first get into it and why did you decided to gear your business energies towards it?
I’ve been involved at various levels for years. It’s certainly been on my radar since the very early days. I don’t think I truly understood it until I began reading about the technology and really getting my hands dirty. I focused my energies when I realized that this was the most exciting thing to come out of the technology sector since the Internet itself. I was a little too young to miss the creation of Google and other billion dollar Internet companies; I’m not going to make the same mistake twice.
You’ve created two companies, SenderDefender and CoinLock. SenderDefender is a way for people to encrypt documents in their browsers, store them on your site, and then send a link to anyone they choose to be able to download and view the document. You claim that this is a great way for lawyers, doctors, or anyone dealing in sensitive information to send information. Did I get this description right?
That is pretty much it. SenderDefender is actually a product of Coinlock and was developed afterwards as I tried to commercialize the encrypted file transfer technology. I’ve rolled it into a pretty sweet chrome plugin for Gmail, which your readers can check out here.
CoinLock actually looks to me like it is built on top of the SenderDefender idea. The addition is that the people who store their encrypted files with you get a link that they can then put on their sites. When someone clicks the link, it will take them to a page where they will need to pay with Bitcoin, Litecoin, or Dogecoin in order to download the document. From what I can tell, the buyer pays you, but after you subtract a small fee, you send the proceeds directly on to the author. Correct?
This is exactly how CoinLock works.
What kind of response have you seen for these services?
It’s been decent. CoinLock is one of the only micropayment-for-files services in existence. It is a new take on an old idea: How do you combine content delivery and payment into the same operation. People have been using it, and I think we will see steady growth as digital currency use expands worldwide.
Who do you think will be the people most interested in using your CoinLock service and how can they get started if they’re interested?
It is the fastest way to sell digital content for Bitcoin. It is easy to use, no overhead, no commitment, and low fees. You don’t need a complex e-commerce site; you just drop the generated link on to your blog and you can sell your stuff.
I was actually curious about the name CoinLock itself. It sounds a bit like it might be security or safety deposit service. Why did you settle on that name?
It’s like an encrypted lock box for files. I think I was looking for something that let people know it was digital currency related but also denoted security.
So to wrap up here, I’d like to ask you what you think the one to two year future of Bitcoin is going to be like. Not so much price prediction, but how do you think things are going to develop?
I think we are going to see consumer and business proliferation. Someone (me) is going to create something that really brings this mainstream and dramatically increases the utility of the network. That increase in fundamental utility is going to drive the price higher.
Lastly, when you find yourself talking with someone who only knows Bitcoin from the IBT, what’s your elevator pitch to swing them over?
Bitcoin is a worldwide financial network running on top of the Internet, and it promises to change the way the world conducts business. It democratizes finance such that a billion people who are currently denied access due to fees and friction will one day be able to directly inject capital into the world economy and be a party to global prosperity.