GoCoin CEO Steve Beauregard discusses what exactly are Bitcoins and how the GoCoin payment gateway can help merchants accept Bitcoin and Litecoin payments, while getting paid in USD, EUR, or other currencies.
Jude Belanger: Hi and welcome to Silicon Beach, today we're going to talk about Bitcoin. Bitcoin has been getting a lot of attention lately, they are being looked at by the Senate for regulation, and they're also being watched by Wall Street, so there's a lot of interest in it. It's volatile a little bit, the numbers go up and down so you can play with the global currency and you're not exactly sure where the numbers end up. I'm here with Steve Beauregard the founder and CEO of GoCoin, here on Silicon Beach. So Steve, tell me a little bit about Bitcoin, what you know of it and how you got into this.
Steve Beauregard: Sure! So, first of all, the way you think about Bitcoin is digital cash, so it's the cash of the internet. The interesting thing about it is that it has a lot of the principles of cash, but it also trades a lot like a commodity, like gold, so in many ways it's gonna follow the markets of a commodity, however it does trade like a currency as well.
JB: It's global, so you can buy something in Italy, with Bitcoin online?
SB: That's correct. You can send wallet to wallet payment anywhere you want. You and I can take our wallets out, our mobile phones and send Bitcoin to one another, or you can be around the world and I can do it just as easily, frictionless.
JB: Of the population in the world, how many people are using Bitcoin?
SB: It's still miniscule. I mean the entire distribution of Bitcoin right now is about 11.5 million Bitcoin, and the market cap would be, if you spoke in those terms about 1.5 billion dollars.
JB: Now there's a lot of negative press on this. That drug dealers are using this, that you could lose your money in it, the bubble could burst. It seems to be something that is sensationally tapping the headlines. However, that may not necessarily be exactly true.
SB: Yeah, people like to sell newspapers and love to tell stories, and the scarier it is, the more people read it. You talk about the percentage of people using cash for those kinds of transactions, and it's much higher than with Bitcoin. So actually, by way of a percentage it's much smaller, because it's a public ledger. Everything, every transaction is public, although people say it's anonymous, and sure it's a little bit difficult right now to trace back to an individual, but at some point it's going to be easier and easier to trace that back.
JB: I mean if you're using cash, what's the difference? That's still anonymous as well.
SB: Right, it's just hard for you to physically get your cash from here to Brazil, or to Argentina, or to wherever you wanna get it, whereas you can instantly do that with digital cash.
JB: So what's the process? I go online, I take my money, I go to a coin bank, a Bitcoin bank, I just trade in my money?
SB: Yeah, you have two choices. First of all, you can get a wallet that you store on your own computer, or you can get a hosted wallet with one of the providers, and there's a number of them doing a really nice job. No, if you store it on your own computer, you better safeguard it because it's just like your wallet. If somebody hacks into your computer and hacks your Bitcoin wallet, guess what? They're gone, just like if you leave your wallet on the desk and someone picks it up and walks away, it's gone.
JB: And where does this money come from? The Bitcoin, where does it come from?
SB: So there's a series of mining operations that go on, and anybody can run a mining operation. It's really a matter of getting a computer. It's getting more and more specialized now, used to be you could get a high-end graphics card and download the open source mining software and "boom", you're running a miner. Now, what a miner does, is it's the mint, so as it validates transactions or a series of transactions, it goes through a little proof of work that it has to, to show that it is done in order to mine new Bitcoins. It's almost like a reward, almost like a lottery system. Once one computer comes up with the right answer before the others, it submits it, gets approved and the whole organization says "add that in Blockchain, we all agree, and here's your 25 Bitcoin". That's how Bitcoin comes into circulation.
JB: So there are groups of people out there, like, you take a bank, a big, tall storey building. It's got many, many computers and those are all processing. This basically takes all those computers, chops them up and puts them into the general population with people that want to become miners, right? And these are the people that form this network?
SB: Right, and it's all a peer-to-peer network. So think of it like BitTorrent, or any of these peer-to-peer networks where once those miners are out there and in operation..