Last week, I sat down with Roger Ver for an exclusive, hour-long interview where we discussed his company Blockchain, his team, and his vision for the bitcoin industry.
We first connected after Ver came across a blog post of mine in which I dismissed Blockchain as “too understaffed and undercapitalized” to compete with the likes of Coinbase and Circle, long-term.
The man, who many have started to refer to as “Bitcoin Jesus”, emailed me with some objections and let me know that Blockchain had tripled the size of its team in just over a month while continuing to lead the industry in web traffic, wallet users and bitcoins stored. “By just about any metric, we are the #1 Bitcoin website in the world,” he wrote.
When Ver offered to set the record straight in a one-on-one interview, I gladly accepted.
Ryan Galt: You’re actually the majority owner of Blockchain, not just a seed investor. How did you come to acquire the company from [Blockchain founder] Ben Reeves?
Roger Ver: In late 2011, I started emailing every bitcoin website that had a half-formed business plan, asking if they needed money to expand operations. I was excited about bitcoin and wanted to help grow the ecosystem.
Ben replied because he knew who I was from [my investment in] BitInstant. He needed additional servers, and told me how much he needed. I asked him how much equity would be fair in return for that investment, and when he set the terms, I sent him the money. Then we didn’t really talk for another year or so.
Galt: He was working by himself at that point, and he didn’t even talk to you?
Ver: I was available, but he didn’t need me. One thing that cannot be emphasized strongly enough is how absolutely amazing Ben is. He created the entire website by himself, the iPhone app by himself, the Android app by himself, and up until nine months ago he was also running a service that allowed people to buy bitcoins through wire transfers and cash deposits in the Eurozone.
He was handling all of that, including customer support, by himself. But then, the powers that be in the banking system shut down his personal bank account, his business bank account and his brother’s personal bank account without warning. While he’s an amazing developer, he didn’t want to have to deal with banks and lawyers and regulators. That’s when I got more actively involved.
Galt: What is your role today with Blockchain?
Ver: I still have responsibilities related to some of my other investments, but I am close to full-time at Blockchain now. I’ve been helping with recruiting and lining up advertising partners. There were implementations that Ben had done for free that now account for over $20k per month. And those customers didn’t think twice about paying.
Galt: With Blockchain, everything seems free. BitPay makes money from monthly subscriptions, Coinbase makes fees on its pseudo-exchange, and Circle will likely have a similar model. Does Blockchain make any money outside of ads?
Ver: Right now our goal is to give everything away for free. Later on when the whole market develops a bit more, maybe we’ll start charging for tiered levels of access for data we have about the Bitcoin network. But we are, and will continue to be, a great advertising platform first and foremost.
We’re the #1 bitcoin website on the internet with more eyeballs viewing our website than anyone else. We already have revenues well into the six figures per month, and we are cash flow positive, so we’re in really good position.
Galt: You guys seem radically transparent. Is it good to give away so much?
Ver: I think it’s a good thing that all of our client-side code is open-source. Every once in a while, you’ll see a reddit post like “the Blockchain Chrome extension is now closed-source,” and everyone goes crazy! It’s because Ben forgot to push the latest update to Github.
But all these people complaining about our supposed “closed-source” update, don’t seem to realize that Bitstamp, Coinbase, Mt. Gox and Kraken have been completely closed-source from day one. We’re a contrast to that. It’s part of the philosophy we’re developing at Blockchain: support the community, be open with people and build out Bitcoin.
Galt: How does Blockchain plan to work with regulators? Do you feel you have any responsibility for compliance with anti-money laundering and know your customer laws?
[post-quote]
Ver: We have a world-class legal team working hard to ensure we don’t fall under any of those regulations. The way our wallet is designed means we never have access to anybody’s bitcoins. We don’t have the ability to freeze accounts or block transactions or control anybody’s bitcoins.
As the law is written currently, that means we are not a money transmitter or a money services business. From that standpoint, we’re probably the best bitcoin business out there because we don’t deal with any regulatory craziness.
Galt: You and some of your teammates, especially Andreas Antonopoulos, are outspoken when it comes to the illegitimacy of government regulators. Do you feel bitcoin can be regulated?
Ver: At the end of the day, no, Bitcoin the protocol can’t be regulated. Obviously, men with guns wearing costumes are scary, but a gun can’t change the mathematics behind Bitcoin.
Our goal with Blockchain is to provide the software tools that everyone on the planet can use to send and receive bitcoins to anyone else on the planet without needing permission.
Galt: But without regulations and integration with the financial system, do you think bitcoin can grow to mass scale?
Ver: I do, but it would certainly be a slower process. To be fair, Coinbase and others like them [that offer these regulated services] are incredibly valuable, and offer an easy user interface to buy and sell bitcoins. There’s definitely a need for things like Coinbase in the ecosystem, but at the end of the day I sure wouldn’t store my bitcoins in a system like that.
Galt: Why do you say that?
Ver: At some point, because of the way that systems like Coinbase are designed, it’s just a matter of time before the regulators come in and say “freeze this account” or “undo this transaction”.
At the instant people realize that their bitcoins can be seized or frozen while stored in a Coinbase wallet, they will flock to a service like Blockchain where accounts can’t be frozen. In the long-run, we think that will be the strongest selling point of Blockchain. We can’t help you recover your password, but nobody on the planet can take your bitcoins if you use a secure password and don’t forget it.
The bad case scenario is for an authority to come along and say “give me Roger Ver’s bitcoins”. But the worst case scenario, which is the scary one, is for someone to come along and say “give us everyone’s bitcoins”. That’s a real problem with “off-blockchain” systems like Coinbase. We’re totally “on-blockchain”.
Galt: What do you mean by “off-blockchain” versus “on-blockchain”?
Ver: We think the bitcoin industry will be split into two worlds. You’ll have “on-blockchain” businesses that stay true to the unregulated, decentralized principles of Bitcoin, and “off-blockchain” businesses with fiat business models that must comply with all local regulations as a result.
Apple’s iOS versus Google’s Android is a good analogy: the “walled garden” versus the truly open platform. The iOS ecosystem is closed, tidy, and sanitized. The Android ecosystem is disorganized, self-emergent, and messy. The market has room for both.
We’d compare Coinbase and Circle to Apple and Blockchain to Android. We think following “on-blockchain” principles is the best way to build a bitcoin business.
Galt: Interesting, but this seems like a niche approach. Do you think mainstream consumers would ever opt for an “on-blockchain” model if it meant there was no way to recover passwords, and they were 100% responsible for being their own bank?
Ver: When you say “niche”, I disagree. Think about the “other six billion”. Most people outside of the developed world especially would rather be their own banks than have password recovery options from their local bank.
Galt: After speaking with some of your team, it seems you are all aligned in terms of your core bitcoin philosophy. That said, the team is spread across four continents. How do you manage that?
Ver: Obviously, the key is building a culture and finding people who embrace bitcoin’s openness and decentralization. I think it’s clear Blockchain’s is the wallet design that holds truest to Satoshi’s vision for Bitcoin.
Logistically speaking, we tend to coalesce around one place and travel as a nomadic tribe. We’ve congregated in 12 cities across four continents in the past two months.
Galt: So to wrap up, the billion dollar question: why do you think Blockchain will succeed where others may not?
Ver: We have a first -mover advantage and fundamentally our design is better. Coinbase and Circle will always be at the beck and call of every regulator because those companies control their users’ deposits.
With Blockchain, we don’t have the ability to do anything an authority would ask us to do. That decentralized approach will allow us to continue to dominate the market.
You can read the full interview here.
Ryan Galt is a blogger, entrepreneur and freelance opinion writer for CoinDesk. His opinions do not necessarily reflect CoinDesk’s. You may email him at 2bitidiot@gmail.com, or follow him on twitter @twobitidiot.