“Bitcoin and Fiat Money will be jointly used well into the Future” – Jase Leung, CEO Bitcoinnect
Cointelegraph had the chance to interview Jase Leung, CEO of Bitcoinnect based out of Hong Kong.
Cointelegraph had the chance to interview Jase Leung, CEO of Bitcoinnect based out of Hong Kong. Their two-way Bitcoin ATM is the first machine that provides real-time purchases and sales of digital currencies in the region.
Their Bitcoin vending machines are currently operating in locations across Hong Kong and Macau. And given China’s stance on digital currencies, we were interested in getting a first-hand perspective on how a Bitcoin company maneuvers in such a regulatory gray area and gauging the demand for physical points of exchange in China.
Cointelegraph: Can you tell me about Bitcoinnect and why did you decide to start your company? What do you hope to achieve in the short term?
Jase Leung: Bitcoinnect is a HK-based Limited company established by a group of young entrepreneurs. We believe, without a doubt, that Bitcoin will be the currency of the future. Our company and our machine are named “Bitcoinnect" — Bitcoinnect aims to connect people around the globe through the usage of Bitcoin. The story of creation behind Bitcoinnect is one born out of the difficulty we experienced in getting our first coins.
In the earlier days, when there were not so many online trading platforms and Bitcoin vending kiosks, it was a big hassle to start trading Bitcoin. First, we needed to register a trading account online. Then we had to get the account verified. Finally, we had to deposit fiat to the account via bank.
It took us a week to get the account straightened out. Meanwhile, the Bitcoin price had already doubled. We had lost the investment opportunity because of all the paperwork and time involved in connecting our bank to the traditional online trading platform.
We started Bitcoinnect and engaged in the Bitcoin vending kiosk business because we aimed at physicalizing this online trading platform, putting them onto the street and closer to the people. Bitcoinnect provides an instant, convenient, secure and user-friendly crypto-currency trading platform and experience to the public.
Bitcoinnect cuts through all the red tape and delays associated with online platforms. Furthermore, with Bitcoinnect, everyone can easily buy and sell crypto-currency instantly via our machine - they do not need to wait for few days for the top-up or withdrawal of fiat.
In the short term, we expect to have 20 Bitcoinnect machines deployed in HK and Macau, and are aiming to reach this in our first year.
CT: How do your ATMs stack up against western competitors such as Robocoin and Lamassu?
JL: We are happy to see the growing array of choices of Bitcoin vending kiosks in the market, as it leaves end users and potential operators with different opportunities and introduces healthy competition into the market.
The Bitcoinnect software is highly adaptable, and can easily support additional currencies and services. In addition to Bitcoin, Bitcoinnect also currently supports Litecoin and Dogecoin. More currencies can be added to the machine depending on the market development and infrastructure. Our machine operators can always decide which currencies to be listed in their machines from their management backend. This gives more flexibility to our operators. They can adjust their machines to suit clients' needs in their local markets.
Similar to other machines, Bitcoinnect combines KYC devices and software routines that enable compliance with any possible regulatory requirement that may develop in the future. Operators can implement the fingerprint scanner, EMV card reader, high definition camera and SMS verification system should it be deemed necessary.
Our operators can activate or deactivate any of the KYC devices, through the back end management system, so that they can decide from time to time what level of KYC measures they want and to comply with regulatory requirements in their local jurisdictions.
Bitcoinnect is built on a traditional bank-grade ATM platform. Among other competitors, it has highest bank note capacity for cash deposits and withdrawals. Bitcoinnect can accept 2,200 bank notes and dispense up to 6,800 bank notes. The machine is capable of handling frequent and high volume transactions, without the hassle of replenishing the cash cassettes. All cash is stored behind bank-grade vaults with combination locks. Therefore, our operators can be very confident of the security of the machine and the cash inside.
Furthermore, all Bitcoinnect is managed via a comprehensive backend management system. Operators can remotely manage all their machines and keep track of cash flow and profit at anytime regardless of their physical locations.
CT: Have you experienced any pressure from the government or warnings against installing your BTC ATMs?
JL: We have taken a lot of effort to seek legal advice for running the business. Currently Bitcoinnect does not need any special license to be operated in HK and Macau, save for normal business registration which is needed for all kinds of business.
However, we have taken a proactive approach and communicated with the government authorities to seek their advice on our business. For example, the Monetary Authority of Macau issued a press release on 17 Jun 2014:
"...... [Bitcoin ATM operators are] prohibited from using the words, expressions or any other terms having or implying the idea of operating the business of a credit institution, including “ATM” , in the course of their business; "
In view of the above press release, we thereafter adjusted our machine’s branding to reflect "Bitcoin vending kiosk" instead of "Bitcoin ATM". We always do our best and require our operators to comply with the regulations and legislation in their jurisdictions, if there is any.
CT: How have you adapted to China’s decision to ban all third party processors affected your operations?
JL: It is observed that Bitcoin trading volume in China is perhaps the largest in the world. After China's decision to ban all third party processors, it became more difficult for Bitcoin traders to buy and sell Bitcoin in China. But yet, after all these incidents, the trading volume of Bitcoin in China still continues its surge higher. It suggests that the suppressed demand of Bitcoin in China should be much larger than the current trading volume via online trading platform.
Since trading Bitcoin via Bitcoinnect does not involve any third party processor, we have in fact received quite a number of enquiries from China after the decision of the Chinese government. We are looking forward to having our Bitcoinnect launched in China very soon.
CT: Is there a stark difference between HK and mainland China? Are you planning to expand your operations outside of HK and Macau?
JL: Yes. We do not limit our operation in HK and Macau only.
As we have mentioned, the demand for Bitcoin in China is huge and we believe Bitcoinnect is a great solution to bringing access to Bitcoin to China. There are quite a number of differences between operating in China, HK and Macau. One obvious difference is population distribution. The population in China is more dispersed when compared with HK and Macau, so location planning is vital to ensure that Bitcoinnect can reach sufficient population, as operators' profit is one of our primary concerns.
Also, we have to closely monitor the government policy, both in local and national scope. The legal systems in the Mainland China, Hong Kong and Macau are completely different and independent, so we have to stay alert on those differences when doing business among the three jurisdictions. Logistically, Mainland China has a much stricter and more complicated policy for importing and exporting goods, when compared to Hong Kong and Macau.
CT: As infrastructure support improves and more opportunities arise for the public to exchange and convert fiat and Bitcoin, do you foresee increasing or decreasing demand for physical ATMs?
JL: We are excited to see improved infrastructure for exchanging Bitcoin and fiat currency. We believe more Bitcoin applications will be prevalent in daily life in the near future. In our opinion, Bitcoin and fiat money will be jointly used well into the future, as each of them has their own uniqueness and cannot be replaced by one another in short period of time.
The demand for Bitcoin and fiat exchange will increase, and trading platforms will seek to have more physical locations to enhance their accessibility to cope with the demand. Therefore, we are of the opinion that the demand for the two-way Bitcoin vending kiosks will increase accordingly as well. Given our competitive advantages compared with our competitors, we strongly believe that Bitcoinnect will earn a leading position in the vending kiosk business.