Canadian Brick-and-Mortar Store Bitcoin Brains Secures 10-Year, $2.1M Deal with BitNational
According to owner and president Dave Bradley, Bitcoin Brains is perhaps the world’s first full-service, brick-and-mortar Bitcoin store in the world — certainly in Canada.
According to owner and president Dave Bradley, Bitcoin Brains is perhaps the world’s first full-service, brick-and-mortar Bitcoin store in the world — certainly in Canada. The Canadian brokerage services firm and Bitcoin ATM provider BitNational acquired the store’s operations for $2.1 million.
“We secured the deal with a deposit done by multisignature. This kind of application will be huge in the future. We priced out the alternative of having a deposit held in trust by a lawyer, and this option saved us around $6K.”
— Dave Bradley
The acquisition move is immediately important to Western Canada as a whole, since it consolidates Bitcoin ATM ownership under one ambitious provider. This furthers their goal of creating a country-wide Bitcoin ATM network, and positions it as the leader in Western Canada’s Bitcoin services by spanning the cities of Edmonton, Calgary, Vancouver and Richmond
In certain ways, the deal’s future is the future of Canada’s Bitcoin ATM Network. If things go well for BitNational, it could indicate that they will go well for the entire network.
Cointelegraph took some time to talk in depth with Bradley. He shared with us his insights about his company’s beginnings, their experience educating people about Bitcoin, and small but remarkable successes like a hairdresser who cuts her expenses by 70% because of Bitcoin.
Cointelegraph: What can you tell us about the deal?
Dave Bradley: We're pretty excited about it. It’s a 10-year deal valued at $2.1 million. It will see BitNational take over all our brokerage operations in Calgary. The really interesting thing is that we secured the deal with a deposit done by multisignature. This kind of application will be huge in the future. We priced out the alternative of having a deposit held in trust by a lawyer, and this option saved us around $6K.
CT: How did you start Bitcoin Brains?
DB: We basically started off doing brokerage as hobbyists, meeting people from localbitcoins.com at coffee shops or diners. It got to a point where we were doing enough volume that way that we figured it made sense to open a store. That was early 2013. Once we had a store, we decided that it would only make sense to sell mining equipment and get our fingers into anything else relating to Bitcoin that we could. To my knowledge, we were the first full-service, brick-and-mortar Bitcoin store in the world. We officially opened in September 2013. By November 2013, we were selling out of bitcoins every day.
“Gox got away with running a fractional reserve for so long because people are trained not to expect instant access to their funds by the banks.”
CT: That date means you went through the Mt. Gox crash. What can you tell us about that?
DB: Luckily we weren’t directly affected and neither were most of my customers. However, one person I talked to had put in 10K U.S. dollars the last day deposits were being accepted. He was hoping to buy BTC at 130. Greed got the better of him. Gox got away with running a fractional reserve for so long because people are trained not to expect instant access to their funds by the banks.
CT: How many people work at Bitcoin Brains?
DB: Myself and my co-founder Andre Gagnon. We employed a couple other people when we had a bigger store. We’ve also employed international freelancers. Bitcoin will help us close international wage gaps as it opens the world up. When we started this company, I hired a guy in South Africa to make my logo, and it cost about 1/20 of what it would have cost to have a local designer do it. It’s just open markets.
Now everything is integrated to BitNational. They have been running ATMs and a brokerage in Edmonton. Now they are expanding to Vancouver and Calgary with the goal of a national network. We’re excited to be working with them.
CT: Bitcoin Brains also sells mining equipment. Is it good business? Any accidents?
DB: Yes, we sold a ton of mining equipment over the last two years, but we’re selling less and less. We always try to get people who are looking at mining as an investment to compare that choice to just buying the BTC as it’s not really a great money maker for the average home miner these days. You either need free or very cheap power, or free equipment to compete. We haven’t had any accidents personally, but some of our clients burnt out their power supplies either because of their bad quality or insufficient wattage.
“For every high-profile, VC-funded startup out there, I bet there are 100 smaller companies working on just as interesting and innovative things.”
CT: How do you feel about Bitcoin Brains bringing knowledge to the public?
DB: Now that we've made this deal with BitNational and we won't be doing the day-to-day brokerage, education is one area we'd like to focus on a lot more. We are still thinking around some ideas. One restaurant we've spoken with wants to do a “dinner and Bitcoin” night where people can buy a ticket and come learn how Bitcoin will affect them. It’s just getting into the consciousness of lawyers, bankers and other traditional business people. A lot of people have realized that it will be an important part of their industry or world, but aren't yet sure how it will fit in. Most of the time they react uncertain.
We are focusing less and less on mining. We are still available to help anyone who needs some guidance, [whom] we are put in contact with through the BitNational network, but overall we are focusing on consultation and education, and we have a couple other projects on the go that I can't announce yet. The only thing I can really say about one of them is that we want to make it even easier to get bitcoins anywhere in Canada.
CT: What about your local Bitcoin community?
DB: We are pretty entrenched in the Calgary community. We know all the local enthusiasts. The community here is fairly small for a city of its size. This is an oil and gas town and people are pretty conservative sometimes. In Canada overall, it's huge — probably the biggest per-capita community of any country.
Since we aren't running ATMs or doing over-the-counter brokerage anymore, we have a lot more time. One of the things we are working on is how we can help the different brokerages around the country. There are a lot of ways that we can help make things more efficient for people operating existing brokerages, and for anyone wanting to set up a new business we can pretty much give them an out-of-the-box solution.
“The next wave of Bitcoin companies will be focused more on using Bitcoin as a tool to solve real-world problems than simply on pushing adoption.”
CT: What do you think about Canada's Bitcoin market penetration?
DB: Well, I'd say Canada is leading the world in adoption. At least at the consumer level, we have more ATMs than any other country with a fairly small population. At the merchant level, we've haven't seen a ton of brick-and-mortar adoption yet, but I don't think that's what people are really after.
I suppose it's a pretty expensive infrastructure. I think the next year or two will be really important, though. Some countries may set themselves back decades if they over-regulate and stifle all the innovation that's coming from the Bitcoin world right now. For every high-profile, VC-funded startup out there, I bet there are 100 smaller companies working on just as interesting and innovative things.
CT: What can you tell us about Bitcoin’s current and future impact?
DB: The next wave of Bitcoin companies will be focused more on using Bitcoin as a tool to solve real-world problems than simply on pushing adoption. It’s such a useful tool. We are already seeing it. Companies like rebit.ph are making remittance possible at much cheaper rates. Individuals are also using it to solve their problems. I've got one customer who owns a hair salon and can buy supplies from china at about 70% off what he can buy them locally, and the vendor will only take BTC because the risk of chargebacks from overseas is so high for them.
People are finding the opportunities to take the middlemen out the loop, and the next wave of companies will just empower them to do that on a greater scale with more products and services.There will still be middlemen in Bitcoin, but it's more efficient, so fewer middlemen will be needed. In cases where you are the trusted party, it works great.