We met Charlie Lee, the inventor of Litecoin, at the 2014 Texas Bitcoin Conference and sat down with him to discuss how Coinbase removes the price volatility for businesses who want to start accepting Bitcoins.
This last part of the interview with Charlie Lee was conducted by myself and the glorious James D’Angelo from the World Bitcoin Network with Leon Fu behind the camera.
Tai Zen: I have some friends that have some dance clubs here in Austin, and they ask me which bitcoin merchant account provider should they use and I recommended to them Coinbase.
One of the concerns business owners have is that if he accepts bitcoins, he doesn’t want to deal with the volatility.
Could you talk a little bit about how you guys absorb or deal with the volatility of bitcoins for businesses?
Charlie Lee: Companies like overstock.com use us. If they don’t want to hold any bitcoin that they receive, we do the instant exchange and make the transfers.
So what happens is someone buys something for $20 and pays them with bitcoins, so Coinbase gets the number of bitcoins and then at the end of the day, we deposit $20 to their bank account.
They don’t hold any bitcoin value to the risk if they don’t want to… They can if they want to.
Tai Zen: But they can have the option to hold the bitcoin if they want to?
Charlie Lee: They have the option to hold the bitcoin if they want to.
They have the option to hold the same percentage. But if they want to, they can offset all the risk.
So to them it’s almost a no-brainer. They get zero fraud risk; the only risk is they have to trust us.
So, if Coinbase goes out of business, they might lose one day of sales, if we lost all the money and were bankrupt, for example. But we’re not.
Tai Zen: I see that you guys seem to be growing because I looked at your company charts and the number of users are increasing.
Charlie Lee: We recently hit one million user accounts and we recently got $25 million in funding from venture capitalists.
Tai Zen: I looked on your career page and you guys are constantly hiring new developers?
Charlie Lee: Yes, so anyone who wants to join one of the coolest bitcoin companies, we’re hiring like crazy.
James D’Angelo: We talked about this earlier but I was just wondering as an insider.
Is Coinbase considering at any point trying to do… instead of putting “Bitcoin Accepted” outside of the store, maybe have, “We Accept Coinbase”?
So that you can walk in and do your transaction with the store owner?
For example, I have an android Coinbase wallet, and I walk in and get an instant transfer without no fees?
Are you guys looking into doing that sort of brick and mortar type transaction?
Charlie Lee: So, kind of like what PayPal is doing?
James D’Angelo: But PayPal is not free in between the transactions… LOL… far from free.
Charlie Lee: We want to push the bitcoin technology forward so there’s really no reason to say “We Accept Coinbase” only so that Coinbase merchants can accept bitcoins from anyone.
If you use a Coinbase account to send bitcoins it’s really easy.
If you’re already signed into Coinbase, for just one click or two clicks you can click pay and then click confirm and then you send the bitcoins.
But we also accept bitcoins so, if you want to use your own wallet to send the bitcoins to Coinbase, it’s just as easy.
So, to answer your question, we do have bitcoin clients right now to do that. The benefit is pretty small because the fees for bitcoins is still very low compared to other payment systems and it’s next to nothing anyway, so there’s very little reason to say zero or absolutely zero transaction fees.
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