Interview Series Part 2: Bruce Wagner - The Bitcoin Show / OnlyOneTV / BitcoinMe.com
Watching the markets over the last couple of days has been exciting, no doubt. Value fluctuations, however, are not important in the long term. What truly matters in these formative years for Bitcoin is the incredible amount of talent and effort going into the development of Bitcoin's infrastructure. A great example of that talent is the ExchangeBitcoins.com site developed by David Sterry and his team out of California. David is president of ExchangeBitcoins.com (also known as ExchB) and joined us to answer some questions about the exchange.
BT: David, the first thing I see when I go to your website is that ExchB was the first US Bitcoin exchange. How did the site come to be, and when did it first open?
DS: At the beginning of May, I was interested in funding a project from a large number of small donations and payments. Having read about Bitcoin last year when Slashdot covered it, I decided to revisit Bitcoin. At that time the price had just crossed $1 and lots of people were taking notice.
As I read more and more about it, it became hard to focus on anything else. The Bitcoin system is brilliant and every time I tried to knock it down, it kept getting back up. Seriously, Bitcoin.
At that time, people were also asking for more diversity in exchanges and I had a tingle down my spine as I thought about creating one. Over the next few days I started designing the foundation and ExchB was born.
After a month or so of development and testing, ExchB opened on June 15th, 2011. We've been steadily growing and innovating ever since.
BT: Your affiliations with Chase and Wells Fargo have significantly improved the process, for Americans, of buying Bitcoins. Has that translated into increased volume on the exchange?
DS: We're extremely pleased with the instant cash deposit feature and improving the process of buying Bitcoin is what we're all about. Our volume is steadily increasing with cash deposits providing more consistent growth of volume than any other source.
Many people who deposit cash with us are new to Bitcoin. I have to say we provide a pretty optimal purchase experience and that's good for everyone who owns or uses Bitcoin.
BT: The vast majority of Bitcoin trading marketshare still lies with MtGox. Do you think that will ever change? As president of ExchB, can you give us some hints as to how you plan on acquiring a greater portion of the market?
DS: We can't discuss future plans but of course we feel volume will shift as the Bitcoin economy matures. We started by building a solid, easy-to-use and reliable exchange. Our investments in reliability and the backend are what we feel will position us to lead when serious businesses consider transacting in Bitcoin.
Customer service is another area where we excel. We have a phone number and respond asap to email. If you've had a good experience with ExchB, let people know! If anything about ExchB was less than optimal, I will personally see that it's remedied.
"...people think that when they see something as good as Bitcoin, that there must be a catch." -David Sterry
What can we say about the future? There are some problems that are impeding Bitcoin's widespread use and while many think it will take years to solve them, we feel ExchB will help solve these problems in the next three to six months.
BT: Since you first became aware of Bitcoin, how have you seen it change, and where do you think it's going from here?
DS: Since the time I learned of Bitcoin it went from sub-penny prices and no exchanges to tons of businesses now opening to serve the Bitcoin community. Now we're learning some tough lessons on how to stay safe as a community with such a fluid payment system as we have with Bitcoin.
Next, we as a community will increase efforts to reach out to established businesses and organizations. Our explanations of Bitcoin's benefits are becoming clearer and people with real business experience are getting involved with Bitcoin. We see a bright future ahead.
BT: Are you working with any developers to build new applications for Bitcoin?
DS: We're constantly talking with developers and businesses about potential partnerships. ExchB only succeeds if Bitcoin succeeds and judging by the ideas and plans we're hearing, and in some cases helping to implement, some really exciting applications are coming.
BT: Is there anything else you'd like to share with us?
DS: Yes, I would like to say something about Bitcoin’s current and future value. People ask, "why is Bitcoin valued in the under $10 range when it has so much potential?"
In a way, Bitcoin is a victim of its own potential. Bitcoin will enable many wonderful things but we as a community are still developing the tools to take Bitcoin mainstream. Until Bitcoin goes mainstream only those with a very active imagination can envision that potential.
At the core of Bitcoin’s current price is that people are unsure of how to value Bitcoin. Additionally, people think that when they see something as good as Bitcoin, that there must be a catch. This understandably leaves them skeptical.
Many miners have costs which they must cover through the sale of Bitcoins. They then keep the remaining Bitcoin as investment in the future. Their need to sell drives the price down.
The short term speculators seem to value Bitcoin based on sentiment: good news about Bitcoin means Bitcoin is worth more. Bad or no news means Bitcoin has less value.
"In the future, Bitcoin will be for reputable transactions and credit cards for unsavory transactions." -David Sterry
There are people who get the Bitcoin concept and who are not willing to sell Bitcoin for under $1,000. They’ve bought as much as they can and they would buy more if they could. Unfortunately, they don’t influence the price of Bitcoin much.
About the future price, here are a few of possibilities I see:
As Bitcoin use becomes widespread, even non-investors will benefit from Bitcoin as they see a two to there percent discount on everything they would have bought with a credit card.
In the future, there will be a complete reversal from today’s perspective. With large established merchants, like Amazon, consumers will use Bitcoin and enjoy a two to three percent discount. With smaller vendors that consumers only buy from once, don’t know well, or where they would like buyer’s protection, they will use a credit card. In the future, Bitcoin will be for reputable transactions and credit cards for unsavory transactions.
One final possibility I’d like to share is what happens when large industry adopts Bitcoin. Credit card companies charge gas stations a two percent transaction fee, which is equivalent to their profit margin. By eliminating credit card transaction fees, gas station owners could double their profits. The US consumes 65 billion gallons of gasoline per year and at $3.70 per gallon, this could be $240 billion dollars going through the Bitcoin economy per year. If the market cap for Bitcoin was $240 billion, each Bitcoin would be worth $34,000 dollars.
And finally, Bitcoins are now under $10 each. If you don’t have even one or two, you should definitely get a few today at ExchangeBitcoins.com.
David Sterry is founder and president of ExchangeBitcoins.com, the first Bitcoin Exchange to be launched in the United States.