Coast River Business Journal recently spoke with cryptocurrency expert Jeremy Alan. Alan owns and operates the Seaside Crypto Bitcoin Helpdesk, a free service to support and educate Bitcoin enthusiasts and assist businesses in safely integrating the use of Bitcoin.
Can you tell me a little bit about yourself and how the helpdesk started?
“I retired here with my family a little over two years ago. I wanted to have a project to keep me busy. I’ve active in the Bitcoin community in the development process for a long time and it’s a personal hobby and passion. I like to have the opportunity to share that and help people and businesses incorporate the technology behind Bitcoin into their operations.”
Where did you move from?
“I moved most recently from Portland. I came to Oregon from Florida and wanted to experience the West Coast life. I thought Portland was fantastic. I got there and realized that for raising a family maybe I wanted to go outside of town. The coast seemed like an attractive place. I like that Seaside is a smaller town and still very close to Portland if you need to go in for larger services. The people are friendly and we felt very welcomed here. I look forward to being here a long time.”
You look a little young to be retired. How old are you?
“Yes, I’ve been very fortunate. I’m 38.”
What did you do before retiring here two years ago?
“I’ve done a variety of different things. The most relevant would be my background in IT consulting. It has given me the opportunity to see a lot of different types of businesses and understand how they work, a sort of a business analyst role, then incorporate technological solutions to help accomplish whatever their business goals are. It often revolves around how to process payments and take payments — especially in an Internet connectivity kind of situation. That’s where the combination of that experience leads into Bitcoin.”
When did you officially open the helpdesk in Seaside?
“Aug. 1, 2017. We’ve been open about a year and a half.”
And the service is free?
“It’s a free service, I don’t charge anything. I’m retired. My money-making days are over. All I’m interested in doing at this point is helping other people understand and use this technology. Bitcoin has been good to me and now I want to be good to Bitcoin by being a resource that anyone can come through and talk to and ask questions about. Obviously it’s a somewhat difficult to understand technology, it’s not exactly intuitive. It works differently than the way we’re used to money working and most people don’t really question how money works anyway. It’s a rabbit hole when you open this up.”
Do you have regular hours?
“I don’t. I’m retired and I try not to work too hard (Ha-ha). Anyone can call or text and I will go in and meet them.”
What’s the response been like from those you’ve met?
“The initial response is curiosity at this point. It’s very early days in the world of Bitcoin. Most people see it as a money, but I see it as a technology first and subsequently as a money. The easiest way to describe it is…when the Internet was first conceived, its creators had a vision for a protocol to send and receive money that would be just like the protocol to send and receive data from a website or e-mail. But it turns out that problem is actually pretty hard. It is known as one of the more difficult problems in the field of computer science and it has it’s own name called the ‘Byzantine Generals’ Problem’ and that’s what Bitcoin is designed to solve. In 2009, when Satoshi Nakamoto released the white paper for Bitcoin, it proposed a solution to the ‘Byzantine Generals’ Problem’ which made for the ability to transfer money over the Internet in way that people can’t cheat. That was the revolutionary aspect of what Bitcoin does. In the 10 years since the creation, Bitcoin has grown to a global phenomenon with lots of different software stacks built around what the core Bitcoin protocol does and that’s what I enjoy learning about. When most people come in they’re curious about how to use it.”
What was the problem with sending money in the past?
“The problem is how to verify. When you send money to someone else how do you verify that the transaction went through? That they actually got it and can’t turn around and spend that money twice. When you’re using something like Bitcoin the main difference is there aren’t third parties, like a VISA network. There aren’t these trusted actors in the system to decide who gets what, everybody decides the state of the network by themselves through the use of the software. That’s the revolutionary part, that you can trade money without having a guy on top telling you how it goes.”
Who’s been seeking your services so far?
“It’s a mixture. The Bitcoin community is still rather small, but there’s nothing else quite like this out there. I get a lot of people who are old-school Bitcoiners who come through for the camaraderie. I get a lot of tourists that want to kick the tires and understand a little more about it. I also get a lot of businesses who are interested in taking advantage of this technology because they know if they accept Bitcoin for services online they can do so without a 2.75% fee or all the problems and frictions that come along with the traditional financial system.”
How many people do estimate have come through your door since opened?
“In a year and half, about 500 to 600 or so. It’s Seaside, so it’s not like a metropolitan hub. There are a surprising number of local people interested in the technology and I get a lot of tourists driving Hwy 101 too.”
How did you first get interested in Bitcoin?
“I’ve been interested in digital money since the late 90s. There have been many attempts to create a system like Bitcoin. I have a researcher in the space learning about the successes and the failures of each project that have led up to this. I was in a very unique spot where I was able to know that technology was coming about and get active into it early on. I’ve just always had a fascination with money and the Internet and Bitcoin brings those two things together.”
What is the fundamental difference with Bitcoin and regular money?
“The fundamental difference, to me, is when I use Bitcoin, nobody can tell me I can’t use it. Nobody can stop me from using it. Nobody can steal my Bitcoin. That’s different from regular money. Today there is a lot of talk about content creators getting de-platformed on the Internet for holding views that aren’t mainstream. Recently, Patreon came under fire for removing several people from its platform for basically having the wrong ideas about the wrong things. Whether or not you agree with those people, the question comes down to who has the right to exclude them from the financial system. If Mastercard comes out and says they don’t want someone to make money through their system, that’s a pretty big deal because our financial system needs that liquidity, it needs the ability for people to transact in a fair and open way. If you have a system where you have centralization, whether it’s banking or processing level, there is always someone there with their finger on the button that can click and say you’re not welcome anymore. Bitcoin, to me, is about financial sovereignty, being able to know for sure that your wealth is safe and secure. It’s interesting. Because of those properties it’s an uncorrelated asset to the rest of the financial system. A lot of the home offices I speak with are interested in investing 1 to 3 percent of their portfolio into something like Bitcoin as a hedge against volatility in the traditional financial markets, as we’ve seen in the past couple weeks.”
“A blockchain is the artifact that the Bitcoin network produces, essentially a chain of blocks. Each block is a set of transactions. It’s how the network orders the transactions. If I buy a candy bar with Bitcoin, that transaction is put into a block that’s mined on the Bitcoin network. When it goes into a block that’s like a history of all the transactions that have ever happened and can’t be changed. Once it’s there, it’s there forever. I can’t spend that same Bitcoin again because it’s already been in a block. That’s how the network is able to order its transactions without relying on trusted third parties like banks, governments or the VISA network.
Are businesses beginning to accept Bitcoin?
“Yes, but it’s still the early days. There are very few engaging in any substantial amounts of commerce right now, but we’re in the stage where people are developing and building the technology to allow them to do that. There have been some stories over the past year of large companies like Starbucks preparing to accept Bitcoin for payments but they needed a certain type of technology level in order to make it happen. The original problem for transferring value in computer science is a hard problem to solve. Recently we’ve had some exciting developments like the Lightning Network that does enable that type of transaction to happen at scale. We’re still in the building phase but I look forward to a lot of announcements in 2019 about the larger retailers accepting Bitcoin.”
What do you feel will be the impact of more businesses accepting Bitcoin in 2019?
“I think the most important impact will be helping people understand their own finances from a different perspective. I don’t think it’s too far out to say that we live in a culture that’s driven by consumerism and spend, spend, spend. There are certain negative consequences that come about as a result of that whether it’s strip-mining resources from the planet or contributing to global warming, all sorts of negative aspects to a system that is designed for you to spend money. It designed for you to spend money because it’s an inflationary system. The Federal Reserve targets an inflation rate of two percent every year and we’ve seen it this year much higher than that. If you know that every dollar that you hold in your pocket is going to lose two percent of its value every year, that’s an incentive to spend into the system. Bitcoin is a slightly different system, it’s deflationary instead of inflationary. It’s designed to increase in value the longer that you hold it. Because of that, I think the major impact will be a shift in how people see saving and spending. I think it will be a tool for a lot of people to rise up out of poverty and afford a better life for themselves. And that’s really important in a day and time where most people you ask don’t think their children or grandchildren are going to better life financially speaking then they had. We’ve seen a big change in that over the last 40 years. This is an opportunity to reclaim our heritage as a nation of savers and people who want to build for the long term.”
When did you first invest in Bitcoin?
“It’s a good question. But it’s a hard question to answer depending on what you mean by it. I like to say you get into Bitcoin when you make a conscious decision to understand the network and to try to build something around that. For me, that was pretty early on. There have been a lot of ups and downs.”
What year did you get involved in Bitcoin?
“I first decided to get involved in the network in 2012. Over a longer period of time, I’ve done different things. It’s not necessarily important when you get in. Some of the people who have discovered Bitcoin in the past year are some of the most intelligent and thoughtful people in the space right now, some of who I follow on Twitter for example. To me, you could have been involved in Bitcoin since the beginning and not know what it’s all about and you could get in yesterday and be really squared away.”
What’s been the biggest lesson you’ve learned?
“The biggest lesson I’ve learned is there is no way to fake it till you make it. In a lot of businesses you can fake it until you make it. But with cryptography, it’s not quite so easy. You really have to do the research and understand the math behind it in order to get a good idea of where this technology is going.”
The current value of a Bitcoin value is hovering around $3,700. But you can invest less than that?
“Yes, you can buy a fraction of a Bitcoin. One of the cool things about Bitcoin is it’s more divisible than any other kind of money. It’s divisible to eight decimal places, which means you can have one hundred-millionth (.00000001) of a Bitcoin, it’s called a Satoshi. Last week there was an auction that made history. One of the people in the space, who does crypto-related art, took a dollar and chopped into little pieces and made a black swan artwork. He did an online auction for the lowest bidder. In order to bid for the artwork, you had to underbid all of the others in the space. With technology like Bitcoin, you can bid very tiny amounts of money. The winning bid was 37 billionths of a Bitcoin. To put that into perspective, right now on the bulk dirt market you can buy a ton of dirt for $9. A grain of dirt in that ton is more expensive than the bid that won this artwork. It may seem kind of strange and people might ask ‘What’s the practice purpose of that?’ Well it enables new types of transactions to happen like streaming payments. In the not too distant future I’ll be able to open my Uber app, summon a self-driving car, jump in the car and pay per second or mile on the app because I’m using a service. Maybe I’m downloading a movie from Netflix and I only want to watch the first 10 minutes to see if I like it, I can pay by the second. Enabling streaming payments with microtransactions is one of the cool use cases for Bitcoin in a related technology. It gets really deep.”
Have you bought anything using Bitcoin?
“Yes, many times. I’ve used Bitcoins for transactions for a number of years, since the beginning. Some of the early uses for Bitcoin were online market places that sold drugs and other types of contraband that really focused on the nature of Bitcoin as being not censorable. Like I said, nobody can tell you can or can’t use it, so you can go on these market places and do that. Those market places were very popular in the beginning and they’re still out there. You see more commerce happening now in traditional white market areas. Those early transactions proved the point of what it’s about.”
What’s the most common use for Bitcoin now?
“I think the most common use right now is to hold it as a speculative asset. Most people, even those in the space, see this as a way to hold their value into the future and hope that it goes up in value. I think speculation is the predominant use, but that doesn’t mean that other uses aren’t being explored and developed.”
Would you encourage people to invest in Bitcoin?
“I would encourage people to learn about Bitcoin. What I do here isn’t giving financial advice, it’s giving technical advice. I see it as a technology first and a money second. If you understand the technology, then you’ll understand how use the money aspect of it safely and appropriately. If you jump to the second part, then you can make mistakes. You can very easily lose Bitcoin. If you don’t understand how to make transactions you can send it to an address that doesn’t exist, for example. You really want to make sure you have some basic level of understanding of how the technology works before making any sort of investment into the space. I think it’s interesting enough that people should have some exposure to it. If you have your own portfolio and you’re invested in stocks, bonds, CDs or money market accounts, you do that to have a diversity of investments to mitigate risk. I think it’s appropriate at this stage of development with Bitcoin to mitigate the risk of your portfolio by putting something like one percent of your holdings in something like Bitcoin. But do it safely.”
What’s the most common mistake people new to Bitcoin make?
“I think the most common mistake that people make is that, if they don’t understand the technology, they might repeat the same mistakes of the past. For example, when you go to buy Bitcoin today most people buy it through an exchange. There are many different exchanges. The biggest exchange operates out of San Francisco called Coinbase. People will buy Bitcoin on Coinbase.com and then leave the Bitcoin there but what they’ve done is just traded one bank for another. Bitcoin allows you to have financial freedom by controlling your own money, but if someone else has it in their account, you are still trusting them that they will give it to you at some point in time. The best way to start from the beginning is to have something like a hardware wallet. A hardware wallet is a little device that you can use that creates the private keys that are the basis of the cryptography that secures Bitcoin. Once you have that and control of your own private keys, then you’re truly using the Bitcoin network. But if you’re trusting someone else to hold the Bitcoin for you, then you’re repeating the mistakes of the past. That would be the number one thing. Learn a little bit about it, get a hardware wallet, then get some Bitcoin.”
Where do you see Bitcoin in a year? Five years?
“In one year, we will see the adoption of easy to use wallets for Bitcoin. Right now you can download a wallet on your phone but there are some aspects that are a little clunky and it requires you to do a lot of research to do it safely. Within the next year we’re going to have wallets that are easier to use for the average person that doesn’t want to do all the research. The story of Bitcoin over the next five years is a story of gradual adoption. It’s a story of business setting up a way to accept Bitcoin alongside the ways they accept credit cards, Paypal and Venmo. There are five or six processing partners that most businesses work with and over the course of the next five years you’re going to see Bitcoin or some software built around that added to that list. Once that type of economy starts to pump and flow, you’ll see more people buying into the network. The excitement and development around it is going to rise. You’re going to see more complex types of transactions. Right now the technology exists for us to create a virtual corporation that is set a private keys that uses a smart contract to execute business. We could have a partnership that automatically pays us out or percentages of ownership, for example. We could that with two people or 20. Those types of smart contracts will enable more complex organizations like businesses and trusts to use the money in a more efficient manner. That’s really what it’s all going to be about, reducing the friction that currently comes along with the legacy financial system. Every time you move money in the legacy system, you’re getting a fee for some reason or another. Banks are really good at charging fees — it’s really the point of their model. Now you’re going to have the ability to maneuver your money in all these different ways and eliminate that fee structure. It’s going to open up a lot of opportunity financially speaking for businesses in local communities. I can’t wait to see the impact on places like Seaside when you have that ability. Instead of sending that three percent of every dollar that’s transacted here to some bank in Delaware, it now stays here and that’s a really positive impact.”