Charlie Shrem is 23 years old and one of the leading Bitcoin entrepreneurs, having founded BitInstant in 2011. One of the early “Bitcoin millionaires” he exemplifies the world of opportunity and adventure that Bitcoin has opened up to anyone willing to knuckle-down and start building the infrastructure that will make Bitcoin accessible to millions. He is also Vice-Chairman and co-founder of the Bitcoin Foundation.
Bitcoin Magazine: How and when did you learn about Bitcoin and what caught your eye at first?
Charlie Shrem: I got involved in the Bitcoin community really early on. I was an econ grad in college and obviously interested in the space. The more I learned about Bitcoin the more I had to learn. I had never even heard of the Austrian theory of economics (it was all Keynes this and Keynes that in college). The idea – save money if you want to grow the economy was so foreign, I thought, hey maybe this could work. And from there I just really dove into it.
BM: What pushed you into setting up a Bitcoin business?
CS: Gareth Nelson reached out to me in 2011 via the Bitcoin forums. We had never met but respected each other’s reputation. He had a great idea and really saw a pain in the Bitcoin ecosystem – moving money quickly. I recognized the opportunity and given my previous successful startup jumped at the opportunity to be more involved in Bitcoin. He handled the tech and I handled the business, it’s a perfect partnership.
BM: What would you say to encourage all those potential Bitcoin entrepreneurs out there?
CS: Bitcoin is such a young experiment, there’s so much opportunity for anyone with a great idea and the ability to execute it. I’d definitely suggest putting your idea to paper, researching the marketplace and really exploring all the challenges you might face. Build a team of people you can really trust who will get things done. If you can put together a prototype, great, do it. Then start reaching out to friends and family for some initial investment. The more money you get from angels, the more of the company you can keep for yourself.
BM: What are the online businesses that would benefit most from Bitcoin adoption and what are they waiting for?
CS: All of them. Bitcoin makes so much sense for online transactions more than anything. Traditional banking infrastructure was never really designed for the online world and it’s fraught with issues, the worst of which are ridiculous fees and security concerns. Bitcoin solves these problems – transactions can be executed and verified for a fraction of the cost of the older payment methods and the security is unbelievable.
BM: Beyond being a better payment system, Bitcoin brings financial freedom to the masses. Why is this important? How will it change the world?
CS: There are a lot of people who are politically motivated by Bitcoin and very vocal about how it can solve the world’s problems. The phrase “Bitcoin will bring freedom to money like the Internet brought freedom to information” is really true. Whether or not Bitcoin (or another digital currency) ever replaces fiat is an open question. But even if it doesn’t, it’s disruptive. If it makes even a little impact (and I think it will) it really forces traditional payment systems to become more efficient, reduce friction and fees and increase security. Even these little changes when considered across trillions of dollars worth of transactions start to make a meaningful difference. If Bitcoin’s existence can force online money transfer fees to be reduced by even 2% just think of how much money is saved and can go to improving the world in real ways (instead of losing that $10 to a big bank you could donate it at your local soup kitchen)!
BM: Will established players and industries in the payment, banking (and central banking) world resist Bitcoin, or adopt it as an improvement on their current technology? How would you convince to embrace it instead of fighting it?
CS: We’ve already seen some signs that more traditional payment systems are starting to look at Bitcoin. You can be sure they’re talking about it behind closed doors and wishing they had thought to implement something like it themselves. I think we’ll see Bitcoin serving as a catalyst to push existing banking to take a hard look in on itself and really try to reduce the inefficiencies. The market will demand it – if Bitcoin is widely adopted and people understand how low the fees are, they’re going to look at the same types of transactions taking place via banks and wire transfers and ask the hard questions “Why does it take 5 to 10 percent to send my money overseas? Why does it take three days to move money between accounts when it’s an instant digital request?” These questions are going to spark changes to the traditional banking systems – how they choose to address them is anyone’s guess.
BM: Why is privacy important online? Is it just for porn, gambling and fraud? Is privacy a human right?
CS: Since its inception, Bitcoin has obviously really struggled with definitions of privacy and anonymity. There’s a big difference between regular, law-abiding people seeking privacy and those who seek to be anonymous for illicit activities. I believe that the right to privacy is fundamental. What exactly does it mean though? You should be able to buy legal items without it being tracked somewhere in a government database. Historically cash has provided this privacy. You could walk into a drugstore and buy medications for health problems that might be embarrassing and pay cash. Now, with credit cards everything is electronic and tracked. Bitcoin gives you some of the privacy back. I like to call it “cash with wings.” This basically means that it has all the conveniences of cash but you can use it over huge distances. People like to say “Oh, you could by drugs with Bitcoin!” You can buy drugs with cash. You’re not stopping people from doing the things they’re going to do but you shouldn’t penalize the people who are legitimately using a tool like Bitcoin to do things more efficiently in our modern world. At BitInstant we understand the need for financial regulations and have gone out of our way to be compliant – we know our customers. We’re working to make government officials and naysayers understand that Bitcoin adopters are just visionaries who understand the need for a fundamental shift in the way we think about money.
BM: Having your account blocked is a major problem with some online payment systems, and even bank accounts, as Cypriots learned to their misfortune. How does anyone put up with this now that you can use Bitcoin?
CS: Even though Bitcoin is gaining in popularity it’s still flying under most people’s radar. It’s still in a stage where people don’t understand it and aren’t aware of its benefits. There’s also mistrust that we have to overcome. People are more willing to continue with the status quo than trust a new system. It won’t be until more people are directly hurt by the current banking systems that they start to move away from it and look for alternatives. In the meantime, the early adopters (like me) will be here building the infrastructure and trust that ensures that Bitcoin will be here as an alternative to the pitfalls of the traditional banking structure.
BM: If the US-based Bitcoin Foundation is ever co-opted by regulators to undermine the thingsthat make Bitcoin so liberating… will you denounce it? When there is a major Bitcoin fork, what principles will you fight for?
CS: There’s an awful lot of speculation in that question. Right now we’re all (both Foundation members and the general Bitcoin community) doing our best to carve out a place for Bitcoin in the current regulatory climate. There are a lot of us who want to do things the right way and make sure Bitcoin is seen as legitimate. Speculating about the Foundation’s future run-ins with regulators doesn’t really get us anywhere. Right now the best we can do is to use the Foundation to promote Bitcoin, help protect the existing community and put it in front of people for more widespread adoption. As far as a fork goes, I don’t like to say. I’ve made my general opinions pretty clear in presentations and panels. But categorically stating my opinion about a forking situation that hasn’t come up yet is just silly. Things change all the time.
That’s the beauty of Bitcoin. It’s not controlled by a central power and everyone has more of a say in what happens to the technology. My opinion changes based on a lot of things – like regulation, trust, the support of the community, improvements in technology – so I’ll cross bridges as I come to them.
BM: Bitinstant has made buying Bitcoin with fiat extremely easy in the US and several other countries. What are your expansion plans? When are you going to partner up with some major airport money changers?
CS: BitInstant is committed to growth and helping more people in more places around the world acquire Bitcoin. But we’re only interested in growth the right way. We could move fast and enter new markets and new countries…but we won’t do it until we’re sure that it’s sustainable and we don’t get shut down. That means having the right partners and making sure we’re within local regulations with what we’re doing.
We’ve heard a lot of interest from people in the UK, Australia, Cyprus, Greece…the list is almost endless. And we’re going to add the countries to our list, do our due diligence and make sure we’re on solid ground in each country we move into.
BM: What other part of the Bitcoin infrastructure is in urgent need of building? What major problems need solving for Bitcoin to grow?
CS: One of the challenges that we’re facing at BitInstant is an information problem. Just making more people aware of Bitcoin and separating it from some of its more radical roots and supporters. We believe that Bitcoin has value for everyone, regardless of politics. So making sure that we’re doing our part to make the currency more accessible to the people it can really help the most is huge.
