Bitcoin Box

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Interview with Nefario, founder of Bitcoin Global

author: kiba
published: 2011-06-05 14:39:07 UTC

One of the coolest company to come out of the Bitcoin start up community is the cypherpunkish company called Bitcoin Global, which is responsible for the GLBSE and help usher in the crypto-anarchistic bitcoin economy.

Kiba: First of all, can you introduce yourself to our readers?

Nefario: My name is (Doctor) Nefario, I'm something of a cypherpunk. I started using bitcoin around October last year, and have been involved with bitcoin in some way or other since that time.

My meatspace job is teaching English in University, I'm based in a tier two city in P.R. China.

Currently I'm CEO of BitcoinGlobal, what has turned out to be the first bitcoin company.

There are about 5 people other than myself working for BitcoinGlobal, with roughly 10 persons as shareholders including myself.

We have a number of projects on the go at the moment, glbse.com & Bitdrop being the most well known, and working beginning on nomico.in and CryptoCloud over the next few weeks.

I would like to say more but I would prefer to remain pseudo anonymous, at least for the time being, and therefor not release any identifying information.

Kiba: Can you tell us more in depth about the projects you're working on?

Nefario: As many of you know, it's essentially an asset market for bitcoin, currently most people use it as a stock market to raise capital for their projects by selling shares. Although it's much more flexible than that, being able to handle almost any financial type of asset using Ricardian contracts. Right now this project is still young and has lost of improvements and features to look forward to, the next one being a web interface for ease of use.

BitDrop is a decentralised, package delivery service that's paid for with bitcoin. It works by having runners that are near each other passing the package along until it reaches it's destination, with each runner taking a cut of the overall payment.

Nomico.in is to be the implementation of the anonymous exchange that I've written about before. However we need to wait for CryptoCloud to be up and running before starting this.

CryptoCloud is to be a cloud based computing platform (ala. Amazon AWS) that is hidden in cypherspace (inside the darknets I2P or Tor) so that their location cannot become known. This will allow anyone to easily start any kind of project that if it were illegal in whatever jurisdiction, will be able to run with impunity on CryptoCloud. So services such as Torrent sites, copies of the original Napster, and even directly selling copyrighted materials will be allowed(actually the policy as it stands is that pretty much anything will be allowed).

We're building CryptoCloud because we see a need for most of our services we're working on to be available no matter what any authority says or does, so instead of doing it one by one we're going to build a platform that everyone else will be able to use, and pay for with bitcoin.

Kiba: Obviously, you're expanding into new area beyond the GLBSE.com. Why did you decided to expand into BitDrop and everything else?

Nefario: The most obvious reason is for money, I(we) think that these project's will be able to make us a nice profit by providing needed services in the bitcoin economy.

There are other deeper reasons.

Defense, we suspect that within the next 6 months many if not most bitcoin exchangers (especially MT.Gox, but also non exchanging services such as glbse.com) will be shutdown by various authorities around the world.

This will cause a liquidity problem for us(never mind our prime service being out of operation) and nearly every other business that uses bitcoin (this includes our suppliers). It would also kill the overall buying power that has grown with bitcoin over the last 6 months or more. This will seriously hurt our ability to operate and our bottom line.

To prevent this happening we hope to have the nomico.in (and CryptoCloud for it to run on) up and running before this eventuality.

Bitdrop is a mix of defense and cool factor. There is a need for a bitcoin paid delivery service, especially of goods that are.... less likely to pass through the current postal system unobstructed. We think it's a pretty cool project. However we also see it being of use for our nomico.in project as cash & card collection and delivery.

Kiba: How did the GLBSE idea comes about?

Nefario: Just to expand a little bit on question 3, actually I would have preferred to have been able to focus on glbse.com instead of running multiple projects, I can't give enough time to all of them. We're doing them because we need them. If someone else was going to do them instead then I'd be happy to leave it to them, and buy their service.

What led me to GLBSE was another project that I was trying to get started on. An anti-scammer project. However I found that getting the capital, and managing things related to shareholders was going to be quite a bit of work, so we thought we'll do a stock exchange to manage it all for us. We still haven't started on the anti-scamming project yet, GLBSE has more promise and is a higher priority, but it is something we've got planned...when we get around to it.

Kiba: What was the most challenging part in developing the GLBSE?

Nefario: Going live...sooner than intended.

What actually happened was I told a few people "hey this is there to play with, let me know what you think", came back a couple of days later and found someone had IPO'd on the exchange over the weekend!

In an instant this turned this project from Alpha testing to LIVE with responsibility. I've never run a service before, and getting used to the responsibility was hard.

I really lost sleep over it. It would be the first thing I'd check after getting up, and before going to bed, it was on my mind all the time. The fear that there might be some catastrophic bug, and it would show when I wasn't there, and by the time I had gotten back many had lost their bitcoin. I was terrified that I was going to lose someone else's bitcoin.

But it's been a few weeks running now, with nothing catastrophic. I'm starting to relax a bit now and get more development done. For those first few weeks I was kind of paralised and it's only recently that I've started getting back to programming.

Kiba: Who was the first to IPO on the GLBSE?

Nefario: Ubitex (symbol UBX). Everything turned out very well in the end, the issuer got their capital, the buyers got their shares. I aged 5 years in a weekend. Nothing really went wrong(we'll there was a slight issue but nothing noteworthy).

Kiba: What is next for the future of GLBSE? What is your long-term plan?

Nefario: We've mapped out some of our medium and long term goals on GLBSE's roadmap.

Short term we're developing a web based interface (actually it's written entirely in Javascript, so no need to trust the server with passwords or private keys.), and is due by the 6th of June.

We've found the biggest barrier has been using the client, the python client is difficult to install and not exactly easy to use. I'm actually surprised at how much activity there is on the market using it.

We're working on adding bitcoin options, and shorting (of anything on the exchange). So we would like to be able to hook into all the exchanges currently available and have anyone able to trade bitcoin options.

We're starting work on smart contracts, and hope to have something useful in about a months time. Although right now it's still just ideas, we haven't figured out the best way to implement it(it's more complicated that I had originally thought).

Medium term we want to have CryptoCloud up and running and move GLBSE over to it.

Following that we want to start integrating GLBSE into other asset systems like loom and make it possible for people to buy with assets/currencies other than bitcoin.

Following this we would like to move the backend over to Open-Transactions. We'd actually like to do this earlier but feel that we need to focus more on features first before we start revisiting backend development.

Kiba: How would smart contract works? What situations would it be useful for?

Nefario: A smart contract contains its own terms of enforcement in a way that can be interpreted by an information system such that the information system can easily enforce those terms.

To give a concrete example, a smart contract might contain the maximum number of shares of that contract that can be issued, and if the issuer attempted to issue more than the stated maximum, it would not be allowed.

It could also cover many other things such as whether to release raised funds to an issuer by a certain date, or to refund contract owners if certain terms are not met, limiting the maximum number of shares one person can hold and so on.

Kiba: Basically, a smart contract is a program that can respond to changes in the environment and notes these details or enforce certain rules in the contract?

Nefario: Not exactly(although what you said is correct), before an action can be done (like buy, sell, issue, withdraw, or other functions on GLBSE) it checks the contract and see's if the contract allows the action, if not then the action is not performed.

So if a contract specified a limit on the number of shares sold, and that limit was reached, and someone tried to sell more, the system would check the contract before selling, see that there is a limit, and then see that it's already been reached, so the sell would not be allowed to go through.

It's more a set of rules that are checked before actions are allowed to be performed.

Kiba: Can you give me more use cases for smart contracts?

Some of the other use cases for smart contracts might be:

Futures, preventing the contract being sold after the delivery date, meaning the person who holds the contract after that date must take delivery.

For bonds it would set the date of repayment, and prevent the contract being sold after that date. It could also automatically make the payment from the bond issues account if there is any bitcoin in it.

For shares there is a whole list of possible options:

For croudsourcing:

And more, I'm expecting that once we begin providing some smart contract features (as outlined above) that GLBSE users will start telling us what else they would like. The above list is just what I've thought of, I'm sure there are a lot more.

Kiba: From taking a look at the GLBSE, I cannot understand the prices of the various stock on the exchange market. I see numbers but I do not understand what these means. Do you have plans to creates charts or roll out a JSON API so that services like bitcoincharts.com can render these information into usable form?

Nefario: trade:1@100000000:DISHWARA:1307065643

The first element is either buy,sell or trade, buy and sell are orders placed, and trade is the order happening. The next is the quantity of the asset @(at)a price in full 64bit integer, so you can see that this share was sold for 1 bitcoin(100000000=1btc), then the name of the asset, and finally a unix timestamp of the event.

I think a json api would be a good idea, and it's something we will certainly do, that would be the next step I think for usability after our web client is released.

Our intention is to progressively add functionality and improve GLBSE gradually. As improvements are made people as for more changes, and we generally follow our users feedback.

Kiba: With the current deflationary environment, how long do you expect your capital reserve to last? Do you think it will continue to expand faster than you can spend?

Nefario: At the current rate of deflation, the value of our capital is growing faster than we are spending it. Sooooo in theory if this trend continues, we'll never run out of bitcoin.

Of course it won't continue at this rate, and we'll probably be increasing our own rate of expenditure. What this actually does for us is allow us to increase our rate of development(along with the number and scope of our projects).

Our initial capital had a USD value of around $2000, That has now jumped to about $20,000, and that's after everything we've spent already(although if we had just sat on our capital, it would in theory be worth..... about $50,000).

Something that I've recently realised, although we are spending capital, and there is the chance that in numeric terms we might not get it back(that is we may never get our initial bitcoin capital investment back). The upside is that the value of the remaining capital we have is growing, and we will soon (in about a month) have a growing revenue stream.

But specifically our work is partially the cause of the value rise in bitcoin (combined with the work of everyone else in the bitcoin economy), so although we might be working for less bitcoin (possibly not even getting our full initial capital back) our work directly causes the value of bitcoin to grow. We're working to raise the value of bitcoin as well as to make profit (therefor increasing the value of our own bitcoin).

Kiba: I believe this conclude the interview. Thanks for your time.

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