The BSV Blockchain Association discussed BSV exchanges and liquidity on Twitter Spaces, featuring speakers including Brett Banfe, Gavin Mehl, Jamie, Crescenda Babiera, Xiaohui Liu, Deggen Kellenschwiler, Alexander Mitchell, Michael Hudson, and several others.
— Bitcoin Association (@BitcoinAssn) May 3, 2023
Introducing the speakers for this Twitter Spaces session
Gavin Mehl introduces himself as an entrepreneur interested in discovering the demand for a BSV marketplace “like the early Coinbase before it became what it is now.” According to his own research, this can be pulled off in the United States and potentially elsewhere.
Deggen Kellenschwiler is involved with several technical projects through the BSV Blockchain Association, including LiteClient, helping exchanges with the problem of running full BSV nodes.
Xiaohui Liu primarily works on sCrypt these days. He says he’ll mostly be a listener in this session and is joining to learn what the community feels about a native BSV exchange.
Jamie works at the leading BSV wallet HandCash. He’s an old-school Bitcoiner and remembers the old days. At HandCash, he and the team are trying to solve the BSV onboarding problem, dealing with regulations and everything else involved. He says we are in a “liquidity war” that we need to win to survive.
Alexander Mitchell represents a major FX desk called Shift Markets. He’s been looking at working with the BSV community. He has studied the BSV ecosystem and is well aware of its needs, and is interested in providing some solutions. He says there are three options: go to existing exchanges, build an exchange, or convince a large financial institution that wants to build an exchange to support BSV. Mitchell says option three is the “golden goose,” and this would be the best way.
Michael Hudson is an entrepreneur in the BSV space. He started BitStocks and ran Gravity, a GBP on-and-off ramp for GBP and EUR. They took compliance very seriously, but they were still dependent on OTC desks which had concerns, eventually forcing Gravity to close its doors. Having learned much from this experience, he believes nothing short of a unified, well-funded effort by the BSV community acting together will solve the problems of liquidity and onboarding.
Thoughts on onboarding and exchanges
Kellenschwiler says he remembers using peer-to-peer websites to facilitate the exchange of bitcoins between individuals. You had to qualify to become a seller, including passing KYC checks. There was a struggle to buy and sell Bitcoin back then, yet people still figured out how to do it. He says integrating with big banks and financial institutions sounds good, but he’s not a speculator; he needs a solution to fuel applications, including integration with wallets, etc.
Mitchell says there are several ways that such a solution can be built. He acknowledges that speculation, for speculation’s sake, is a bad thing, but playing well with others and getting more people to use BSV is crucial. Kellenschwiler replies that he doesn’t think speculation is inherently bad, arguing that it has its use in price discovery. However, he’d want the focus to remain on getting users who want to use BSV for payments.
Jamie wonders why end users need to hold BSV at all. He thinks BSV will ultimately become something for companies using the blockchain while end users will use tokens built on top of it. “The problem now is we are playing within the crypto rules and framework,” he says, noting that big exchanges replicate the Wall Street model. The focus should be on survival and building companies, but this is challenging because we’re playing by the wrong rules.
Mehl agrees with this point. He says that when you really dive into KYC regulations, bank secrecy laws, etc., these must be complied with if companies are getting involved in trading futures, tokens, and other assets. However, for the simple onboarding process, he sees it as no different than someone buying gold or silver, and it shouldn’t be any more difficult than that. He also likes Mitchell’s idea of utilizing banks to onboard new people.
Babiera reiterates the point that we might not need ‘crypto’ or exchanges for fiat currency at all. She wonders what will happen to micropayments in this case. Kellenschwiler answers that it’s possible to acquire BSV directly from miners, it’s possible to offer services for micropayments, and there are other ways of onboarding people without using exchanges. Jamie says that the minimum amount users can top up through Hand Cash is $5 due to fees and other considerations.
Gifts cards as an onboarding mechanism
‘Cryptovoyager’ notes that HandCash has started offering gift cards as a way out, and he wonders if it’s possible to use them as a way in. He says he’d be willing to pay a 10% premium to get a small amount of BSV to listen to a podcast. This would be particularly useful in countries like Mexico, where people still use a lot of cash, and for smaller amounts, it could eliminate KYC concerns in many countries. Jamie says he has talked to some chain stores, but for now, the costs are prohibitive, but he agrees with the point about KYC rules for smaller amounts.
Kellenschwiler says he’s a big fan of the idea of gift cards and recently used one to buy some shoes. However, he notes that KYC rules do help prevent scams, and so platforms that enable lots of spending without checking who is asking for trouble in the long run, such as by attracting money launderers. He says that payment protocols that partially reveal identity, such as those that Dr. Craig Wright has been talking about in his The Bitcoin Masterclasses series, could be one solution to this.
The need for the BSV community to join forces
Michael Hudson talks about his experience running Gravity and some of the issues he experienced. He believes a well-funded, coordinated, and unified effort will be needed to build a BSV exchange that solves the issues of onboarding and liquidity.
Xiaohui Liu agrees with Hudson’s thoughts. He says that the first step is to sit down and think about the most difficult challenges from every angle, and he asks the group to share their thoughts. Hudson says the biggest challenge is the regulatory side of things, but it’s a manageable challenge—it can be done relatively easily from Lithuania and Estonia. Other challenges include making sure the financial support is there and making sure liquidity is going into one place.
Mitchell says that the favored destination has switched from Lithuania to Estonia. In his work, he’s noticed an uptick in people getting whacked for taking shortcuts related to things like KYC checks. He says it’s worth taking on challenges with regulatory compliance to get into markets where the juice is worth the squeeze, such as Hudson did in the U.K. He says that a flagship BSV exchange will need to aim for the highest level of regulatory compliance in jurisdictions that are respected.
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