Exclusive 20 Minute Interview With Coinapult COO & CFO Justin Blincoe
By Alberto Mata
On Friday November 28, Coinapult re-launched their Bitcoin by SMS service and announced it via a reddit post titled “Send BTC by SMS – a new, global service from Coinapult that operates through plain old txt msg, no need for a data plan. Bitcoin can boldly go where it hasn’t gone before.” The post received 245 comments and 901 upvotes, and the Coinapult SMS walkthrough infographic received 54,093 views.
We interviewed Coinapult COO and CFO Justin Blincoe to learn more about Coinapult and their SMS service. The transcript and full video of the interview are below.
Tell me about you and how you first got involved with Coinapult?
Sure, Eric Vorhees and I have been friends for quite a while, we both discovered bitcoin at the same time. He jumped into it faster than I did, he recognized the potential, but we kept in touch and eventually when they were able to move the company down to Panama, he requested that I join, and of course I said yes. I really like Ira, I followed what they’ve been trying to do — the philosophy. And, I was really excited about everything they were trying to do and the potential. This was back in early 2013, and it’s been a real fun ride since — going on just over a year and a half.
What is Coinapult?
Coinapult provides bitcoin services to both bitcoin users and bitcoin companies. The consumer facing services include locks, which allow you to remove volatility from the bitcoin world. You can lock your bitcoin to one of five assets — USD, pounds, euros, gold, or silver. And, that’s both within our wallet and also we’re brining external wallet partners so that you can do the same in other wallets. We’ve also got bitcoin via SMS. We relaunched that service recently. Bitcoin via SMS was our first service back in 2012. We’ve rejiggered it, cut out the US from service unfortunately, and launched global service. We just accomplished that in the last few weeks. Right now we’re working to add additional local number support so that in each individual country there’s no need to use international SMS and the associated fees. On the B2B side, we provide liquidity for companies that are writing buy and sell to their customers. We also provide merchant services, and we also work with merchants using locks — so that can be a merchant acceptance tool as well.
What wallets other than Coinapult support Locks?
I probably shouldn’t announce too early. I don’t want to jinx things. There are a number — they are some of the top wallets in the industry. Some of these guys have been around for quite a while, and have built really great products that I personally use as my bitcoin wallet. I expect that within the next month — right now we’re working with the integration and testing. Which shouldn’t take too long, but obviously if we run into barriers or issues or things we didn’t think of, it’s much more prudent to make sure we have all the issues put behind us before we start putting anything out. Look for that announcement coming soon, we’ll certainly be excited to do that.
Why is the US cut off from the Coinapult service, and do plans exist to change service availability?
We have cut off services to the US geographical area, and the main reason is legal — we’ve consulted with our attorneys, and we just aren’t exactly sure what regulatory regimes we fall under, what rules we need to follows and what rules we don’t need to follow. Mostly [our decision] is based on a lack of clarity. Obviously as soon as we get that clarity, many of the employers of Coinapult are from the US and we understand it is one of the largest bitcoin markets today. But, it’s also one of the most unclear regulatorily. We do have some product implementations that may allow us to offer some of our services in a clear way that we know are legally compliant. But as our service operates today, we don’t quite have that clarity, but we hope to soon.
Tell me about your recently rereleased SMS service.
At the core of it it’s pretty simple. You can either link your account to your web wallet. So if you already have a Coinapult account you just go into settings and add your SMS number and get that linked. Or, you don’t even need to do that, you can just start using the system. Online right now we have our instructions, and basically you need the SMS number. Right now we only have the Canadian number, but we have about 10 other numbers that we’re about to roll out in the next few weeks, and a gameplay to get a number of other countries as I mentioned. To that number you text “addr” which basically gets you a bitcoin address. From there, if you send that address to anyone, they can send you bitcoin. If you have an internal wallet that you want to fund and put on the SMS you can send to that bitcoin wallet — someone else can send you funds. Or, through the Coinapult web wallet, you can send to an SMS number. So I can send to your number “+1 512 …” you know your phone number. And, you would get an SMS from Coinapult, “Congratulations, you just got 1 bitcoin from Justin. Press help to find out more.” From there you can send bitcoin to a bitcoin address, to an email, or another SMS number. Obviously a 16 digit bitcoin address is going to be a little bit crumsy to type into a feature phone, and I wouldn’t wish that on anyone. With a smart-phone, copying and pasting works. You can also send to email addresses and other SMS numbers. The core feature of our SMS wallet compared to a number of other wallets that are offering SMS is that you can use it entirely offline. Obviously the online experience is a little bit smoother and you can add additional security features, but it’s not necessary to use the service.
How does a MITM attack work, and how does Coinapult mitigate that risk?
I’m not the best person to speak on the security features — our CTO would obviously be a little more qualified. The main security feature that we provide is a verification code. So if I send 1 bitcoin to Albert’s SMS number, that is relatively easy to spoof. I can make it look like it’s coming form my phone number to Coinapult’s SMS number, and saying send bitcoin here. It’s quite a bit harder to spoof the return message, where Coinapult sends a message back to me and says if you actually want to send this, input this confirmation code. It’s not perfect, but it basically means that an attacker would have to be quite a bit more sophisticated to pull off the attack. So would that be worth it for $500, $1000, $10,000 for an attacker? Potentially yes, but would it be worth it for $10? Everything is a question of ease, and it would probably be easier to come at me with a wrench to get the $10 in my pocket than buy equipment and sit near me, and hope that I send an SMS to Coinapult. It is the security adequate for large amounts? I wouldn’t say so, but given the fact that the desire for this service is [from] people that don’t necessarily have access to the interne — this is the maximum security that you can really provide save telecom providers getting on board, and providing actual equipment so the phone would allow digital signing or some other feature.
Where have you seen adoption for the Coinapult SMS service?
We have seen a lot of user using the system, but we don’t really track the geography. We accept messages and return messages, but we’re not really saying alright all this activity is coming from Argentina or China — the server isn’t able to tell which country messages are coming from obviously, as you saw, we blocked the US so when we see message coming from the US we have to return with a polite reply of sorry but we can’t. But, we’re not really doing that kind of digging into our user-base. Our real focus is just on improving the product and making it more user friendly.
One of the reddit posts mentioned that India was a tough nut to crack, tell me about India.
India has some very bureaucratic telecom regulations. The problem in a lot of these countries is you can’t pick up a number and start sending and receiving messages. The telecom provider requires you to go through approvals. They want to know why you are sending these messages and what are you doing. And obviously, in these stricter areas, when it’s something that’s new and they don’t understand, there is going to be red tape. When you say we want to use this to facilitate use of our bitcoin wallet, the first thing is what is that? What are you doing? Is it legal? It comes back to the bitcoin 101, and you can do that with the agent that you’re first talking to, and they have to upgrade to the manager [because] they’ve never had this question before. India is notoriously bureaucratic. A number of companies that have tried to work in the Indian space have run into a lot of issues. The local operators have run into issues themselves. I know there is a few that are starting to gain some traction — figure out how to deal with the tax situation the VAT, and some of the other nuances of India, but it’s certainly a bit complicated for someone that is not local.
One of the most innovative aspects of bitcoin is the permission of access to people who didn’t used to have it. One of the promises that bitcoin has, and this hasn’t obviously been realized yet, but I think that a lot of us that are evangelizing and working within the bitcoin industry realize could be in the future is: people that don’t have access to the traditional financial system cold be granted access via bitcoin. Coinapult’s core driving ambition is access. People that don’t have access to smartphones, droids, iPhones, PCs, and a lot of people in the world have access to Internet through maybe their local library or an Internet cafe, but not 7 days a week constant access so the SMS can kind of augment between times we don’t have that [access]. Same thing with locks — one of the issues that a lot of people have with bitcoin is that volatility is pretty severe, and there aren’t many people in the world who are willing to take a 10% drop in their money. Locks is an attempt to bridge access between bitcoin, the core protocol as it works and how people think about money today. The thing I’m most excited with Coinapult is that we’re working to provide access. We get a lot of criticism from the core bitcoin crowd decrying our lack of decentralization and the trust that it takes, but in my opinion, there is going to be a blend — people that have all the resources and the technical know-how to secure the bitcoins themselves and do everything, but you’ll have a lot of people that either haven’t learned, don’t have the resources to learn, or don’t have access to the tools to use bitcoin properly but can still find value in some of its other properties — the ability to send [money] around the world, and the low [transaction] fees.
Are you guys currently hiring?
No, we don’t have any open positions that we are hiring for. I still consider ourselves in the building face. We’ve launched a number of products and we’re iterating and trying to improve them. That said, we would never turn down talking to someone who understands the crypto space, is motivated, and is looking for a way to help us out. I don’t have any individual positions that we are looking to fill at the moment, but we would certainly love to talk to anyone who is interested in working for us, partnering up with us, or providing complementary products. One of the things that we really try hard to do is the use of partnerships because there is a lot of bitcoin companies out there working on their own specialization, and if we can bring some of those companies together it makes the user experience a lot more fluid.
How can somebody wanting to learn more or get more involved reach you?
Our website is coinapult.com, we have a support team that is always standing by that can be reached at [email protected] and I can also be reached at [email protected] We try to be communicative, and always interested to hear feedback on our products — criticism, praise, ideas, anything like that.
Is there anything you would like to tell our viewers?
Coinapult is going to be at the Rio bitcoin conference this weekend. We’ll also have Ira going to the Dubai conference which is next weekend. If you are at either of those feel free to swing by and meet us in person. Otherwise, I hope to catch up with everyone as this whole bitcoin [movement] evolves.
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