We met Mr. Ximo Guanter Gonzalbez at Coinsummit in London. He was one of the companies featured in the startup showcase. He had only 7 minutes to explain everything, which isn’t that much time. We did talk to him afterwards and as such we asked him if he had time to do an interview. So here it is.
Serge: Can you tell us about Coinffeine?
Ximo: Coinffeine is a next-generation bitcoin exchange, where we use the properties of the bitcoin protocol and we reuse existing payment processors to provide an enhanced security model. This lets us remove any single point of failures or trusted third parties, and move towards a purely distributed, P2P bitcoin exchange.
There are several advantages of this new model over the one current exchange use. The most important one is the enhanced security the exchange has, since you don’t need to trust anyone in the network (not even us!) in order to be able to trade. Another benefit is an increased privacy since we don’t require you to provide verification documents or open an account with us. We also provide very competitive pricing since we do not charge any fees.
Serge: So Coinffeine is a distributed Bitcoin exchange. Some people hear the word “Exchange” and think Mt.Gox. What makes Coinffeine different to all others out there? Basically what makes Coinffeine unique?
Ximo: Since we are completely distributed, any exchange that happens in Coinffeine happens is a peer-to-peer fashion. This means that you never lose control of your bitcoins or your fiat money (euros, US dollars…). Unlike in traditional bitcoin exchanges, in Coinffeine there is no server containing all money in the exchange, which means we avoid having a high value target for any kind of attacker. All of this means that what happened with Mt.Gox cannot happen in Coinffeine, since we never touch our customer’s money.
We are basically trying to create a bitcoin exchange that follows the same principles as bitcoin itself: open source, distributed and without a need for trust.
Serge: Could you briefly explain the Gossip Protocol to people who are not financial-savvy?
Ximo: In order to create Coinffeine we had to solve two problems: how to enable a P2P exchange when there is no trust relationship between the parties and how to match buy and sell orders in a P2P network in a fair and efficient way. We have solved the first problem by relying on game theory properties in our protocol to ensure the exchange can be performed without the need for trust. The second part of the problem we have been able to solve by using a gossip protocol.
The gossip protocol is a computer protocol that mimics how gossip spreads in a real life social network. There kinds of protocols provide an efficient way of spreading information in large, unstructured networks, and along with a consensus mechanism, they provide a means of having collective decision making. This is exactly what we need in order to pair buy and sell orders while making sure no single individual can cheat when pairing the orders.
Serge: In the crypto community there is a growing popularity of certain alt coins. Are these available on your exchange or are you planning to add some gradually to Coinffeine?
Ximo: Our first goal is to support bitcoin-to-fiat exchanges. Once that is done, we will definitely consider adding other altcoins for crypto-to-fiat exchanges or even crypto-to-crypto.
Serge: What is your opinion on the current stance some governments have toward exchanges? Some influential lobby groups are working hard to push some kind of regulation concerning Crypto exchanges, while others have a more live and let live approach?
Ximo: Having clear rules and legal guarantees for crypto currencies is something that will only provide greater momentum and strength for the crypto currency movement. I is important to have specific regulations that encourage institutional investors and provide consumer protection mechanism if we want to keep growing and reach that 99% of the world that still doesn’t know what bitcoin is.
That being said, regulation is a double edged sword and can also be used to try and slow down the progress of the financial market (the same way the music industry is still trying to stop the internet music services from being successful). I think it is important that we take the lead when it comes to regulations to ensure they are focused on letting the financial industry progress instead of trying to maintain the status quo.
Serge: What is the climate for Crypto exchanges like in Spain? Are they neutral, friendly or more passive aggressive? Did you have any problems with your start up of Coinffeine?
Ximo:The Spanish government has had for the most part a wait-and-see approach to bitcoin. It seems they are hoping for a European level solution and are trying not to provide specific guidance for crypto-currencies until that happens.
In Coinffeine we think providing legal guarantees to our customers and the bitcoin ecosystem is very important, so we are using our position to push for clarification about bitcoin at the legal level. For example, in Spain you need 3000€ to incorporate a company. We pushed the government to accept bitcoin as our incorporation funds, so we have been able to set a legal precedent there. We believe it is very important to comply with current laws and help governments clarify the cases where current laws and regulations are ambiguous when applied to crypto-currencies, and we will continue to go down that path.
Serge: How are you planning to re-use the existing financial infrastructure? Any plans you can tell us about at this point?
Ximo: We reuse the existing financial infrastructure by using existing payment processors to handle the fiat money during the exchanges. One of the problems traditional exchanges have is the need for several bank accounts around the world in order to handle the fiat money of their customers. It turns out these banks accounts have been and are still used by banks as a way of pressuring exchanges into doing what they want, or they just outright stop processing any transfers for these accounts.
In Coinffeine we didn’t want to have that problem, so we have chosen to reuse what’s already out there instead of reinventing the wheel: payment processors like OkPay or Dwolla. That, in turn, also means we have a lower risk of getting regulated than traditional exchanges. For example, the EBA published a document with their opinion on virtual currencies a few weeks ago. In that document, they propose adding regulation to virtual currency exchanges in Europe, but if you look at the definitions Coinffeine doesn’t fall into the “virtual currency exchange” definition, but rather into the “virtual currency trading platform” definition (for which there is no proposed regulation).
Serge: If Coinffeine does not charge any fees, how do you earn revenue?
Ximo:For our first release, we aren’t planning on having a revenue stream. We want to provide a P2P alternative to traditional exchanges because we think this is good for the bitcoin ecosystem as a whole and it will minimize the impact of any other Mt.Gox-like events we might have in the future
. Once we have gained momentum, we plan on adding an additional trading option in which you place a very low amount of trust in Coinffeine in order to pay less fees to your payment processor. We would charge a small fee for that service.
We, Serge Schouterden and Jean-Pierre Buntinx, from CryptoArticles thank Ximo Guanter Gonzalbez for granting an interview with us.
Website : http://www.coinffeine.com/
Twitter : https://twitter.com/coinffeine