BSV Blockchain Association on Twitter Spaces: BSV exchanges and liquidity

by Arthur · May 9, 2023

[gpt3]rewrite

The BSV Blockchain Association discussed BSV exchanges and liquidity on Twitter Spaces, with speakers including Brett Banfe, Gavin Mehl, Jamie, Crescenda Babiera, Xiaohui Liu, Deggen Kellenschwiler, Alexander Mitchell, Michael Hudson and several others.

https://t.co/67J1aEDAx1

— Bitcoin Association (@BitcoinAssn) 3 May 2023

Introducing the speakers for this Twitter Spaces session

Gavin Mehl presents 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 extracted in the US and potentially elsewhere.

Deggen Kellenschwiler is involved in several technical projects through the BSV Blockchain Association, including LiteClient, helping exchanges with the problem of running full BSV nodes.

Xiaohui Liu primarily works with sCrypt these days. He says he will mostly be a listener in this session and will join to learn how the community feels about a native BSV exchange.

Jamie works in the leading BSV wallet HandCash. He is an old fashioned 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 must win to survive.

Alexander Mitchell represents a large FX desk called Shift Markets. He has looked at working with the BSV environment. He has studied the BSV ecosystem and is well aware of its needs, and is interested in offering 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 area. He started BitStocks and ran Gravity, a GBP on-off ramp for GBP and EUR. They took compliance very seriously, but they still relied on OTC desks that had concerns, eventually forcing Gravity to close its doors. Having learned much from this experience, he believes that nothing short of a concerted, well-funded effort by the BSV community acting together will solve the problems of liquidity and boarding.

Thoughts on onboarding and exchange

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. It was a struggle to buy and sell Bitcoin back then, but people were still figuring out how to do it. He says integrating with big banks and financial institutions sounds good, but he is no speculator; he needs a solution for fuel applications including integration with wallets etc.

Mitchell says there are several ways such a solution can be built. He acknowledges that speculation, for the sake of speculation, is a bad thing, but playing well with others and getting more people to use BSV is essential. Kellenschwiler replies that he does not think speculation is inherently bad, and claims that it has its uses in price discovery. However, he wants the focus to remain on getting users who want to use BSV for payments.

Jamie wonders why end users need to keep BSV at all. He believes BSV will eventually become something for companies using the blockchain while end users will use tokens built on top of it. “The problem now is that we play within the crypto rules and framework,” he says, noting that major exchanges are replicating the Wall Street model. The focus should be on survival and building companies, but this is challenging because we are playing by the wrong rules.

Mehl agrees on this point. He says that when you really dive into KYC regulations, bank secrecy laws, etc., these must be adhered to if companies get involved in trading futures, tokens and other assets. But for the easy 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 using banks to bring in new people.

Babiera reiterates the point that we may not need “crypto” or exchange for fiat currency at all. She wonders what will happen to micropayments in this matter. Kellenschwiler answers that it is possible to acquire BSV directly from miners, it is possible to offer services for micropayments, and there are other ways to get people on board without using exchanges. Jamie says the minimum amount users can top up through Hand Cash is $5 due to fees and other considerations.

Gift 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 would be willing to pay a 10% premium to get a small amount of BSV to listen to a podcast. This will be especially useful in countries like Mexico, where people still spend a lot of money, and for smaller amounts, it can eliminate KYC concerns in many countries. Jamie says he has spoken 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 gift card idea and recently used one to buy some shoes. However, he notes that KYC rules help prevent fraud, and thus platforms that enable a lot of spending without checking who is asking for trouble in the long run, for example by attracting money launderers. He says that partially identity-revealing payment protocols, such as those discussed by Dr. Craig Wright in his The Bitcoin Masterclasses series, could be a solution to this.

The need for the BSV community to join forces

Michael Hudson talks about his experience driving Gravity and some of the problems he encountered. He believes that a well-financed, coordinated and unified effort will be necessary to build a BSV exchange that solves the problems with 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 all angles, 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 the liquidity comes to one place.

Mitchell says the preferred destination has switched from Lithuania to Estonia. In his work, he’s noticed an increase in people getting busted for taking shortcuts related to things like KYC checks. He says it’s worth taking compliance challenges to get into markets where the juice is worth the squeeze, as Hudson did in the UK. He says a flagship BSV exchange will need to aim for the highest level of compliance in jurisdictions that are respected.

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[gpt3]