Can you say in one sentence what your startup is about and what it does?
Vaultoro.com enables anyone in the world (banked or unbanked) to use bitcoin without the volatility by using assigned physical gold bullion as the store of value and the native internet currency bitcoin as the global and instant transfer protocol.
by Krzysztof Marszałek — 26 JAN 2016
Can you briefly explain how you arrived at the current stage? How did your startup evolve?
I lost a lot of money when a big bitcoin exchange (MtGox) went bust. My brother and I wanted to build a bitcoin exchange that was truly transparent, an exchange that if it went bust people wouldn’t care because their savings are stored as an asset secured in their name.
We built Vaultoro to safely and transparently store anyone's bitcoin and gold without the risk inherent in dealing with centralised exchanges, as was the case with MtGox.
We hope to inspire the rest of the bitcoin, gold and banking world by setting a new standard of transparency in finance, while maintaining the privacy of our client’s data. The blockchain has allowed us do this with ease.
We started off wanting to be the most transparent exchange in the industry but as more and more people started to store their wealth in gold bullion instead of Euros or Dollars we noticed an increased demand for our services in developing countries.
People in developing countries have witnessed the horror of debt-based, centrally controlled currencies.
Imagine working your whole life and 1 year later all or your savings are worth half of what they were when you earned them! Countries such as Venezuela, Argentina and Zimbabwe are great examples of poorly managed currencies.
Many people in countries such as these have managed to not only pull themselves out of poverty by selling goods or services online with bitcoin, but also peacefully exit badly managed currencies by simply downloading an open source app. They then use vaultoro.com to hold any bitcoin gains in gold bullion secured in their name as their legal property within a top-tier profesional Swiss vaulting facility.
This is something that was previously only available to the super rich.
Do you use any online tools while managing Vaultoro?
Yes we use many different tools. For security reasons I don’t like to talk about them too much. Some that I can talk about are for instance Mailchimp, yes newsletters are boring but important. We use Mailchimp to make sure it’s super easy for us to communicate with our members but also let them unsubscribe from the emails easily because a clean email inbox is also nice :)
We also use the to-do tool Asana to keep our team organised. We tried so many different to-do lists as they all have slightly different methods but Asana is the closest to what we need in our current development phase.
Github is a must for almost all projects, I think github should even be used in politics where people put in pull requests for law changes, anyway that’s another story.
Google Apps for your domain are also totally worth it. Their email spam handling is great and being able to sync calendars easily is really important for CEOs of startups to stay organised across many channels.
Make sure to use 2 factor auth on all online tools you use, especially email.
What made you assume there is a space for a product like yours on the market?
I have been part of the bitcoin community since the very early days and have witnessed over and over again how opaque exchanges would cheat people out of their money. I felt the pain firsthand of being cheated by an exchange that was not transparent. Bitcoin was such an amazing breakthrough in computer science, it had transparency built in through the blockchain and I personally wanted an exchange that was transparent.
I also knew that bitcoin was the future of money and will at least compete with the old legacy banking system online.
We started out just wanting to make a prototype to let anyone buy gold with bitcoin using a trading platform but then realised that our prototype trading engine was faster than most in the industry. So we decided to just keep building on it. I am a huge fan of the lean startup philosophy, which is all about bootstrapping a barebones prototype, launching it and seeing who comes.
The problem was that a bitcoin gold trading platform’s barebones are huge - there is so much to do before you can launch!
We launched a barebones exchange and people wanting to buy gold for bitcoin from all over the world rushed in to use the service. We noticed that a lot of the trades were in the milligram size from developing countries and this was the signal we needed from the market. I felt confident moving forward.
This is a very good question and everyone building a startup needs to ask themselves how they can quantify the demand before investing large amounts of time and money into their project.
How would you describe Bitcoin startup scene?
It’s the most exciting space to be in. I love it because, many years from now when I’m lying on my deathbed, I can feel like I made a positive change to the world. I think a lot of founders of the space feel like that. Money is one of the most important parts of any society - if it’s managed badly by a government it can create a lot of pain. Bitcoin can pull many people out of poverty by giving billions of people access to the global markets without waiting for the legacy banking system to give them permission.
Bitcoin takes the R out of Revolution making it an evolution. It’s revolutionary because it’s going back to stateless private money. Unlike revolutions however, which are often violent, Bitcoin is a peaceful exit rather than a violent takeover.
Some of the smartest and most interesting people I know are building amazing use cases in this scene. Apart from taking on the legacy banking system it also brings asset money into the internet age. We are seeing startups creating smart contracts enabling machines to enter the transaction economy.
Imagine self-driving cars bidding against each other to pick you up, or crowd funding a self-driving taxi car with bitcoin as a public good that owns itself and it is self sustainable, checks itself into garages for services and pays for it all with bitcoin. See this talk by Mike Hearn to blow your mind as to the possibilities that bitcoin heralds.
Anyway what I’m trying to say is that the space is rich with disruption and is really fun.
What are the biggest risks and chances of Bitcoin market?
The biggest risk to bitcoin in my mind is fungibility and anonymity. I’ll go into anonymity a bit because people often think that it is ‘only for evil doers’ but it is not. If you run a business you might not want your competition to find out who your supplier is or you might not want a client seeing what your markup is, the list of reasons for anonymity are endless.
Many businesses I have talked to find the current lack of privacy scary and have told me that's why they are not accepting bitcoin. Sure you can make bitcoin super anonymous but it’s hard to do and you could mess it up. Business owners want an easy to use solution for private money.
Anonymity needs to be more cooked into the normality of bitcoin before we see mass mainstream adoption. The wonderful thing is that it’s not even really a problem because it’s an open source protocol - anyone can write solutions for risks without permission.
People are concerned about the scalability of the network and the uncertainty around the blocksize, but this soon will be fixed as the community and developers are reaching a compromise in a truly decentralised fashion.
Who is Vaultoro's biggest competitor?
Our biggest competitor is BullionVault and Bitgold. Bullionvault does not deal in Bitcoin and bitgold is not a true marketplace, they are simply a gold broker who also don’t allow you to convert your gold back into bitcoin. We are still the only one in the world doing what we are doing. Competition will come which we don’t mind because competition spreads the cost of educating the market.
Are there any books on startups that you've read and would recommend?
I really liked “The hard thing about hard things” by Ben Horowitz. It can scare you a bit because it shows you how hard it is to build a startup.
But if you can pull yourself out of the OMG there is so much to do fetal position after reading it then great! Horowitz realistically highlights a lot of the challenges founders face and gives you great advice on how to face them.
Another great book is “The Six Secrets of Raising Capital” by Bill Fisher.
One of the hardest things about building a startup is sourcing initial funding. This book turns the light on and shows you a lot of the holes that you could fall down if you went wandering through in the dark.
Why fall down traps when you can read about them first.
Did you get inspired by other startups which in your opinion are built in the right way? Can you name them?
I love Uber, they took the taxi mafia and kicked them where it hurts, right in the monopoly! I call it law hacking - finding a ridiculous legacy system that protects its monopoly via government regulations and licences and finding a loophole. This is what Uber did and also what bitcoin as a technology has done to the no minting private money laws.
I also love startups like Storj.io. They are using a blockchain and building a decentralised dropbox with it, where you can lease out your hard drive and earn bitcoin.
They are nearly up to 1 petabyte of storage and they are still in early beta.
What are the main challenges - other than fundraising - of a startup founder before launching the product?
Time management is key! There is so much to do and the internet is designed to feed your monkey mind. Most internet marketing is scientifically built for you to stop what you're doing and click on it! DON’T CLICK!
Get back to what you were on that page to do.
It sounds basic but the web can suck you in. Stay focused! You jumped on twitter to tell everyone about the new feature you are about to launch and ended up clicking some interesting link and reading for 5 minutes - DON’T! When you go to Twitter wanting to post, tell yourself “I’m going to see an interesting link but I’m not going to click on it, I’m going to get in, post and get out!”
How does your Vaultoro's business model look like?
Vaultoro charge a small trading fee between 0.2% and 0.5% depending on how much you trade. This is far lower than any gold dealer I know and it’s only possible because of bitcoin and our partnerships with one of the biggest gold dealers in Europe (Pro Aurum).
There is a tiny vaulting and insurance fee of 0.034% per month but this is passed directly on from the vaulting facility and insurer. We are doing this because we want Vaultoro to be for everyone. Gold should not only be for the rich. Money needs to be affordable so that everyone can use it.
What factors did you take into consideration while deciding on the technology for Vaultoro startup? Did anybody help you with that?
My brother Philip Scigala is the CTO and has been in web and app development for 15 years. He is constantly getting excited about some new programing language or framework. When we first decided on a bitcoin gold exchange we knew it had to be fast and responsive!
Meteor was in beta but was looking very promising for most of the backend and frontend so we decided that’s how we will code our prototype. We have since added some other technologies as well but most of the system is still using the Meteor framework. It’s important to choose the right technology! Not doing so kills many startups, if they can’t scale for instance.
Do you have an investor? If yes, at what stage did you start talking to an investor and why?
We negotiated a small angel investment round from 4 investors and we also threw our own savings in. This was just before launching the platform. We are currently seeking our seed growth of 700K EURO (or bitcoin), if anyone is interested in joining this round, we would be interested in talking to you.
What do you wish you'd known when you became CEO?
I wish that I had got myself a standing desk because the amount of sitting, emailing and phone calls is probably not good for anything!
What are Vaultoro’s plans for the next 6 months?
We are going expand into accepting Euros, Yen, and other legacy currencies as well as translating the service into Chinese (Mandarin), Spanish, Russian and German.
Our goal in the next 6 months is to expand into these multi billion dollar markets. We are also expanding our API so that any point of sale terminal can accept bitcoin and convert it to gold and then spend that gold as bitcoin instantly.
We are also talking to ATM companies to enable people to buy and sell gold through an ATM as well as releasing a gold backed visa card or mastercard so people can spend their gold anywhere they are accepted. A very exciting year!
Can you convince the reader to start using Vaultoro in 2 sentences?
When the people of Greece woke up to find all banks had shut their doors and held everybody's life savings ransom, would you rather have had Euros in a bank or bitcoin and gold in a radically transparent offshore vault where you could spend your gold globally in seconds using the open source permissionless bitcoin protocol?
It is an important part of any investment portfolio to diversify your savings across multiple jurisdictions and asset classes, like gold, silver, bitcoin and real-estate.
Thanks for the interview Joshua.
Questions? Comments? If you are considering launching your own tech startup, feel free to drop us a line below or pop me an email at firstname.lastname@example.org. We're ready to help.