Bitcoin Victoria, Blockstream Enjoying Solid Growth In Virtual Money Sector
VICTORIA – Gold 2.0, a shooting star, a piece of an investment portfolio, or the wave of the future in the world of global finance?
Cryptocurrency can be any or all of these. One thing is for sure, it is shaking up the financial sector, as individual investors, chartered banks and even national governments are dabbling in the virtual money game.
Bitcoin Victoria Founder Anthony Kokin
There are several cryptocurrency related companies on Vancouver Island like Bitcoin Victoria, started by Anthony Kokin in 2020, which recently expanded to open Vancouver Cryptocurrency Exchange in Vancouver. Both firms enable clients to purchase and sell numerous cryptocurrencies, and have grown steadily.
Originally created to be electronic cash, cryptocurrency is not reliant on the current banking system. The first, and most popular, Bitcoin, started in 2010, and represents 40 per cent of the total market value of all circulating cryptocurrencies. Ethereum is the second most popular, and Kokin says that today, “there are tens of thousands of cryptocurrencies, since anyone can create one. In terms of those with a decent amount of value, though, there are about a thousand.
“There are 445 cryptocurrencies with a market capitalization of at least $100 million, and for those with $10 million, you’re looking at about 1,200,” he explains. “Most cryptocurrencies are pretty valueless, or they are direct imitations of another coin that is well-known. Many are created as get-rich schemes.”
To explain cryptocurrency, Kokin uses a sports analogy.
“If the Canadiens and Canucks were playing a hockey game and the Canucks won 5-3. Are the two points in the standings that the winning team gets ‘real’ – even though they’re not physical? Yes. So if you think those are real, then Bitcoin is real. You can’t go back and change the story. It is history now.”
Blockchain is another term frequented with cryptocurrency. Simply put, it is a distributed ledger, which provides a record of every transaction that has been made for a specific cryptocurrency, since the creation of the first unit. It includes an alphanumeric string of one virtual address to another, but does not provide the names of the individuals making the transactions. It creates a lot of security through its anonymity, while verifying each transaction.
Kokin first bought Bitcoin in 2016, and rode the wave as it rose from $600 to $20,000 during its first big bull run.
“Basically I was temporarily pretty rich, but it didn’t last long,” he recalls. “It was my first time making any sort of investment. I had no concept of taking profits, and had no intention of selling, thinking it would just grow forever – which it didn’t. Then my portfolio crashed very hard.”
Samson Mow of Blockstream
When Bitcoin went down to $3,500 per unit in 2019, he decided to sell most of it, while keeping some cryptocurrency as he moved to Victoria, with plans to re-start a university tutoring business he had operated in Montreal after graduating from McGill University.
“For a while I was doing a few in-person trades here and there, gaining experience buying and selling like a precious metals dealer would with gold and silver. Starting in June 2020, FINTRAC required Canadian ‘virtual currency dealers’ to be registered with them as a Money Service Business in order to operate, so I did so and decided to do this for a living ,” he states. “It made the whole thing more legitimate because here the government was recognizing it, so I thought it was a good time to start an actual business.”
Kokin’s idea was to offer an alternative to online exchanges for cryptocurrency, where customers could make transactions in-person and receive one-on-one guidance tailored to their goals and needs. Now considered an OTC (Over The Counter) exchange, clients are provided with quotes, can pay in cash or send funds through e-transfer or wire, and buy the cryptocurrency of their choice. The same process in reverse goes for when customers wish to sell. Almost like a personal bitcoin bank.
“We’re non-custodial, which means if someone comes in to buy $5,000 worth of cryptocurrency, we don’t hold it for them. We immediately send it to them, it’s in the client’s control,” he explains. “They can do whatever they want with it, send it when they want to whomever they wish, and they don’t have to worry about getting hacked.”
Bitcoin Victoria also deals in precious metals, buying gold or silver with Canadian dollars, or cryptocurrency.
“Our clients can directly swap gold or silver for bitcoin or vice-versa instead of first going to a precious metals dealer,” he states. “Customers are excited to know we can do that for them.”
Volatility is an expected consistency with cryptocurrency, and there is plenty of speculation involved for investors.
“Somebody who bought $10,000 in cryptocurrency a year ago could be a millionaire today,” he states. “Volatility is one of its appeals. But if you invest too much, don’t diversify, or are too greedy and never take any profits, it can be very risky.”
Kokin sees a bright future for cryptocurrency.
“I think we’ll definitely see the elimination of fiat money as we know it,” Kokin states. “It is possible that a country could create its own digital currency, as it is so much more efficient and secure. Having Bitcoin or another one being the world’s currency where national currencies are no longer existence is something that a lot of people don’t think will happen. It would take a really extreme scenario, like a complete worldwide economic collapse, for that to happen.”
Blockstream Growing Steadily
Another firm with operations in Victoria, Blockstream, was founded in 2014, and builds crypto-financial infrastructure based on Bitcoin. A second layer on top of Bitcoin, if you will. Blockstream is a service provider to the Liquid Network federation that was formed in 2018 and cooperates to run the Bitcoin network, similar to an industry association.
“We develop the software that powers the network, as well as some of the hardware that produces blockchain for the network,” explains Samson Mow, Chief Strategic Officer for Blockstream. “We work with people who want to build on the Liquid Network in order to issue digital assets and coins.
“One of the recent projects we’ve been working on is creating bonds on the liquid network for the government of El Salvador.”
Bonds? For countries?
“The interesting thing about using this technology for bonds is that we can reduce the minimum size of investment significantly, which increases access to these financial instruments,” Mow notes. “Traditionally, investors would need thousands of dollars, if not millions, to get involved. Because we’re using the liquid network, we can use the efficiencies to get the minimum size down to $100. In this case, El Salvadorans can issue that access to anyone who wants to buy.”
Blockstream has close to 90 employees in offices in Europe, California, Montreal and at Uptown in Victoria.
Growth has been steady. Last year, for example, they raised CAD$266 million with a valuation of CAD$4 billion, and they made a number of acquisitions.
“We’re hoping that 2022 will be a bigger year for us,” Mow notes, adding “It’s becoming more prevalent, and you hear of a lot more people talking about Bitcoin and using it to store their money.
“I’m a Bitcoin holder, and some professional athletes are getting paid in Bitcoin now. El Salvador has made it legal tender there now.”
Mow is one who believes that somewhere in the future, bitcoin could replace physical money in countries, and refers to it as “digital gold”.
“In many ways, bitcoin is replacing gold,” he adds. “The younger generation is going to adopt bitcoin faster, and they’re growing up with it and they will see it as their money.”
Mark MacDonald is President of Communication Ink Media & Public Relations Ltd. and can be reached at mark@communicationink.ca