In an exclusive interview with ForkLog SatoshiPay’s CEO Meinhard Benn spoke about the reasons behind the project’s decision to opt for Stellar network and what it has in store for the users.
Disclaimer: This interview was taken a couple of weeks prior to the announcement about the Berlin-based start-up’s plans for an IPO on the London Stock Exchange’s AIM.
Established back in 2014, when Bitcoin was still far away from being an object of the mainstream mass media intense interest and Lightning Network was not even in the plans, micropayments provider and cryptocurrency processing service SatoshiPay is among the veterans of the industry.
The SatoshiPay platform is based on blockchain technology supplied by the Stellar network and offers a frictionless micropayment solution to help digital publishers monetize content globally.
Not everything went smoothly for the VC backed startup though, and last year when Bitcoin prices and transaction fees skyrocketed, SatoshiPay had to revise its original strategy and look for other less expensive alternatives.
Initially the developers looked at the IOTA protocol, having declared their intentions publicly in July 2017. However, the plan was not there to be either, and ultimately SatoshiPay opted for Stellar, the blockchain the platform is built on today.
ForkLog: Hello Meinhard, so why did you decide to stop working with Bitcoin and look for alternatives? Was it a purely financial step?
Meinhard Benn: Basically yes, everybody knows Bitcoin became very expensive. We were under a lot of pressure to change to a ledger that was not so expensive for our purposes.
ForkLog: Initially you considered IOTA, but then came Stellar. What did actually happen there?
Meinhard Benn: We were looking for different options and different projects and because IOTA was also active in Berlin and Domenic [Dominik Schiener, IOTA’s co-founder] was there too, we talked and said: “Okay, we’ll do Proof-of-Concept or prototype and see if IOTA can do what we need to do.”
We needed very small payments and many fast and cheap transactions, so we did a prototype together with them and concluded that we need to wait a little bit more before we can work with IOTA ledger, because there were some impractical things. For example, the Proof-of-Work that was done in the browser took to long, if someone paid for content they had to wait 20 seconds for the PoW to be done. So that was not very practical for us.
Also sometimes transactions didn’t go through, so that’s also was one of the reason we couldn’t use it. Additionally we were looking for multisignature and token support on protocol level, and I think these features are still not there on the IOTA ledger. So that’s why we decided we needed to look for something else. So, we sort of put IOTA on the long term observation list and integrated Stellar instead because it had all these features that were looking for.
ForkLog: So now SatoshiPay has Stellar fully integrated?
Meinhard Benn: Yeah, Stellar has been integrated since December 7th last year, that’s when when launched the integration, and the Stellar Foundation also has a broad partnership with us. They support us and give us free credits for our users, and that’s up to 50 XLM per users. That’s roughly 12 euros per user, and that’s pretty cool.
The Stellar technology has been in production for many years, and even though it has a limited, or I’d rather say a small feature set without this sort of virtual machine or Turing complete language, but structurally it is very sophisticated. As I already said, it has multisignatures and token support as well as a built-in decentralized marketplace, so for us it was just perfect.
ForkLog: So, just to draw the line, at this particular moment there are no plans to get back to IOTA?
Meinhard Benn: No concrete plans because we focus on the market and not so much on the ledger technology. That means we deploy features for publishers, all the new tools and dashboards which is not so much related for the ledger technology. So we just take that layer as “Okay, it solved for now”. There is no actual need for us to sort of change anymore.
ForkLog: There are plenty of startups declaring different things, disruptive technologies and promising solutions, but when it comes down to real use things often look bleak. Do you feel SatoshiPay is successful with what you’ve been doing?
Meinhard Benn: We have about 1,800 active publishers or publisher signups. The number of those who are actually active in publishing content is a bit lower but the interest is definitely there. We have sign-ups every day now, we have about one hundred thousand user wallets generated, and despite it’s only a fraction that actually top up using the system we see a steady stream of payments being made on the network. So, yes, the platform is being used, and we are sort of overwhelmed by the amount of use cases. We also have to see if they are legal because some people are trying to sell movies or images, and we need to review the content and that take a lot of our time at the moment.
ForkLog: As a processing service, are you supposed to check the content people are buying and selling?
Meinhard Benn: We speak to the publishers individually, but we don’t tell them what they can sell. Yet as a payment provider we have to make sure that only legal stuff is being sold. Ultimately, of course, it’s the publisher’s responsibility what kind of content they sell, but what we have to do is to find the black sheep and say: “Okay, we need to lock your account because you have to accept that some things are illegal.” Fortunately, this happens only on a small scale and most of the content that is being sold is completely legit.
ForkLog: What are the most popular items people are buying?
Meinhard Benn: E-books, PDFs, that is something that is being done by quite a lot of people, and also we have sort of blog posts on WordPress that have a free preview and then you have to pay a small amount to read the rest of the article . It’s kind of like a ‘Read more’ button, but to read more will cost you some money.
ForkLog: How does it all look for end users, the people who purchase content? After SatoshiPay enabled top-ups via PayPal last year, is this option still available, or people are supposed to buy XLM first to get access to things they are interested in?
Meinhard Benn: The end users who don’t have Lumens, they top up with PayPal, and what’s happening in the background is that they get Lumens sent to the browser wallet, but the only thing they see is the top up using PayPal or a credit card. Actually they don’t need to know anything about blockchain or cryptocurrency, for them it looks like a sort of in-game payment where you pay with credit card or with any other payment system.
So basically being unaware of the fact that cryptocurrency is involved, people still can understand what Stellar Lumens is, they can also see their XLM address in the Stellar network and the transactions, but they don’t need to know it. In fact, they usually don’t see it, they only see that they have to top up 20 tokens and spend one or two tokens on different content.
ForkLog: What about SatoshiPay’s plans for the future? Will there be any new features added?
Meinhard Benn: The big news is that we will eventually implement the Eurotoken, meaning that we will move away from the volatile XLM asset. It’s something like Tether USDT but fully regulated and audited.
ForkLog: Who is issuing this Eurotoken?
Meinhard Benn: That’s a correct question. Who issues this token is actually the most important question. It will be a fully regulated bank in France called Tempo, they will be issuing this token on the Stellar blockchain and it will be audited every two weeks by French banking authorities.
ForkLog: Did you just say every two weeks?
Meinhard Benn: Exactly. The bank itself is a regulated entity, the local regulator is actively engaging with them, so it will be very easy for them to check our full reserve: what they need is just to see our bank account, then they look at the Stellar ledger, they see how many tokens are in existence and this has to match. If it doesn’t match it means something is going wrong.
ForkLog: Do you have any regrets that at some point you had to leave Bitcoin in favour of other solutions?
Meinhard Benn: Well, we had to act as a pragmatic business, not so much as evangelists or let’s say from Myspace ideology, because we are a venture capital funded company and of course the investors must see return on their investment. If we just hold on to certain ledger for ideologically reasons, it would be very bad for our business. Do we regret it? No, I don’t think, so. The Lightning Network or everything that is happening in Bitcoin space now is where the Stellar ledger is for our use case which is very cheap and fast microtransactions.
I think when Bitcoin reaches the features parity, then we might be regretting it, but then I expect another year to go by to the feature parity with Stellar. And in that year we as the company should be growing fast and big, so I think it was a wise decision not wait until Bitcoin reaches the features parity.
ForkLog: Speaking of the cryptocurrency industry on the whole, what do you think is the outlook for the end of the year, or if we talk from the midterm perspective, for the next couple of years. Where are we actually going?
Meinhard Benn: I believe Bitcoin will maintain its status as the most dominant coin, because it is also the brand that represents the whole crypto industry for the mainstream. I think that’s going to stay like that because Bitcoin was the first, it has so much traction, it’s also improving now. Just a year ago there was a bit of stagnancy but now we can see more movement.
I also expect that many other real world use cases will come out. We were one of the first who actually used Bitcoin and blockchain as a mainstream application, but there will be other things like maybe buy your car or supply chain management that are pushing things into the real world. Of course, a lot of things are still on the proof-of-concept level and not so much in production, but I know of many products, that are actually putting blockchain technology into production and it will continue to be developing into a B2B efficiency mechanism.
As for Bitcoin eating the world and replacing euro or dollar, I’m not so sure, because the past has shown that for the mainstream the volatility is just too high for them to accept it as a store of value. I mean, if you have bought coins in the beginning of this year you lost next to 60 or 70 percent of your value, and obviously it’s not acceptable for most of the people.
ForkLog: Would you agree then with those saying that Bitcoin is more like a tool for speculations?
Meinhard Benn: Well, it can be a store of value just to diversify your holdings. Let’s say, you have real estate, you have fiat and you might also have some crypto and some gold. In this case put some money into crypto not for speculation but just not to put all of your eggs in one basket.
So things will happen, and even if today it’s a very small percent of the world population that starts doing that, Bitcoin will grow dramatically. I’m sure we will see more of these booms and busts coming and going all the time as we did it the last the seven years, but what actually happens that each time after price spike and crash things are settled at a higher level.
Meinhard Benn was interviewed by Andrew Asmakov