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transaction fees for bitcoin were just a few cents, making it affordable to walk up to an ATM, put five dollars in and get five bitcoin back. “A very easy pitch point for digital currency was, ‘Oh, you should just pay me bitcoin, it’s free,’” Adham says. “It was a great way to just onboard somebody and show them the magic of this new type of currency.” Now, as the frequency of transactions per block (the foundation of the Bitcoin payment network with a set activity capacity) increases, so do the transaction fees. When the exchange rate reaches five dollars to four bitcoin, selling a skeptic on the idea of digital currency is a bit more complicated. The next step for the ATMs is likely to add ether, the digital currency born from the Ethereum network, which is being touted as a strong alternative to the popular incumbent. This presents its own problems, though. The transactions become more complex when the machine has to explain, over the course of a one-minute interaction, what the differences between cryptocurrencies are to a user who has never dabbled in digital currencies before.

SMART CONTRACTS MOE ADHAM, CEO AND CO-FOUNDER OF BITACCESS, NEXT TO A BITCOIN ATM. PHOTO BY CRAIG LORD.

OUR DIGITAL CURRENCY FUTURE

Why one Ottawa startup is betting big on Bitcoin ATMs, smart contracts and all things blockchain

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wallet or take some out, and receive an electronic receipt sent by text message to their smartphone. It’s a simple, familiar transaction that Adham says is meant to onboard new users to the idea of using a digital currency. The first ATM was launched in Toronto’s financial district on New Year’s Day in 2014. The initial site was a hub for blockchain enthusiasts then called Bitcoin Decentral, now just Decentral. It has become an auspicious starting point for digital currencies: Adham says the origins of Ethereum actually spawned from here, too. “The founder of Ethereum (Vitalik Buterin) was the IT guy there that day. He was the one helping us setup the internet for the ATM,” he recalls. While Adham looks back on their first ATM, the efforts of three weeks’ work on the he days of considering cryptocurrencies digital currencies, are already disrupting the project, as a rudimentary product, the global a niche interest – reserved for a few still-fresh sector. Ethereum, for example, response to their innovation was immediate. brilliant but isolated programmers – are allows companies to crowdfund their own “We knew we were on to something over. Whether you’re an early adopter, a cryptocurrencies through an initial coin because we immediately got interest from all recent convert or remain a steadfast skeptic, offering, or ICO, as an alternative to raising around the world for more of these things,” blockchain’s capacity to overhaul fintech can money on a traditional exchange. Adham says. He and his team maxed out no longer be ignored. There are thousands of opportunities their credit cards and got to work mass For the unaware, digital currencies for startups to enter this market and producing their bitcoin ATMs. or cryptocurrencies are intangible, take blockchain in a new, previously Though they’re now manufactured decentralized forms of money. unimagined direction. In fact, that’s exactly through a partner in China, they were first Cryptocurrencies such as bitcoin, the most what Bitaccess did, an Ottawa-based firm produced out near the Ottawa International common example of digital cash, are built that now has hundreds of bitcoin ATMs Airport. The ATMs quickly spread to on the back of blockchain networks or, operating around the world. Belgium, Switzerland and across the United a series of ledgers maintained across the “I am absolutely convinced that digital States. Today, there are more than 1,000 internet. currencies are here to stay. They’re not going across the world, including a couple in One of the selling points of anywhere. They are going to be a deeper and Ottawa. cryptocurrencies is that they’re not bound deeper part of our lives,” says co-founder by the same restrictions as traditional and CEO Moe Adham. BEYOND BITCOIN currencies. Transactions are borderless, for The rise of competing cryptocurrencies example, making it easier to pay bills or send THE GATEWAY TO DIGITAL CURRENCY provides new opportunities and challenges money internationally with a bitcoin instead Bitcoin ATMs look nearly indistinguishable for Bitaccess. Counterintuitively, the surging of a Canadian dollar. from traditional models, but are connected popularity of bitcoin ATMs has dwindled, But it’s not just bitcoin anymore. Digital to the Bitcoin network instead of a personal Adham says, as bitcoin itself becomes more platforms such as Ethereum, with more bank account. Users can walk up to the mainstream. complex capabilities than acting solely as machine, put a few dollars into their digital When they were just starting out,

Blockchain isn’t limited to digital currency, though, and Bitaccess is pivoting accordingly. “Ethereum, when it was conceived, was not necessarily designed as a payment network… It was designed for what they call smart contracts,” Adham says. The foundation of blockchain is that its ledgers are maintained by a series of concurrent records on nodes (any personal computer linked to the blockchain) around the world. Instead of a centralized body such as a bank or government verifying the validity and value of a currency, these hundreds of thousands of nodes ensure that if a single record is changed on one computer, the others are there to correct it. This same concept can be applied to contracts, and Ethereum’s programming specifically allows for this functionality. Bitaccess builds smart contracts for specific use cases such as options trading and public auditing. Adham says the company is also building a product to help users secure their increasingly-digital asset portfolios. One of the firm’s goals is to add property rights to blockchain, but that may require a concession in terms of decentralization. An authoritative body would have to verify who owns a property on the blockchain in the first place. “Unless we start by putting authoritative data on a blockchain, we might lose the momentum we have now to see smart contracts become what they can truly be,” Adham says. If Bitaccess is successful, and the momentum of blockchain and digital currencies continues, these applications will pervade our lives in as-of-yet unimaginable ways. Beyond holding bitcoin or ether in your wallet, decentralized, digital records may become the norm for all aspects of ownership and public holdings. “I believe that there’s an immense opportunity in that space, and Bitaccess is really well positioned to capture a lot of that value,” Adham says.

Techopia September 11, 2017  

TECHOPIA aggregates, shares and creates noteworthy content about the technology and startup community in Canada's national capital region.