Perhaps it’s best that Magic: The Gathering, An Online Exchange has now ungathered and lost its magic; it is sad that so many people have lost their fiat and bitcoin to this poorly-managed exchange. I trust this tragedy acts as a reminder to the bitcoin community to do our research and due-diligence in selecting and trusting a third-party entity with our money. It is far too easy for pretty-looking websites to consume our funds and simply vanish. Remember – we are the ones doing the feeding.
Despite our best analysis, businesses will always come and go. The best we can do as consumers is vet companies as best as we can and trust that all will go well. In the downfall of Mt. Gox, an exchange like Vault of Satoshi is a breath of fresh air. The Canadian-based cryptocurrency exchange exemplifies three key principles to success that all bitcoin businesses (and businesses in general) should embrace: clarity of purpose; effort to legitimize; and cooperation in the community. I believe that we bitcoiners have the power to demand that companies work on values-based models. Indeed, it is our duty as consumers to research and support businesses that do. This article will examine Vault of Satoshi from a high-level perspective and explain three aspects of their business operations that I believe are essential to all business practices.
1. Clarity of Purpose
A great business is built on clear and unshakeable purpose. With this clarity, a business can more easily navigate the downturns they are all sure to face. Purpose infuses their work with a sense of urgency, importance and care. Even though the computer screen, I can feel the passion Michael Curry and Ryan van Berneveld- the two founders of Vault of Satoshi – have for bitcoin: “we… care deeply about creating positive change in this world. We are eager to support new ideas that evolve us as a collective.”
Both co-founders believe that our current financial systems are broken. Their purpose is to change the world by helping drive Bitcoin adoption through empowerment: “So many of the problems we have in this world come down to wealth and wealth distribution,” Ryan explains. “Crypto-currencies can change the power structure of the world. It takes control of money out of the hands of the few and gives it to the many. Institutions have way too much power in the world to affect people’s lives, with very little oversight. Bitcoin, for me, is about empowering people.”
Having and remembering one’s purpose is the most important principle for success: it ensures your decisions are good ones and the path forward is an ethical and beneficial one. I believe Vault of Satoshi has a defined clarity of purpose.
2. Legitimacy
While important in any business, the legitimacy principle is especially crucial for Bitcoin businesses. Mike explains the emphasis legitimacy plays in VoS, even since inception: “At the start, we [hired] Andrea, our compliance officer. Right from the beginning, we have focused on following suit and keeping up with compliance documents the staff have to follow. We want to legitimize it,” Mike explains. Indeed, VoS is the first company to cooperate with Equifax, despite friction in the beginning. “We reached out to Equifax. They heard the word ‘bitcoin’ and said, ‘how about no? We’ll talk to you later’. It was a really quick call and I was pretty upset.” However, after sending their pile of compliance documents, Equifax called them back and said, “we’ve never seen this level of compliance from a bitcoin exchange.”
It is an exciting time to be involved in bitcoin, and it feels like things are moving at a breakneck speed. However, businesses fail when they move to market too fast. They can’t move forward in a sustainable way unless they take the time and necessary steps to create a solid plan and focus on legitimacy.
Legitimizing the bitcoin experience encourages adoption, as it removes some of the fear associated with the purchasing process. “[Fear of the process] is a big barrier for adoption,” Ryan explains. “A lot of people see it as sketchy, and it is kind of sketchy! A lot of these exchanges, you don’t really know what’s going on behind the scenes. Is this just a 13-year-old kid in his basement trying to run off with a bunch of bitcoins? And that actually happens! Exchanged have been launched in China that just shut down their doors and disappeared! We are trying to bring some legitimacy to this field.” Mike said this before Mt. Gox took their Japan-based website down last week.
Ryan and Mike are unsure about the regulations that are coming for bitcoin, but they believe the best way to legitimize it is to be at the forefront of the changes, and do “everything in their power to comply with everything.”
Let’s face it. It’s easy to trust a site that has a “trust” or “secure” badge on their site. Dig deeper and work with the businesses that are seriously building something around the principle of legitimacy. Businesses also need to take the time to develop a solid, functional, and safe site. Gaining legitimacy is a job for both consumers and businesses, and it is the second essential principle for business success. I think Vault of Satoshi has done a good job in building and sustaining a legitimate business and I believe they will continue to do so.
3. Cooperation
The last principle for business success is cooperation: cooperation internally, with shareholders, stakeholders, other players in the industry, and in the community. Indeed, Ryan contributes a “big part” of their success to community engagement: “We will respond to anything. Criticism and praise… We like to engage our users.”
This engagement, communication and spirit of cooperation is a key differentiator for VoS as a business, and one that sharply contrasts them from a business like Mt. Gox, who appears to have left a simple site up instead of actively engaging and responding to their hysteric clients who have no idea what is happening with their funds. However, it must be noted that Mt. Gox apparently had great customer support in the beginning, until they became busier. I assume that VoS will become much busier with time as awareness and adoption increases; I believe the exchange will scale their customer support to keep pace with the growing need.
There are aspects of Vault of Satoshi that I admire. Do you want to tour the facilities? Show up to their Brantford office. Their address is on the site. They’ll walk you around with smiles on their faces. You can meet all their team members; their pictures are also on the site. When you call the business, they pick up their phone. When you write in, they respond, usually within 24 hours. Would this business ever throw up a generic website, telling you not to contact them and to read the site for further news? I sincerely doubt it. I do get the feeling that if anything were to go wrong internally, they would actively be responding, instead of rebuffing efforts of the community they serve, like this. This kind of transparent, accessible cooperation is essential for a company to succeed, especially in a technology as vulnerable as bitcoin.
Furthermore, VoS is part of the bitcoin community. Have you been on Reddit? They’re all over it. They constantly engage their users. In fact, during the development of their site, they allowed users to “give it to the site, hack it” for 6 months so they could understand user experience, desires, concerns, reliability and safety of their exchange: “We gave everyone access to [the site], and now it’s open to you as a very safe, safe site. We have zero fraud and zero loss to date,” Mike explains.
This kind of active cooperation with the bitcoin community (as well as with other key players in the industry, like Equifax) achieves multiple things: it builds trust and confidence amongst the users of the exchange; it helps promote wider adoption, as the exchange is seen as reputable and willing to work with others to overcome the obstacles that Bitcoin faces; and it shows consumers that the business is receptive and flexible to feedback, so we work together to create the best bitcoin experience for us all.
If our purpose for being involved in bitcoin aligns with Mike and Ryan’s, we understand that the key to adoption is an easy, simple and trustworthy user experience. We understand that adoption is hindered when fear is present. There can’t be trust and confidence when we are scared of the process.
So, as a community, we need to search for and promote businesses that follow essential principles like the three described above. Bitcoiners, please do your homework before committing your funds to anyone, even a site that promotes trading “with confidence.” Unfortunately, that’s not enough. This homework – due diligence – will take time, but it may save us misery and money. To the bitcoin businesses out there, please ensure you are operating for good reasons. Bitcoin exists because of a network of people who want for something better. Help, don’t hurt. And remember that transparency and accountability is what this is all about.
To Mt. Gox: thank you for the lesson. To Vault of Satoshi, and others like you: here’s to the future of Bitcoin.
Disclosure: I called a handful of Greater Toronto Area-based businesses to interview them for Bitcoin Magazine and Brantford-based Vault of Satoshi was one of them. I did not have an account with them, trade with them, know them from anywhere before. However, after interviewing them and getting to know the owners and seeing their operation, I have opened an account with Vault of Satoshi and now trade within their platform to understand their operations more fully.