Max Cajurzaa, Money on Chain CEO, “Ask Me Anything” in Bitcoin Mendoza
English translation of the “Ask Me Anything” of our CEO and Co-Founder Max Cajurzaa
Bitcoin Mendoza is a group in Telegram for the discussion about cryptocurrencies within the Mendoza community (Mendoza, Argentina). On November 2nd, Money On Chain was invited to a round of questions
Below are questions from community members and responses from Max Carjuzaa (CEO and Co-Founder of Money On Chain).
Bitcoin Mendoza (Emi Velazquez): Can you tell us a little about your story?
MoneyOnChain (Max Carjuzaa): I program since I was twelve years old. I’m a software systems graduate. I worked very close to technology, software and finance all my life. My experience is mainly in payment systems and financial services. I worked many years for American Express and later in MercadoLibre.com. I was one of those who built DePrestamos.com and after that I worked in Ticketek, among others.
I started in the crypto world many years ago. I found out about Bitcoin in mid-2009 researching about distributed applications. I got to know Bitcoin and what Bitcoin mining was at that time when you could only mine with your wallet. Then there were no mining pools, there were no exchanges and bitcoins did not have monetary value. At that time I researched it from the technological point of view, and like most people who come to Bitcoin, what I thought at that time is that the Blockchain was a great invention, but that bitcoins were useless. And I discarded it.
I rediscovered Bitcoin in late 2011 after it had reached its first $ 33 bubble and then dropped to 3 or 4 USD per BTC. I told myself “how interesting” is this that I saw few years ago that until that moment I considered it was just a “crazy experiment.”
Now it had a commercial value, people valued it. I began to investigate the reason why people were giving value to this, which for me was nonsense.
I started to study a bit about the history of money, some schools of economic thought like the Austrian School and finally I reached the “aha” moment with Bitcoin.
From that moment on I was fascinated with this technology and the possibilities that Bitcoin generates for humanity.
In 2013, I began to give some talks at universities about this technology and I started to spread the word. In 2013 I also set up a small Bitcoin mining operation with some investors. With that company we did quite well, but it was short-lived. We quickly realized that the Bitcoin mining industry was going to change and that small mining operations were not going to be very profitable.
The business was in designing, building and selling to the miners, a business that for example Bitmain knows how to do very well today.
Back in 2013 also with who is currently the CTO of Money On Chain we developed an Exchange. The reality is that Exchange never saw the light for two main reasons: at that time it was impossible to open a bank account in Argentina for a Bitcoin Exchange and we felt that the technology was still very immature on security issues.
Then I continued working as a consultant for an university and a telecommunications company on issues closely related to technology.
MoneyOnChain (Max Carjuzaa): In 2015 I started thinking that what Bitcoin and the ecosystem was needing to keep growing was a stablecoin with Bitcoin as collateral. But there was no way to do it. Today there are many stablecoins with Ethereum and with fiat as collateral. But I think that the volatility and the monetary characteristics of the collateral is important. If we are going to make a stable currency in the crypto world, it is very important that the stablecoin preserves those characteristics of decentralization and censorship resistance that Bitcoin has.
Considering the characteristics that such stablecoin required, we waited for Roostock (now RSK) to become a reality. RSK is the only network that allows us to generate smartcontracts with Bitcoin. We believe this is the only way for a stablecoin to inherit the properties of decentralization and censorship resistance. Any stablecoin that does not meet those requirements does not make sense. If you have a stablecoin that has collateral in fiat where the fiat (e.g. USD) is in a bank account, you have the risk of the owner of the bank account, of the bank, of the government that can close that bank, or that a government decides that that stablecoin was used to launder money and freeze the funds in the account. Those things must not happen in a crypto stablecoin.
Bitcoin Mendoza (Álvaro Gandía): How does your stablecoin work? Is it with the Argentine peso? What does it use as a collateral? How do you ensure stability over time?
MoneyOnChain (Max Carjuzaa): Our stablecoin has important differences versus the rest of the projects that are productive and/or we know are in development. The first and most important difference is that our stablecoin will be decentralized. We are going to have a DAO. The collateral is Bitcoin and we will have a multicurrency stablecoin. In the our first version we will be able to choose between a stablecoin that follow the price of the American Dollar (Dollar On Chain) or of the Argentine Peso (Peso On Chain). Then we will add the Euro (Euro On Chain) and Yen, etc. A person will be able to exchange between those currencies without spread, only with a small fee of 0.05%.
On the other hand, for those who provide the collateral, there is also an interesting difference. There are multiple ways to contribute collateral. One is specifically designed for Bitcoin Holders, where the added collateral has very little leverage, where if Bitcoin price rises, the token appreciates a little more, and if the Bitcoin goes down the token goes down a little bit further, and additionally this token receives a “passive income”, which will be a daily interest for contributing the collateral.
Additionally, for those who seek even more aggressive positions, there will be a way that adding collateral can be leveraged in the price of Bitcoin 2X, 5X, 10X or 20X. That means that if I am leveraged 2X, if the price of Bitcoin goes up, my token will go up twice, and if it goes down it will go down twice as much. Those who choose this way of adding collateral (with strong leverage), have a small cost, but it will be a lower rate than the market rate. If Bitfinex would be paying 1% per month to leverage 2X, in our platform they will pay less. Depending on market conditions, they will pay between 0% and 0.8%.
Bitcoin Mendoza (Álvaro Gandía): Are you already live on the mainnet?
MoneyOnChain (Max Carjuzaa): We are not operational yet. Today we are developing our minimum viable product [aka MVP]. Once we have our MVP, we will go through all the security checks and peer reviews. We estimate that in the third quarter of 2019 we will go live on the mainnet.
Bitcoin Mendoza (Emiliano Velazquez): Is the idea to always collateralize with RBTC? Or do you plan to add other assets that are issued in RSK?
MoneyOnChain (Max Carjuzaa): In a first stage we will have only Bitcoin as collateral. In a second stage we will transform our stablecoin into a stablecoins platform in a way that other projects can issue their own stablecoin by choosing another asset as collateral. For example you could have a project and launch your own stablecoin using your token as collateral. We are going to make this technology open so that others can launch their stablecoins on this platform, but the stablecoins of Money On Chain will always be collateralized with Bitcoins.
Bitcoin Mendoza (Emiliano Velazquez): Who do you think will be the first people to use the DolarOnChain? B2B? Payment systems like MercadoPago? Others? Or do you think that crypto traders will be the first users?
MoneyOnChain (Max Carjuzaa): MoneyOnChain is a product made by Bitcoiners and designed for Bitcoiners. We believe that in a first stage the DolarOnChain will be used by Bitcoin holders that if today they are looking for some kind of stability they now leave the dollars in the Exchange exposing themselves to the risks that implies, or end up buying Tether or other alternatives such as TrueUSD, exposing yourself to similar risks. Additionally we have a product specially designed for Holders where they can put part of their bitcoins as collateral, with very low or no leverage and receiving a passive income. Finally, as mentioned above, we have a product designed for traders looking for risk and leverage and in this platform they will be able to operate in a more economical way than in traditional exchanges and with less risk, because they will be doing it against a smart contract in a decentralized platform where nobody has the keys to take their BTC.
In a second stage, the stablecoins generated by this platform will be used to “pay for pizza”.
On the other hand, there are already several projects that have contacted us and that need a stablecoin in their platforms. That is a very interesting niche to also develop.
Bitcoin Mendoza (Emiliano Velazquez): How do you expect the government’s response to people using DollarOnChain or PesosOnChain?
MoneyOnChain (Max Carjuzaa): We do not know how governments will react. It’s a big challenge. There is a regulatory risk. But we are not the first to do a stablecoin, nor we are the first to do a stablecoin with collateral in crypto. But we are the first stablecoin collateralized with Bitcoin, which will provide peg to different fiats and also allow to do leveraged operations. We understand that governments are being benevolent with these technologies and are not trying to kill innovation but to regulate it in a logical way. We still do not know in what jurisdiction we are going to launch. That will depend on how advanced the regulations are.
Bitcoin Mendoza (Álvaro Gandía): How is the process of adding my bitcoins as collateral?
MoneyOnChain (Max Carjuzaa): The process to add your bitcoin as collateral is super simple. We are going to have a wallet. In that wallet you will have RBTC which are the bitcoins that work on the RSK network. You will have a button where you can choose to buy TPRO which is the token that you keep as proof of your collateral. You select the amount you want to buy, you send your smart bitcoins (RBTC) to the smart contract, and the smart contract will return the TPROs. At the beginning the TPROs will be worth 1 BTC each. As the price of the BTC goes up, the TPROs will go up a little bit more. The day you want to return your collateral to have your RBTC or BTC, you will send the TPRO and receive your BTC back.
Bitcoin Mendoza (Emi Velazquez): If you had to recommend products or things for the Crypto Argentina community to develop: Do you see something that is missing in terms of infrastructure?
MoneyOnChain (Max Carjuzaa): Today the greatest need that the crypto world has is a stable currency. Additionally, there is a clear need for infrastructure to support the Lighting Network and the Lumino Network.
We believe that if someone wanted to build or collaborate with the crypto ecosystem, it is in that direction that you have to go. Once they exist, and the stablecoins are well tested, there will be a lot of services to build with stablecoins. Payment gateways that exist today, with few in Argentina, to ways to give credit and ways to pay with escrow. But to build all those solutions that we can use on a day-to-day basis, we first need a stablecoin with bitcoin collateral, which will enable Bitcoin to be used in day-to-day transactions.
Bitcoin Mendoza (Emi Velazquez): Are you looking for people for your project team?
MoneyOnChain (Max Carjuzaa): Yes, we are looking for people. Today we have a small development team that we have to expand. We are in the search for developers.
Bitcoin Mendoza (Mike Tango Bravo): ¿Have you talked with the National Securities Commission (CNV) to see the regulation in Argentina?
MoneyOnChain (Max Carjuzaa): We are not talking to the CNV. The project is a global project that will not be based in Argentina. Possibly the founders will not be much longer in Argentina.
Bitcoin Mendoza (Álvaro Gandía): Do you plan to be available in Exchanges so that traders can use your stablecoin?
MoneyOnChain (Max Carjuzaa): Yes, we plan to be in exchanges. The liquidity of the stablecoin is key. We are in talks with some exchanges and Payment Gateways in Argentina and in the region and we are also in talks with some decentralized exchange that they are going to launch on RSK. Although it will always be possible to trade the currency against the smart contract, it seems important to us that our stablecoin can be traded in other exchanges.
One of the ideas that we had was to make ourselves a decentralized exchange on RSK. We have some experience. In 2013 we made a development in that sense. But we prefer other exchanges to list our tokens. We want to focus the effort on the development and adoption of the stablecoin, which is not trivial.
Bitcoin Mendoza (Eze Kemel): I see certain similarities with MakerDAO regarding collateralization and stablecoin. In the case of Maker, they have a governance token, to decentralize decision making. In your case, is it not necessary?
MoneyOnChain (Max Carjuzaa): We have some similarities with MakerDAO, in the sense that the two projects collateralize the stablecoin with crypto, although in the case of MakerDAO that is so for now. MakerDAO is trying to add tokenized assets as collateral which is against the philosophy that we have because when you have tokenized assets you are adding centralization points.
We have a token, similar to the MKR, which is used to control MoneyOnChain DAO. These tokens are going to control the smart contract. Additionally, these tokens will be used to pay the smart contract fees. One will be able to choose between paying the smart contract fees with Bitcoin or paying them with MoC, which are our tokens controlling the DAO. In the case of paying the fees with MoC, those fees will cost 50% less and those MoC when used will be burned. In the case that the fee is paid with BTC, those BTCs go to a “sachet”, which are then used to buy MoC and then those MoC are burned. Every time we burn MoC, so there will be less.
There are other fundamental differences between the MakerDAO project and ours. In the MakerDAO project one provides collateral to issue the Dai (which is the stablecoin of them), and you have to pay an interest as long as you have those Dais, until you destroy them and you can re-withdraw the collateral. In our case you can add collateral or add stablecoin. And you do not have to pay interest to have our stablecoin.
Bitcoin Mendoza (Mike Tango Bravo): The timelines that you have depend a lot on RSK, decentralized exchanges, among other things. You mentioned Q3 next year for the launch of the stablecoin. How safe do you feel with the calendar of the other pieces? Do you see fundamental the adoption of the Lumino in a soft-fork of BTC, for example?
MoneyOnChain (Max Carjuzaa): We have a roadmap that fits quite well with RSK times. Our project is more than three years old and we started to develop this year because we were waiting for RSK to be productive so as not to have that bottleneck and not encounter this problem.
In a first phase of our project we are targeting Bitcoin holders that will use the DollarOnChain to escape the volatility of Bitcoin or that will buy the TPro that is the token that the smart contract gives you when you provide the collateral. Those TPro to receive a passive income.
We understand that we do not need the Lumino Network at all for that first phase of the project. The number of transactions that will be made in the RSK Blockchain in a first phase of the project will be clearly low because it is a network that is just beginning. And the projects are just starting on RSK. We just see a need for our tokens to go on the Lumino in a second phase of the project, when you go to “pay for the pizza” with the DollarOnChain or with the PesosOnChain. And for that we understand that there is a lot of time left.
Bitcoin Mendoza (Álvaro Gandía): You said that your vision was to pay for coffee with the stablecoin. How do you see the way to get there? What would be your logical go to market product process?
MoneyOnChain (Max Carjuzaa): Yes, we have the vision that at some point you are going to pay for coffee and pizza with DollarsOnChain or with PesosOnChain. We are not focused on that stage today. This is a super dynamic market, which changes from month to month. So for us now it does not make sense at this stage of the project to have written in stone a go-to-market strategy for something that we are probably going to do in 2 years. Today we are focused exclusively on bitcoiners. As I mentioned before, this is a project designed and made by bitcoiners for bitcoiners. And today the need for bitcoiners is other. And it’s not paying for coffee with the stablecoin.
Bitcoin Mendoza (Alberteto): Do you think it is necessary for an entity to audit collateral?
MoneyOnChain (Max Carjuzaa): Anyone will be able to audit the collateral in real time, because they will be held by the smart contract. What does seem crucial to us, and what we are dedicating a lot of focus to is the audits of the smart contract code before launching, because that will define the security of the collateral.
Bitcoin Mendoza (Emi Velazquez): Is there any idea of keeping a stable currency NOT attached to any fiat? Could an index be created, like Brazil´s Real in its origin, a currency that maintains a stability in Latin America?
MoneyOnChain (Max Carjuzaa): Yes, it is something that we plan to do, although we believe that the market is not mature yet for that. We probably will not do it in 2019. We’ll see in 2020. But it’s something we definitely want to do: a stablecoin that is really stable. Not to follow the price of the dollar, but rather to a basket of commodities, markets, the price of milk, etc. etc. that maintains a stable purchasing power.
The technology is ready on our platform to do that because we designed it thinking that one day we will develop that solution. You just have to define the basket of assets that we are going to put there. Some PhDs in Finance and Economics are helping us think about that. But we do not think about it for Latin America, but globally.
Bitcoin Mendoza (Mauro Velazquez): Is there an open source repository of the code?
MoneyOnChain (Max Carjuzaa): There is not yet a public repository of the code. There is not yet a technical paper on the model. For now we tell what the mathematical model does but not how it does it. All the technology we are developing will be Open Source, so that everyone can see how it works. But it is something that we do not share yet.
Bitcoin Mendoza (Alvaro Gandía): How can we contribute from Mendoza as a bitcoiner ecosystem?
MoneyOnChain (Max Carjuzaa): We think that the success of Money On Chain is the success of Bitcoin. If the 2,500 million USD that a few weeks ago were in Tether, moved to DoC, it would cause the 2,500 million USD that are currently in a bank account to go to Bitcoin. That would produce an increase in the price of Bitcoin and a strengthening of the ecosystem. As bitcoiners from Mendoza what you can do is spread this technology, Bitcoin technology, support projects like ours (not only ours), which try to support and enhance an ecosystem and not compete against that ecosystem. Our philosophy is to collaborate with the ecosystem and not how to compete against the Bitcoin ecosystem, as we see many other projects do.
Bitcoin Mendoza (Emi Velazquez): How do you see the tokenization of assets in the RSK blockchain, who still need confidence in the real world? Let’s say if someone decided to tokenize gold. That is something that can be used to collateralize.
MoneyOnChain (Max Carjuzaa): I do not like tokenized assets. We believe they go against the problem that Bitcoin tries to solve. The main characteristic of Bitcoin, the most interesting, that made Bitcoin reach where it is now, is decentralization and resistance to censorship. When you tokenize an asset, you are putting a centralization point. There is someone, a company, an entity that is responsible for tokenize those assets. Then those tokens are going to have value as long as the person who tokenized it is honest and the collateral is really there. Any problem that exists with the entity that tokenized the asset will cause the token to lose value. The tokenization of assets can solve some problem and in some cases, it may make sense. But we believe that it does not have it to be used as collateral. To use a tokenized asset as collateral of a stablecoin is to break that decentralization and that trustless and resistance to the censorship that Bitcoin has.
Remark: At the moment of the interview, RSK’s native token symbol was SBTC (for “Smart Bitcoin”), but later it was changed to RBTC (for “RSK Bitcoin”) to avoid confusion, because SBTC was also used by an almost abandoned fork of Bitcoin.