 Today's episode of The Bitcoin Show is brought to you by USGoldCoins.com, 1-800-HOTCOIN, and MeseGrill, M-E-Z-E-Grill.com, and TradeHill.com, and MtGox, m-t-g-o-x.com. Hello everybody and welcome to The Bitcoin Show, episode number 29, I'm Bruce Wagner. This is Manny Manna. And today we have a lot of stuff to talk about. I don't know how we're going to get it all in. But it seems like twice a day we have breaking news here than the Bitcoin world things that happen in Bitcoin time. I used to call it internet speed, but it's really like Bitcoin speed. It's so crazy. Today, our special guest is Kior Mithawala from campbx.com. Did I pronounce it right? You did, Bruce. OK, great welcome. It's Kior. Kior, yes. Kior, Kior, OK. It's not spelled like English phonetics. Kior, got it. So from campbx.com, campbx is a relatively new exchange site based in the US and Atlanta. And also we're kind of doing Atlanta Bitcoin Week because we've got a few guests from Atlanta start-ups on this week. We'll have another one tomorrow, which is interesting from bit-pay.com, right? bit-pay.com. So it's only from bit-pay. Yeah, bit-pay, bit-pay, because there's another thing called bit-pay. Well, that's an Android app, but it's not related, I guess. But anyway, bit-pay, I'll say. And campbx, you just launched, right? When was that? We did. Today is our third week anniversary. Wow. Believe it or not, Bruce, when we are preparing for the show, we just crossed 1,000 users threshold. 1,000 users? Wow, that's pretty fast. So come on your show tomorrow. We should what? We should come on your show tomorrow. Every day, we do it every day. You're welcome, absolutely. You can come and just sit down right here. You know, you're actually going to be here, because I'll remind a shameless plug for the, as you guys know all about it, the Bitcoin Conference and World Expo NYC 2011 in NYC is coming up August 19, 20, and 21. We're also going to have, if you're coming early, we're going to have a little bit of pre-conference fun on Thursday, August 18. Then the conference will start Friday, August 19. Saturday is the big day, August 20. And then half a day, pretty much formal stuff on Sunday, the 21st. And then we'll have post-conference festivities on Sunday afternoon, Sunday evening, it's going to be a blast. So later today, actually, within a few hours today, we'll have it all up there on bitcoinconference.com. Bitcoinconference.com, all the details. So you want to be sure and register. And we're going to announce, actually, we may as well go ahead and announce that Friday morning, 10 a.m. Eastern time. This Friday morning, 10 a.m. Eastern, which is, you know, Friday, July 29, at 10 a.m. Eastern time is when the actual tickets will go on sale and you can buy them with Bitcoin. So you've got three days to buy some Bitcoins. If you need to buy some and you don't have any Bitcoins, just call us and we'll arrange it. Of course, we're not taking PayPal. We do not take PayPal, MasterCard, Visa, not even Diwala. We only take Bitcoin. And it is important to state that the seating is limited. Yeah, that's right. The seating is limited. We're only reserving 50 spots. So you want to be sure to get there 10 a.m. Eastern time to bitcoinconference.com and buy your admission and also your vendor tables, vendor booth space or table space, really. It's Manhattan, so it's not a booth. It's a little table. But anyway, it's going to be kind of a small space, but it'll be very cozy and oh my God, it's going to be fun. People are flying from China, from Central South America, Australia. I heard some rumors somebody's chartering a private jet to fly here. It's going to be really, really fun. Amazing. A lot of companies are saving their announcements and their products, technologies, and demonstrations for this conference. And also, rumors of major media, like Al Jazeera English, more than rumors, they told me Al Jazeera English wants to be here and CNN International and so on, they have talked about coming. And so I think there'll be a lot of major media coverage here. And I think it'd be really pivotal to the Bitcoin community just to get a congregation going on, some discussion going on between different vendors and services and help push some hopefully revolutionary Bitcoin products and services that can make it more ubiquitous. Innovation, brainstorming, nothing happens better than when you put brains together. And with all these like-minded people, not only are they like-minded philosophically and technologically and even politically, whatever, they put all their heads together and everybody's going to see each other's ideas and go, wow, we could take that and what could we do if we put our heads together. It's going to be really exciting stuff. So make sure you get there. 10 a.m. Eastern time, Friday morning, bitcoinconference.com and buy your tickets. And we'll see if we sell out like mad really fast, we'll then we'll start a waiting list. And if we have to, we'll move it to a larger venue. I mean, we've got a backup plan. So, you know, if we- You have at least four people flying in from Atlanta. At least four people? Okay, there we go. We just sold the first four. So you got to be there at 10 a.m. on Friday. Okay, but we won't block you out. We have our banner ready for the Bitcoin World Conference. You know, we are just waiting for you to announce so you put up the banner. Yes. On the web site. We won't lock you out. I promise. Somehow, we'll get you guys in if we have to bring you in the back door through the catering entrance. We're going to get you in. But it's actually, right now, the venue is only one TV studios. We have the whole fifth floor at 295th Avenue and this is where we're at. So right now, this is the venue. I mean, hotels in Manhattan are crazy and small. Most of the hotels don't have a meeting space. Or if they do, if they only have a maximum of 16 people, or something absurd like that, we have some big studios. So we're going to rearrange things and make a few rooms off limits. But we're going to convert conference rooms and our main big studio one, which you guys don't normally see, because this is a smaller one. And we're going to convert it basically into a convention center. We'll see how that works. But if we run into a massive number of people wanting to come, like twice as many as we expect, we will probably have to move it to a larger venue. But we can do that. So just get there, buy your tickets, and if it is sold out, make sure you send us an email. Like if you get blocked out because they were sold out, send us an email at, what is it? Registration at bitcoinme.com. Is it registration or register? Register, whatever it is. Go to bitcoinconference.com and the email address will be there. And make sure you send us an email so that you get on a waiting list. And that way we'll have an idea of how many people really want to come. And we're also trying to make the admission very, very affordable. You'll see all the details will be up there soon today. Register, R-E-G-I-S-T-E-R at bitcoinconference.com. There you go. But obviously, you only have to do that if you weren't able to get in the first 50 that are sold. All right, so back to K-U-R. I can't even say your name right. K-U-R? At the end of the story, move up. I will, I'll get it. It takes me seven times and I'll get your name. So is it K-U-R? Yes, it is. K-U-R, remind me. Okay, so tell us about camp BX. What does BX mean? Is that like barracks? Bitcoin crossroads. Oh, Bitcoin. That's what we were aiming for. The camp part comes from the feeling of brotherhood. Oh, okay. We have a vision of a camp at the Bitcoin crossroads where people get together, exchange their regular currencies for Bitcoin and enter a new world. Okay, Bitcoin crossroads or Bitcoin exchange, obviously, it stands for X, too. So all right, cool. So it's been three weeks. How is it going? What's your, you've got 1,000 members now. How's the volume? Is it, is there volume happening yet? The volume is picking up to a proofs. We believe that there is a tipping point somewhere around 2,000 users. Around 2,000, yeah. So 3,000 users, that's when the activity really picks up. Yeah. Yeah, because they can be users. The whole volume, when Bitcoin prices fluctuate more. Right. But when the prices are stable, the volume of course tends to be low for everyone. Right, that makes sense. Okay, now, one of the things that, well, there's so much going on. I don't know where to begin. I mean, I think probably we should talk about what's breaking first. And then I want to get into some more details about CapBX. One of the things that we broke yesterday in the last episode of the Bitcoin show, which was what, 28, is this Duala crisis, I guess we could call it, in that tradehill.com has detected transactions being reversed and actual statements. Like they're basically a bank statement. It's a Duala statement that a merchant would get. It's like a bank statement actually retroactively being changed. They're online statements. So if you don't print them and then actually study them and compare the old ones to the new ones, you would never even know. And so, which kind of explains why it took so long for people to notice because if you go to the online statement and you assume that it's stagnant, they tell you, if you ask them, they were told, tradehill was told that no, statements can't change. No, transactions can't reverse. And meanwhile, the transactions they claim are changing. The transactions are reversing and the statements are changing. Now this, this is a tradehill saying that approximately $40,000 worth of transactions have been lost because of these transactions that were cleared and they got an email saying they were cleared and it says on the statement they were cleared, then days later, they are unclear. Now this just came in. This is, we just got notification of this from MagicalTuxes, his handle, which is Mark, who owns Mt. Gox. Now originally, you know, as soon as this happened I got ahold of Mark and he said no, we're not affected, let me check, he checked again. Nope, we're not affected. Over 20,000 transactions from Duala, not affected. The thing is, I fear that what I feared at that moment was that he was checking his statement and his balance and they matched and that's a problem because the statement may have been changed and he's looking at the new statement. And this is why a merchant would never notice. So if it takes something out from the statement they're also going to take it out from your balance. Yeah, of course. But I hope that this was just a total oversight or error or system software error on Duala's part and this was not intentional. We all hope that this was not intentional because if this is intentional, this is really, really fraudulent in my opinion from the merchant's perspective to modify a statement that's already happened when you tell people that that can't happen and to reverse transactions when you're told as a merchant that they cannot be reversed. As you heard on yesterday's episode 28, I called and I said, can I'm a merchant? If I'm a merchant, can transactions be, that are cleared, be reversed? He said, no, absolutely not. And then he goes, you know, well, unless the bank reports an NSF, I'm like, oh, well, okay, so if it aside from an NSF, once it's clear, obviously, if it's an NSF, it's not cleared. But if it's cleared aside from an NSF condition, once it's cleared, they can't be reversed. Is that right? He's right, they cannot be reversed. And then later he goes on to backpedal and backpedal. I think he recognized my voice, which explains why I got an email three minutes later when I hadn't even told him my name. You know, that he had just talked to the COO within three minutes after I hung up with him and I got an email when I hadn't even told him my name. All right, so whatever, that is what it is. Now, this just in, basically, Mark, Capelle's from, who's the owner of Mt. Gox, as you guys know, was saying, this is from the IRC chat room, the Bitcoin IRC chat room. He's saying, someone was asking him, any comments on the duality issues some other exchanges are having? And he says, so far no problems here. I'm not sure this log speaks exactly of the same problem. Let's see, there has been almost no occurrence and we have detected those. And but he goes on to say, I see three points why Dualla is at fault. And he mentions false advertising about the lack of charge backs, number one, saying that there are no charge backs. Of course, now they've modified their help system and their FAQ and their blogs and things, like retroactively going back and changing them as if they were never there. The internet doesn't forget, people. Don't lie, because you're gonna get busted on the internet. The internet doesn't forget. You can't lie on the internet. You just can't, you're gonna get busted. All right, so not that they're lying, but you know. Anyway, they're changing their policies quickly, which is understandable. But they advertise that there can't be charge backs and they must have known, of course they're gonna be charge backs if they're using ACH, all right. Anyway, no communication with the merchant when a transaction is reversed. What is that about? I mean, this is Mark from Mt. Gox saying that this is another thing. It's very disturbing to him, even though he checked his balances and everything's okay, that this claim that there's no communication with the merchant when a transaction is reversed, absolutely inappropriate, right? And then, well, he's saying, not communicating with the merchant prevents the merchant from taking appropriate actions with law enforcement, et cetera, because if these are fraudulent account holders and you don't even tell the merchant, then they're gonna continue. They're gonna continue doing this. So they put in money and they say it cleared and then they just, oops, just erase it, pretend like nobody saw that, you didn't see that, did you? And then the fraud continues and continues and continues. Like Dualla is actually like aiding and abetting the fraud if they don't tell the merchant that it happened. They reverse the transaction and say, this is our little seek, don't tell the merchant. That's not cool because then it makes the fraud grow exponentially. These fraudsters will only do it more, obviously. Now, Trade Hill caught this with their software that they created to compare statement with statement and they caught it, luckily, but they're still like $40,000 down. I can't imagine, all right, all right. So now, Mark, about Gax, says no. As far as he's concerned, he checked, everything's good. I mean, he checked, it only took him moments, so I don't know how much checking he possibly did in those moments, but he must, I'm assuming he must have just been checking. If I can jump in real quick. Yes. What happened with Trade Hill? It's very unfortunate, $37,000. It's not a small amount for any new company. But I'm surprised that they caught it so late. So late? Yeah. What do you do essentially at the end of the day? No matter what business you make, if you have a Bitcoin business, if you have a cash register business, is you run a talent. How much you have in the bank account? How much you have in the database? And running this tally is very quick and very easy. So we have built in a report that comes in at the end of the day, and it shows you if the tally matches up. If there were any reversals, you would have the Dvala balance go down, but your database balance will show you a little bit higher amount. And when you see that happen, you know that there was some reversals. Right, well, Trade Hill, we have processed over a few hundred Dvala transfers, but we have not seen any of the reversals in our daily tally. And I think that's what Mark Carpill, he said Mark Gox might have done the same thing. He might have run a tally. So if you find a discrepancy, of course you have to dig deeper. But running a tally, it's a very quick and easy process. Well, now Trade Hill said that they actually were doing that, and they did catch it. They caught it early on, but they contacted Dvala and they said, no, no, everything is fine. And they basically put it back on them and the mistake must be on you. And so Trade Hill spent a lot of time trying to figure out what is wrong with their own internal auditing that this mistake could, where's the mistake? I mean, they dug and dug and dug, and they couldn't find the mistake. And so finally, it occurred to them that they should actually audit Dvala, that the mistake wasn't on their side, that it was Dvala's statements that were not correct. And so finally, they actually developed software to audit Dvala's statements over time, and that's how they caught it. And actually, now that I understand how it happened, I mean, if you assume that your bank statement on your online banking is correct and they're not playing with the numbers, you're starting with that assumption, then you're not gonna doubt what you see on the screen. There is, Dvala is an out here. The statement that Trade Hill is using, these are the CSV files. They are not the official monthly statement. They are provided as an additional service for the exchanges, but you are not supposed to base your transaction off of that. According to Dvala, the official statement comes out at the end of the month, and that is the only valid statement that you should base your transaction on. Right, but they have technical out here, but I agree with you 100% that they have done an unethical thing by reversing the transaction without notify the merchant. Well, yeah, I mean. As soon as you share some light on it, Dvala really woke up. I think you lit a fire under them. So I was able to get up all of their support team yesterday at 11 p.m. And they responded to all my questions with an urgency. Yeah. Oh, really? They responded to your questions at 11 p.m. with urgency. We made a positive suggestion. We said, so far, we have a business plan. We are well-capitalized. If we had any losses, we would have been easily able to absorb them. Fortunately, we don't have any losses. You don't have any losses? No, absolutely not. Not even a single dollar missing from day one to day three. But you did find some fraudulent people using Dvala fraudulently. Right. And that was the user hacking. We found some Dvala accounts that were hacked by the users in probably Eastern European countries. Right. So we received a deposit on Minneapolis. And when we do the verification on that deposit, the trans-out numbers are going to offshore phone numbers. Their IP address is coming in from Czech Republic and Russia. So we were able to pass the incident very early. Okay, so you were doing a lot of exceptional verifying. Right. So we have rules engine built on top of that. It looks at your IP address. It looks at your amount of activity, which looks at how often you use the transactions. How quickly the transactions move from registration through buying, selling, and drawing. Right. And when you pull these together using simple statistical rules, you can flag the account which may be for you. So we have a process in place to notify Dvala. In fact, this morning we notified Dvala about three accounts that may have been compromised. Okay. So they are investigating right now and we are expecting an update any minute. Okay, now this is the continuation of the story with Mt. Gox, just for everyone's information. So then, Mark continues, or later, actually this is later in IRC. He says, he's continuing the conversation. He says, so someone says to him, so when you detect those, and it sounds like unfortunately for you, there haven't been, sounds like fortunately for you, there haven't been many. You just eat the loss and he says, yes we do. So he has detected them. Okay. He says some transactions just vanished. This is Mark from Mt. Gox saying this. Some transactions just vanished. So he's having the same experience. Now remember, I'm all using the same backend. They're using the CSV file download which is a web service available from Dvala. Yeah. So as long as you are using this avenue to process your transactions, you will have this error. Well, the thing is that that is, I mean, they can say it's not their official statement but I'm sorry, it is their official statement. If you give me a statement and it comes from you, it is your official statement. And also Dvala said, told them over the phone that if you receive an email from us confirming that the transaction is clear, then that's absolutely official. And you can see from the presentation we did in the last episode, there's the email, there's the email confirming this transaction has cleared and it matches the CSV. The CSV is exactly in coordination with the email. So what they're doing is they're absolutely clearing it on their official statement, their email, their CSV and all that. You know, that's official. I'm sorry, that's official. I don't care what you say. I mean, then don't give it to me if it's not accurate. That's nonsense. That's a nonsense, bogus excuse in my opinion. If you give me a transaction email and you give me the matching spreadsheet and a CSV and then you tell me that's not official, that's nonsense. They told them they can rely on that. You know, the reality of the business is going to be ACS network allows rolled back. Exactly. It's a small amount, baller will absorb it, but simply from a business continuation standpoint, they have to pass some of the rollbacks onto their customers. Yeah, yeah, that's fine, but not when you deceive the customers. When you tell merchants there's no such thing as a chargeback. When you tell merchants once it's cleared, it's cleared, then you are being disingenuous. That is absolute, that's consumer fraud, I think, under the definitions of consumer fraud. That is called consumer fraud and isn't that a felony? I mean, that's serious. That's really, really serious. They should at least notify that something happened. And then without even notifying you, reversing the transactions without saying a word, they talk about an arbitration system that they have in place. How about not communicated, don't tell anybody just changed the numbers, fudged last month's numbers, no, that's not okay. All right, so then Mark continues, some transactions just vanish. This is Mt. Gox. And remember, if you were to assume, I don't know that this is true, but if you were to assume, Trade Hill says two and a half percent of their transactions last month were reversed like this, were disappeared. And if that same percentage applied to the volume Mt. Gox is doing, we're talking about half a million dollars of disappeared money. Who's gonna eat that cost? About 100 million dollars a year, so even one and a half percent of that, that's a lot of them. I mean, Duala, like I said yesterday, Duala has only three customers. Their biggest customer, which is the majority of their business from what I hear is Mt. Gox. Their second largest customer, which is pretty much the rest of their business, is Trade Hill. And then everybody else is a tiny little fraction. Basically, Duala is Bitcoin. Duala is Mt. It's kind of like, you know, like they say about Walmart. You know, Walmart is China. I mean, it's like everything comes from China. It's like that. I mean, Duala is Mt. Gox and Trade Hill. You put Mt. Gox and Trade Hill combined and that pretty much is Duala's business. So, and they don't want to be associated with Bitcoin, nothing to do with Bitcoin. But meanwhile, they are a Bitcoin, they're actually a central point of failure in the Bitcoin system that we have presently. So that's why it's so relevant to the Bitcoin world. But it's absolute, I mean, there's so many things that are not right. I mean, to tell people that transactions cannot be reversed, and then to actually reverse statements that have already happened, and then not communicate anything to the merchant, what is that? I mean, PayPal doesn't even do that. And it's crazy. Okay, let's see, Mark, I want to continue this. Mark says, some transactions just vanished. I send them an email about that. He sent them an email about that. All right. So basically, Mark is saying yes, it is happening. It is happening at Mt. Gox too. And I bet you he's really busy checking that out right now because we're talking about a lot of money. You know, I also want everybody to know that I did contact, you know, the CEO of Duala. And I asked him to be on the show actually repeatedly. And I got a nice letter, you know, saying declining to be interviewed. So, you know, and Trade Hill, you know, everybody loves Duala as a service, as a technology. It's a great thing. But, you know, it's all about trust because you're talking about money. You're talking about, you know, as I say, OPM, other people's money. And when you're messing with other people's money, man, you do not mess with that. And it has to be, you have to have the utmost transparency and honesty and communication above all else. Even when you screw up, even when you make a mistake or the computer makes a mistake, you have to be honest and you have to communicate that. You don't hide behind a phone and say, no, he's not available for weeks at a time to your largest customer that has, you know, half a million dollars at stake or whatever the thing is. I mean, that's just not cool. It's absolutely not cool. I don't care if you do say you're the dumbest man in the room. Not taking Jolla's side at all. Yesterday, I was one of the audience when you were taking this news live and it came as a shock to me. And Jolla has definitely messed up here, but we have a commitment from them that by the end of the week, they're going to make it right. I hope so. I mean, I only wish the best for them. The three steps that we were talking about before the show is that the rollbacks are not going to completely disappear. What needs to happen is that there needs to be a process around rollbacks. So any Vala customers, like Kempia, Straight Hill or Pond Golfs, we can manage our risk. Right. You know, if there is a process, you can manage the process, you can manage the risk. Yeah. So the recommendations that we put in front of Vala are number one, the vendor must be notified. Ignorance and hoping that this would slide by. It is not an answer. You have to have a vendor notification and you have to have a mediation process that is agreed upon by all of the parties involved in the dispute. Right. And I mean, the thing is that if you... No, it's not right. So... Oh, sorry. I apologize. And by the end of the week, they're going to update their process documentation and they're also going to send us some additional information about how their rollbacks are going to happen, how are they going to be mediated and what is going to be covered. Right. I mean, the thing is, if you guys in the exchange industry, if you wanted to take all this chargeback liability, then you would just accept Mastercard Visa and PayPal and you wouldn't need Vala in the first place. But when you're promised that there's no such thing as a chargeback, you're basing your business around that. So it's just not honest. It's just not honest to say that there's no chargebacks and then, oh, yeah, there are. Oh, we updated our FAQ today. Okay, but what about last week, last month? That's not okay. You can't just pretend it didn't happen and rewrite history. You've got to stand up, be a man and face the music. No matter what business you have, chargebacks have to be a part of the business plan. Unless you're dealing with cash, yeah. There is retail tax anywhere from 3% to 5%. So you build that into the business plan for retail prices. Right. So can't be accessed on the same thing. Our threshold is about 1%. We can take 1% chargebacks and keep rolling without a problem. But what are your... If there are more chargebacks in a month, we can absorb them for a short period, but it's not sustainable in the long run. Right, I mean, what are the fees, by the way? You will have to build your business plan. Now that we're talking about cash. What chargeback you are going to accept, but you're not going to accept. Right. So speaking of can't be x, because obviously you are can't be x, what I mean, am I misunderstanding something? Like, if your fees, like what are the exchange fees that can't be x charges? Sure. The can't be x exchange fees are 0.055% for free. Okay, so explain to me how you can accept a 1% chargeback if your fees are less than 1%. And then comes up from the volume. When you are doing certain amount of volume, you keep in mind that you charge the fees both sides of the... Oh, right. Right. There is a bi-transaction, there is also a self-transaction. And you'll have a very thin margin to live with, but we can't rolling with 1% charge. Okay, yeah, and you're... Okay, I understand. And the exchanges are happening even when they're not withdrawing. The second parameter to that, the dollar transfer is 1%. Right. If you transfer $1,000 into your account, that is $1,000 of risk for us. Right. But once to the $1,000, you're going to cycle it multiple times. You're going trade it three times, buy it at your initial capital. Yeah. You're going to buy $4,000, you're going to sell $4,000, and you're going to keep churning. Yeah. So the first generation, 1,000 dollars of capital, they have more than the percentage that charges for. Right. And there's no chargeback risk when you're allowing them to withdraw via doalla, obviously. There's only a risk when they're uploading, when they're depositing money via doalla, so that makes sense. Exactly. So cycling gives you more profit than what you made with them. I mean, is doalla the only way to fund your account at Camp BX right now? Yes. That is the only way that presents. We are working on additional ways to bring and save up for Europe. And we are also in talks with PayPal to use the digital service. Wow. Okay. Now, why are regular bank, why are transfers? Because why are transfers are hard to regulate from a compliance stand. When you wire transfer come in, there is no way you can diffuse the transaction without entering a penalty on your side. So our compliance program, it builds around the automated transaction gateways or payment processing gateways. Every time a doalla payment comes in, there are some rules that are applied to incoming traffic. If we are not doing any of the regulation, this is not a concern for companies like trade or governments because they don't fall inside the regulation. But for us, this is a problem. So you can stop it? Any money, money from any company that is not based in the United States. That's why we don't accept the word. Because that company is based, I believe in Costa Rica. All of our payment processors have to be based in the United States. And they have to have a documented process that we can use for managing the clients. Okay, so you're saying with doalla, you can actually stop the payment from coming in if you want to? Yes. Okay, so that's interesting. Is that based on an automatic filtering of some sort? No, it is a manual process. You have to reach out to doalla right now. But they are working on putting in more automation in place. Okay, all right, so that's interesting. So that you have that control with doalla or PayPal or something, but you don't have that with a bank wire. But I mean, with a bank wire, it's still tied to the person sending it, but you're saying you don't have it and know your customer. You know, reversing a bank wire payment is much more documentation intensive than bulk. You have to go to your bank, you have to talk to them. You fill out the form to send out the turn transfer. For doalla, it's just a quick form. Now what about MasterCard and Visa? Because if you're going to tolerate chargebacks within a certain range, why not just accept Visa, MasterCard, American Express? Yes, so that's something we are looking into right now. Really? But I think that is the next step in making Bitcoin more legitimate. As long as we are using offshore payment mechanisms like Liberty Reserve, it's always going to be seen as sort of fringe bit. If you want to move into the center of the economy, we have to accept credit cards and traditional avenues of payment like PayPal. Okay, so if you accept credit cards, you're going to have a tremendous chargeback liability for up to six months. People can put it by $10,000 with a Bitcoin and reverse $10,000 of payments five months and three weeks later and say, screw you, I used American Express. And there are processes around that. So if you're doing one-off credit card transactions, of course, it's very difficult to manage and put the process together. But when you have hundreds of transactions coming through, you can have specialized software that scans for fraud, that scans for unusual activity on credit card accounts. And if you have a relationship with the payment processor, they tend to rule in the favor of the vendor rather than in favor of the customer. Really, that hasn't been my experience. I mean, I've had a relationship with credit card processing. If you are processing anywhere more than 300 to 500 transactions with a small payment processor, they are going to take your business as a very legitimate business, that if you are dealing 500 customers and you have zero complaints so far, certainly three complex pop-up, they are not going to rule ID form against, they are going to look into this very serious. Okay, I've had experience with some of them where American Express, Platinum, and I was told flat out by American Express that they always cite on the side of the card holder if it's a Platinum card, it doesn't matter what documentation, I could have their fingerprint and a blood sample and a contract and notarized, it doesn't matter if it's a Platinum card holder, they cite on the side of the card holder, it doesn't matter the circumstances. I mean, that's what I was told. So I mean, I don't know, it's interesting. And what about the... PayPal is different. PayPal has a policy of citing goods to vendor. Yeah, yeah. And in my previous experience with PayPal, whenever there were a discrepancy, if you can prove that there was a transfer, there was a valid transaction. And a basic tool is some physical proof, like mailing a receipt to the customer. PayPal will rule in favor of the... Okay, now the, let's see, what about the, there have been merchants who've tried to set up operations where they're just literally just flat out selling bitcoins for MasterCard and Visa. And MasterCard Visa International or their merchant process or their bank, whatever, has pulled their account and said, and just shut them down because they didn't wanna be associated with, you know, whatever, virtual currency or whatever. So I mean, is that up to MasterCard Visa International or your bank or your processing company? Who makes that decision? And what do you do when they yank your account? Right, so this is an agreement you need to have with them before you start your business. And that's the step we are at right now. I'm sure you've experienced this all the time when you tell someone new about bitcoins, they Google it. The first news that pops up is Chuck Schumer to Christod. The first thing that comes up is what? The first news that pops up is Chuck Schumer and Christod trying to ban bit for Silk Road. Oh, right, right, right, right, yeah. So there's public perception issue, but when he go in, can get with the vendor and show them that we have the right permissions in place, they're a legitimate business in Georgia, not offshore, they are willing up to us and they're willing to do it, it's very serious. Right, right, so I'm hoping the public understands that these are just clowns trying to get publicity and they really need to ban the green paper coming from the private corporation called the Federal Reserve. If they wanna bust crime and drugs, they really need to crack down on those green pieces of paper and take that away from the people and see if the people stand up against that. What is the pink blouse? You think about it, bitcoin, it's not a problem. You know how Silk Road ships the drugs, ship them to the West P.S.? Right, they use the government postal system, yeah. Exactly, ban that. It's more than the pink issue, doesn't matter who you pay, if you can stop the shipment, if you can track the source of it, that is your issue. They need to ban postal mail, they need to ban the post offices, they need to ban cash, cars and phones, especially cell phones. Yeah, they need to ban trucks, cars, everything. I know, it's just absurd. Let's just ban the internet, it's so silly. I mean, I hope that the public is smarter than that. I really do give the public credit that they see these people like Schumer and he's just a clown. He just doesn't have the big shoes and the red nose, but he's an absolute clown. I mean, I hope that people can see that. That has nothing to do with Bitcoin or technology. It has to do with, you know, being, it has to do with donations to your political campaign, you know, more than anything else. So, all right, so back to CapBX. I have some questions because you're gonna specialize in, you're in the United States and you're gonna be super compliant and you're also gonna get into options trading, right? That is great. So, I've got questions about that because especially when you talk about United States compliance and options trading, you put those three together and I actually asked some of our audience to send us some questions, which I wanna get to in one second, but this is actually a really good time to thank the people who are bringing us to you. So let's take a quick break and I wanna thank usgoldcoins.com. If you wanna diversify your investments and not put all your Bitcoins into one big Bitcoin wallet, you wanna diversify, think about the second best, maybe, or it could be the first, it depends on your opinion, but that is rare as otherwise known as numismatic gold and silver coins. USgoldcoins.com, 1-800-HOTCOIN is their number, is actually Andy Gauss. Andy Gauss is my monetary guru. He knows everything about money, in my opinion, he is the world renowned expert and he's actually gonna be hosting the real world of money here on OnlyOneTV, Wednesday mornings, 10 a.m. But not only that, he's a sponsor, but not only that, he's a friend. We actually began our relationship with him by listening to his show. He's got a radio show every week, twice a week actually, and which is moving to OnlyOneTV. But we were big fans and we became customers and we became friends and I absolutely vouched for his integrity. He's not like these cash for gold nonsense. This is the real thing. You call his number and ask for Andy and you got Andy. You can ask him about your mortgage. I mean, he's an absolute expert. But call him up and thank him for sponsoring the Bitcoin show and bringing us to you every day. Every day, 2 p.m. Eastern, Monday through Friday, and all the other languages and other shows on OnlyOneTV. But it's usgoldcoins.com. If you happen to be in the U.S., it's easy to call 1-800-HOTCOIN. How can you forget that? 1-800-HOTCOIN. Call him up and thank him for sponsoring the show. And Meze Grill. Meze Grill, mezegrill.com. Obviously, everybody knows that Meze Grill's claim to fame is they're the world's first brick-and-mortar restaurant to accept Bitcoin. They also have other things like authentic Mediterranean food that has excellent flavor. It's our favorite restaurant. One of our favorite restaurants and that's how we actually met Marwan, who owns Meze Grill. And they're serving breakfast now. If you're in New York City or you're passing through New York City, it's just a couple blocks south of Columbus Circle. And this is a good time as any to make this little announcement about Meze Grill. Meze Grill has announced that they are going to be selling Bitcoin at the retail level. You'll be able to walk into Meze Grill and buy and sell Bitcoin. So I just talked with Marwan yesterday and he's agreed to do this. So that's coming any minute. We're gonna be able to do that. So he is, or he's gonna be able to do that. So you'll be able to literally walk into a brick-and-mortar store, retail outlet. And maybe, I don't know if this is the first in the world but probably the first in New York where you have a known location, address, and hours. You can go there any time that they're open, which is obviously long days and long hours, seven days a week. They're open for breakfast, lunch, and dinner. And you can buy Bitcoin. And you can sell Bitcoin too. So basically, for a small percentage fee, but at the last price, market price, very fair. So Meze Grill, not only the world's first restaurant to accept Bitcoins, but maybe the world's first brick-and-mortar retail outlet that you can buy and sell Bitcoins in person for cash. All right. And thank them for sponsoring as well as Trade Hill. Obviously, Trade Hill is the exchange site that makes it really easy to buy Bitcoin without even going to Meze Grill. Without even going out of your house. You can just get online. And there are many ways to buy and sell Bitcoin on the online exchange, tradehill.com. Obviously, you can use our referral code TH-R141 and get 10% off of your trade fees for life. They're introducing, they have the Euro now. And they have, so they have, they're introducing currencies and they're introducing more and more ways to get money in and out of Trade Hill. We know them well. These are all our pals. We all talk to them every day. We all know them. And MtGox, obviously, MTGOX.com. They're the market leader. Who doesn't know? Anybody, if you know Bitcoin, you know MtGox. They have the vast majority of the market share in the online exchange. They also have two-factor authentication as well. And they now take the Euro, the British, sterling British pound, Australian dollars, Canadian dollars coming any day. And they have, they're continuing their 0.3% fees through August 9th. So they've got a little bit more time to cash in on those low trade fees. We thank MtGox. So thank all of our sponsors, please. Just email them and say thanks for sponsoring the Bitcoin show. You don't even have to do business with them. Just thank them for sponsoring the Bitcoin show. Let them know that you appreciate what they're doing. So, all right. And then getting into what Camp BX is doing, just for those that don't understand because options actually comes from a pretty advanced portion of the financial sector, which most people who even do options don't really know that underlying variables are involved with that. So just very quick, 30 seconds. Basically what an option is in terms of finance, it's a derivative financial instrument that sort of specifies a contract in the future between two parties. And it's basically saying, I give you the option to buy something a month from now at a set price. And basically it's not an obligation, it's just an option to do that. So you're paying a premium for an option and just in case you don't know what a derivative is, that increases the complexity a little bit. He's basically a derivative in the terms of a financial instrument is that basically there's some underlying variables that's gonna affect what the price is. And this could be anything from a tradable asset or even a non-tradable asset like temperature, which is the case of weather derivatives or the unemployment rate. So it involves a couple of advanced financial options or I don't know how to explain it, but it's a little more on the advanced side, but it's pretty interesting because a lot of people are excited about this, especially people in Wall Street. Right, so basically the idea is derivative, I mean just sort of sum up what you said. Derivatives are absolutely anything. You can say derivative of the number of leaves that are gonna fall before this. What you can do, a derivative is just anything you make up and it's a number that can be measured. It's just a number that can be measured and you can basically buy and sell based on some number. Options is very specific and that is like you said, actually options is just like what it sounds like. It's an option to buy something or sell something at a certain price in the future. So you're actually buying the option to do that. So yeah, there's also calls which is a call is like to buy if you wanna buy something in the future and a put is if you wanna sell in the future. So you could go both ways about it. Two types of options. Okay, so now that we've got the basics covered, so with the audience, that's good, the audience knows what these are. Now I've got some questions that have come in because we asked the audience to send us. Before we jump into options Bruce. Yes. Options is something we don't have available right now. Okay. What we offer is margin faith. The margin is different than options. It gives you a leverage on the current price of Bitcoin. So you put a 50% before the other 50% and you can make trade margin or a short sale based off of that. Okay, so margin trading is where you're basically borrowing money to buy Bitcoins. So you're actually extending a loan. Or you're offering Bitcoins to sell and short sell. So it's basically a margin is sort of like a collateral that the holder of which would be Camp BX, they're gonna deposit to cover some of the risk that's inherent with Bitcoins. If I'm assuming correct, you're gonna cover some of the risk using collateral. And this will allow you to short sell Bitcoins if that looks good. That's all right, here you clearly. Explain to us. Okay, when you say a margin, you're talking about, let me just ask it in my layman's term because I'm not a financial person. So if you're talking about, if I'm a customer of Camp BX, I have a certain amount of funds on deposit. So I can actually borrow more and then use that to buy Bitcoins or buy options. So if you have $100, you can buy Bitcoins up to 200, no. Okay, so that's the same thing as borrowing $100. You can do the exact opposite and sell 200 Bitcoins. Okay, so in my layman's terms, what you're saying is if I put up $100, I can borrow another $100 and basically you're gonna be extending me credit. Exactly. Okay, and if I lose, and now if I somehow the market crashes or something and I lose everything, then I'm in debt to you. No, you will not be. You will have a loss, but you will not be in debt. Oh, because it'll be a washer, it will just, it'll automatically liquidate what I have and then it'll have nothing. So there's a margin call. In traditional stock broker environment, what margin call means is that they send you a notification that we have to post more margin. That means you have to deposit more money to your margin. Okay. In the bid for there is no edit. So what the margin call is going to mean is that you will receive two notifications that your trade is decreasing and the trade is going against you. For example, you will get a notification at 15% drop in the trade. You'll get a second purification at 20% in the trade well. And if you don't liquidate the trade at 25% drop, the algorithm will automatically go ahead, liquidate, split the money back to, send back to you and you will essentially take a 25% drop in your initial. Okay. We're getting a little bit of feedback. Maybe you can adjust your volume down just a little bit. I think it might be coming out, coming back on your end if you hear that little echo. But okay, I think I got it. So all right, let me ask you a few of these questions that viewers have submitted about these kinds of things, especially about compliance because this is new. I mean, in the Bitcoin world, it's kind of in the Wild West and a lot of the entities are offshore. And so when we're talking about USA compliance, it's a whole new ballgame. So here are just some questions I want to throw at you. One was, can't be ex-licensed as a money transmitter? No, Bitcoin is not money, according to legal terms, as of now. So to transmit Bitcoin, you don't need a money service business license. You know, okay. When you're transmitting United States dollar, there is a threshold of $1,000. If you are below that threshold, you do not need to be licensed as a money service business. And that's what we have in place right now. One more thing you're working on is to get the money service business license. So we will be able to do more than one US dollars a day in transfers. So if we're to understand correctly, as long as you're not allowing people to cash out more than $1,000 at a time, technically it wouldn't classify as a... It includes both transfers. It includes deposit and withdrawal. You cannot deposit more than $1,000 a day. You cannot withdraw more than a cent. That's considered money transmittal. If I deposit more than $1,000, or I withdraw more than $1,000, that's more... Even if it's to my own account, it's still considered money transmittal? No, it's not. Oh, okay, so let me ask this. This can't BX allow funds transferred from account to account, like US dollar balances. Can I send US dollars from my account on can't BX to Manny's account on can't BX? No, you can't. You can't, okay. So, but if I deposit, like if I were to deposit $2,000 into my account and withdraw $2,000 from my account, would that be considered money transmittal? You would not be allowed to deposit or withdraw $2,000. So our goal is to stop you as soon as you reach $1,000. And after that, you will have to wait 24 hours before you can make any additional transfers. Okay, so it is a limit of $1,000 a day, is that what you're saying? And it is hard-coded, so there's no way around it. Okay. But even 1% on top of $1,000. Okay, so now, and you're saying that the reason for that is because of this money transmittal issue, because I mean, I don't understand how it's like, I guess you're saying that legally it is money transmittal, even though I'm putting it into my own account and withdrawing it from my own account, that's still considered- For us, we are transmitting the money for you from one point to other. Oh, okay. All right. And so did you speak with a lawyer? Do you guys have a legal team where they looked at case studies? The first thing we did, before we start off with the business, and the first thing we did was reach out to Georgia Department of Banking and Finance and request policy qualifications. We submitted an overview of what we're going to do with our business. And we asked them, what are the recommendations and further policies that we need to follow to make sure that business is still in Georgia? So- So this issue went pretty high up because Bitcoin was new to Georgia Department of Banking and Finance. It went up a couple of super- So we got an answer. But we had written out the policy qualifications and the lawyers built a compliance program based on the policy qualifications. So- Do you repeat the last part that the coders built? What did the coders do? I'm sorry, you broke out for a little bit. The compliance policy and the algorithms, they are all based on this clarification. You know, compliance is not something that you can slap on top of a business model. Your business, especially when it's related to business, the business, the pay you need to do the transaction, it has to be built in a certain way if you're applying for it. We're not catching it. Maybe, can you turn your speakers down just a little bit because I think we're getting some feedback and Skype is cancelling out your audio. You talked to your video feed, so- What was that? I lost your video feed. Yeah, and we did that on purpose to give us more bandwidth. Skype is playing games again. Sometimes, if the speakers are too loud, it'll give feedback and that is Skype trying to cancel out that echo. And so, just repeat that last part again because I think Skype was cancelling it out. Sorry. So- So once we received the clarification from Georgia Department of Banking and Finance, we gave it to our lawyer and worked with them to build a compliance program. That what rules and what business checks and balances we need to have in place to make sure they're compliant with all rules and regulations. Okay, so you have a program in place? It was also given to our technical teams who are actually doing the programming to make sure that when you write the algorithms, when you draw up the architecture of the system where how different modules talk to each other, there are also some legal implications at the code level, believe it or not. Okay, let me ask, let me get through some of these questions because we're running out of time already. How do you calculate the initial margin requirements? I'm not sure I understand it. Well, like the margin requirements, for example, I mean, you give the example, if I have $100, then I can actually use $200 worth. Is it just a two to one ratio or is there an actual formula that you use to calculate that? It is a ratio. Is it two to one? Is that what the ratio is? Yeah, it's called leverage. It's two to one leverage. So how did, I'm sorry, where does that come from? If you call it margin rules, it's 50%. 50%. If you call the leverage, it's going to be two to one. Oh, okay, so it is, it's 50% or two to one, okay. And nevermind, I forgot. And will the, let's see, this question, will mark to market margin requirements be the same as the initial margin? I don't even know what that means, but this is a question from the audience. You know what that means? Yes, okay. The margin requirements are based on the value in time. So mark to market means you calculate the margin call at the beginning and you enforce it and that's what we are going to do. There is an initial price at the moment of purchase. Your $100, our $100, they combine into a $200 amount and they go into a dedicated margin account. Now this transaction is timestamp along with the initial price of the transaction. So every time we calculate a margin call, it is calculated from the original price. Okay, and then how frequently will you mark to market? And that's what mark to market is. When you, it means you set the value when the transaction is executed. Okay, and then will that be updated automatically? It's difficult to explain in one sentence, so I'll be happy to answer the question in more detail on our support for the support health care system. Yeah, okay, and what's the protocol for liquidation of positions when a margin call can't be met? I'm sorry, could not hear you. Oh, I was saying, what will be the protocol for liquidation of positions when a margin call cannot be met? Right, we thought we were smart enough to know how much of a trade site to allow based on the liquidity. If there is a plastic drop in market liquidity from the time when you open the account, from the time when you trade to the time that you liquidate the trade, we will have some of the wrongs. Okay, and okay, so more questions about compliance. Will a W-9 tax form be required? W-9 tax form. Right, apparently that's a U.S. tax form requirement, and also asking if day trading profits declared to the IRS's income, is that gonna happen? So what you, when you were day trading Bitcoin, this income that you generate, it is technically bartering income in the tax term. Okay. So any profit that you make on camp you have to declare it on your IRS as bartering or cited? Okay, so just so I can repeat it so the audience can hear. Basically any profit made from camp BX or I suppose this extends to Bitcoin in general has to be sort of identified on your tax forms as barter and trade. Right. And will this be reported to the IRS by camp BX? No, it is not, in the United States it is the responsibility of the individual to make sure that tax forms are accurate. Okay, and now what about tax withholding on foreign accounts? Are those accounts without a social security number? Sorry, couldn't hear you, Bruce. Oh, the question was what about tax withholding on foreign accounts or those accounts without a social security number? We do not allow foreign accounts right now. Oh, okay. So it's only us. We are United States only. Okay, so there's no non-US accounts that take care of that. And if IRS declarations are eventually required how we calculate cost basis, cost basis for Bitcoin is deposited on the exchange. I'm not sure, I think this is something that we will have to run by our CPA. Okay. So we have to engage a CPA firm who are going to manage the taxes forms. Okay, and then I have one more. I'm sure they know all the answers. Okay, all right, then one last question. This is, will the aggregate total of short positions be public data? Aggregate total of short positions. That is something we are not considered publishing yet. The short positions, they will be visible to you. If you have a short position, you will know how much of short you have, of course, but we are not published that to the public as of now. Not publicly, okay. Okay, and wow, I got in those quizzes. I can't believe it. We just in the nick of time because we're at 59 minutes and 24 seconds. Well, I want to thank you, Key for joining us and Key for myth, ha-wah, ha-wah, ha-wah. Ha-wah. I can't say it, but campbx.com and welcome to the Bitcoin community and happy anniversary, happy three weeks. Thank you. All right, thanks for joining us. Thank you very much for answering everything. Yes, thanks so much. And we will see you same time tomorrow, 2 p.m. Eastern, every day Monday through Friday. Thanks for joining us on The Bitcoin Show. Thank you.