Bach Nguyen: “With Bitcoin you are your own bank”
Bach Nguyen of Prague firm SatoshiLabs explains various aspects of Bitcoin, the virtual currency that is increasingly visible in the Czech Republic.
“SatoshiLabs is a cryptocurrency firm and our main product is Trezor, which is basically a hardware Bitcoin wallet that keeps Bitcoin more secure.”
Why does a Prague-based company have this Japanese-sounding name?
“Satoshi is from the pseudonym Satoshi Nakamoto, which is used by the inventor of Bitcoin.
“So we took the first name and added Labs to create a name that sounds weird for a Czech company but actually makes a lot of sense for a Bitcoin community.”
This is a huge question, but how did Bitcoin come about? And how did it develop to where it is today?
“Bitcoin was developed as a decentralised electronic payment system, for money payments.
“It was developed back in 2009, if I remember right. We still don’t know who developed it but they use the name Satoshi Nakamoto.
“And the fact that it is decentralised, without any governmental control, is what led to the popularity that it has right now.”
Are there any downsides to the fact that there isn’t centralised control of Bitcoin?
“I can’t think of any downsides right now.
“You’re not subject to the whim of a bank that can choose to withhold your currency and have it stuck there for several days.”
“Maybe there’s a downside in regulatory terms in that if you lose Bitcoin, there’s no way that you can get it back – so it involves a certain degree of technical prowess to use it safely.
“But in essence I feel like the advantages coming from this decentralised cash system outweigh the downsides.”
I am not an early adopter and I’ve never used Bitcoin. In practical terms, what’s involved in acquiring it, holding it and then spending it?
“I’ll just divide that first. You can acquire Bitcoin by either buying it on a typical exchange or by mining it.
“Mining is running a strong computer that solves cryptographic functions, and if you are lucky enough to solve one in time, before all the others do, you receive a reward for that.
“As for holding cryptocurrencies, there is a general misconception that you hold cryptocurrencies in a wallet.
“In fact, cryptocurrencies never leave the ledger, basically.
“They stay on the network and what a cryptocurrency basically is, is just a history of transactions, going all the way back.
“So when you want to spend a cryptocurrency, you make a transaction and you sign it with your digital signature, which gets broadcast to the entire network.”
Do you have your own online page?
“This network is online and the ledger is distributed among all the users that want to run their own server.”
So if I bought Bitcoin, I could see it online in my own ledger – is that right?
“But nowadays if you are a general user, you don’t need to run your own server. Because that’s a little more technical.
“For a general user, you can use services that offer you wallets – like us.
“We offer a hardware wallet where you can see your entire history on a website, and spend out of that.”
What are the main advantages of Bitcoin?
“It’s instantaneous, or more or less faster than a bank transfer.
“You don’t need to go through currency exchanges.
“For example, when you’re sending from the Czech Republic to Argentina, you generally need to change to some world currency first.
“But with Bitcoin you just send it straight in Bitcoin and then the recipient can do whatever they want it.
“Also, you own the money. You’re not subject to the whim of a bank that can choose for regulatory reasons to withhold your currency and have it stuck there for several days.”
Are the traditional banks resistant to Bitcoin?
“I feel like traditional banks have now realised that advantages of a block chain, the technology that Bitcoin is based on.
“They’re trying to find a way they can leverage this new technology to make their older system more efficient.”
How advanced is the Czech Republic in this area?
“The Czech Republic is actually one of the most liberal countries when it comes to Bitcoin adoption.
“We have an institute, Paralelní Polis, where they organise Bitcoin meetups, cryptocurrency meetups, on a regular basis.
“You don’t actually need to know much about the technical details about how Bitcoin works in order to use it.”
“They also have a Bitcoin coffee place, where you can only pay with Bitcoin, making adoption there a little bit more practical – there is a practical case that Bitcoin can actually be used as a means of exchange.”
Are there a lot of retailers or restaurants that take it now?
“The franchise chain Subway accepts both Bitcoin and Litecoin and the biggest electronic retailer, Alza, also accepts Bitcoin.
“You can go to the Alza website and pay with Bitcoin, then pick up your purchases.”
That must have been a big step for Bitcoin in this country, given how huge Alza is?
“It was definitely a boost about public knowledge about Bitcoin in this country.”
I was surprised recently when I was in a pub near where I live, a kind of old-fashioned pub, and they take Bitcoin.
“Yes. It’s actually very easy to accept Bitcoin and send Bitcoin, since essentially all you need is a phone app.
“Then you scan a QR code and send it to the other person, and they know almost immediately that the money is on its way.”
Does the public need to be educated about Bitcoin? I presume using it is still very much a minority activity?
“You don’t actually need to know much about the technical details about how Bitcoin works in order to use it.
“There are certain security precautions that you should think about while using it, like not losing your backup or not showing the secret part of your wallet to somebody else.
“But in general the companies making these wallets are trying to be very user-friendly towards non-technical users.”
“Trezor is the world’s first hardware wallet.
“Essentially, what you need to do when sending a transaction is you need to sign it with your digital key.
“And since this key is digital, a hacker could attack your computer and copy your key and then he could make the transactions as if he was you.
“What we do is we keep the key inside our device, the Trezor, and only when you need to send the transaction you plug the Trezor into your computer and confirm that you want to send that transaction.”
And the Trezor is about the size of a mobile phone, is that right?
“It’s about the size of a car key or a garage door key.”
Is it already in use? Or is it a project for the future?
“It’s already widespread. We were the first on the market.
“Development started in 2013 and right now we are preparing our second generation Trezor, which should be ready by the end of this year.”
Is it being used internationally? I presume your market is mainly outside the Czech Republic?
“Yes. The market is biggest in the US. We sell most there worldwide.
“If you go onto Bitcoin forums or websites and somebody asks about a secure way to secure Bitcoins, Trezor is very often cited as the one choice.”
Famously right now in the Czech Republic there is a big labour shortage. Do you have trouble finding people who are technically able to work in this field? Or is it a “sexy” area that’s attracting a lot of people?
“The politics is inherently libertarian as it does not involve any regulation.”
“I feel like if you’re already looking to work at SatoshiLabs then you’ll have some basic knowledge about what Bitcoin is.
“And people who work in our company are either ideologically enthusiastic or just enthusiastic about the technology itself.
“So when we look for people there are a lot of applications.”
When you say ideologically, is it libertarian, this whole Bitcoin area?
“Yes. The politics is inherently libertarian as it does not involve any regulation.
“You are your own bank. You don’t depend on anyone else.
“But you don’t need to be a libertarian to use Bitcoin, obviously.
“You can believe in other political structures and still be able to understand why Bitcoin is beneficial for you.”
Had you yourself been interested in Bitcoin before you started getting your job at SatoshiLabs, or did that come later?
“My first exposure to Bitcoin was actually at college in the States, where I took an economics course on globalisation.
“There I wrote a presentation about Bitcoin. At that time it was worth two dollars. Right now it’s worth 2,500 dollars.
“After that project I saw how it could be useful.
“As I went through college I kind of forgot about it, but then when I came back to the Czech Republic I saw this company.
“I looked it into and felt like this could be something I could do.”
“I can definitely imagine it in the long run.
“Because as I said, sending and accepting Bitcoin is very easy.
“If you consider that you only need to have a mobile, it’s probably easier than paying by credit card with a phone by NFC.
“Because not all phones have an NFC, but many phones have a camera and a display, which is all you need.”