#728 Increasing Bitcoin Adoption w/ Chris McAlary

Chris McAlary was an early bitcoin miner and today serves as the founder and CEO of CoinCloud, the world’s largest network of two-way digital currency kiosks. In this conversation, we discuss bitcoin, mining, ATMs, increasing adoption, and how Chris has built such a large company. =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Chris McAlary was an early Bitcoin miner and today serves as the founder and CEO of CoinCloud, the world's largest network of two-way digital currency kiosks. In this conversation, we discuss Bitcoin, mining, ATMs, increasing adoption, and how Chris has built such a large company. I'm really impressed with Chris and I enjoyed this conversation. I hope you do as well. Before we get into this episode, though, I want to quickly remind you, are you looking for a job in the crypto space? Do you want to work at a Bitcoin company or a crypto company? Well, we've got two products specifically designed just for you.

• 0:45Anthony Pompliano?

  The first is the job marketplace. Anyone in the world who's looking for a job can go to pompcryptojobs.com and you can apply to hundreds of open roles at the top companies in the industry. People have already been hired at Coinbase, Kraken, Gemini, BlockFi, Strike, and many, many others. Go to pompcryptojobs.com and start applying today. Next up is if you think that you don't have enough knowledge to actually go through the hiring process yet, we've got you covered there as well. You can go to pompcryptocourse.com and you'll go through our training program. It's a three-week intensive program that we've worked with a number of the leading HR teams to actually develop the curriculum. The goal is that once you go through that, we hand you off to the HR teams and you can

• 1:29Anthony Pompliano?

  immediately walk into an interview confident and full of all the knowledge they need you to have in order to get hired. So pompcryptojobs.com if you want to go straight ahead and just apply to open roles, or go to pompcryptocourse.com if you want to go through that training program. All right, let's get into this episode. Chris, I hope you guys enjoy this one.

• 1:46Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 2:10Anthony Pompliano?

  All right, let's uh, let's get into this first. Let's start with your backstory. Uh, you were very early to Bitcoin. Noticed that this might be a thing, maybe get a couple Bitcoin in case it catches on, as Toshi said. Tell us kind of how you originally came across Bitcoin and uh, and what caught your eye.

• 2:24Speaker 03

  Yeah, so uh, I was a part of the online poker craze and boom uh, in college. And uh, rather than getting a real job out of college, I moved to Vegas and played online poker. Uh, bought a house, did that for a few years and then uh, in 2011, uh, what they call Black Friday happened. And the Department of Justice shut down Full-Tail Poker, Poker Stars, um, and uh, Ultimate Bet Poker. And you know, as a kid with his whole bankroll on those sites, I was a kid in my early twenties. Have it locked up overnight, you know, I just saw sort of the power of uh, not custoding your own funds. And uh, that was 2011. I just heard about Bitcoin for the first time at the end of 2010.

• 3:10Speaker 03

  And I was like, wow, uh, yeah, if I'd had my money in Bitcoin, I could have, I could have prevented a lot of this. And I went down that Bitcoin wormhole, started reading the Bitcoin Talk forums, you know. Just went down the full wormhole, started my, in my garage uh, in 2011, because that was really the only way you could buy it. Unless you wanted to wire money off to Japan, which uh, you know, given my experience with online poker, I wasn't sending money offshore anymore. And so uh, became sort of like the Bitcoin guy amongst my friends, family acquaintances, was meeting people. Um, telling them, you know, you should buy some Bitcoin. They're like, okay, yeah, how do I do that?

• 3:52Speaker 03

  You know, yeah, you gotta go mine, build a mining rig, you gotta send money to Japan. Which one do you want to do? I'm like, okay, no thanks. So I sort of saw the problem of how hard Bitcoin was to get in the early days. And uh, was going to Bitcoin conferences and at this conference uh, in 2013.

• 4:11Speaker 03

  Saw the prototype of the Bitcoin ATM. It was this giant behemoth thing called a RoboCoin. And uh, I ended up buying one of those and they're like, well, we're only selling them to uh, Canada and Europe right now. Because nobody in the US has figured out a cash to uh, crypto compliance regime uh, as a money service business. And so uh, My college roommate was a lawyer, worked with him to help figure out how to do this compliantly. And we launched our first location in 2014 here in Las Vegas. And today, we've got 4,500 locations in 48 states and in Brazil. And we're still growing really fast. And we're

• 4:56Speaker 03

  just trying to make, bring digital currency at all.

• 4:59Anthony Pompliano?

  All right. So I want to go back first, 2010, 2011, you have this kind of catastrophic external event where literally you wake up one day, Black Friday, bam, they took all the money. And they're like, we're freezing everything, and we'll figure out how to do it. When you start actually looking at Bitcoin, you had that as the perspective, or that as the backdrop. So it's very clear, hey, the fact that I hold it rather than somebody else, interesting. When you begin mining, and really kind of entering into the space, what was the general sentiment? Like, were you like, oh, this thing's going to, you know, $60,000 and like, hey, we're all going to get rich? Or was it very much just like, oh, this is like intellectually interesting to us? I want to kind of play around and learn here. And then it became this thing that was much, much bigger than everyone thought at the time?

• 5:39Speaker 03

  Yeah, when I first heard about it, it was on a podcast, Econ Talk, was one of my favorite podcasts at the time, with 70 cents. And, you know, like, a few months after that happened, it crossed $1 parity. And I was like, wow, this is like, it's at $1, it's more valuable than the US dollar at this point. And I thought it was the coolest thing ever. And so at that point, like, I'd sort of gotten this itch of like, price appreciation. And, you know, it was like, part, I wanted to get some Bitcoin, and it was really hard to get. So I just did it for that purpose. But I also wanted to learn about, you know, how it actually worked, what this mining process was. I'm very much like a learning by doing sort of person. And, you know, yeah, I went down this wormhole. And looking back, like, I can't believe I actually was like, did what I did in terms, I had like, this

• 6:24Speaker 03

  octopus computer that had like, eight graphics cards connected to it. I was like, writing scripts in my garage, like, on, you know, how to mine. It was, you know, I'm not really that technical of a person, but somehow I got it done.

• 6:37Anthony Pompliano?

  Yeah, that's awesome. All right. And so talk to us about CoinCloud. So I start from the top in terms of just how many employees, how many locations, and then if you can disclose, how big is the business from a financial standpoint?

• 6:50Speaker 03

  Yeah, so we're 240 employees. We're headquartered here in Las Vegas, Nevada. We've got 4,500 locations installed today in a variety of amazing retailers, HEB, 7-Eleven, many others. You know, we're bringing this mainstream, digital currency mainstream. So when you're at your checkout counter, look around, you'll probably see one of our kiosks.

• 7:17Speaker 03

  In terms of, you know, how big is this financially? Yeah, we're in the hundreds of millions, if not billions, in terms of our total sales today. I'm not sure what we'll be at by the end of this year.

• 7:30Speaker 03

  We're looking forward to a good November and December. So I think we'll probably get into the billions this year.

• 7:35Anthony Pompliano?

  Got it. And when you look at how this works, so you go to, let's take a 7-Eleven, right? Or some other kind of retailer, you go to them and you get the ATM actually placed inside of that. What is the relationship between your business and the retailer? Like, I don't think people understand how these businesses work from like a mechanism standpoint.

• 7:55Speaker 03

  For us, it's really simple. We're subleasing basically a 1.6 square foot space in their store. And the value proposition of them is really simple. They, you know, get rent. So based on the rent we pay, we're already the number one, you know, revenue per square foot in their entire store. And, you know, if you got a small C store or a grocery store, they're really looking at that metric. In addition to that rent and revenue that we pay, we're bringing in lots of new foot traffic. So around 300 people a month are coming to the destination to buy and sell digital currency.

• 8:33Speaker 03

  We're one of the few digital currency machines that, you know, our entire network is two-way and that you can buy and sell. And so, you know, that adds a lot of repeat traffic. People who've bought elsewhere and want to cash out, one of the only places they can get cash for crypto is our kiosk. And so that drives a lot of traffic into their store and retains a loyal customer. And because crypto is so sort of new and scary to a lot of people, we have a live 24/7 customer support line that...

• 9:06Speaker 03

  You know, they can call anytime. How do I download a wallet? How do I do my first transaction? How do I sell my Bitcoin for cash? Where do I find a location? Where are the hours? You know, call us anytime. Well, you don't even have to be a customer. We'll help you, you know, understand what digital currencies are, how to use them and use our product. And so building that trust with it with our customers is a really important piece of what we do and brings a lot of customer loyalty to both our business and the host business.

• 9:34Anthony Pompliano?

  Got it. And then walk me through in terms of who is this for? Right? I think a lot of folks, when they think of buying Bitcoin or cryptocurrencies, they're thinking about going on to kind of a traditional exchange. I'll put traditional in air quotes of it's something that I do on the internet. I go, I sign up for an account and I go and I purchase it that way. These are in-person, physical retail devices. So what is the kind of intended or target demographic, age, you know, location? Like, how do you think about why somebody would go to the physical system rather than go online?

• 10:06Speaker 03

  Great question. That's just a lot of things or one key point most people don't understand about our business, but it's cash to crypto. There's no banking intermediary with our product. It's a direct in and out to crypto with with cash. And, you know, cash is in a very immediate payment means and still serves 30% plus of all transactional activity in the United States. Now, COVID might have put a dent into that a little bit, but cash isn't going anywhere. And there's a certain piece of cash that is financially independent from sort of the legacy banking system that you don't need a bank account in order to do these transactions.

• 10:44Speaker 03

  And as somebody who's been in crypto since 2010, I probably had 50 bank accounts closed because because banks saw, you know, a Coinbase wire coming in out of my account or Gemini wire coming in out of my my account. And for a long period of time, there was this sort of embargo against people who did crypto transactions. And so, you know, I think the importance of cash to crypto is really

• 11:15Speaker 03

  You know, missed in the mainstream media today. And, uh, you know, we sort of provide that sort of base level of, of being able to supercharge your dollars, right? You, you can, you can take your US dollar and you can turn it into a digital currency and get, you know, a million more use cases and value out of it. That's a, that's a really powerful thing to, especially to people who are underbanked that, um, or don't want to be banked or, or unbanked. You know, there's this whole class of, of US citizens that, um, the banking system just doesn't serve and they still need to interact with the global economy. And, uh, you know, cash to crypto is, is an amazing way for them to supercharge their dollars.

• 11:57Anthony Pompliano?

  And then is this all individuals or there are other types of organizations, whether they're corporations or other types of folks, uh, that would be using this as well? And then maybe you can also talk about the US versus international, right? Is there a difference there that you see, uh, between, uh, what many would describe as like a Western developed nation versus anywhere else that you guys may have locations?

• 12:17Speaker 03

  Yeah. So at, at the retail level, we're, we're to individuals, you know, corporations don't really use, use that part of our business. We do have an over the counter trading desk, private client desk for people who want to do over $25,000 a day. Um, we see more corporations use that. We also have, uh, sort of a, an on-chain DeFi fund, um, that's gaining some, some corporate interest that came out of just managing our, our company treasury, which is a whole new business we're, we're getting into. But, um, in terms of the international front, uh, Brazil, you know, we see much smaller transaction volumes, but a higher quantity. And, and Brazil's a country where over 50% of the people are paid in cash.

• 13:01Speaker 03

  And, you know, over 50% as well are not connected to the legacy banking system there. And so the value proposition to, uh, users in that country is massive and we see a lot of just small dollar volumes there. And, you know, then it's all about education there, I think. You know, they're a little bit further behind in terms of their adoption curve. And so, uh, we're making, you know, uh, big efforts in both places, both in the United States and Brazil, um, on education.

• 13:29Anthony Pompliano?

  Got it. Joe. John, what questions you guys got?

• 13:32Speaker 04

  Hey Chris, how you doing, man? Good to see you.

• 13:34Speaker 03

  What's up, Jeff?

• 13:35Speaker 04

  Not much, man. So my question would be just like, how big can this business be, right? You've obviously got really good traction here in the United States. It sounds like you're doing some cool and interesting things abroad, but like, how big can this business be?

• 13:47Speaker 03

  So I think we all believe this is the future of finance, that crypto technology is going to be behind all personal corporate finance in the 21st century. And so anywhere you see a legacy ATM, there will be a crypto ATM in its place or next to it over the next, whatever, 50 years. So that's hundreds of thousands, if not millions of locations. I think today there's 4 million ATMs out there. So the use case for crypto and cash or crypto to your local economy is massive. And so we're going to continue to put machines out and we've just continued to grow and grow and grow and meet the needs of the market demand.

• 14:30Speaker 03

  And so I don't see it slowing down anytime soon.

• 14:35Anthony Pompliano?

  John, what do you got?

• 14:36Speaker 04

  Yeah, how you doing, Chris? Love what you guys are building at CoinCloud. Can you talk about like the KYC stuff that happens? Like what happens when a consumer actually walks up to the machine? And what is the process for them like?

• 14:47Speaker 03

  Yeah, so we've got a, the initial KYC level is up to a thousand dollars a lifetime. You can just come up and use a phone number. And we wanted to make crypto easy to try and buy on your, on a first experience like that. And so beyond that, if you want to do over a thousand dollars a lifetime, you're going to, you're going to take a selfie and scan your driver's license or government ID in some form. We'll do a match on that. Make sure that you're not on any sort of terrorist watch list or anything like that. And that'll give you a $8,500 per day limit. And if you want to go above and beyond that, you do, you know, share your social security number and you can do up to $25,000 per day.

• 15:32Speaker 03

  You're going to answer a couple of questions around what your source of income is and how you're planning to use the digital currency. And so those are our limits. That's our KYC, very similar to most of the other online exchanges in the space.

• 15:48Anthony Pompliano?

  Chris, when you think about talent in the space, one of the things I'm really interested in is it seems like there are companies growing at an immense rate. You mentioned that you've got hundreds of employees. Where are you finding the talent? And also, how many of those people are coming in already being familiar with Bitcoin and cryptocurrencies? And having a kind of foundational knowledge base versus you're having to actually train them? And you're saying, hey, look, you're really good as a technician, or as marketing, or customer service, but we've got to teach you this other component of it?

• 16:16Speaker 03

  Great question. So, the company's been around since 2014. Throughout the years, we've been the ones training people as they've come on, because barely any people had any sort of knowledge or expertise in this space. Recently, we have our customer support staff, we just had a training session, starting last week, where we brought in a group of 30 or 40 people for our latest class. Over half of them already had crypto, or crypto enthusiasts, had NFTs. Like, they're coming in with NFTs as their profile pictures on our company Slack. So, they're so ahead of the curve, this generation, that's crypto

• 17:00Speaker 03

  generation that's popped up in the last year or two. So, that's really exciting to see. The labor market's tough generally right now. I think all companies are having a tough time finding people who are good quality that want to work. We're no different from that. We've got, we're growing fast. We've got a lot of job requisitions out. And so, getting those people to get off the couch, I guess, and work is tough in this environment today, for whatever reason. But, the one thing we do have going for us, we've got a lot going for us. We're an amazing place to work. But, the fact that we're in crypto,

• 17:44Speaker 03

  I think, is of interest to a lot of people. People see it as the future. People want to get involved with this industry. And as one of the few crypto companies in Las Vegas, that's something really, really attractive to a lot of young people in this area.

• 17:56Anthony Pompliano?

  Absolutely. When you start thinking about the biggest risks or challenges for your business moving forward, what are those things that stick out in terms of things you're working to mitigate right now?

• 18:06Speaker 03

  Biggest risk. So I think we're all confident crypto is going to continue to grow the market for taking your fiat dollars and moving that into digital currencies. That's a great business. I think it's going to be a good business for years to come. Risk, you know, I would say sort of like crazy regulation that might come out. You know, you just see like stuff that doesn't make any sense that is in Washington. You know, for us, we also have to do licensing at a state by state level. And, you know, we've encountered some weird things at the state level.

• 18:41Speaker 03

  That are, you know, scary and they come sort of out of misunderstanding usually.

• 18:49Speaker 03

  Of how this space works and how it operates and what the risks are. And so something going wrong there at the regulatory level is, I think, the biggest risk. I think it's a short term risk. I think in the long run, people get it right. In the long run, in the United States, I think we really want to have the economy grow and be.

• 19:10Speaker 03

  You know, be a centerpiece of, you know, the future of this technology and the future of the economy. So look at their heads on straight at some point. It's just got to be about education and, you know, interacting with the regulators so they make smart, informed choices.

• 19:28Anthony Pompliano?

  Awesome. Before I let you go, I got two last questions. The first one is, what is like the pitch for why people should use the coin cloud device? Or kind of go find a local location for them?

• 19:41Speaker 03

  Easiest way to buy and sell digital currency, you know, walk up, put in your phone number. Put in some cash, get it sent to your phone within a couple of minutes or less. That's, you know, the easiest way to try digital currency. You can buy as little as $1 a kiosk, which is, which is pretty amazing. You know, if you try and do that at a Coinbase or Gemini, you're going to be wiring in $1. That's not, doesn't make any sense. You're going to pay a $30 wire fee. It's going to take you, you know, a couple of weeks to go through onboarding and compliance, you know, with us. You're buying a beer at your local liquor store, walk in, try it out, right? Like, like I said earlier, I'm, I find learning by doing is the best way to figure stuff out.

• 20:22Speaker 03

  And I think that the magic of experiencing a crypto transaction and having your own digital currency, there's nothing like it. And so if you, if you come across a coin cloud kiosk anywhere, I'd encourage you to just take out a dollar, five dollars and, and give it a try.

• 20:41Anthony Pompliano?

  All right. And then last thing is where should we send people to find you on the internet? Twitter or somewhere else?

• 20:46Speaker 03

  Um, me personally?

• 20:49Anthony Pompliano?

  Yeah.

• 20:50Speaker 03

  Yeah, Twitter. I'm probably most active on Twitter. All my other accounts are locked down. I think I'm at Chris underscore McCallery.

• 20:59Anthony Pompliano?

  You are. I'm going to drop the, the Twitter account in the chat right now. We can, uh, maybe get you like two or three more followers. See, see what we can do there. If anyone want to, uh, go follow Chris on Twitter, you can go to that link right there. You know, now, now, listen, okay, this is, this is great. I appreciate all of your perspective, but I gotta now check with your employee to make sure. Let's see what they think. How did you think of his performance?

• 21:23Anthony Pompliano?

  I don't know, man. Tough crowd, tough crowd. What did you say, Sean?

• 21:26Speaker 04

  John said great.

• 21:27Speaker 03

  Great.

• 21:30Speaker 03

  I hear the roaring.

• 21:32Anthony Pompliano?

  Yeah, listen, I appreciate you very much, uh, coming on. Uh, obviously you guys have built a massive business here. You've been in Bitcoin for a very long time. So appreciate all the work that you've done there and trying to get more people on boarded into, uh, into the asset, more, uh, of the education that you guys are doing. And we'll have to bring you back as you guys continue to build a bigger and bigger business. I know that, uh, that we're super excited and cheering for you. And every single person that walks in this studio sees, uh, sees the ATM here and, uh, asks us, hey, what is that? So it's strategically placed in, uh, a place where everyone sees it.

• 22:05Speaker 03

  Love it. Hey, I love what you guys are doing for the space. You know, I've been following you guys for, for many years. You know, what do you guys do in terms of all the topics you discuss and the education, uh, Bitcoin and beyond, um, personal finance, you know, I, I think you're doing amazing things for, for.

• 22:23Speaker 03

  The whole world. So thank you for what you guys do.

• 22:25Anthony Pompliano?

  And you have and you have this coming towards you. I'm gonna send you one of these. We're gonna get you. Now, here's the problem is a bunch of people who are watching this from coin cutter are gonna start hitting us up. Be like, hey, how do I get one? I need one to wear to the party too. So hopefully you guys have a great Christmas party and we'll talk soon, my friend.

• 22:41Speaker 03

  All right. Thanks, Palm Boys.