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SPOTLIGHT ON CENTI: Centi completes its payment system with launch of BSV’s first native stablecoin

Centi, based in beautiful Zurich, Switzerland, set out to create an entire payment system [back in 2020], and its new BSV-native stablecoin may be the final piece of that puzzle.

Centi founder/general manager Bernhard Müller has had an interesting journey. He got his start in plant pathology, then spent a decade testing medical instruments before being hired by a financial services firm in his native Switzerland to handle business development and compliance.

Long before then, he’d caught the Bitcoin bug. Bitcoin’s direct peer-to-peer transfer model appealed to Müller, who’d seen how much of traditional payment systems seemed broken…particularly, the role of fat-cat middlemen who got in between merchants and consumers wanting to pay with credit cards.

After running into Ralf Zellweger at a Bitcoin meet-up, the pair saw an opportunity to collaborate on what Muller called “a real paradigm shift in payments.” And with that, the pair co-founded Centi in 2020.

Müller has described Centi as targeting “people who don’t care about Bitcoin.” True to form, customers who use Centi at a growing number of both retail and online merchants may not even be aware of the app’s Bitcoin SV (BSV) association. They only know it works, seamlessly, for payments large or small.

While customers can fund their Centi accounts with BSV, they can also use credit cards, other payment apps such as Twint as well as IBAN transfers. In February, Centi’s Swiss customers were also given the option of popping into a local post office to top up their Centi accounts with cash!

Merchant appeal

As for where users can spend the funds in their Centi accounts, the company has set a goal of onboarding over 1,000 merchants by the end of this year. Müller said this ambitious goal is looking “very realistic” given Centi’s new “very big partnership” with PayRexx, the Swiss e-payments aggregator that has relationships with over 40,000 Swiss businesses.

While Centi continues to fully onboard merchants on its own – including its first customer in Denmark, where Centi has been approved to operate – Müller says the PayRexx deal (which will be integrated in April) offers Centi “a lot of access to the market.” It helps to have a good product to convince these merchants to hop onboard and Centi’s pitch is compelling to say the least.

First, merchants respond favorably to the fact that a Centi user can purchase items that cost less than a single franc – say, a pack of gum – via the app. The lack of a financial middleman in this transaction means the merchant retains his/her profit on the product, whereas a credit card company’s charges would eat up the merchant’s entire margin.

Second, direct payment means there are no chargebacks or dispute options. Obviously, the merchant can still offer refunds for defective products, but the customer cannot hold the merchant’s money hostage for 180 days by escalating the matter through the payment system.

Yet another perk for merchants is Centi’s open API (application programming interface). Visa and Mastercard restrict access to their APIs to certified providers, with whom merchants must first onboard, installing yet another middleman in the transaction chain.

Centi merchants – currently a 50/50 split between online and retail – can also customize what they accept as payment. This can include a mix of cash and bespoke rewards/loyalty points, even tokens issued by other merchants if they have a relationship – or decide to band together to form a new one.

BUT WAIT…THERE’S MORE: A stablecoin for non-Bitcoin nerds!

Müller said Centi spent over two years building technology, first on the merchant side, ensuring that its payment method was fully compatible with existing BSV wallets. After that, the focus turned to fine-tuning Centi’s own app, which landed in Android and iOS app stores last September, adding features that many other apps didn’t have, such as top-ups. 

The missing piece of this puzzle was a BSV-native stablecoin, which Müller views as crucial for onboarding people other than “Bitcoin nerds like myself.” The traditional volatility of digital assets is a major turnoff for neophytes, who might have $200 on their app, spend $30, then might not touch the app for weeks or months. When they next open the app, they expect to see $170 there. And it better all be there.

Müller says Centi’s CCHF stablecoin – which debuted on March 21 – has three key differentiators from others of its ilk. First, befitting a BSV-based product, its focus is on utility and consumer payments, including minor payments. Other stablecoins primarily focus on arbitrage traders who want to move a lot of money from one exchange to another to take advantage of a perceived price advantage in this or that token.

Secondly, unlike the constant questions surrounding the reserve assets of Tether or USDC, Centi’s stablecoin is fully backed by a Swiss bank guarantee. Even if Centi were to default, the bank will guarantee the 1:1 recoverability of its stablecoin.

Third, Centi will sell and accept stablecoins directly from customers. No need to go through an exchange, no million-dollar minimum purchases. It’s a stablecoin made for payments by everyday users, with similar top-up capabilities available via the app.

Despite his excitement for Centi’s near-term expansion, Müller says the ecosystem as a whole has a long way to go before the masses are ready to embrace direct payments with digital assets. “It’s like trying to convince everyone in the U.S. to speak Chinese tomorrow.” But with all the pieces of Centi’s payment system falling into place, Müller believes Centi has “a very good chance of becoming a billion-dollar company.”

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Liar, liar, banks on fire

Venture capital’s desperate pursuit of a government bailout of tech-focused Silicon Valley Bank (SVB) not only exposed the lies behind VC’s libertarian pose, it offered lessons on how they conned the public into believing the neutered BTC protocol was Bitcoin.

SVB’s recent near-death experience sent a shiver down the spine of many a tech exec, that is, until the federal government stepped in with their don’t-call-it-a-bailout-bailout. Employees of tech start-ups will continue to be paid after the feds agreed to guarantee all SVB deposits, even those above the FDIC’s $250,000 insured maximum.

SVB’s major crime was seriously misjudging the Federal Reserve’s willingness to raise interest rates. SVB plowed a bunch of capital into long-term bonds that lost value as interest rates spiked. When too many of SVB’s tech-focused customers began dipping into their savings, the bank was forced to redeem these bonds at a loss, leaving a nearly $2 billion hole in its balance sheet.

But SVB also relied far too heavily on a single business sector, with predictable results. Many of its tech clients were equally at fault for putting too much of their capital – in some cases, all of their capital – into a single financial institution.

Some VCs reportedly pressed their portfolio companies to bank exclusively with SVB, apparently because that made the companies more likely to qualify for SVB loans, thereby alleviating the need for the VCs to pony up additional cash themselves.

Prior to Sunday’s bailout news, panic-stricken pleas were issued on social media by prominent VCs, all of whom had apparently undergone a 180-degree conversion from staunch Randian objectivists to enthusiastic Keynesian interventionists. The minute they feared their funds were in danger, these rugged individualists began crying for their federal mommies to save them.

Perhaps the most galling element of this campaign was the VCs’ apocalyptic warnings that failing to make them whole would cause SVB’s woes to spread to other banks. It wasn’t for their sake that a bailout had to happen, but to protect society. Without immediate intervention, America would resemble something out of Cormac McCarthy’s The Road (minus the mitigating presence of Charlize Theron).

They calmed down once the grown-ups reassured them that the monsters under the bed were all gone. But while these VCs might now claim they were never, like, really worried, their ‘get government off our backs and let us innovate’ schtick won’t play anymore. As countless others have observed over the past week, there are no atheists in a foxhole and even fewer libertarians in a bank run. And the feds definitely aren’t helping by turning moral hazards into mulligans.

Yeah, but what have you done for me lately?

Before the feds stepped in, many VCs had signed a joint statement of support for SVB, claiming that if the bank were “purchased and appropriately capitalized, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them.”

Notably absent from the hundreds of VC names appearing on this statement were prominent crypto investors a16z (Andreessen Horowitz), Paradigm and Pantera Capital. Presumably, they were among the lucky few who managed to get their cash out of SVB before the doors were locked.

Also absent was Founders Fund, whose partner Peter Thiel reportedly helped spark the single-day $42 billion bank run that brought SVB to its knees. Founders Fund withdrew the entirety of its deposits from SVB before it shut and urged its portfolio companies to do likewise. Since then, neither Thiel nor Founders has spoken publicly about SVB.

But Thiel’s escape – and his pulling up the drawbridge behind him – didn’t go unnoticed. G Squared founder Larry Aschebrook called it “truly unfortunate that several GPs and companies are making a tough situation for SVB worse by pressing the panic button. SVB has supported entrepreneurs and GPs at all stages of their businesses and that partnership should run both ways.”

Following SVB’s collapse, Upfront Ventures’ Mark Suster expressed annoyance at certain VCs who were “telling people to run for the door and congratulating themselves for it … I’m seeing emails from VCs to their [limited partners] – of which I am in some firms – and they are forwarding these things like ‘Aren’t I super smart?’”

You get the heroes you deserve

Unlike the faux libertarian VCs who got out their begging bowls, Thiel’s actions are the epitome of Randian self-interest. That Thiel would act to preserve his own interests at others’ expense isn’t illegal. It’s arguably not even unethical. But his selfish actions did shift the worst-case scenario from theoretical possibility to guaranteed outcome.

Not that Thiel’s ethics weren’t already suspect. As detailed in Max Chafkin’s book, Thiel’s early stint as PayPal CEO included him urging the board of directors to turn over the company’s cash so that he could invest it with his Thiel Capital hedge fund. The board reportedly viewed this as evidence of Thiel’s ‘lack of a moral compass.’

Thiel’s PayPal tenure also demonstrated a willingness – if not eagerness – to ignore ‘know your customer’ regulations in order to rapidly grow the company. Thiel called his more compliant competitors “insane” for following the rules. In other words, Thiel was a perfect match for crypto.

Thiel’s crypto involvement has focused primarily on BTC, although the Founders Fund portfolio includes crypto-friendly payment processor Stripe and Paxos, which until recently issued the BUSD stablecoin. Thiel is also a founder of Valar Ventures, whose portfolio included the crypto exchanges Bitpanda and (now bankrupt) Vauld, as well as the XanPool fiat-crypto gateway.

In January, the Financial Post revealed that Founders Fund netted $1.8 billion after selling its BTC holdings in March 2022. Just one week after that sale, Thiel gave a speech at a BTC conference in Miami in which he held up several hundred-dollar bills, declaring them to be “probably not very good as toilet paper. It’s not good as wallpaper. It’s sort of this crappy fiat money.” He then tossed the bills into the audience and openly mocked those who scrambled to pick them up.

Thiel justified his stunt by declaring that BTC “is telling us that the central banks are bankrupt, that we are at the end of the fiat money regime.” Thiel neglected to inform the audience that he’d recently traded his massive BTC holdings for that archaic, crappy fiat money.

Why the subterfuge? Perhaps Thiel is just a fame whore and can’t live without occasionally basking in the adulation of a room full of sycophants who haven’t yet realized that he thinks they’re rubes. Thiel also might have been aware of the furious tongue-lashing his former PayPal partner Elon Musk received in absentia at the 2021 conference from Max Keiser, who repeatedly yelled ‘Fuck Elon!’ after Musk’s own massive BTC sell-off was revealed.

Thiel would also have been all too aware that fiat money might be crappy but BTC will never be money, because BTC in no way resembles the vision of peer-to-peer electronic cash described in Satoshi Nakamoto’s 2008 Bitcoin white paper. BTC transactions simply cost too much for it ever to serve as a currency. What’s more, its transaction capacity is so constrained, BTC could change to a ‘proof of carrier pigeon’ consensus mechanism and few would notice.

Thiel’s Miami speech declared that BTC “is a movement, and it’s a political question whether this movement is going to succeed, or whether the enemies of the movement will succeed in stopping us.” That is, unless the enemies are already inside the castle walls and secretly sniggering at the peasants still lining up to trade their filthy fiat for magic BTC beans.

Just like yesterday

A long time ago, Bitcoin was electronic cash, until some greedy grifter types realized there was an opportunity to fence in the financial commons that Satoshi had gifted the world. The BTC Core developers did the rest, kneecapping Bitcoin in order to force transactions off Layer 1 and onto proprietary sidechains.

The Frankenstein’s monster that emerged – forget ‘digital gold,’ it’s a digital gelding – became known as BTC. Many of the same opportunistic swindlers cited above would have you believe that BTC is Bitcoin. Don’t buy their bullshit. They were lying then and they’re lying now.

I’m dating myself here, but The Who’s Won’t Get Fooled Again was part of the soundtrack of my youth. The line about how “the morals that they worship will be gone” kept popping in my head as the SVB debacle played out. Just like the Core developers’ enforced dogma that ‘BTC = Bitcoin’ always brings to mind the line “they decide and the shotgun sings the song.”

Me? I’ll get on my knees and pray that we don’t get fooled again. Meet the new boss. Same as the old boss. BSV is Bitcoin.

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