EB38 – Flavien Charlon: Coinprism, Colored Coins, Open Assets Protocol, Crypto Equity

Transcript

[Music] hello and welcome to fcenter bitcoin the show which talks about the Technologies projects and startups driving decentralization and the global cryptocurrency Revolution my name is Sebastian kuch and I'm Brian fan cran welcome to for our 38th episode today our guest is flaman Charlo he's the founder of colored coin wallet coin prism so color coins allow people and organizations to securely issue and trade real world assets like quy stocks Bonds on the Bitcoin Network um if you think of the kind of new ethereum Etc protocols color coins was sort of the first instance of something like that uh they recently won the global startup

challenge at the Bitcoin Foundation uh conference in in May Amsterdam and he's also involved or he's also the founder of the predictions which is a Bitcoin based prediction market so he has 8 years experience in software engineering and Microsoft soft building large scale distributed systems graduated of e s Leon where he received in math and Engineering so it's great to have you on FIA yeah happy to be here thanks for joining us fan uh so you're in Dublin right now right yeah in Dublin in Arland yeah uh so you you've been based there for how long uh for seven years actually oh cool it's about the time I got to France uh so yeah we'll get to talk to

to fvan a few minutes about color coins open as prot call coin prism uh all that stuff uh first we just want to mention a couple of things so first of all we mentioned this last week uh our regulatory is feris respond at Shon Jones is going to be at inside Bitcoins London on September 15th and 16th doing some interviews for us there and recording some interesting talks uh that conference is uh taking place in London and there are some very interesting uh uh talks there uh centered around crypto law kind Bitcoin 2.0 a lot of Bitcoin 2.0 Focus stuff uh happening at the inside bitcoin's London and FL you're going to be there as well right yeah I

will be on the um uh altcoin panel so I will be there and if somebody wants to talk to me there or you know chat with me you can contact me uh on Twitter At at@ Con prism and we'll be happy to meet people cool and so there we have a 10% discount code and that uh discount code is epic ic14 epic ic14 if you want 10% off inside bitcoin's London it'll also be on our SoundCloud page and on our show notes if you didn't get that um also I'm happy to announce that there is a the first frankophone Bitcoin conference in

Europe as far as I know happening in Paris on October 8th it's called Euro Bitcoin and you can find it at Euro bitcoin.org it's uh organized by the French Bitcoin Association uh in coordination with the Belgian Bitcoin association association and the Swedish Bitcoin Association and it's a one-day event so it's happening October 8th at the very prestigious biotech na France and we have a 10% discount code as well for that it's epicenter and there will be many talks there in French and in English we've got some guests uh some speakers already confirmed such as John Gavin andrion but also some very famous uh uh French politicians intellectuals economists and uh it should be a great

event and so again there's a 10% discount code if you want to go to that and if you're in Paris it's uh epicenter and that's and you're moderating a panel no I am moderating I'm I'm going to be uh moderating a VC panel which is going also going to have a startup showcase cool right yeah uh so there's also going to be some guys the guys from mcoin will be there as well and everybody from uh from payum like all the French Bitcoin Stars will be there uh as well as some uh some Americans Josh mnik from uh the Chicago Sun Times will be there as well uh who else Gavin andri might be coming haven't confirmed that yet but should be

coming and fvan will be there as well yes would be there yeah so diving into color coins flavan can you give us a brief introduction to as to what color coins are Yeah so basically with Bitcoin what you can do you can send uh essentially cash from one point to another uh through the Bitcoin Network and that's very convenient for that you you have low fees and uh it's it's pseudonymous um and you don't have to go through any uh bank or any institution it's like peer-to-peer and basically the concept behind col coin is to reuse the this whole infrastructure to essentially send uh assets like real world assets through the same network so instead of just

being able to send cash or like Bitcoin you're you can send gold you can send Euros you can send uh maybe uh shares Etc so that's that's the whole concept behind cor coins and can you kind of dive into what are some of the types of applications that we can use color coins for yeah so uh there are quite a few actually because uh basically everything that has a value in like uh in the in the real world can be represented as a Col coin so I guess the the first example is the uh the example of um shares so like crypto Equity so if a business wants to do an IPO on the blockchain they would basically just

issue some shares uh represented by colet coins and they would sell those shares so like let's say they issue one million shares and sell every share for $1 and that's a way to raise $1 million and then that share is is a token that you have on the blockchain it's it's in your Bitcoin wallet and then you can uh send it to somebody across the world or uh you know just send it to your friends um and you can do that very easily the same way you can send Bitcoin so that's that's a very uh that's kind of the application that's uh very popular at the moment because we see a number of IPOs so the kot coin had a few IPOs so far but I guess the biggest one are are on different platforms like counterparty but it's basically the same

concept uh and there are more uh more use cases so one one very useful use case would be to have US Dollars uh represented by colod coins so let's say a company could uh so yeah for example one thing that's happening in Africa is that with Mesa they you have um you have a phone company which which is like they have like uh like dollars that's represented by phone credit and this phone credit is is being exchanged as a currency so this would be the same concept here so let's say you would have a company which would issue credit which which represent dollars and then you would be able to use those tokens as

real dollars because you can always spend it at that company um so yeah dollars currencies Euros Etc uh and also commodity like gold silver could be represented by col coins and uh yeah going F further you could represent also a percentage of ownership of a house or yeah or like a property like that it's called smart property so I know color coins has been around for a really long time I think it's older than right all these other projects that we've now you know seen getting a lot of attention can you uh tell us a little bit about the history of color coins like when did it first origin and how has it developed since

then yeah so I think it was described for the first time in a blog post in 2012 and uh originally yeah the concept was really uh what the name uh I mean what what it sounds like with the name so it you take a Satoshi or a few satoshis and you tag them so that you can track them through the blockchain and so you basically color uh in like uh not literally but like you color some satosi and TR them on the blockchain and you can always recognize them so uh after this blog post I mean there there was a team or like a few people who came together and started to work on a on a client uh the uh uh NCCC was the name Next Generation col colon

coin client which was later renamed in chroma wallet and so they it's a it's basically a wallet that you download so it's open source download it and then you download the blockchain then works of the blockchain uh but yeah it was never really marketed very well and it was never really also ready for production so they never they always recommended to just use it on test net uh so I mean people were and you know it takes it wasn't really ready for uh the end user so it was taking a lot of setup was complicated to set up so it it didn't I guess at this point that's when it got overtaken by uh Master coin uh initially before counterparty existed um

and yes so then more recently uh we founded coin coin prism so we started working on that uh end of last year 2013 and we took a different approach instead of going with the downloadable wallets that you run on your own machine we took the the approach of uh use uh building a web wallet so the same model as blockchain.info so it's all web based but still we don't store the keys the keys are encrypted with a password and uh we don't have the password so there's even if we get hacked there's no the keys are not leaked because uh it's the same model as blockchain.info uh but the difference with blockchain.info is that we uh we

basically uh work with colod coins so you can use coin pres to issue coins like colod coins you can create your own colod coins and issue them and you can send and receive the colot coins and store them as well um so yeah we released that uh uh in May last this year and then now we're adding more features so we add we've added the dividends featur so you can send dividends to sharehold like to people who own a specific coin um and also uh a couple of weeks ago or last week actually we released a new feature for crowd sales so it's uh it's it's a convenient way to run crowd sales so if you have you want to raise some money with a crow sale you basically create a

color address and people send Bitcoin to that address and then uh the feature on coin prison will automatically return uh colon coin uh in exchange for the Bitcoin you send so if you send uh one Bitcoin and the colon coins are uh 0.1 uh Bitcoin per colod coin let's say that's the price of the share then you're going to get back 10 uh colod coin automatically from that so that's uh and so that's a way to run a crow sale campaign and also we're we've just released uh yesterday actually uh color core which is a downloadable wallet which is also open source it's only common line and Json at the moment but it's very convenient for integrating

with a server so if you want to build an application that uses colod coin then it's easy to integrate with that and yeah it's it's compatible with the open assets protocol now how can you kind of explain how a color coin gets tagged as a color coin on the Bitcoin blockchain and perhaps that would be a good segue into how colar coins are different from other projects like brand mentioned like counter priority Master coin Etc yeah so I mean so there are like more than one way to skin and cat so there are many ways to implement colot coins and the chroma wallet actually implements a different way than us so we have more uh uh like a more recent more modern uh implementation which kind of solv some

of the issues that the older implementations had and so now uh but basically the the thing that they have in common all the implement ations of col coins is that they work at the output level so uh it's it's a very thin layer on top of Bitcoin you know with Bitcoin you have outputs and the uh uh every output has a value and then col coin adds uh instead of just having a Bitcoin value it also had has an asset type and an asset value uh so this is this is how col coin works and so that allows uh uh colod coin to work with uh unconfirmed transactions and uh you know SPV and the all all the the nice things that come

out of the box with Bitcoin so on the other hand counterparty Master coin take a different approach so they it's address based instead of being uh output based so uh when you send something it's uh it goes into an address but uh there's no output representing that necessarily so it's um you basically have to parse the whole blockchain uh to see every transaction every counterpart transaction for example and because every single transaction could affect the whole the the global State and I guess more uh more like another important difference is the fact that Master coin and counterparty um they use an intermediate coin so xcp with counterparty and MSC with Master coin and some of the

features of the protocol requires this intermediate coin whereas uh with col coin it it's directly based on bitcoin so there is no there is no like potential for pump and dump because it's all based on bitcoin or at least uh yeah or we could pump and on bitcoin I guess but it's not really it's past that stage so um one of the thing I things I find really interesting about a lot of these projects you know be it like counterparty Master coin ethereum or many others is that you know they create their own currency that's in use on that platform and of course the powerful thing is that you can turn this into some a a way to a

monetization scheme really because if the platform becomes used then the currency appreciates in value and that also has allowed projects like Master coin in ethereum uh I guess not counterparty because they they they burned the currency to issue it but others have raised money that way in order to finance the development and then people invest hoping it will succeed so I think this is a really a powerful Dynamic um and it it seems color coins is a bit as a at a disadvantage they're not having that do you view that the same way or do you think there are also perhaps advantages to not having a currency well I think the advantage is for the user because um you have to

please both the so for like counterparty in ethereum and all those Alternatives you have to please both the investor and the users uh but uh at the same time the money has to come from one uh side and go to the other one so uh you can see that with Master you know there can they're kind of struggling to um to uh to have the coin appreciate because you know the co the value has been going down for a long time and uh they're kind of making more and more features not require any Master coin to use so then the price is going down so I think it's kind of a it's kind of a like a a cycle so I mean if it works it works but if it doesn't work it doesn't work um and you

know Master coin is kind of showing that it may it may not be actually such a good idea on the long term because you know it started very well they raised a lot of money the coin was very was very high but then uh you know as as the value was going down for one reason or another uh the pro people started to uh you know um abandon the protocol you know not use it anymore so they're basically just using it so that it gives a value to the coin but if the coin loses its value they just abandon the ship and stop using it all together but but don't you don't you think that may have other reasons maybe it just doesn't work as well people abandon it and then the value decreases in which case it's

sort of well that's just an expression perhaps of of the utility of Master coin and the prospects of it rather than being intimately tied to it declining or or do you think Master coin having a coin actually contributed to it losing some of its momentum see actually so I know many people don't share that opinion but what I think is that um I mean it's kind of a fact that you can you can Fork Master coin or any of those project you can Fork it so there is kind of a uh there is kind of an end game where if it becomes very successful somebody's

going to Fork it and make it just a little bit better in one way or another just because of the fact that it's not as expensive maybe and then people might just move like the new users are going to want to use the new uh the new protocol because it's just cheaper and it gives the same features so there is always this risk of forking and um sooner or later if one of those protocol becomes very successful then it will be forked and you can see that even with ethereum actually that uh there is this ethereum thing coming up and using the Bitcoin distrib tion for the and this is giving kind of a well I I don't know if I I totally agree with you so I mean I think one one factor that's really important here is to what extent are

their Network effects cuz you know once there are a lot of let's say application Services built on a certain platform then maybe it's not so easy to leave because and with Bitcoin we really have the same situation right you I mean you could say well all those Bitcoins are in the hand of a few why don't I just uh Fork the project distribute Bitcoin more widely and then everybody should switch over to me well but it doesn't work like that because Bitcoin has has built up this mass and infrastructure and ecosystem so it is almost it's very difficult to get people to switch over to something else even if it may be slightly better and and I guess it's unclear I mean I totally agree the risk

exists of that happening but it may not right I think it's just sort of a and not known and we'll see yeah I mean you're absolutely right the the network effect is basically what you're is actually the the actual value of the coin so that's why Bitcoin is is so is is the best at the moment because it's the most used and this is why col coin actually has a has a good advantage on that side because it's using the the whole uh Network effect uh from Bitcoin and you know the other ones they they may not have such a strong Network effect yet and it's it's hard to tell can you explain how colored coins benefits from the network effect of Bitcoin yeah so well basically um it's using the Bitcoin blockchain so uh and

if you want to to um to make a colur coin transaction you have to pay the transaction fees in Bitcoin which is like the normal mining fees and anybody with Bitcoin can use col coin so it's kind of if you only have Bitcoin and that's the only thing you have and you you you know there's a barrier to buying something else then the only you can use or or the easiest thing you can use is col coin because you don't have to buy anything you just make a transaction that's that's a little you know little bit different but then you're using colod coin without having to buy any other coin okay so yeah you have a lower barriers to entry because you can you don't have to go through an intermediate currency yes now there's been some talk about

different so there's different color coin wallets there's uh the chroma wallet there's also coin prism and and others and one of the criticisms has been that uh those wallets are not necessarily compatible each with each other and I think you may have mentioned this to me before when we met uh in London that uh the color coins implementation that you use allows for essentially shares to be issues that aren't necessarily match to a certain amount of Satoshi so one Satoshi could be worth x amount of shares whereas other color corn implementations one share is at least one Satoshi uh and so that causes perhaps some some problems moving forward uh to uh uh help this network effect uh of C coins becoming

more and more used can you um comment on that yeah so um yeah basically we have this we use a protocol called open asset and uh so it it's kind of building on top like building on what the previous implementations of col coins have been doing but improving in some areas so the one one of the areas is the one you're mentioning and uh so with the previous implementations it was like the color the asset value was linked to the Satoshi value so if you wanted to issue uh let's say um 100 million shares you would at least have to have 100 million satoshis and this is one Bitcoin so it's it becomes Capital intensive at some

point and uh you could also make the argument that if uh K coin become very very successful then you're going to run out of Satoshi at some point so what we did in the uh like instead of uh of doing that we're encoding the the amount directly in an OP return output so up return is a new feature that supported since uh Bitcoin Z 0.9 uh so that's kind of new from this year but uh using that we can encode any number so if you want to issue a trillion shares then you can do that and you only need the minimum output value which is 600 satoshis so regardless of the amount you so essentially attaching metata to the transaction and that metadata is is what

represents the amount of shares regardless of how many satoshis you're sending yeah that's interesting cuz cuz I always I think I explain color coins to people many times because it's sort of the easiest way to explain this Bitcoin 2.0 idea right like the especially the shares idea right so you take some some Bitcoin and then you say oh this represents a company now and all the inputs all the the money the outputs then in the future represent parts of the company you can go back through the blockchain and track that Etc and I I totally wasn't aware I I'd always thought of it as this you know you take 50% of that original um the origin transaction or

how do you call it uh Genesis transaction yeah the Genesis transaction and then that's 50% of the company so I I totally wasn't aware that U people have mov moved away from that that you have moved away from that yeah so I mean this is because you know the Val the the the usefulness of uh so basically yeah what what col coins are it's like a paper money basically because you use something to represent something else so it's like a paper money and the utility of a paper money is increases with the uh uh as the the value of the medium decreases so this is why you know now we have Bank notes because instead of coins you know we have less and less coins and more and more Bank notes because it's

cheaper to manufacture the bank notes because the paper is cheap whereas with the coin it's the metal is more expensive so you know the paper money is becomes more useful when the paper becomes cheaper so this is why we're doing that so you you always only need 600 satoshis or the minimum that can be uh transacted and then you can put whatever value you want on it so like the ratio the efficiency increases a lot more so um I'm I'm curious cuz you know we touched a bit on the differences between you know different protocols counterparty mastercoin Etc and color coins I'm curious are are there certain types of applications that can be built

on uh colored coins that you think will be better on colored coins and and do you feel there are other types of things that perhaps would be better implemented on another type of platform so yeah in terms of the app ations like everything is possible on every platform but like the advantage that colot coins has compared to let's say counterparty and mastercoin would be that uh it's it's it's basically it can use everything that the Bitcoin protocol can do out of the box so things like SPV you know simple payment verification uh con coin can do that um also the payment micr channels uh so this is uh I think this was uh some something that was

first described by Jeff garik uh but it's basically a way to have um uh off blockchain transactions but still uh trustless so you have between two peers so you can have uh like you basically uh let's say I sent uh so Alice send some Bitcoin to Bob and then Bob sends some money back to Alice and so on and so forth though you can use the payment micr channels to to revise that balance very quickly so many times per second and it's always trustless so if one of the party bails out then the other party still has the money they have the same transaction to come in the money but then it saves it saves the uh a lot of the fees because you only pay

the fees once you want to commit the transaction into the blockchain and also it allows you to have to revise uh the the amount very quickly so you don't have to wait 10 minutes so this is the kind of things that you can do out of the box with colod coins because it's based on outputs and inter part in master coin uh they cannot do that because they they kind of rebuilding some of the uh some of the the architecture so they only use uh Bitcoin as a Time stamping mechanism but they there are many features that they they sort of replace by using their own protocol um but uh yeah so I mean in terms of the applications I think every every application can be done on every

platform but then uh some platforms make it more convenient uh makes some uh yeah some some things more convenient than the others so yeah okay then that makes sense to me right this micro payments channels where I guess you would have u i mean I always was familiar with this in in the example of let's say using a a Wi-Fi network and you're paying by the kilobyte right so you would keep sending the new updated transaction and then if at any time you bought the other person could sent a track transaction that includes your payment up to that point um and and it makes sense to me right if you have a

similar use case using color coins then that that would be better I guess on that platform are there um other applications that you feel would be better on let's say ethereum because I gu I guess one issue which Sebastian has kind of touched on is the maybe interoperability if like let's say now we have different color coins in implementations and they're not compatible uh do you do you think that could be um a problem um so I guess they all fall under the col coin uh name uh because they it's kind of uh fitting the same model but in the end there are still different implementation so you know you

could also say that counter party in a way is colot coins and master coin in a way is also colot coins uh but you know it's it's all different implementation so yeah I mean col coin I guess is Broad so it's it's kind of encompasses more than one implementation but yeah the none of like all the all those implementations like chroma wallet uh open assets um counterparty Master coin they are not compatible but I think eventually probably there's going to be uh probably one or two uh implementation that that are going to stay uh that are going to attract all the uh liquidity because uh you know the liquidity tends to uh to to you know uh attract itself so you know the more

liquidity there is the more liquidity comes so so is your hope that now other people are going to build colard coins applications as well using the same implementation you've used with coin prism and that then those applications will be interoperable and you know you can use the same colored coins uh on these different applications yes exactly so actually one of the design uh decision one of the design goals for open assets was to make it very simple to implement and you know if you look at the specification it's uh six pages uh long so everything is described including some examples takes six pages so it's very simple to

implement uh whereas if you look at Master coin I think uh when I looked at it there was I think 57 Pages uh describing the protocol so it's it's much more complex and it it kind of makes it impossible pretty much to get to make your own own implementation uh and we're actually seeing uh I mean I was talking to other companies who were actually making their own implementation of open assets so it's so simple that they can in a few days of work they can go and implement it in their own language their own programming language so yeah the goal is was to make it very easy so that it's easy for people to integrate and to to build their own service and there's no dependency to another coin so they don't take a risk

they it's not like they're baiting on a specific coin the only thing they're betting on is Bitcoin basically and yeah so that's the goal we wanted to make it easy for developers to integrate and I think that's that could be also an asset for uh for open asset and so what's the I mean you obviously talked to other uh color coin wallet uh uh implementations out there what are they on board with your open asset protocol or not like what's the what's the feedback you're getting from uh from some of your competitors yeah so I mean uh the the team from chroma wallet they they said

that they they they will look at make making it compatible uh with open assets and also there's the iridis project which also is going to support open assets so yeah it's uh I mean there's a yeah I mean it's it's probably going to that direction at the moment it's it's hard to tell yet but yeah it's probably are they contributing to the to the specification or for for now you're either the only one contributing to it um well the specification actually now is is final so that's also one difference with counterparty and master coin where they have an always evolving specification whereas with open assets and col coin it's it's so simple that you can say okay now it's finished we we support everything we want to support and there we're not going to to we're not going to add any more features

that's all we need because we cannot take the minimal approach um so yeah so yeah they did contribute I mean we there was like back and forth and you know Lot number of iterations on the protocol if you look on GitHub at the history I mean there there has been a lot of uh modifications and a lot of iterations on the protocol but yeah it's kind of now it's kind of final so people can take a dependency on it and they can they can be sure that in the in two years or in five years it's going to be the same and you know the the code that exists today is still going to work in 5 years whereas with uh counterparty uh for example they they have breaking changes is uh like maybe every 2 3 weeks so every two 3 weeks everybody has to

update their wallets or they they kind of go out of consensus and they you know it doesn't work anymore so they there also a lot of maintenance for people implementing counterparty and that's something we wanted to avoid could this also be a problem though let's say there are some things that maybe aren't optimal in the current protocol would there be a way to change it in case you know some some changes will make it uh more optimal yeah we could we could create a new version so like a version two which would be different and would have different features and version one would would continue existing so you know maybe uh the the same way you can have HTML 4 pages on the web and HTML 5 at the same time and everything still

works you would have the same so you would have some open assets version one transactions and some open assets version two which would coexist and that wouldn't uh really split the liquidity because uh you would still everything is still based on bitcoin so this is uh so you yeah you do have this ability whereas again with counterparty uh if you create a new version and want to keep the first version in existence then you split the liquidity in two so yeah this is also something that's uh that's possible with open assets and col coin in general cool um perhaps we can move on to talk about coin prism um can you sort of give us uh uh a little bit of a history on how you how you got started how you got involved with uh color coins and and uh

your idea for coin pris yeah so my uh originally I had actually so I was working on predicts and then um uh I had this idea that uh you could have uh kind of options like uh American style options and predic because so it's uh and you would there would be a collateral paid in dollars uh so that then that simplifies a lot the um the counterparty risk if if you do that but then that requires people from depositing dollars onto predicas and uh we didn't want to touch Fiat money at all we didn't want to accept uh Bank deposits or PayPal or stuff like that like because you know it's it becomes

very complicated and there's a lot of risk associated to that so then I that's when we thought that col coin would be a good uh a good way to achieve that so with col coin you would have colot coin that represent dollars and you would be able to deposit that on predicas and then you have a dollar balance and you can you can withdraw that onto your Bitcoin wallet so everything remains in the crypto World on the Bitcoin blockchain but still you have dollars on your account but uh yeah we were still far from that uh there was uh there was the chroma wallet implementation which was uh progressing very slowly and yeah there was uh there was Master coin at the time but uh it was also very yeah I mean I didn't like the fact that you

require a separate currency uh I didn't want to introduce yeah dependency to a separate currency just wanted to stay within the Bitcoin uh like like strictly within the Bitcoin uh ecosystem I would say uh so that's that's when I decided to um I figured that maybe there was uh something to be done with scol coin to make it more user friendly and yeah so basically uh that's how we got the idea to to build a web wallet um and uh yeah so it took uh it took a few months uh and then we we released the beta uh in March I think um so it was test net first and then we went main net and then

in uh in may actually just the week of the Amsterdam conference we released the the like the the final version so like like the yeah the the live version onto Main net and yeah so we launched at this point and then we had just uh we we just had at the time the ability to issue and receive and send assets but then we've added a bunch of new features since then so like I was talking about earlier uh the ability to send dividends uh and also the ability to um to run cow sale campaigns so so is it just you working on the project or do you have a co-founder other developers yeah I have a co-founder uh so we're two of us just

just two of us I'm the main developer though okay and is there a business model behind coin prism yeah sure so uh the idea is that uh coin prism the wallet itself will remain free and the tools that we're building like the um yeah the the blocked Explorer uh is also going to remain free so we yeah we released the block Explorer in August uh but uh yeah the business model is to build an exchange basically where you people will be able to list their coins so if I'm a company I want to raise some money I can create I can issue million coins and List It On The Exchange and sell and let's say put a sell order uh with a million coin like sell a million

coin for $1 each and then people can come in and buy let's say two coins three coins 10 coins uh and that that's a way to make an IPO and then at the same time after the IPO is finished people can still buy and sell the coins uh on a on a free market and uh then we would uh take a transaction fee for for for that service so the same way you pay a transaction fee to bitstamp when you go and buy Bitcoin you would pay a transaction fee here so I guess this may be a good way uh or a good moment to dive into something very briefly I don't know to what extent you thought about it but it's something I've been thinking about quite a lot recently which is the whole legal side to this now I know it makes a lot of sense to

sort of say I'm going to issue my stocks uh on a blockchain and I can pay dividends and I can just IPO immediately I don't have to wait until I'm like uh $500 million company uh is cheap you know you can avoid the whole regulation but at the at the same time this just seems to be no way that this is going to be uh that this is going to be accepted right because it's just so obviously is is against the current Securities laws and and you know I think pretty much every country so so I'm wondering what do you think is the use case for this who would actually do that cuz cuz I

have a hard time seeing for example regular startups taking advantage of a of something like that yeah so you're absolutely right uh you you cannot sell like Equity like uh yeah you cannot you cannot sell Equity because that would be that would fall under the SEC regulations and you would probably uh be in big troubles if you did that uh but one thing you can do is uh sort of go around that and not offer Equity but offer a token that gives access to a service uh so this is a bit like Kickstarter you know how they're doing uh it's it's uh it's not actual Equity that you're buying uh but yes something like that so and this is actually uh something that uh swarm was doing recently they had an IPO where they sold

swarm coins which give you access to uh it give you access to uh more coins basically I mean it's it's a more complicated model but yeah and then M safe also did that where you you get coins which then you can use to access the MFE Network so as long as it's not Equity it's fine uh so you know you you you basically have to and this is you know ethereum has been very careful in in specifying that in their IPO saying that you're not buying any Equity uh also you you need to make sure that you're not uh giving dividends because yeah dividends is um it's a legal term so you know you can do Revenue share uh things like that uh but you know if it's

if it's dividend then yeah the word dividend actually has a legal uh actually legal meaning so you cannot call it really a dividend but you know if it's a revenue share or interest uh then that's fine so there are some ways to sort of go around it but yeah obviously you need to be careful and you need to check with the lawyer uh that that you're doing something that you're allowed to do are you aware of anyone basically creating or or or looking into creating legal entities uh that then would kind of issu some tokens that can be traded I guess that would be another sort of roundabout right but that you would have them some sort of redeemable or perhaps the company would have an

extra contract that would give certain rights to the owners of of these uh crypto tokens I mean I I I presume this would also be very risky from a regulatory perspective uh but I'm curious if people are actually trying to do this so you mean people trying to uh issue actual shares yeah yeah actually well so I I guess another thing another problem would be even even if you say I'm going to IPO my company on color coins uh if there is no recognition of this in the court of law of course who stops the company then from just saying I don't care anymore now these are all worthless

and the compan is totally mine and anyone who bought those shares they don't have any rights so uh to have first of all I guess you would have to address the the SEC problem or the problem of of not selling securities and the other thing is you'd have to somehow uh give people the ability to actually have similar rights that they have when they own shairs yeah yeah you're right actually and uh I think this those two come together so uh the the reason why it's not allowed uh is precisely because there's no protection against people investing so I think if it becomes legal then you would you would have at the same time legal protection it kind of goes hand in hand so you you cannot have

any expectation that when you buy a m safe coin or ethers that that you will have a return uh on investment and actually it's um yeah ethereum actually was very good uh when defining that because you know they have this long prospectus and they they actually you know Clearly say that uh you cannot have an expectation uh that the coin is going to be worth anything or that the the software will even be released and I think at the moment that's the only way to have a legal uh um IPO in quotes uh that's by saying that you know you there's no guarantee that this is going to be worth anything it's more like a and of course the ethereum guys also right they they defined it as as a

product so they said well we we're pre-selling a product which of course is somewhat you know I I think the people people who actually bought it they didn't think of it as a product they thought of it much more as a share like thing but from a legal standpoint of course that's not you can't sell that so they they phrase it as a product as you correctly put it and and then they also say there's no guarantee so so yeah it's interesting I guess how they found sort of a a work round but but of course you're totally right it gives you zero protection um yeah I think in the future uh well it's maybe in the next five 10 years uh when the regulator start to

look into that uh you know slowly uh I'm sure that they there will be some kind of framework uh now the question is whether it's going to be uh you know it's going to make it impossible to do completely or it's going to make it possible but I think there is some possibility that in the future it becomes a something that's possible to do okay I'm going to stop you right there because we we said that we were not going to talk about regulation today and legal matters this this is this is a topic that we've been covering I'm kidding but it's just regulation and legal matters always seem to come up in any discussion that we have with regards to this stuff so yeah yeah I mean it's true right is kind of

a annoying Topic at times it keeps coming back I feel this is though one area of the regulation that we haven't talked so much about and that I think is sort of still ahead of us in that there haven't been any statements and all really is the whole you know there's been all this discussion on on bitcoin as a currency but the whole idea of like crypto Securities and all that that's really still ahead of us I'm sure I'm sure we're going to have lots of conversations in the future about the legal side of that but you know I agree that's that's going to be probably uh I don't think it's going to be that far down the line I think this is going to start pretty soon I mean people people know about this and Regulators I'm sure we will see statements soon I think we

will see action taken against some projects as well um but but yeah let's not dive into that now but uh can you perhaps talk about some of the other uh aspects of coin prism so I'm on the wall I'm on the website right now uh uh I just logged in um one thing that's interesting is how you're handling the actual ownership of the keys so you'll notice when you log in that there is no actual there's no like forgot your password link that's because your password is the passphrase essentially which encrypts your wallet is it used as a seed or or is it

encrypting the keys that are then shared stored on your servers yeah for now it's it's encrypting the keys that are stored on the server so similar to blockchain.info but yeah at some point we we will support also HD wallet so it may be used as a seed in the future but yeah for now it's just encrypting the Keys okay well I mean that's an interesting security feature I think is uh I'm not a security expert but I think is as a good alternative to using a seed which you know you may lose or you may not be able to remember to log in easily um so some of the other features when you when you first get onto the wallet you have a main address and you have the ability to send coins and to uh

obviously create your your your new color uh the interface is really cool I mean I I really like the the user interface it's quite simple to use um and I notic also there's uh there's a block Explorer so can you tell us about your the coin prism doino which is a block Explorer yeah so we've released uh We've released that I think uh in uh in August I think uh first week of August so about a month ago and uh this is this is a very uh straightforward block Explorer so the same as blockchain.info or block blockr.io uh except the difference is that it will show the the col coin transactions so if you look up a transaction that uh was uh in addition to sending Bitcoin if it was also

sending col coins then you will see it uh on the on the on the like on the page so it will tell you so many gold coins have been sent and same thing if you also if you have an issuance so if you issue like uh 10 shares it's going to tell you so many shares have been issued and there's also an asset directory where you can see uh the the most popular assets uh on like most popular col coins so it gives you a list and you can uh you can click on any asset and see the details about data set so like the the definition uh what's what's the name what's the what's the contract so the contract is kind of uh uh the text uh whereby the issuer explains uh what

the coin is supposed to be worth so if if I'm issuing gold coins I'm going to say okay this is uh gold that I store in My Vault and this my company is that company and this is my registration number uh this is where you can find me I'm located here so this is basically how you make yourself trust trustworthy and then you also have the ability to see all the uh owners of a of a coin so because it's all public on the on the blockchain if you select any coin you can go to to that page I'm talking about so coin holders and it shows you all the addresses uh and how many coins they own so it's it's a way to see how many shareholders you have and what is the distribution of the coins that's really cool I had noticed that you can actually

go and look up the ownership now I would invite you all to go to coin prison. info assets to see what the top coins are the the second one is is quite interesting yeah so I'm also I'm also curious I was playing around a little bit with coin pris before and checking out the Explorer Etc so when you click for example on the last block in the Explorer it seems to show you all Bitcoin transactions is that correct or yeah it's it's all the transactions in that block and if if there was one transaction that was uh transacting assets you would see it here as well but in that case I guess in the last block there was or maybe there was but it's in the in the later Pages you don't see it straight away oh so you you don't like

filter this and and only show the the colored coins or the color coins on top or something uh no we we don't have have this feature although that's something we could add quite easily okay for now it's just show it just shows you everything for now so when you do the original one when you say I'm going to I think it's called create a color right mhm um does that involve making a transaction as well yeah so first of all the way it works uh in coin PRM is that you define the metadata so the metadata will be the name uh the description and then you can also upload pictures and that data obviously is is going to be

maybe one or two kilobyte so it's too large to be stored on the blockchain so it will be hosted on the web and then when you do the actual uh so when you want to issue coins that's when you do an actual Bitcoin transaction and that's a single transaction which has uh so it's defined in the protocol how it should be and uh it basically says okay I'm creating so many coins and I'm associating those coins with that definition and then the way you associate It Is by putting the URL to that definition file now that definition file if you use coin prism and uh you want to you know try it out it's going to host it on on our own server so on coin prism but obviously it's it's only an option so if you have your own

servers and if you're serious about your coin you should host that file onto your own server and then put the link uh you have this you have a drop down where you can put the link when you issue the coins in Co prism so you put that link and it's going to put your website in the blockchain so then uh I mean it's going to put the link to your website into the blockchain so then uh clients so yeah and then the whole thing is that the client like coin prism or any other client will uh see that in the blockchain they will see the link and they would they will follow the link and see that file which describes the coin so yes so it's basically are you talking about the resource URL yes yeah the resource Ur correct okay cuz I just created the EP Center Bitcoin uh color

coin and the oh how is that possible uh yeah and the resource URL doesn't seem to be doesn't seem to be an editable field uh so the in that case uh that's because you're editing it on coin prism server but when you issue you can set uh so when you issue you have a selection you can either use the definition that's on coin prism in that case it uses that resource URL or you can also enter your own URL which in that case you uh you you can put whatever you want but but that's you select that at the point when you edit the oh sorry when you issue when you do the issuance transaction okay I see so do you do you see a lot of you know are

there people developing applications on top of C coin or already using uh color coins uh issue through coin prism for to power some kind of projects or crowd sales or I don't know what yeah so so far uh there has been uh a few uh Crow sales so there was uh one so uh was called clipped uh so it's uh hair salon in Australia and they they were uh they are opening new locations like new shops uh I think in in Melbourne and Sydney so they wanted to raise some money so then they sold some shares on coin prism and you can see it in the asset uh the asset directory I

think it's in the top 15 or something and you can see like they sold a few shares so they they raised that I think a few thousand not not much because it's it was one of the first and there was also u a company who who is doing vaporizers so they also did an IPO using col coins and I think there was maybe one or two others and uh so there are more coming uh in the next uh few weeks actually but I cannot really talk about it right now because it's still confidential but now more coming because vaporizers are at the limit of legality right yeah yeah vaporizers they uh they actually only make sales in Bitcoin so that's why uh they don't even have a bank account so oh yeah of course uh but uh yeah so yeah more Crow

sales coming and also uh there there's also a few other companies which again I cannot really talk about but they're also Building Services on top of col coins yeah I I was just looking at this clipped thing uh it it's pretty cool I like it and I think it's especially great that you have some sort of you know brick and mortar simp po business like um like that as as one of the first projects mhm yeah well I think we've uh we're coming to the end of our show um where can we where can we reach you so you can follow uh us on Twitter so at

coin prism and uh there we also have a Blog where we post uh our updates so blog. coin prism.com and um uh yeah that's basically it and then if you want to check out coin prism it's uh coin prism.com awesome and also link to the to the open uh assets protocol in the show notes and all the things that we talked about in today's show so if you want to find out you can find that at uh on our website or on our SoundCloud page and yeah thanks very much for joining us today that it was really interesting to talk about it and uh I I think I I must say I I see some more uh some more benefits to coin prism you know like as as opposed

to the other protocols I guess it would be really interesting to see how this is going to turn out because there there's so much competition in this place so much activity and um yeah and it's exciting to see what you're doing yeah thanks and thank you for having me on the show okay well thanks so much for for listening in um we'll be back next week and if if you want to support the show what you can do is you can leave us an iTunes review that helps new people find the show and you can let us know how we're doing you can also follow us on Twitter at epicenter BTC and of course we very much appreciate donations in Bitcoin Litecoin Dogecoin and so far no colored coins but perhaps if sastia creates the enter Bitcoin colored coin

then you can buy that and donate it back to us or something yeah why and and you can do that at epson.com tips thanks for much for listening and we'll be back next week [Music]