Stablecoin Interview with NOS.Cash
For this week’s podcast we have the pleasure of interviewing Daniel Neetzel, CEO & Founder of NOS.Cash, a company based in Malta which issues the NOLLAR, a fiat-backed, feeless stablecoin with minimal energy requirements through a technology called block lattice.
This interview is <20 minutes long, feel free to click play and listen to it now, subscribe to our podcast here to listen later, watch it on YouTube, or simply go ahead and read the edit below. Please enjoy and let us know what you think!
SR: What got you into crypto, and what inspired you to create a stablecoin?
DN: What got me into crypto was my roommate, who in 2012 used to buy goods in the darknet with cryptocurrency. I also bought some bitcoin back then, but unfortunately kept it on Mt.Gox and lost everything when it went insolvent. I got into stablecoins in 2017 because Bitcoin transactions would cost $50 and take 1–2 days to clear, while Tether did not seem transparent. I believe that when you solve the transaction speed, cost and volatility we may have a case for mass adoption.
SR: What was the thought process that led your team to choose a fiat-backed stablecoin?
DN: There’s three stablecoin models, as you’ve shown on your website, and I think each are totally different and don’t compete with each other. Fiat-collateralized seems to be the most scalable, targeting the largest market, whereas a crypto-backed stablecoin would be more appealing to crypto-purists focused on full decentralization that don’t care to redeem into fiat. The major advantage of fiat-backed stablecoins is that they can actually be redeemed once the user performs KYC/AML. The brand we are selling is a USD-voucher, the USD is the largest “currency brand” and we believe it makes sense to start with that.
SR: Will your banking partners be public, and how reliable are they?
DN: We have the same banking partners as TrustToken, Stably and Stronghold. We all work together through the same setup, where the money is held by a license custodian in the US that works together with around 200 banks to distribute the money around them. The advantage is that we do not hold the money — because it belongs to the stable coin holders and not to us, so even if we wanted to we couldn’t access the funds, nor the trust company. That is different from something like Tether, because they keep the money in the bank accounts under their name.
SR: How often will you perform audits?
DN :In a reasonable timeframe. In Malta we are working with PwC to perform attestations of the funds held. Users can also check the block explorer or setup a node to confirm that the balance is equal to the attestation. Audits will be performed whenever it is reasonable, whenever there are big wins or a long time frame where we did not audit.
SR: Nollar is being advertised a a “green stablecoin”. Please explain your technology, could it limit your market reach?
DN :On the contrary, this technology could potentially enlarge the market. Right now, most stablecoin competitors focus on ERC-20, they all issue Ethereum tokens and are limited by the fees and times on that network. We forked Raiblocks Nano, the fastest decentralized blockchain in the market, to offer fee-less and instant tractions. You can setup a wallet in a few seconds to receive and send Nollar, for free, instantly. I can understand why most stablecoins are launching with ERC-20, given the network effects of Ethereum, but there isn’t any traction in these dApps and they may not scale. What’s important to us is to create a product that creates long-term value for people. It is also important to create something that is not wasteful of resources like energy, we are the only green stablecoin because it uses far less energy for transactions than Bitcoin or Ethereum.
SR: How do you expect to generate revenue as a feeless stablecoin?
DN :Most other stablecoins also do not make money from the transactions, the Ethereum network does. Our business model is to earn interest rates on the deposited dollars and small redemption fees to incentivize people to stay in the network and use Nollar.
SR: Why are you based in Malta? We see this as a growing trend in the space.
DN: Legal opinions from German and Liechtenstein advised us that stablecoins would be regulated as E-Money, but in Malta the regulators’ opinion did not confirm those views, they said its not E-Money but a new virtual financial asset that does not yet require license and will be regulated going forward. I was drawn in by the very friendly approach towards the blockchain ecosystem in Malta. Doing a stablecoin in Germany may never have gotten off the ground, whereas in Malta we have time to work with compliance officers and provide regulators what they need. It fosters innovation instead of stifling it.
SR: What’s your answer to people that criticize fiat-backed stablecoins, since it keeps us dependent on central bank issued currencies? Do you foresee a future without central-bank issued fiat?
DN: We are a decentralized layer on top of the centralized USD to provide a USD-voucher. This is not appealing for crypto purists, it will not led to full autonomy from governments and its not the full decentralization that many other projects are targeting; but it is a bridge that is appealing to the mass market. If I go to high-inflation countries and offer them to own USD-vouchers on a decentralized network, where they hold the wallet without any intermediaries and they can redeem or transfer globally, this has a far stronger appeal to the mass market.
It will take a long-time to redeem with crypto-collateral stablecoins and make it appealing to the mass market, and it is very difficult to maintain the peg from an economics and scaling perspective, given that is not capital efficient to have extra collateral. Furthermore, the founders are publicly known and even if [crypto-collateralized stablecoins] are regulated differently, they still must comply with the law if there is money-laundering in their network. If it were fully anonymous it’d be harder to stop them, but what if the team is arrested? It’s really hard to build something that is strictly anti-government and succeed. TUSD started much later than DAI and their market cap is much larger, that is because of the scalability and the appeal of USD. It will be interesting to see how the space evolves.
What I don’t believe in are the unbacked/algorithimic stable coins. A simple algorithm keeping a coin stable without collateral is a Ponzi scheme, they only function if they continue growing, but when a crisis happens they collapse.
SR: There are over 120 stablecoin projects at the moment, how do you see this moving forward? Will there be thousands of stablecoins, mergers, project failures?
DN: I don’t think there are many competitors to Nollar specifically since most are issued on Ethereum. But the space is definitely over-hyped and it will be interesting to see if there is adoption in the space or it just fades away. Luckily we can always run our stablecoin on a very low structure. Creating a fee-less, more productive world with instant transactions is a very important mission and we’ll do everything we can to make it happen.
SR: How and when can we buy the Nollar?
DN: You can signup today and perform KYC/AML check to buy Nollar and start using it, the product is live and you can create a wallet here or get in touch with me on Discord or Linkedin if you need help.
Nollar is already traded on exchanges, and it amazes me when comparing the experience of sending other stablecoins vs. sending Nollar, which is why I believe in our approach.
SR: Is there something we did not cover that you would like to tell our readers and listeners?
DN: Tether, which has the second largest trading volume in the crypto market, could soon collapse and a lot of exchanges will have to integrate new stablecoins that are waiting for their chance. That would be good for the stablecoin ecosystem, but it could collapse the trust of cryptocurrencies.