NEWSLETTER
Founder: Nicolas Burtey
Founded date: September 2019
Location of the headquarters: USA
Number of employees: 11
Website: https://www.galoy.io/
Public or private? Private
Last week, Galoy He launched wool, software that allows banks to accept bitcoin as a guarantee for loans.
Wool helps the community and challenger The banks (the banks that Galoy seeks to work) to offer loans backed by bitcoin to various types of clients.
“Some banks may want to use it to retail trade, and some may want to use it to sell commercial customers or high -heritage people,” Burtey told bitcoin magazine.
By offering such loans to a wide range of customers, Butey believes that the high cost of loans currently associated with these products will decrease.
“Today's interest rates are 12% to 15% if you want to obtain a loan using your bitcoin as a guarantee,” Burtey said.
“The rates are high because there are so few financial institutions that offer this type of product. We see an opportunity now that regulations are allowing banks to do things with bitcoin, ”he added.
“We believe that many banks will want to enter this market.”
If Butey is right in his prediction that banks are interested in offering bitcoin loans, this will not only reduce rates for such loans, but also introduce open -source bitcoin software in the world of banking, what could initiate a new trend in the industry.
But more about that in just a minute. First, some background about Galoy.
Galoy History: From the flickering wallet to wool
Founded in September 2019, Galoy had intentions to allow banks to use bitcoin from the beginning, but had to wait in doing so due to a hostile regulatory environment.
Then, on the other hand, he focused his efforts on creating and supporting Flashing wallet (which was originally called the bitcoin Beach wallet and that Galoy sold recently), a custody wallet and a lightning wallet that is used predominantly at the beginning in El Salvador and then in <a target="_blank" href="https://blog.bitfinex.com/education/a-look-at-bitcoin-circular-economies-around-the-world/”>bitcoin circular economies worldwide.
“Galoy's mission was aboard bitcoin five years ago,” Burtey said.
“But the regulatory environment was so bad during the last five years that we decided to create a flickering. The reason why we are now focusing on our original mission is because with the end of Strangulation point 2.0 and the Delrogation of Sab 121We believe that now is the perfect time to help banks to adopt bitcoin. “
Burtey talked about her work in the creation and growing blinking with love and shared that she had to stop working on the project just because it would be too difficult to continue administering it and also intended to serve a new type of clientele.
“Blink is a work B2C (company by customer), and is difficult as an early stage startup to focus on too many things,” Burtey explained.
“Galoy is a business promoted by B2B (company to company), and we want to work with banks and financial institutions,” he added.
“It's good to concentrate on one thing.”
And, as mentioned, that thing will be wool.
How wool works
Wool is a software that Galoy helps banks to integrate and manage a subscription rate. With this software, banks can issue loans supported by bitcoin under the terms they create.
“We are not the ones who decide how much interest will be charged or anything like that,” Butey explained.
“We give the banks the platform to do this, and then they can discover its cost of capital, the duration of the loan, the liquidation price of the bitcoin in the loan and the rate they want to lend,” he added.
“We are giving it software and we help you execute and automate that software.”
Something more than Galoy No Do for Banks is custody The bitcoin provided as a guarantee for the loans they issue. Each of the banks with which the company works is responsible for selecting its own custodian.
“You can go to pitgo or fire blockages or each loan can have your own multisig,” Butey said. “We are agnostic in custody.”
That said, wool helps banks to monitor bitcoin in custody so that banks can be aware of whether the guarantee is close or not of the liquidation levels.
“A key piece of this product is risk management,” Burtey said.
“bitcoin is volatile, and the bank will need a tool to show that it is taking the calculated risk. Therefore, we will provide banks with a board to monitor this risk, ”he added.
Who will use wool?
Galoy is aimed at community banks and other smaller financial institutions with this new product mainly because they believe that these smaller players will benefit more from it, and because large banks will probably not need such a product.
“We don't believe JP Morgan really wants to work with us,” Burtey said. “They are probably building something like this themselves, while a smaller bank, a credit cooperative or a small business probably is not.”
Burtey also understands that smaller lenders who incorporate wool instead of building something comparable can save these financial institutions a significant amount of time and effort.
“Our goal is to say: 'Look, you can develop this internally, and it will take you six months, one year or more, depending on how much you know about bitcoin,” Burtey said. “'Or we have a loan product as a service for you, and you can launch it much faster.'”
And as Butey and his team aboard their first round of smaller banks, they will not only make history to allow more banks to accept bitcoin as a guarantee for loans, but potentially alter the trajectory of the bank in general when presenting Open -Source software For him.
Open source bitcoin banking
The long -term vision of Buretey for Galoy is to do much more than just help banks to broadcast loans backed by bitcoin. You are looking to introduce open source software into the bank as more banks begin to adopt bitcoin.
However, it is important to keep in mind that Lana is not yet open source. Is of fair origin The software and, under said license, the code becomes open source after two years.
“It is an open source system, but everything is available in Github,” Burtey said. “You can go and try it, try it and play with him on your own.
According to the Fuente Justa license, no other company that Galoy can sell the product to a bank at this time, allowing Galoy to benefit while continuing to build with auditable code.
“We sell the deployment and help banks connect to their custodian,” Butey explained. “We are building outdoors, but we also want to generate income.”
Beyond helping banks to implement wool, Burtey wants to develop the “central bank software” of open source, while seeking to interrupt the oligopoly of the “biggest book”.
“The biggest book is where banks store account data, customer information and transaction details,” Butey said. “It is the source of truth for banks.”
And only three companies, Fis, Fiserv and Jack Henry, have the Ledger Core Ledger market.
“All these are like companies of one hundred billion dollars that have probably never heard of talking because all they do is to concentrate on selling software to banks,” Burtey said.
“Our long -term goal is to interrupt this industry doing something that is open source,” Butey said. “Today, there is no company that makes a central bank with the idea of open source, so we are working towards this.”
Burtey imagines a world in which open source software can make it much easier for someone to start a bitcoin bank. (For those who move before the words “bitcoin” and “Bank” that are used together, can I remind them that it was the legendary Hal Finney who wrote that the banks bold by bitcoin would serve as a scale solution).
“Starting a bank today is a very expensive and complicated process,” Butey said. “You must pay $ 100,000 more just to buy Core Ledger technology.”
Burtey then referred to his own experience when the Blink wallet began, essentially a bitcoin Bank is executed with open source code, before continuing.
“I simply went to El Salvador and I began what my own bank was indeed because I wanted,” Burtey said.
“We need to reinvent how central banking software is being done in the world of bitcoin, and I think this is where the open source becomes relevant,” he added.
“This is really the reason why I think the world of banking and bitcoin will be very different from the banks with Fiat, and I think we are one of the companies at the forefront of this.”
