Founder: Nicolas Burtey
Date founded: September 2019
Position of the headquarters: United States
Number of employees: 11
Website: https://www.galoy.io/
Public or private? Private
Last week, Galoy launched wool, software that allows banks to accept bitcoin as a guarantee for loans.
Lana helps the banks of the community and challenger (the banks with which Galoy is trying to work) to offer loans supported by Bitcoin to various types of customers.
“Some banks may want to use it to sell to retail and some may want to use it to sell commercial customers or high network individuals,” Bitcoin Magazine said Burttey.
In offering these loans to a wide range of customers, Burttey believes that the high cost of the loan currently associated with these products will drop.
“Today’s interest rates are from 12% to 15% if you want to get a loan using your Bitcoin as a guarantee,” said Burttey.
“The rates are high because there are so few financial institutions that offer this type of product. Let’s see an opportunity now that the regulations are allowing banks to do things with Bitcoin, “he added.
“We think many banks will want to enter this market.”
If Burttey is right in its forecast that banks are eager to offer loans supported by Bitcoin, this is not only lower for these loans, but will also introduce Bitcoin Open Source software in the world of the banking sector, which could start a new trend in the sector .
But we will talk about it in a minute. First, some backgrounds on Galoy.
Galoy’s story: from the Blink wallet to wool
Founded in September 2019, Galoy had intention to allow banks to use Bitcoin from the beginning, but had to resist doing it due to a hostile regulatory environment.
Therefore, however, he concentrated his efforts on the creation and support of the Blink wallet (which was originally called Bitcoin Beach Wallet and that Galoy recently sold), a custodian Bitcoin and a Lightning Wallet used mainly at the beginning in El Salvador and then In Bitcoin Circular Economies globally.
“Galoy’s mission was that of Banks in Bitcoin five years ago,” said Burtey.
“But the regulatory environment has been so bad in the last five years that we have decided to create a blink of eyelashes. The reason why we are now focusing on our original mission is because with the end of Choke Point 2.0 and the repeal of Sat 121, we think it is now the perfect time to help banks to adopt Bitcoin. “
Burttey spoke of his work in the creation and cultivation of beats with affection and shared that he had to stop working on the project only because it would be too difficult to continue to manage him, also aiming to serve a new type of customers.
“Blink is a B2C (Business-to-Customer) game, and it is difficult as a startup in the initial phase to focus on too many things,” Burttey explained.
“Galoy is a B2B (business-to-business) company and we want to work with banks and financial institutions,” he added.
“It’s nice to focus on one thing.”
And, as mentioned, that thing will now be wool.
How wool works
Lana is a software that Galoy helps banks to integrate and manage a subscription fee. With this software, banks can issue loans supported by Bitcoin according to the terms they create.
“We are not the ones who decide how much interest will be charged or something like that,” Burttey explained.
“We give the banks the platform to do it, and therefore they can understand their cost of capital, the duration of the loan, the liquidation price for bitcoin in the loan and the rate with which they want to lend,” he added.
“We are giving you software and we help you perform and automate that software.”
Something else than Galoy No Do for banks is the custody that Bitcoin provided as a guarantee for the loans they emit. Each of the banks with which the company works is responsible for the selection of its custodian.
“You can go to Bitgo or Fireblocks or each loan can have its Multisig,” said Burtey. “We are agnostic in custody.”
Having said that, wool helps banks to monitor the bitcoin in custody so that banks can be aware of the fact that the guarantee is approaching or not at the liquidation levels.
“A key piece of this product is risk management,” said Burtey.
“Bitcoin is volatile and the bank will need a tool to demonstrate that it is taking the calculated risk. So, we will provide banks with a dashboard to monitor this risk, “he added.
Who will use wool?
Galoy is targeting community banks and other smaller financial institutions with this new product mainly because they think that these smaller players will benefit more – and because large banks will probably not need such a product.
“We don’t think JP Morgan will really want to work with us,” said Burttey. “They are probably building something similar alone, while a smaller bank, a credit union or a small company probably not.”
Burttey also includes that smaller financiers who incorporate wool instead of building something comparable can save these financial institutions once a significant time and effort.
“Our goal is to say:” Look, you can develop it internally and will want you six months, a year or more depending on how much you know about Bitcoin, “said Burttey.” ‘OR HAVE A LOAN PRODUCT as a service for you And you can throw it much faster. ‘”
And while Burttey and his team aboard their first round of smaller banks, they will not only make history in allowing multiple banks to accept bitcoin as a guarantee for loans, but they will potentially change the trajectory of the banking sector in general by introducing open -Source -Source Software to it.
Bitcoin Banking Open Source
Burthey’s long -term vision for Galoy is to do much more than help Banks to issue loans supported by Bitcoin. He is trying to introduce open source software in the banking sector while more banks begin to embrace Bitcoin.
However, it is important to note that wool is not yet open source. It is a fair software and, under this license, the code becomes open-source after two years.
“It’s a delayed open source system, but everything is available on GitHub,” said Burtey. “You can go to try it, test it and play it alone.
According to the Fiera-Source license, no company other than Galoy can sell the product to a bank at this moment, allowing Galoy to profitable even if you build with a verifiable code.
“We sell the deployment and help the banks to connect to their custodian,” Burttey explained. “We are building outdoors, but we also want to generate revenue.”
In addition to helping banks implement Lana, Burttey’s wants to develop “banking software”, while he is trying to stop the oligopoly of the “main accounting”.
“The main master book is the place where the banks archive the account data, the customer information and the details of the transactions,” said Burttey. “It is the source of truth for the banks.”
And only three companies – FIS, Fiservo and Jack Henry – have put the main accounting market for the tightness.
“These are all like one hundred billion dollars that you have probably never heard of because everything they do is focus on the sale of banks software,” said Burttey.
“Our long -term goal is to stop this sector by creating something open source,” said Burttey. “Today, there is no company that makes a banking base with the idea of Open Source, and therefore we are working for this.”
Burttey imagines a world in which open source software can make much easier for someone to start a Bitcoin bank. (For those who jump to the words “bitcoin” and “bank” used in tandem, I could remember that it was the legendary Hal Finney himself who wrote that the banks supported by Bitcoin would serve as a downsizing solution.)
“Start of a bank today is a very expensive and complicated process,” said Burttey. “You have to pay $ 100,000 more just to buy the main accounting technology.”
Burttey therefore referred to his experience in the start of the beating portfolio, essentially a Bitcoin bank was performed on the Open Source code, before continuing.
“I just went to El Salvador and I started what was actually my bank because I wanted,” Burttey said.
“We must reinvent the way the basic banking software is made in the world of Bitcoin, and I think it is here that the source becomes relevant,” he added.
“This is really the reason why I think that the world of banking and bitcoin will be very different from the world of banks with Fiat, and I think we are one of the companies on the front line.”