Background and context
Centbee and its management team is committed to acting with the highest ethical standards and in the best interest of its current and prospective customers.
It is important to give context to Centbee and its team. Centbee is a well-respected and prestigious business in the blockchain community, managed by industry leading FinTech entrepreneurs Mr. Angus Brown (CEO) and Mr. Lorien Gamaroff (CEO), both of whom are very well respected in the broader South African financial markets as evidenced by their career histories and advisory interactions with regulators such as the South African Reserve Bank (“SARB”) and Financial Intelligence Centre (“FIC”).
Centbee has provided significant advice to the Intergovernmental FinTech Working Group (“IFWG”) which is constituted of the SARB, FIC, National Treasury and Financial Sector Conduct Authority. Mr. Brown and Mr. Gamaroff have been providing education and advice to these government agencies over many years and actively participate in setting the direction of new regulatory policy development with regard to crypto assets in South Africa.
Centbee is legally registered in South Africa with registration number 2017/014560/07. Our core business is to build a payments ecosystem on top of the BitcoinSV blockchain. Centbee has been operating since late 2016 and has raised well over £1,000,000 in funding to date. Our offices are based at Alphacode (3rd Floor, 2 Merchant Place, Fredman Drive, Sandton). Alphacode is the prestigious FinTech accelerator of Rand Merchant Bank. We have been long-standing Gold members of Alphacode for the past 3 years.
Is BitcoinSV an unregistered security?
Firstly, BitcoinSV is not defined as a ‘financial security’ in South Africa. The current regulatory stance (as re-iterated in 2019) in South Africa is that citizens may buy any crypto assets, store them, and pay for goods and services with them. There are many other assets that do not require registration as financial products, including art, vehicles and houses. Even though BitcoinSV is not registered as a financial security, it is still legal to own and use.
The IFWG has indicated that they intend to provide a stronger regulatory framework for crypto assets in due course. Centbee has reviewed the Consultation Paper and provided detailed commentary and recommendations, which have been well-received by the regulators. Centbee welcomes regulation to protect customers, and has been a prominent voice in the South African and global media over the past year encouraging regulators to make considered regulation and provide guidelines.
Regulatory stance of Bitcoinsv
The Bitcoinsv community and developer ecosystem is committed to compliance with laws and regulations. Whilst many of the crypto-asset projects like Bitcoin Core (BTC) are trying to create anonymous systems (Lightning network) to obscure the nature and source of funds flowing in cryptocurrency transactions, those projects will have a hard time staying compliant with global anti-money laundering and the combating of terrorist financing laws (“AML/CFT”). The Bitcoinsv community and Centbee are very focused on creating a legally sustainable system to the satisfaction of global regulators. We believe that anonymity in financial transactions will only serve criminals, and we agree with Satoshi’s Vision of a crypto asset that is ‘pseudonymous’. This means that your transactions are private, but not anonymous, so that an investigating party, such as a forensic team, can trace funds which will decrease fraud and corruption in the world. Contrary to the unpopular belief that pseudonymity is an infringement on your rights to privacy, we believe that a pseudonymous system will increase freedom in the world by allowing citizens to hold institutions such as government accountable by increasing transparency in all transactions thereby reducing crime and corruption.
Is BitcoinSV or Centbee a scam?
It is vital to note that Centbee is not the issuer/owner of BitcoinSV, and simply acts as the agent of the customer by purchasing BitcoinSV from a local crypto exchange and transferring it to the customer’s Centbee mobile wallet. Centbee itself does not manufacture (‘mine’) or hold material amounts of BitcoinSV. Our product is not BitcoinSV itself, but rather the software wallet (free to download) and the platform of software capabilities we are building around this.
In the crypto-asset industry, there are multiple people who each promote and support a different crypto asset. Each crypto asset serves a different purpose and uses different technology. There is often heated and vociferous debate between the supporters of various crypto assets, and this is often amplified on social media. Trolling and flame-wars are common occurrences in a competitive industry where there is a strong sense of ‘tribalism’ and animosity towards competitors. Very few crypto assets have any use other than speculation on price, and this leads to vocal ‘win-lose’ competition between holders of different assets. Centbee is on record as not supporting crypto-asset speculation, but rather believe that BitcoinSV should be used like cash – to buy goods and services.
Centbee’s founders have been involved in Bitcoin for many years. The first Centbee software wallet app was actually initially built to send, receive and store the cryptocurrency called Bitcoin Core (BTC). Due to changes made to that protocol by a group of developers, certain important technical attributes were changed. This damaged the legal certainty needed for use in contracting and payment systems. We carefully considered the implications and switched to a different protocol that we believed better suited the original objectives of Bitcoin and our customer’s needs. In late 2018, a further change was proposed by a group of developers, and after due consideration, we switched again. It can be objectively seen that that protocol (now known as BitcoinSV) most closely follows the original design in the Satoshi Nakamoto white paper in 2009, and the codebase that was released shortly thereafter.
Centbee is a business and takes technical decisions has on careful analysis of the attributes and benefits of the underlying protocols. We do not take decisions based on ideology, nor on current popularity amongst the blockchain development community. It is Centbee’s considered opinion that the only version of ‘Bitcoin’ that will ever be used for payments (our core business) is BitcoinSV. We do not base that decision on philosophical ideology or hidden financial intent, but rather based on the facts that transactions can clear immediately and are practically free (<$0.01 fee). The cryptocurrency called Bitcoin Core (BTC) takes a minimum of 30 minutes to safely confirm, and costs anywhere between $2 and $30 per transaction depending on how congested the network is. It is Centbee’s considered and professional opinion that Bitcoin Core (BTC), has deviated from the original design of Bitcoin and as it currently stands is not viable as a payment system.
We do respect the right of other businesses and customers to have different views, and to express their views. Centbee is most certainly not committing a ‘scam’. We clearly disclose our ‘load fee’ to users, which fee is used to pay the retailers for their cash-handling costs. We use the most-current ZAR-BitcoinSV exchange rates from an independent data source, and do not make any hidden margin. Once Centbee has transferred the required BitcoinSV into the customer’s wallet, that customer has full control over that crypto asset. They can send it to any other BitcoinSV user anywhere in the world, spend it anywhere BitcoinSV is accepted, and sell it for any other asset on any exchange worldwide. We do not have any further control over that crypto asset.
Clearly there are differences of opinion amongst people on which their preferred crypto asset is; and in a free market economy, users and the market should decide which crypto asset they prefer to use when it comes to paying for goods and services, and moving money around.
Centbee obtains legal advice from top legal experts in the country, and we have gone above and beyond in ensuring that we are as proactive as possible with regard to compliance with laws and regulations, whether enacted or prospective. Centbee imposes very conservative limits on the amounts of BitcoinSV that a customer can purchase – certainly not the hallmark of a scam?
Do our shareholders influence our decision?
The majority of the shares in Centbee are owned by the co-founders (Angus and Lorien). There are several other institutional investors, some of whom are professional venture capital investors and have no specific views on crypto-assets. Two of our investors (nChain and Calvin Ayre) happen to be prominent supporters of BitcoinSV. They invested in Centbee because of the financial attractiveness of our business. We have no legal obligation towards them to support BitcoinSV. Centbee makes technical decisions based on the best fit for the customer’s needs. Centbee is committed to solving problems and using the best available tools to solve those problems.
It’s perhaps worth mentioning that nChain has registered over 600 patents on Bitcoinsv and have stated their intention to begin enforcement of those patents in the future. We see this as posing a significant risk to businesses who choose to ignore this. Although this isn’t a technical reason for Centbee supporting Bitcoinsv, we find comfort in the fact that the global leader in Bitcoin patents has publicly committed to enforcing its intellectual property rights on the Bitcoinsv network.
Can we use the word Bitcoin?
When the Satoshi White paper was published in 2009, the word ‘bitcoin’ was coined (excuse the pun). As the software was released as ‘open-source’, any competent developer could make changes to that code and release this as a new protocol – typically called a new ‘coin’ or crypto asset. The developer or the community could use any word to describe that new crypto asset – and early ones were LiteCoin, Dash, Ethereum etc. These new coins were typically distinguished from the word ‘bitcoin’ by the feature differences they had from ‘the original bitcoin’. Logically the version of the code that is closest in the form to the original design and codebase has the strongest claim on the word ‘bitcoin’. It is clearly evident from an examination of the BitcoinSV code base that it is most similar to the original design and codebase to Satoshi’s original vision and Bitcoin.
The word ‘bitcoin’ is not trademarked, and hence can be freely used by any person or organization without payment of any royalty, or approval from any person or organization. Craig Wright has been legally recognized (US Patent Office) as the author and has a copyright on the Bitcoin White paper of 2009, and he has explicitly provided Centbee with permission to use the word ‘Bitcoin’. We recognize that the brand of the crypto asset BitcoinSV does not currently have as much market recognition as the generic ‘bitcoin’ brand, and we at Cenbee strive to help customers understand this difference. We recognize this may take some time.
Economic sustainability stems from the fact that Bitcoinsv is the only version of Bitcoin that scales to thousands of transactions per second, as opposed to Bitcoin Core (BTC) which has a maximum of seven (7) transactions per second – hardly a use case for global money. In early August 2019, the Bitcoinsv network processed approximately 800k transactions in a single block, clocking a staggering circa 1300 transactions per second (“TPS”) at less than $0.01 per transaction. This is because of the massive 2 gigabyte block size of Bitcoinsv, compared to the minuscule 1 megabyte blocksize of Bitcoin Core (BTC). The blocksize debate remains the most famous debate with regard to how best to scale Bitcoin. The Bitcoinsv community is demonstrating with real word data that massive blocks are the only sustainable way to scale Bitcoin so that it competes on the global stage with Visa and MasterCard. To truly be regarded as a ‘store of value’, Bitcoin needs utility and a real world use case based on scalability, a property that only Bitcoinsv possesses.
Centbee supports Bitcoinsv because of its technical superiority as a payment system and blockchain. In the best interest of our customers and our business, we promote Bitcoinsv as the most efficient and sustainable crypto asset. It’s sustainable from both a legal and economic perspective and we anticipate the true value proposition of Bitcoinsv to become more apparent as time passes and businesses continue to create applications that solve real world customer problems on a platform that scales very cheaply.
Centbee (Pty) Ltd