Founder: Nicholas Bertey
Date established: September 2019
Head office location: US
Number of employees: 11
Website: https://www.galoy.io/
Public or private? Private
Last week, Galoy launched Lana. Lana is software that allows banks to accept Bitcoin as collateral for loans.
Lana helps the community and Challenger Bank (the bank that Galoy wants to work with) provide Bitcoin-assisted loans to various types of customers.
“Some banks may want to use it to sell to retail, while some may want to use it to sell commercial customers and wealthy individuals. ” Burtey told Bitcoin Magazine.
In offering such loans to a wide range of customers, Burtey believes the high costs of borrowing currently associated with such products will be lowered.
“If you want to get a loan using Bitcoin as collateral, the interest rates today are between 12% and 15%,” Burtey said.
“The fees are high because there are so few financial institutions that offer this type of product. There is an opportunity for the regulations to allow banks to do things with Bitcoin,” he added. Ta.
“I think a lot of banks want to enter this market.”
If Burtey is right in his prediction that banks are keen to offer Bitcoin-assisted loans, this not only lowers the rate of such loans, but also introduces open source Bitcoin software into the banking world I will. In the industry.
But that's only a minute. First, Galoy's background.
The History of Galloi: From Brink Wallet to Lana
Founded in September 2019, Galoy intended to allow banks to use Bitcoin from the start, but had to refrain from doing so due to a friendly regulatory environment.
So instead, we focused on creating and supporting Blink wallets (which were originally called Bitcoin Beach Wallets and were recently called ones sold). .
“Galloy's mission was to board a Bitcoin bank five years ago,” Vertey said.
“However, the regulatory environment has been so bad in the last five years that we decided to create a blink. The reason we are focusing on the original mission is the end of Chalk Point 2.0 and the deprecation of SAB 121 I think it's the best time to help banks adopt Bitcoin.”
Burtey spoke about making blinks and his growing work, and shared that he must stop working on projects.
“Blink is a B2C (business to customer) play, and it's difficult as an early stage startup to focus so much on it,” Burtey explained.
“Galloy is a B2B (business-to-business)-led business and we want to work with banks and financial institutions,” he added.
“It's good to focus on just one thing.”
And, as mentioned before, it will now become Lana.
How Lana works
Lana is software that helps Galoy integrate and manage banks with subscription fees. This software allows banks to issue Bitcoin aid loans under the terms they create.
“We are not the ones who decide how much interest will be charged or what that is,” explained Bertey.
“We give the banks a platform to do this, and then they can figure out what the cost of capital, the duration of the loan, the clearing price of Bitcoin on the loan, the fees they want to lend,” he adds. I did.
“We provide you with software and help you run and automate that software.”
Galloi is something else it's not Banks are to custody the bitcoin provided as collateral for the loans they issue. Each bank where the company works is responsible for choosing its own custodian.
“You can go to Bitgo or Fireblocks, or each loan can have its own multisig,” Burtey says. “We have custody.”
That being said, Lana helps banks monitor Bitcoin in custody, allowing the bank to recognize whether collateral is approaching liquidation levels.
“A key part of this product is risk management,” Burtey said.
“Bitcoin is unstable and banks need tools to show that they are taking calculated risks, so we're giving banks a dashboard to monitor this risk,” he adds. Ta.
Who will use Rana?
Galoy is targeting community banks and other small financial institutions with this new product. This is because we believe these small players will benefit most from it.
“JP Morgan really doesn't want to work with us,” Vertey said. “They probably build something like this on their own, whereas small banks, credit unions, or small businesses probably aren't.”
Burtey also understands that rather than building something comparable, small lenders who incorporate Lana can save these institutions a considerable amount of time and effort.
“Our goal is to say, “Look, you can develop this internally. Depending on how much you know about Bitcoin, it can take six months, a year or more.” ” says Burtey. “Or we have a loan product as a service for you, and you can launch it more quickly.”
And when Bertey and his team are mounted on the first round of small banks, they not only make history that allows more banks to accept Bitcoin as collateral for loans, but also open By implementing this, it may generally change the trajectory of a bank – source software.
Open Source Bitcoin Banking
Burtey's long-term vision for Galoy is to not only help banks issue Bitcoin-assisted loans, but do much more. He wants to introduce open source software to banks as more banks begin to accept Bitcoin.
However, it is important to note that Lana is not open source yet. This is fair source software and, under such a license, the code will become open source in 2 years.
“It's a lazy open source system, but it's all available on Github,” Burtey says. “You can go, try it, test it, play it yourself.
Under the Fairsource License, non-Galloy companies are currently unable to sell their products to banks. Galoy can make money while building with auditable code.
“We sell deployments and banks will help plug in to custodians,” Burtey explained. “We're public, but we want to generate revenue.”
Not only will the bank help Lana implement, but Vertaze is looking to develop open source “core banking software” as it is about to disrupt “core ledger” oligocorries.
“The core ledger is where banks store account data, customer information and transaction details,” Burtey said. “It's the source of the truth behind the bank.”
Furthermore, only three companies, FIS, Fiserv and Jack Henry, are pushing the core ledger market down.
“All of these are like $10 billion companies, because all they're doing is focusing on selling software to banks,” Burtey says.
“Our long-term goal is to disrupt the industry by making something open source,” Burtey said. “Now there's no company doing core banking with open source ideas today, so we're working towards this.”
Burtey envisions a world where open source software can make it much easier for someone to start a Bitcoin Bank. (It was the legendary Hal Finney himself who wrote that Bitcoin-assisted banks could serve as scaling solutions for those who flinched by the words “Bitcoin” and “bank” used in tandem. It may remind you of.)
“Starting a bank today is a very expensive and complicated process,” Burtey says. “You'll need to pay more than $100,000 just to buy core ledger technology.”
Burtey then referenced his own experience of starting Blink Wallet, essentially a Bitcoin Bank Running in open source code, before continuing.
“I just went to El Salvador and started what was effectively my bank because I wanted,” Vertey said.
“We need to reinvent how core banking software is made in the Bitcoin world. I think this is where open source is relevant,” he added.
“This is why I think the banking and Bitcoin world is so different to the banking industry with Fiat. I think we're one of the companies at the forefront of this.”
