John Light is the co-founder of PawnCoin, an innovative way for bitcoin users to unlock the value of their bitcoins.He has been making the rounds with investors, pitching his business in front of an audience at the recent Plug and Play EXPO where 10 other bitcoin-related startups also were seeking funds.Light spoke to us about his startup, how it will operate with the risks of volatility and why Buttonwood has become less of an open air cryptocurrency market and more of a social gathering.CoinDesk: Tell us about PawnCoin.John Light: We are going to be offering customers a cash advance based on the value of their bitcoins.So if bitcoin is $1,000 and the customer wants to pawn a bitcoin, then they send us a bitcoin in exchange for $300 cash, which they can play around with for 30 plus 10 days.CD: It’s 30% of the bitcoin’s value?JL: Yes, 30% of the value.And to get their bitcoins back, they just pay a 10% redemption fee and get all of their bitcoins back.10% of the cash that we advance them.

So on a $1,000 coin, they get $300 cash advance and they would pay $330 to get their bitcoin back.CD: Who is the type of person that would want to use this type of service?How did you come up with this idea?JL: I see a space in the market for this.tor friendly bitcoin exchangeAnd I’m sure people will think of a lot more ways to utilize this functionality.bitcoin capital gains canadaAmong a lot of bitcoin early adopters, bitcoin might be your first investment.litecoin 3 year chartBitcoin might be the first thing you ever really thought of like, “hey, I can throw money at this and it’s going to be worth a lot more in the future”.sell litecoin to euro

So they might be your average person that just works a 9-5 or maybe like a part time job, or a college student or whatever.Anyone who needs cash to pay a bill or pay rent or whatever the case may be.And they don’t want to sell their bitcoins because they are probably going to be worth more in the future.why bitcoin is a ponzi schemeBut at the same time, they need the cash.bitcoin satoshi faucetYou can skip the process of pulling out a line of credit and just pawn your bitcoins.ethereum memory sizeUse your bitcoins as collateral for a cash advance, which you can pay back in a week, two weeks or even a month.bitcoin backingCD: How does volatility play a role in all of this?giá bitcoin tăng mạnh

JL: From PawnCoin’s perspective, we’re offering customers 30% of the value of their bitcoin.So built into our business model we have room for a 70% drop in the value.CD: But how do you mitigate that risk?JL: If at the point where bitcoin loses more than 70% of its value, then we have internal policies to manage spikes or declines and we’re also exploring a hedging option to actually fully mitigate against that risk.We’re establishing a bitcoin company.We believe that bitcoin will continue to be successful.Hopefully those are just contingency plans that we never have to execute on.There are a few options that exist in the market for hedging.We haven’t committed to any one of them.So it’s a little bit of figuring out what we need to do and then seeking out people who can help us execute on that.CD: Have you received any funding yet?So far we have been completely founder-funded.CD: What does PawnCoin have to do in terms of regulatory compliance?JL: From a regulatory standpoint, we’re not a money transmitter and we’re not a money services business.

So a lot of the concern that bitcoin exchange companies have to deal with, we don’t.“We’re basically buying bitcoins at a discount, and then customers have an option of canceling that sale at the end of the month.” CD: This kind of reminds me a little bit of the concept of payday loans.Do they not have to register as money transmitters?JL: I can’t speak to that particular business model.But we’re not lending money.We’re basically buying bitcoins at a discount, and then customers have an option of canceling that sale at the end of the month.There are a few different ways that pawnbrokers have conducted their business.For some, it is phrased as a loan that they give people and in other jurisdictions it’s this purchase with an option to cancel.CD: Are you planning on marketing this globally or just in the United States?JL: We have international ambitions.CD: Let’s talk a little bit about Buttonwood San Francisco (Every Thursday 7PM at Yerba Buena Gardens, now being held inside at the food court for winter).

You started it, right?JL: Yeah, I organized the first one.I think what I like about the most about Buttonwood is not the cryptocurrency trading, it’s the people that show up.And as the prices have gone up, people have become hesitant to sell because they know that they can get a better price next week.Or, at least, they believe that they can get a better price next week.Featured Image: Plug and Play Tech Center Flickr The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies.John Light knows a special kind of regret that's familiar to many others who got in early on bitcoin, the world's most popular digital currency.Last year, Light moved to San Francisco to join the bitcoin revolution, and by this past March, the former online community manager didn't have enough dollars to pay his rent, but he have a lot of bitcoins.He ended up covering his monthly rent by selling some of his digital stash, but he quickly wished he hadn't.

A month later, the bitcoins he sold for $30 each were worth more than $250.Today, a bitcoin goes for close to $900.But there's a silver lining to his story.Light's March cash-flow problem has sparked a new business idea.He wants to open a bitcoin pawn shop, so that others can get some cash for their bitcoins without actually selling them.It's a business venture that plays into the idea – popular amongst bitcoin's true believers – that bitcoin is still in its early days and that it's still a bargain at over $900 for a virtual coin.Light has teamed up with Carl Hilsz, a San Francisco pawnbroker, and set up a website called PawnCoin.Now, all he needs are some financial backers.The setup is pretty simple.You hand over your bitcoins to PawnCoin, and they store them in a "cold" bitcoin wallet that is not connected to the internet.A month later, you pay back the cash, plus a healthy 10 percent interest, or Light and Hilsz get to keep your bitcoins.Last week, Light was pitching his idea to investors at Plug and Play, a Sunnyvale tech incubator.

He describes as the perfect startup for the bitcoin bulls.Light, who has also started a weekly face-to-face Bitcoin marketplace in San Francisco known as Buttonwood, says a lot of his bitcoin friends like the idea.Many of them could have used a pawnshop "at one time or another" in their digital currency investing careers, he says.But what if the whole bitcoin bubble should burst?Won't PawnCoin then go bust?"We have internal hedging strategies that we're working on right now to mitigate against the threat of a crash," Light says.He won't tell us what these hedging strategies are – "dealing with that risk is part of our proprietary secret sauce," he says – which is too bad.Stephen Gandel at Fortune recently tried to short bitcoin and found out that it was pretty hard to do.You can't pawn your bitcoins just yet, but you can sign up to beta test the service.Light hopes to have the PawnCoin up and running by the end of March.Early interest seems to be coming from people who want to leverage what they own to buy even more bitcoins, he says.