Founder: Nicolas Burtey
Date founded: September 2019
The location of the headquarters: United States
No. of employees 11
Website: https://www.galoy.io/
Is it Public or Private? Purchase a Private Chauffeur
Last week Galoy Lana is a software program that allows banks to accept Bitcoin as a collateral.
Lana helps community and challenger Galoy (the bank with whom Galoy hopes to partner) offers bitcoin-backed loan to different kinds of customers.
“Some banks might want to use it to sell to retail, and some might want to use it to sell commercial customers or high-net-worth individuals,” Burtey tells Bitcoin Magazine.
Burtey thinks that by providing such loans to such a broad range of clients, the cost of borrowing will drop.
“Today’s interest rates are 12% to 15% if you want to get a loan using your bitcoin as collateral,” Burtey, said
“The rates are high because there are so few financial institutions offering this type of product. We see an opportunity now that the regulations are allowing banks to do things with bitcoin,” Added he.
“We think a lot of banks will want to enter this market.”
Burtey’s prediction, that banks will be eager to offer loans backed by bitcoin, will lower interest rates, and introduce the open-source Bitcoin technology into banking. This could start a trend.
More on this in a second. Let’s start with some history on Galoy.
Galoy’s history: From Blink wallet to Lana
Galoy was founded in September 2019 with the intention of enabling banks to use Bitcoin from day one. But due to unfriendly regulations, they had to wait.
Instead, the company focused on supporting and creating new products. Blink wallet The Bitcoin Beach wallet (originally called Bitcoin Beach and sold by Galoy) is a Bitcoin and Lightning wallet that was used primarily in El Salvador and later in the United States. Bitcoin circular economies globally.
“Galoy’s mission was to onboard banks to Bitcoin five years ago,” Burtey, said
“But the regulatory environment was so bad during the last five years that we decided to create Blink. The reason we are now focusing on our original mission is because with the end of Choke Point 2.0 You can also read about the repeal of SAB 121We think that now is the best time for banks to adopt Bitcoin.”
Burtey talked about the work he did to create and grow Blink with fondness and said that it was too hard to manage it and also serve a different type of customer.
“Blink is a B2C (Business-To-Customer) play, and it’s hard as an early-stage startup to focus on too many things,” Burtey explained
“Galoy is a B2B (Business-To-Business)-driven business, and we want to work with banks and financial institutions,” “He added.”
“It’s good to be focused on just one thing.”
Lana, now, is the one and only thing that has been mentioned.
Lana works
Galoy is a company that helps integrate and manage Lana, a piece of software for banks. This software allows the banks to create their own terms for bitcoin-backed loan.
“We’re not the ones deciding how much interest will be charged or anything like that,” Burtey explained
“We give banks the platform to do this, and then they can figure out their cost of capital, the duration of the loan, the liquidation price for the bitcoin in the loan and the rate at which they want to lend,” He added.
“We’re giving you software, and helping you run and automate that software.”
What else is there? doesn’t The banks are required to keep the bitcoins that they use as collateral in order to issue loans. It is up to each of the banks that the company deals with to choose their custodian.
“You can go to BitGo or Fireblocks or each loan can have its own multisig,” Burtey, said “We’re agnostic on custody.”
Lana is able to help banks track the bitcoins in their custody, so they can know if collateral levels are nearing.
“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’s taking calculated risk. So, we’ll provide banks with a dashboard to monitor this risk,” He added.
Lana – Who Uses It?
Galoy is targeting community banks and other smaller financial institutions with this new product mostly because they think these smaller players will benefit most from it — and because the big banks likely won’t need such a product.
“We don’t think JP Morgan will really want to work with us,” Burtey, said “They’re probably building something like this themselves, whereas a smaller bank, a credit union or small company probably isn’t.”
Burtey is also aware that smaller lending institutions could save a great deal of effort and time by integrating Lana instead of building something equivalent themselves.
“Our goal is to say, ‘Look, you can develop this internally, and it will take you six months, a year or longer depending on how much you know about Bitcoin,'” Burtey, said “‘Or we have a lending product as a service for you, and you can launch it much more quickly.'”
Burtey, his team, and the smaller banks that they have chosen to work with will not only make history as more banks accept bitcoin as collateral, but also potentially change the course of banking by using open-source software.
Bitcoin Open Source Banking
Burtey’s vision for Galoy goes beyond helping banks to issue loans backed by bitcoin. In the wake of more and more banks adopting Bitcoin, he wants to integrate open-source technology into banking.
It’s worth noting that Lana hasn’t been made open source yet. It’s fair-source Software is licensed under this license and becomes available for public use after two years.
“It’s a delayed open-source system, but it’s all available on GitHub,” Burtey, said “You can go and try it, test it, and play with it on your own.
Under the fair-source license, no company other than Galoy can sell the product to a bank right now, allowing Galoy to profit while still building with auditable code.
“Banks can plug into their Custodian with our help.” explained Burtey. “We’re building in the open — but we also want to generate revenue.”
Beyond helping banks implement Lana, Burtey’s wants to develop open-source “Core Banking Software” as he’s looking to disrupt the “core ledger” oligopoly.
“This is the place where bankers store account details, transactional information, and customer data.” said Burtey. “The source of the truth is for all banks.”
And only three companies — FIS, Fiserv and Jack Henry — have the core ledger market cornered.
“You’ve never heard of these hundred-billion dollar software companies because their sole focus is on banks.” said Burtey.
“Open source is our long-term objective to create a disruptive force in the industry.” said Burtey. “Currently, no one is doing core banking using open source.”
Burtey envisions a world in which open-source software can make it much easier for someone to start a Bitcoin bank. (For those who wince at the words “Bitcoin” and “You can also find out more about the bank by clicking here.” being used in tandem, might I remind you that it was the legendary Hal Finney himself who wrote that bitcoin-backed banks would serve as a scaling solution.)
“Starting a bank is an expensive and complex process.” said Burtey. “Just to buy the ledger core technology, you will need to spend at least $100,000.”
Burtey then referenced his own experience in starting Blink wallet, essentially a bitcoin bank run on open-source code, before continuing.
“It was my desire to start my own bank that I went to El Salvador to do.” said Burtey.
“This is the time to open source core banking software in order to make it relevant for Bitcoin.” he added.
“It is for this reason that I feel the banking industry with Bitcoin will differ greatly from banking in the fiat world. And I am confident we are at the forefront.
“This article is not financial advice.”
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Source: bitcoinmagazine.com
