Rodrigo Batista - CEO Mercado Bitcoin

Rodrigo BatistaMercado Bitcoin CEO Rodrigo Batista discusses Bitcoin exchange in Brazil.


Interview with Rodrigo Batista on Bitcoin Brazil

Trace Mayer:  Welcome back to the Bitcoin Podcast. We have Rodrigo Batista. He's the C.E.O. of Mercado Bitcoin. Mercado Bitcoin is the largest Brazilian bitcoin exchange. Welcome to the podcast.

Rodrigo Batista:  Thank you very much.

Trace Mayer:  So largest bitcoin exchange in Brazil, like, how large are we talking about?  Like how many users?

Rodrigo Batista:  We have about 60,000 users registered, but of those we have about 9,000 users that had traded at least once in our platform.

Trace Mayer:  Okay. Nice. So, there is a significant amount of activity going on in Brazil. When we're looking at the Brazilian community do we have meetup groups?  Do people kind of get together like --

Rodrigo Batista:  Yeah.

Trace Mayer:  Do you integrate with other Latin American countries like Buenos Aires?

Rodrigo Batista:  Yeah, so--

Trace Mayer:  Talk a little bit about that?

Rodrigo Batista:  Brazilian, they are a little bit different, like U.S. for example. Here, the strongest relationships that we have are online. So we have like big Facebook groups, for example. So there’s one Facebook group called Bitcoin Brazil that has about 10,000 people. In my webpage, I have about 20,000 followers. And they are very active. They discuss bitcoins online. So actually we don't have many meetups in Brazil. Most of the discussion is done online in Facebook.

Trace Mayer:  Okay. And everybody's pretty active, it sounds like. That's quite fun.

Rodrigo Batista:  Yeah. Yeah.

Trace Mayer:  I know the U.S. bitcoin community in Europe congregates a lot online. We've got a lot on Reddit and the BitcoinTalk forums and other places. But now the community is so large we're having these conferences. I was here last year at the first Latin American Bitcoin Conference in Buenos Aires and now we had another one, the second here in Rio and--

Rodrigo Batista:  Yeah.

Trace Mayer:  -- I mean, it's growing.

Rodrigo Batista:  Yeah. We have like a very strong relationship with the guys of Buenos Aires. They were the first ones to create a foundation in Latin America. Now they're helping to create the Brazilian Foundation that was launched here in Rio de Janeiro. So we have like a very strong community in Brazil and it's basically an online community. In Argentina, we have a big community. And they, kind of, like work together a lot. They are very attached. Being working very well you saw the conference here in Rio. There's a lot going on.

Trace Mayer:  Yeah. And you get a lot of these cross-border work that goes on like I'm going to be interviewing and I have interviewed quite a few other people down here in Rio. And it's very exciting to see the integrations with Chile and Bolivia and Venezuela and Argentina and Brazil, like it's almost like one big market, this whole Latin Americans market down here?

Rodrigo Batista:  Exactly. Yeah. Exactly. Yeah. Brazil, of course, is the biggest one--

Trace Mayer:  Yeah.

Rodrigo Batista:  -- because the population--

Trace Mayer:  250 million people.

Rodrigo Batista:  200. Yeah. Yeah. Yeah. It's more than two hundred people. But those countries they all like, it's good that all of them speak Spanish or Brazilians speak Portuguese that's quite similar. And we all have the same needs. We have like governments that are very crazy when dealing with monetary policy--

Trace Mayer:  Printing everything.

Rodrigo Batista:  -- printing. They’re printing money like crazy guys and that is a problem that bitcoin solves. And we work together to build good solutions in each country.

Trace Mayer:  So, is that one of the main use cases in Brazil?  Or in Latin America in general, like the savings, the value component of bitcoin, even with the volatility?

Rodrigo Batista:  Yeah. Here in Brazil there are two main cases. One is that the savings so people buy a lot for savings. Here in Brazil, for example, if you buy something abroad you have to pay 6.5% fee if you pay with credit cards or debit cards. So bitcoin is also a way to avoid that fee for example. So, I see that it's increasing in my platform people asking our customer support how to do international purchases using bitcoin. So, I think that's about ten percent of our flow that’s which was pretty good, I think.

Trace Mayer:  And it’s probably--

Rodrigo Batista:  And it is increasing. In the press now a day, they sometimes referred to bitcoin as a way to avoid that tax. At some point the government, you know--

Trace Mayer:  Will care about it?

Rodrigo Batista:  Will care about it.

Trace Mayer:  But we've got major retailers now that are accepting bitcoin, like Overstock. They would take bitcoin internationally 200-plus countries.

Rodrigo Batista: Exactly.

Trace Mayer:  And so Brazil is one of those and so now you can buy from Overstock and get it shipped in. I mean what are the major retailers in Brazil, electronic retailers like Amazon. I mean do you even have Amazon in Brazil?

Rodrigo Batista:  They are launched in Brazil now. The biggest retailers that I’ve been talking to some of them they still are very skeptical about bitcoin, but it's my job like convincing them and going there and explain, explain again. I believe that in 2015, we're going to have very big guys. We already have. But most of them are very small startups or a very small online stores.

Trace Mayer:  But --

Rodrigo Batista:  What Brazilians do usually is that they pay for stuff that they buy abroad in Europe or U.S. or even in China. People say that bitcoin is prohibited in China but there are a lot of websites that take Brazilians bitcoins for their products. So the people that buy bitcoins should do payments, they do payments abroad and not in the local market.

Trace Mayer:  Interesting. And so the local market will -- because they don't accept the bitcoins they might be at risk of losing market share, because they don't accept bitcoin as a payment.

Rodrigo Batista:  I think so. But like everywhere else the number of people that use bitcoin to buy goods is still small but it's increasing a lot and I think that what I see here and some of those big retailers and even the big payment processors in bitcoin Brazil they're already thinking about definitely something that's going to change next year.

Trace Mayer:  So, you've had a little bit of legal fund down here in Brazil from what I understand you had a bank account and the bank tried to close it --

Rodrigo Batista:  Yes.

Trace Mayer:  -- which is happening often in the U.S.

Rodrigo Batista:  Yeah, exactly.

Trace Mayer:  What did you do about it?

Rodrigo Batista:  So, I don't know how exactly it works in the U.S. but here at banking is a public service that the government allowed the banks, institutions to operate and what they did that they closed the account but you went to court to fight that and we won. And the judge said they cannot close our accounts with no reason.

So the bank, you know, give a proper reason for the courts to close our accounts. And they had to reopen it and for them to do something they need to somehow to make it knew the decision of the court here in Brazil. So we now have like a stealth account that can't be touched by the bank.

Trace Mayer:  You have a bank account that's very protective?

Rodrigo Batista:  Yeah, yeah. Exactly. Exactly.

Trace Mayer:  That's actually very encouraging probably for your business.

Rodrigo Batista:  Yeah, exactly.

Trace Mayer:  It gives you a lot of -- you might not necessary know what the regulators are going to do but you at least know that the bank isn't going to be able to engage in the arbitrary and capricious --

Rodrigo Batista:  Exactly.

Trace Mayer:  -- activity towards their public service or providing a bank account?

Rodrigo Batista:  Yeah, exactly. Exactly. And if that happens again we need to -- we're going to keep fighting. We have -- here in Brazil we have six banks. We have accounts in four of them and we are going to fight a little bit more to have accounts in the two other ones.

Trace Mayer:  You know just kind of going back in time a little bit, how did you get drawn into bitcoin, like what brought you into it?  I mean, if you've been around bitcoin for a while and of all things like why start an exchange?

Rodrigo Batista:  I first heard of bitcoin 2011 in our local scientific magazine. And then in the beginning of 2012, I started dealing with it. My background, I was an IT developer for Morgan Stanley here in Brazil and the U.S. I used to develop stock trading bots. And then I went to another Brazilian bank, working in electronic trade as well. So I have this technology and a business background. I’m graduated in business and financial engineering.

So, back in 2012, when I got what bitcoin is and when I finally understood I took some time to me to understand it. I realized that it was big stuff and then additional to start trading, I started looking for people to start a business. Back then the exchange business was the only one. And --

Trace Mayer:  Well, it's the first network effect, speculation and then merchants.

Rodrigo Batista:  Yeah, exactly. And then we built the exchange, at some point that I had to leave my job at Santander that’s I was working at. And I left Santander. And I start fully dedicating to the business. It’s just growing. It’s very nice and we didn’t get funding for example. It’s all our money. And now we're going to the second business that’s payment processing.

So one thing that we're going to do in the next month is helping local merchants to start accepting bitcoin. So that's the other business we're doing now. And also as you said we have a very good position in bitcoin Brazil and we started expanding it to Latin America and maybe even Europe. I don't see why we should not be just stay here.

Trace Mayer:  That's great. So you're going to start moving into the merchant acquisition space. I hope you do a wonderful job, then it might be a potential BitPay acquisition target.

Rodrigo Batista:  I hope so.

Trace Mayer:  You know, I work with Alberto Vega down in Buenos Aires.

Rodrigo Batista:  Yeah. We are very close to Alberto. We have some very good conversations. Brazil is a good market. I know that BitPay is coming to Brazil. And I help them.  I think that one of my role is that to help even competitor companies to get to Brazilian market, because BitPay, for example, they have the resources to go to brands and to go to places that I have no resources and I would not mind of having a smaller share of a bigger pie.

Trace Mayer:  That’s really a good way to look the cooperation even among competitors in the space.

Rodrigo Batista:  Yeah.

Trace Mayer:  Like Tony at his presentation here. He said, it’s very important to focus on doing something and doing it extremely well.

Rodrigo Batista:  Yeah.

Trace Mayer:  And so BitPay, you know, they focus on merchant processing. But, even within merchant processing you could focus on the U.S., you could focus on the E.U., you could focus on Latin America, even within Latin America you could focus on Brazil. And that's a gigantic market in and of itself.

Rodrigo Batista:  Exactly. Yeah, exactly.

Trace Mayer:  You know, even that sub, sub, sub-niche in a bitcoin. So, you know, I think the whole bitcoin pie is really, really large.

Rodrigo Batista:  Yeah, exactly.

Trace Mayer:  The potential.

Rodrigo Batista:  I agree.

Trace Mayer:  And there is really no, you know trying to do everything. You know, you try to catch all the rabbits you'll never catch any of them.

Rodrigo Batista:  Yeah, exactly.

Trace Mayer:  So.

Rodrigo Batista:  That's exactly how I think. So, I think like everybody in the industry should focus on making it easier for customers and that's the only way of getting that pie bigger. And, also advocating and create the network that we use in bitcoin to solve problems.

Trace Mayer:  You know, you got the bitcoin network itself, but then you've got the community network around it --

Rodrigo Batista: Yeah, exactly.

Trace Mayer: -- you know, comprised of exchanges and merchant processors and independent consultants and security consultants and auditors.  I mean, you just have all across the spectrum mining, hardware.

Rodrigo Batista:  Yeah.

Trace Mayer:  Swag, you got the branding and the t-shirts, I mean--

Rodrigo Batista:  Yeah, exactly.

Trace Mayer:  We just have so much in this fledgling little industry.

Rodrigo Batista:  Yeah.

Trace Mayer:  So many things that people going to be focus--

Rodrigo Batista:  Exactly.

Trace Mayer:  -- on and doing and you know having more people coming in and having a growing expanding industry that's just good for everybody, in my opinion.

Rodrigo Batista:  Yeah. I agree. Yeah, I agree. Yeah. Yeah.

Trace Mayer:  When you look at the Brazilian market, let's look at the things that you're most worried about. What keeps you up at night here in Brazil?

Rodrigo Batista:  One thing is, it's not only about Brazil, but running an exchange business is not that easy because you’re all the time 20 hours a day, 7 days a week, you’ll have like people's money to deal with. So that’s tough. But for example, what makes me sleep is like we don't have like tight regulations as you guys have in the U.S. But what makes me up -- not sleep is we never know how our government will react. So, it's -- in U.S. even if the regulation is not good, you have a more --

Trace Mayer:  Predictable.

Rodrigo Batista:  Predictable government. Here in Brazil, we never know what's going to happen the following day. So, we know that it's good now that they said that they want to regulate or they won't bother us. But you never know the following day that something is going to change. So that’s the most worrying part of bitcoin business here in Brazil.

Trace Mayer:  Yeah. Just the kind of inaction or the unpredictability of potential regulators or --

Rodrigo Batista:  Exactly.

Trace Mayer:  -- anybody. It's nice to know the rules of the road.

Rodrigo Batista:  Yeah, exactly. Exactly.

Trace Mayer:  You know, to drive by?

Rodrigo Batista:  Exactly. Exactly.

Trace Mayer:  It’s nice --

Rodrigo Batista:  There are no like big turns in front of you.

Trace Mayer:  Yeah.

Rodrigo Batista:  That's what concerns me.

Trace Mayer:  On the other side of the coin what are you most optimistic about?  Like what's the most exciting opportunity for you down here in Latin America in Brazil in bitcoin?

Rodrigo Batista:  I see bitcoin solves a lot of problems that people in Latin America have. One is, it’s usually very hard for them to receive and send money abroad due to capital controls from governments. In Brazil, they are not that bad, but as I told you, we have like a tax if you do any purchase outside Brazil you have to pay 6.5%. And that can be avoided with bitcoin. The remittances use case I think it's huge, but even Mexico, for example, it's not being used basically because bitcoin is very hard for people to understand.

But I think that, it’s a very big opportunity.  I mean, in Mexico it's a $20 billion opportunity only remittances for Mexico. And it’s a big opportunity in Brazil and Argentina as well. We still need to work to make it good for people that are underbanked. So in Brazil it's between 40 and 50% of people that don't have bank accounts.

It's a very good opportunity there, but we still don't have products to reach that part of the population. But at some point I'm sure it's going to become very easy for them as well. I don't know what the channels are going to be if it’s smartphones or even a regular cell phones. But at some point we're going to reach the public as well.

Trace Mayer:  Yeah, I know with, man you look at the percentages of underbanked are unbanked and the ease of use with things like Breadwallet on the smartphone or 37coins--

Rodrigo Batista:  Yeah.

Trace Mayer:  --that it’s doing SMS, bitcoin transactions like, bitcoin’s a protocol that’s able to layer over a lot of these other technologies.

Rodrigo Batista:  Exactly.

Trace Mayer:  And then, man, you can just become very efficient invisible glue for moving value all over the place.

Rodrigo Batista:  Yeah, exactly. I think that solutions like 37coins, for example. They are very good but I don't think they are still – are – what the market needs, because it’s still people need to receive bitcoins from someone else and people need to learn how to do they come to send coins or to check their balance. But I think we are on the right track with products like that.

Trace Mayer:  Well, it's been very enlightful. Thanks for being on the podcast with us. We’ve have Rodrigo Batista, the CEO of Mercado Bitcoin, the largest bitcoin exchange in Brazil. Thanks for being with us.

Rodrigo Batista:  Thank you very much for the conversation.

Written by Rodrigo Batista on January 4, 2015.