Founder: Nicolas Bartey
Date Founded: September 2019
Location of headquarters: USA
Number of employees: 11
Website: https://www.galoy.io/
Public or private? Private
Last week, Galoy Lana launched software that allows banks to accept Bitcoin as a collateral for loans.
Lana helps social and challenge banks (the banks that Galoy is looking to work with) offering Bitcoin-supported loans to different types of customers.
“Some banks may want to use it to sell to retail, and some may want to use it to sell commercial customers or individuals with high net worth,” Bartey told Bitcoin Magazine.
By offering such loans to a large number of customers, Bartey believes that the high cost of borrowing currently associated with such products will fall.
“Today’s interest rates are 12% to 15% if you want to get a loan using your Bitcoin as security,” Bartey said.
“The rates are high because there are so few financial institutions offering this type of product. We see an option now that the rules allow banks to do things with Bitcoin, ”he added.
“We think many banks will want to enter this market.”
If Bartey is right in its prediction that banks are eager to offer Bitcoin-supported loans, this will not only lower the rates of such loans, but it will also introduce open source Bitcoin software in the bank’s world, which can initiate a new trend in the industry.
But more about it in just a minute. First some background of Galoy.
Galoys History: From Blink Wallet to Lana
Founded in September 2019, Galoy had intentions to enable banks to use Bitcoin from the start, but it had to keep it because of an unfriendly legislative environment.
So instead, it focused its efforts to create and support Blink Wallet (which was originally called the Bitcoin Beach Tevebog, and which Galoy recently sold), a custody Bitcoin and Lightning Wallet predominantly used in El Salvador and then in Bitcoin Circular Economies globally globally.
“Galoy’s mission was to board banks to Bitcoin five years ago,” Bartey said.
“But the regulatory environment was so bad in the last five years that we decided to create flashes. The reason we now focus on our original mission is because with the end of Choke Point 2.0 and the cancellation of SAB 121, we think it is now the perfect time to help banks adopt Bitcoin. “
Burtey talked about his work of creating and growing flashes with joy and shared that he had to stop working on the project only because it would be too difficult to continue to control it while also aiming to earn A new type of clientele.
“Blink is a B2C (business-to-customer) game, and it’s hard as an early phase start-up to focus on too many things,” Bartey explained.
“Galoy is a B2B (business-to-business) business and we want to work with banks and financial institutions,” he added.
“It’s good to be focused on just one thing.”
And as mentioned, the one thing will now be Lana.
How Lana works
Lana is software that Galoy helps banks integrate and manage against a subscription fee. With this software, banks can issue Bitcoin-supported loans under the terms they create.
“We are not the ones who decide how much interest will be charged or something similar,” Bartey explained.
“We give the banks the platform to do this, and then they can find out their capital costs, the duration of the loan, the liquidation price for Bitcoin in the loan and the rate they will borrow,” he added.
“We’ll give you software and help you run and automate that software.”
Something else like galoy Don’t do it Do for banks is custody that Bitcoin provided as collateral for the loans they issue. Each of the banks that the company works is responsible for choosing their own custodian.
“You can go to Bitgo or Fireblocks, or every loan can have its own multi -bodies,” Bartey said. “We are agnostic over custody.”
With that said, Lana helps banks monitor the Bitcoin -Present Prison, so the banks can be aware of whether or not liquidation levels are approaching levels of liquidation.
“An important piece of this product is risk management,” Bartey said.
“Bitcoin is unstable and the bank needs a tool to show that it is taking a calculated risk. So we give the banks a dashboard to monitor this risk, ”he added.
Who uses Lana?
Galoy is targeted at community banks and other smaller financial institutions with this new product mainly because they think these smaller players will benefit the most – and because the big banks probably don’t need such a product.
“We don’t think JP Morgan really wants to work with us,” Bartey said. “They probably build something like this themselves, while a smaller bank, a credit union or a small company is likely not.”
Burtey also understands that the smaller lender’s’ incorporation of Lana, as opposed to building something that can be compared itself, can save these financial institutions a significant amount of time and forces.
“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, “Bartey said. “‘Or we have a lending product as a service for you and you can start it much faster.'”
And as Bartey and his team aboard their first round with smaller banks, they will not only make history of enabling more banks -Source software for it.
Open Source Bitcoin Banking
Burtey’s long-term vision for Galoy is to do much more than just helping banks to issue Bitcoin-backed loans. He wants to introduce open source software in banking when several banks start embracing Bitcoin.
However, it is important to note that Lana is not open source yet. It is Fair-Source software and under such a license code becomes open source after two years.
“It’s a delayed open source system, but it’s all available on GitHub,” Bartey said. “You can go and try it, test it and play with it on your own.
According to the Fair-Source license, no company other than Galoy can sell the product to a bank right now, so Galoy can profit while still building with auditorious code.
“We sell the implementation and we help banks join their custodian,” Bartey explained. “We are building out in the open – but we will also generate revenue.”
In addition to helping banks implement Lana, Bartey’s wants to develop open source “core bank software” as he wants to disrupt “Core Ledger” oligopoly.
“Kernebok is where banks store account data, customer information and transaction details,” Bartey said. “That’s the source of truth for banks.”
And only three companies – Fis, Fiserv and Jack Henry – have the central headbox market corner.
“This is all like a hundred billion dollars companies that you probably never heard about because all they do is focus on selling software to the banks,” Bartey said.
“Our long -term goal is to disturb this industry by doing something that is open source,” Bartey said. “Today, there is no business that makes Kernebank with the idea of open source, and so we are working towards this.”
Bartey sees a world where open source software can make it much easier for someone to start a Bitcoin bank. (For those who win by the words “Bitcoin” and “Bank” used in Tandem, I may be able to remind you that it was the legendary hall Finney himself who wrote that Bitcoin-backed banks would act as a scaling solution .)
“Starting a bank today is a very expensive and complicated process,” Bartey said. “You have to pay $ 100,000 plus just to buy core headbox technology.”
Bartey then referred to his own experience of starting the flash wallet, essentially a Bitcoin Bank race on Open Source code before continuing.
“I went straight to El Salvador and started what was effectively my own bank because I wanted to,” Bartey said.
“We need to reinvent how core banking software is manufactured in the Bitcoin world, and I think this is where Open Source becomes relevant,” he added.
“That’s really the reason why I think the bank’s and Bitcoin world will be very different from the bank’s world with Fiat, and I think we’re one of the companies at the forefront of this.”