Mike Townsend: This interview is withDom Rozic. The CEO of Minka. Minka has raised 24 million and they are buildinga open network that enables organizations to move money in real-time. So thenetwork aims to build and connect the world's balances through the web usingshared and connected ledgers. Dom is very passionate, and excited about thepotential for crypto to influence the world of payments.

Mike Townsend: But he realized thatcrypto has to integrate with our current existing payments infrastructure. So,hence Minka, we talked about their early days, how they built the productbefore they had a customer, and then they just landed in Columbia whereColumbian banks. We're doing an RFP proposal and they wanted to integrate onepayment system together to have a settlement layer kind of like Zelle, or youcould think of Venmo.

Mike Townsend: They won thatcontract. We talked about how they won that contract as such a small companycompared to other monsters in the space. And. Bottom line just comes down tospeed and being good at what you do delivering. So they did that. Theylaunched, it was successful. They raised a bunch of money, and now they're ontothe races doing this in other countries and other places.

Mike Townsend: So hope you enjoy thisconversation. I learned a lot. Hope you do as well. Here is Dom Rozic.

Mike Townsend: All right, Dom, I'mexcited to chat with you. You are the founder of Minka, which is based nowwhere you are started off in Columbia. Working in crypto, you guys are raisedabout 24 million is what I have down. Give me the rundown. Tell me why youstarted it and what the problem or opportunity that you initially saw is, andwhere you guys are generally.

Dom Rozic: Yeah. So I can startwith a story of what happened when I came to Columbia. I'm here because of my,my wife and I have two beautiful daughters. And so six, seven years ago, if Iwanted to send a picture of my daughter, all I had to do is get my phone to thephone numbers, send an image and send it right across the, the pond to my, tomy parents, you know, so it was free real time and it was just a phone number.

Dom Rozic: And then when I had topay my door neighbor, we were buying some groceries. And I tried to send him $5through the standard payment system. It actually took three days. They asked mefor a bunch of information and I ended up owning money to the bank. So Irealized that something's definitely not right.

Dom Rozic: And since I was beforein telecommunications industry and I, I really loved payments and just got intothe, the Bitcoin rabbit hole. I decided to, to dig, dig deeper and see what isactually going on. Why in some parts of the world, you can move moneyinstantly. And in parts like Columbia, basically cash is king and it takesforever to make a money transfer.

Mike Townsend: And so generally onbusiness to business transactions in Columbia. And I would imagine it'ssomewhat similar for surrounding countries. What's the default like paymentprocessing. Are there, are people using Stripe? Is there like sophisticated,maybe us based payment processing or how does it look?  

Dom Rozic: Yeah. So, so when youlook at our focus, when we started was basically P to P I wanted to replicatethis experience of of sending money between two people using on your phonenumber.

Dom Rozic: So when we check howthe payment space is, it's very local, there's a lot of local companies, butwhen we get dig deeper, you see that Even the protocols that were used forpayments were done in the eighties or nineties and they still use them. So it'sbasically file based system, there's visa and MasterCard.

Dom Rozic: And there's the localACH similar to the ACH in the us. And all of that is pre-internet and preBitcoin. No. So the first problem was technology. Everything was built aroundthe core, which is the core processing and then layers on top of layers, likean onion. And the more you peel because you have to peel the more you cry.

Dom Rozic: So that was our, ourjob, just to see what is, what is. so, so there's very limited number offoreign companies for them, mostly it's local. And it's very limited to fewways of moving money. So either it's account to account transfers and very lowusage of credit cards, which ends up with almost 85% cash in Columbia.

Dom Rozic: So most people usecash and it's completely. Normal unusual to, to do it here.  

Mike Townsend: And so no Venmo typeexperience by default people pretty much don't pay each other unless they'reright next to each other. And then what, what's the, tell me more about Minka,is it the approach crypto first as part of the way to get around the existingestablishment of payments?

Mike Townsend: Or how did you sort ofthink through integration versus branch off and build new?

Dom Rozic: Yeah, it's, it's a bitof a longer story. So, so we started off with the idea that let's the Bitcoinis the settlement for the internet. So it's a great settlement mechanism. No,but most of the payments are clearing. So we have a promise to pay in our IU.

Dom Rozic: And most of the banksand interactions between institutions is done through this clearing mechanism.No. So we thought about scaling Bitcoin. That was the first idea, but it wastoo early. We always come up with ideas too early and we decided to pitch theidea to the central bank of Columbia.

Dom Rozic: And it was also to, toadvanced or to eccentric for them. So they directed us to local ACH long storyshort, we ended up on the RFP and we won the RFP to modernize the paymentsindustry industry. So in the last two years that we've been live, we were likereal low profile. We integrated 17 banks, which is almost 80% of the bankingsystem.

Dom Rozic: And you have a servicesimilar to Zelle or Venmo now where you can send money instantly using a phonenumber. And you can do that by, without the cost. So, so this is the servicethat we provided. We are basically the rails. We see ourselves as more paymentprotocol, which allows those financial institutions and now other participantsto integrate and now enable money to flow.

Dom Rozic: That that's what Minkadoes. So we're more a payment protocol building a new network.

Mike Townsend: Were you the reasonthey did the RFP, that RFP is being request for proposal. And, and how did you,like, what, what, how did you win the RFP? Was it competitive? I'm curiousabout that process.  

Dom Rozic: I think it was like,when you're starting it, you don't know how things work, then, then you avoidall the big mistakes know.

Dom Rozic: So, so we're goingabout against all the big ones. Of course, the big friend cart companies, wewent against ACI and Seattle, all the big companies in the space. And since wedidn't know that it's really complex, we told them if we can build a pilot intwo weeks, And make something work in two weeks, you should include us in theRFP.

Dom Rozic: No, so we did it, itwas two weeks for us to send the first transfer and it worked for, for someMiraco reason. We already had the platform ready and then we went to thestranded process and we're the best Best proponent there and won the RFP. Soit's been now two years from, since then we are expanding, we're working onsome other countries, but I think Columbia is start.

Dom Rozic: There's very fewpeople that know that, but S are free in colo and we are opening up a lot ofnew use cases, some collection, money, disbursements, even money streaming.There's so many new use cases being built on top of what was founded or startedtwo years ago.  

Mike Townsend: Because it's, it's apretty big breakout moment to have.

Mike Townsend: So you win an RFP tobe the exclusive provider for effectively a Zelle, which is a yeah, like peertope network, that's integrated to the banks. So you, you have the ability tolike create a reconciliation layer and then settle daily or, you know, at someperiodic interval. So if I send you the idea being right, if, if you send me$20, I send.

Mike Townsend: Jeremy $20. Jeremysends you $20 at the end of the day. No money moves. And you have this, thissettlement layer separate from the banking layer, saving transaction costs andall sorts of costs under the hood. Yeah, for this 20 year old, 30 year oldtechnology. Winning this. Yeah. It was a big deal.

Dom Rozic: Yeah. So, so actuallywe started off with, at the end, their idea was that we built on top of theexisting rails now, so that we actually, you reuse the system when we saw howit works. And frankly, I didn't even know that it's that bad, but most of the systemsare filed based in basically exchanging files even the us today.

Dom Rozic: Like that's how a DACH works now. So we decided to build everything from scratch. We managed toconvince the central banks to put the guarantees. So in a way it works like astable coin. The banks who are participating are pre putting guarantees. Andthose guarantees is what's what is issuing this stable coin as we're usinginternal in the system.

Dom Rozic: So in real time, wehave the information about all the users, all the companies connected and allthe banks. So it's a very unusual system where everything is real time. We havereal time information about all the participants and all the money movements inthe country.  

Mike Townsend: And is that stored ina private database that you would have access to or is that stored on chainsomewhere?

Dom Rozic: Yeah, that, that,that's a good question. Since sound bit on maximalist. I. Say a lot of thingsbecause the team gets mad. We are in a way it's a private blockchain. So we areinspired by the architecture Bitcoin. We build our own platform. So we doactually it's interesting. Most of the banks use Bitcoin comparable signatures.

Dom Rozic: To keep the keys andsign the transactions. So they're all signing transactions, even their users.So there's almost like 3 million people in the country, which are using thesame, same private keys to sign transactions. But then it goes through thisdatabase, which in a way is private. And it's where all the data is storedabout users and transactions.

Dom Rozic: The banks prefer notto publish it. We are doing anchoring to, to. Periodically just to make surethat the hashes of the transactions are valid and that's kind of ourrelationship to the, to the Bitcoin blockchain space. So we see ourself as alayer two, but in this case, which is interesting, it's a layer two on top ofthe central bank.

Dom Rozic: Not not on the Bitcoinnetwork as it was originally envisioned. Yeah.

Mike Townsend: What, what does itmean to, what did you say you do? What would Bitcoin reconcile it or you...

Dom Rozic: No. So, so we, we justbuild our own structural transactions is periodically save it. So we have likeperiodic backup, let's say transactions to, to proof of work system.

Dom Rozic: So,  

Mike Townsend: So would you beposting, would you be posting a, a history of transactions to block to theBitcoin blockchain?

Dom Rozic: Yeah. We're buildingaround market three and then it's periodically posted to, to Bitcoin. So, so ina way we're anchoring the transactions just so we have unmutable history. Yeah.

Mike Townsend: I see. And so ifsomebody were to download the full Bitcoin node, the history of alltransactions, your transactions would be in there?

Dom Rozic: They can go to thehash so they can, they can download our transactions, check the Bitcoinblockchain, and they can they can compare it to and see that the transactionsare valid. No.

Dom Rozic: So banks don't evenknow it actually, what's interesting when we started this and especiallybecause we're using the same cryptography we're chaining transactions, welearned a lot of the lot of the components in the work sessions after wementioned it three times, some of the people left. So we just stoppedmentioning Bitcoin like two years ago, because it was not popular topic at thetime.

Dom Rozic: And technology wasalso quite new and also accepted from the side of the bank. So, so most of thebanks don't even know what goes under the hood, but. They know that money movesin real time, which is important.  

Mike Townsend: Do, do they, do they,when you say the banks don't know what goes on under the hood, I would imaginethat maybe the executives, the people making the decisions don't, but then theyhave a team they must somehow audit or make sure this is, you know, it worksright.

Mike Townsend: Because it'seffectively their reputation on the line. Is that how, yeah, tell me, I'mcurious how it's, what they do to participate or audit what's happening.  

Dom Rozic: Yeah, I think actuallyit's interesting because we, we have very good support from the technical team.So they have few things that need to do on their, our, their side.

Dom Rozic: Since there was nolike a standard, how you communicate between two, two banks. We used thethere's two components, one they need to sign all the transactions offline, sothey need to sign it cryptographically. And then they send it to the networkthat we're building. The way they send it is that we, we convince them todevelop the debit and credit endpoints.

Dom Rozic: So in a way we can.Read and write taxes to the banking course. And the reason why, why it's quitepositive because first reconciliation is practically unnecessary because wehave the real time information between the banking course and the cloud. Andsecond integration is quite simple since you're signing transactions and thensending them out, there's no need for like private tunnels.

Dom Rozic: And there's a lot ofinfrastructure usually involved in building a payment. So, so the feedback wasactually really good on technology. I think it's very well adopted betweenthose banks and it's, it's spreading around the region. So based on the successwe had in Columbia, we have several other countries that are already signed andwe are replicating the model throughout the, throughout the region.

Mike Townsend: So the, the idea isthat it's a, it's, it's stored crypto cryptographically, but there is just onedatabase that you guys would have access to. But in order for someone to reador write, they need a, a key to, to write into it. And, and the opposition,like the web two way of doing this would be instead of a cryptographic key, itwould be an API token.

Mike Townsend: And then, so eitherway you have a way to validate that this is, you know, legitimate.  

Dom Rozic: So the difference isthat you're basically signing each transaction. So for us to make a change inthe database or for a bank to change database, it's really hard. So is the userwho signs the transaction, then bank validates it.

Dom Rozic: So if someone wants tohack the system, even if we don't have proof of work or the things that the,the other blockchain have it's really hard because we have few right now it'salmost 20, 30 million transactions that are signed. And it's really hard tomake a change because there is. There is a chain in the transactionstransaction stream.

Dom Rozic: So, so there's fewthings that are, that was kind of a combination of let's make it acceptableenough to the banking industry and not use a native coin, which is example ofsome of the other projects we've seen. So, so it's easily digested. And on theother side, let's, let's keep some of the security aspects that actually weregreat innovation from in the last 10, 13 years now.

Mike Townsend: And from the bank'sperspective, were these 17, 18 or so banks, were they pushing one way or theother? I mean, what's their, how, how do they look at this? They say, well,more people using our system, more, more people being able to move moneybetween banks is better for everybody. So let's cooperate and they don't reallycare about the blockchain aspect of it, or what's their general disposition?

Dom Rozic: Yeah, I think it'smore like the main concern of the banks is the marketing act like the marketexpect. So the reason why they push for the idea to have real time payments isto compete with cash. Like I said, 85% of the all transactions in Columbia aremade in cash. Maybe a bit less now with this system and a few changes in thepandemic.

Dom Rozic: So, so that was theirmain motivation, but also there was re. Not so much about technology. I thinktechnology is quite interesting. And especially if we get to the innovationside of the departments of the bank, they actually loved to innovate. The mainproblem was that it started, or it could compete with the traditional paymentmethods like credit cards, because you can actually enable micropayments at afraction of a cost that you would you would process a card payment.

Dom Rozic: So, so we are enablingmicropayments there's few hundred thousand businesses accepting. Paymentsdirectly through a phone. And we're moving now to other use case like payments,reimbursements, and online payments, which, which will be quite a, quite a bigchange because in a way it's a digital cash, which then opens up a new marketfor, for the banks.

Dom Rozic: So I think their mainobjections is like, how, where do I fit this? Could it cannibalize my existingrevenues. And on the other side they want to reduce the use of cash. So therethere's a, there is an interest.  

Mike Townsend: Hmm. And is thesignificant portion of the bank's revenue from the interchange on the creditcards or is that what they're worried about cannibalizing?  

Dom Rozic: Yeah, that's that's, that'sone segment. They also have very high fees for, for bank transfers. So bank tobank transfers can actually cost three to $4 here. It's similar to us, usactually. No. And with this system, that part, which is P2P is actually free.So what we are seeing is that people didn't use it as often because of the costand the inconvenience.

Dom Rozic: Now there's more andmore people using this type of transfers to, to move money. And that's theoriginal idea enable money to flow without any barriers.  

Mike Townsend: And, and what's theattitude, I guess, Columbia or other countries that you're seeing on. The ideaof the stable currency, the, you know what's the term for this, the currencythat's tied to the banks centralized CBDC CBDC

Dom Rozic: It's like a, there's alot of conversation, but it's a very a topic that is still not mainstream now.So a lot of the banks central banks are actually piloting and this, this iskind of where Minka is going. So our vision is to, to have a platform whereanybody can issue their. Currency and they can move it freely between theparticipants.

Dom Rozic: No. So it could be fora clearing house, like ACH, it could be for central bank, or it could be for asmall FinTech who is basically managing the loyalty points. So, so we, we arevery interested to work with the central banks, but it's still a very. Very newtopic and there's a lot of resistance to the idea.

Dom Rozic: So we'll see, thereare some countries who are leading in the region and investigating doing pilots,probably the SIM most similar project to Columbia is peaks in Brazil. Is thepayment system for Brazil, which is real time payments. And that's probably thefirst step since Brazil was very successful.

Dom Rozic: Columbia has very goodnumbers. There's more and more countries in the region that are looking firstto enable real time payments. And then down the line probably go for somethinglike central bank, digital currency.  

Mike Townsend: Did, did your businessmodel occur. Did you, did the business model happen? I mean, your generalapproach of, you know, RFP to build out the system for transaction 0% feetransactions.

Mike Townsend: Was it timing? Wasthis, it seems like timing has to play a massive role in this. Was it like,Hey, we just, this is an opportunity we see they're about to do let's jump inand do it. Or did you from the onset say like, this is what I'm gonna do. AndColumbia is the best place to go.  

Dom Rozic: Yeah, so, so I thinkwe started like maybe even five years ago, R and D and searching.

Dom Rozic: What is money tryingto understand what money is what payments are, what banking is. And we kind ofbuild the platform without any client. So we got some. Financing. And I left myprevious company. We were just like building it. Like if you build it, theywill come. That was our, our philosophy, you know?

Dom Rozic: And when we saw theRFP and we were working at two companies at the time, so it looked like a rightfit because everything's moving to real time payments now. I think even the uslike fed now is something that's quite a big topic. So the world is movingtowards realtime payments and we had a bit of a head start.

Dom Rozic: So Minka in a prettygood position that we already built a platform and probably too early. But nowin the next one to three years is the time to, to to reap what we, what webasically saw now.  

Mike Townsend: Did you move to Columbiafor this or were you already in Columbia?

Dom Rozic: No, no, I, I met mywife who's Colombian, and then I decided to move here.

Dom Rozic: I actually moved foranother company, which is the first creation unicorn . So I was opening theiroffices around Latin America, and I fell in love with Bogota. I fell in lovewith Colombia and decided to stay here. So it was a bit of an other way around.We build a platform. I decided I'm gonna be here. So let's do something here.Let's change the country, you know?  

Mike Townsend: Wow. What are yourthoughts on USDC or. You know, just the, the, how do you think it should go?Like should banks have, or should governments and countries have their own likecentralized currency that they maintain? What are some of the mistakes thatmight happen?

Mike Townsend: And what do you thinkis like the successful pathway forward for countries and banks to think aboutthis?

Dom Rozic: Yeah. I mean, when youlook at the banking system, didn't change a lot. Like the technology didn'tchange like from the 16th century, honestly. No, because it was like doubleentry bookkeeping, and that's what we have today.

Dom Rozic: We just maybedigitalized some of it. No. And then we look at central banking it started inthe last century and also didn't change much. So, so Central banks usuallydon't do low value payments and they don't go into the turf of the retail bankswho actually issue money based on the guarantees they have in the centralbanks.

Dom Rozic: So doing that step fromactually being the, the, like the, someone of last resorts to actually having adigital cash, it's a big step for the clearing banks. First because I don'tthink they're sure on how they can operate it and what impact it's gonna haveon the economy. And that's one side on the other side, it's quite obvious thatif you have a digital cash, it's easier to have more information in controlthe, the system.

Dom Rozic: So there's pros andcons to, to central banks doing it from a point of view of someone who is moreinto crypto and everything. I see it as a potential. Because it's really easyto misuse it. So if you see the pilots that are happening in China once Chinaissues, their own private currency, they have complete control over whateverhappens to the, to the, to the population.

Dom Rozic: So, you know, you canban someone from taking a train or a bus, and if you can go to that extreme,I'm not sure that's the case for the Western world, but as always, that thatdanger, what is the central bank gonna do once, once all the cash is no longer anonymous,basically. And, and that, that's what usually happens when you go for CBDC now.

Mike Townsend: Yeah, maybe we shouldrewind for a second. So CBDC, if you could just explain the concept and, and,and what the, maybe the rollout plan is for China, who's been a little bit morepredictable in how they're and more aggressive in their investment of rollingoutta CBDC. And I, as far as I know, they're the only country that's likeheavily investing in, in planning to build this out.

Mike Townsend: Other countries, theus included seem to be talking about it, but yeah central bank digital currencyis effectively the idea. Like crypto crypto project tied to the via dollar, butseparate from like tether or USDC and then it's. Yeah. Go ahead.  

Dom Rozic: Yeah. So, so the main,main question is who, who issues the, the currency?

Dom Rozic: No. And when you lookat the traditional economy, like the central bank is issuing the, the M zero,like the actual paper currency that we have in our hands. No. And they controlthat part of the currency. The rest of what is most of money is issued by theretail banks. So The retail bank is the one who issues the loan and in that wayissues, money.

Dom Rozic: So you have those twosteps and then many, many more steps on how money works today. So, so basicallythe idea behind CBDC is that you can issue instead of paper currency, a digitalcash which can then be similar to cash interchangeable. Hopefully anonymous,but in most cases I see the proposal CBDCs.

Dom Rozic: You can actually trackit and then digitalize it. But has those have those balances in the centralbank instead of the bank? So the one that owes you the money for that CBDCwould be the central bank and not the bank itself. So, so it's a very, very bigchange and, and, and nobody knows really what's gonna happen.

Dom Rozic: There are a lot ofpositive benefits. A lot of the central banks see more as an easier way to docross border payment. At least that's the discussions we are having with thecentral bank here. And they see like potential central bank, digital currency,an easier way to do cross-border settlement, but not very few countries areactually moving the step towards doing one locally and replacing cash.

Dom Rozic: Probably north ofEurope is closer because in a way it's very similar to, to what we're talkingabout. Canada is evaluating it and like you said, China, but there's fewinitiatives in the Caribbean, but it's still very, very early.  

Mike Townsend: And, and the generalthings to be aware of is that unlike the current system in the us, the federalreserve determines interest rates that they issue like M zero, which goes tothe banks in the case of a CBDC central bank, digital currency, this is goingto be issued on chain, but there's still effectively one account with.

Mike Townsend: Secret key that hasthe ability to issue new currency. So how Bitcoin issues new currencies is thatafter so many. A blocks, somebody, somebody, yeah, blocks. There's there's kindof a predict, very predictable quantitative graph showing the total number ofBitcoin that are getting released. And the major appeal of Bitcoin is exactlythat is the, the, the volume of currency that's going to be released.

Mike Townsend: And the total amountreleased is hard coded into the protocol that everyone uses. So you can'tchange it unlike. You know, certainly unlike the current system in the, atleast in the us is the federal reserve could print a trillion dollars Domorrowif they wanted to, they, they still could under CBDC. So practically speaking,what, how does control change control of the, of the currency of the currencysupply stays the same.

Mike Townsend: What changes?  

Dom Rozic: Yeah, so it's a goodpoint because. Basically the key point is that they issue all the currencies.So they're the ones who are moving the economy, which is the central bank. Andit's the case for most of the countries in the world. Like almost all the worldadopts a similar model to the fed, even here in, in Columbia.

Dom Rozic: I think the changesthat you still have. Some control of of your own money when you have a dollarpill, because in a way, yes, they determine the value of it, but it'sanonymous. You can keep it, you can change it. You can actually transact inanonymous way with something that is widely accepted as a medium of exchange.

Dom Rozic: No. Once youdigitalize it, then basically have a full tracking of where the money's movingin, in the economy now. And I'm not saying that everybody would like to stay anonymous,but there is that, that component that at least a cash bill gives you becauseit's completely interchangeable. And, and there is no it's untraceable now.

Dom Rozic: And CBDC is on aborderline digitalizing cash cash and making something that was reallyconvenient and untraceable completely traceable in the whole whole system. So,so there is benefits to it for the economy, but then again, you know, we haveto balance out the benefits to the economy and the rights of each individualperson for the privacy, you know?

Dom Rozic: Yeah. But that's myconcern.  

Mike Townsend: The rights of theindividual person seem to be that if there is a blockchain, ironically that onblockchain with CBDC that the, the fact that it's fully transparent is most, mostattempting to the government because now they have more control, like China'sincentivized to do this because they have the ability to what shut down certainwallets.

Mike Townsend: Like what are theactual root privileges that. Central bank or government would have on behalf ofCBDC. What, what can they do practically speaking that you, you couldn't dowith the current Fiat system?  

Dom Rozic: Yeah, I think I, it'shard to say for China, I've seen some of the papers and, and our chiefarchitect who is quite a, quite a personality in Minka.

Dom Rozic: He, he, he lives, helived in China for a long time. So we have had a lot of direct feedback on whatis going on and and the WeChat and the, and the cool things that are happeningthere. But the, the risk I see is that they're already doing that even. Withthe cards because they have their own private card system, which is not visaMasterCard.

Dom Rozic: No. So people who arenot politically correct in their opinion, get blocked of their money wasn'taccepted anymore in certain places. No. So they literally can, can limit withwhom you can interact and money in a way, the language which you use tointeract with most people. And as long as it's.

Dom Rozic: Completelyinterchangeable. You can interact with anyone once you limit that. Thegovernment has a lot of control. So, so that's the reason for China. But Ithink that the Western world is a bit different. They're more worried abouthigh cash usage and the inconvenience of cash. Then they are about privacy now.

Dom Rozic: So I think China is abit of an extreme example.

Mike Townsend: Yeah. I'd imagine. Soif you, if you picture the extreme, I mean, China is just overt. Centralizedand overly, actively involved between the government and, and individualpeople's lives and, and companies. So they could write into the code thatChina's wallet or China's access permissions, give them the ability to shutdown or take yeah.

Mike Townsend: You know, moneydirectly from people's accounts and they wouldn't have to go through banks. Sothe us effectively has, has the same right privileges today in that they can goto a bank, they can audit the bank, they can shut down an account if they. Youknow, whatever they believe and they want to. Yeah.

Mike Townsend: But they still it'sstill a process. Whereas I would imagine if you built the system in a certainway where the government then has instantaneous ability to shut down anywallet, move money, back security, decreases transparency. Yeah. Increases. Butfor the benefit of the government to see where every dollar in circulation is,do you think the, the Western world adopts.

Mike Townsend: A, an approach that isbeneficial for people that doesn't give the temptation to the government toshut down accounts. Like what would be the formula that works for thewest?  

Dom Rozic: Yeah. So, so I wouldinclude Latin America here in the west because people usually do say the us andthe us, you know, have a high penetration of financial service.

Dom Rozic: Credit to access tocredit is really easy. When you look at the most of the world and especiallyColumbia, where I am right now, no, most of the people are invisible and thedownside of using cash. It's not just that yes, it's inconvenient. You carryit. It can be stolen, but the biggest inconvenience that you're completelyinvisible to the system.

Dom Rozic: No. So most of thepeople, and I'm saying large part of the population don't have access tofinancial service. So maybe they open an account, receive some subsidies, butactually when they need to get a creditor loan, because either their kid issick or they can pay their utility bid at the end of the month, they'reinvisible.

Dom Rozic: No. So the benefit ofenabling money to move digitally and fast, good example is India, Brazil. Andnow Columbia, because. As soon as you enable it to move freely in a way thatyou can move with instantly low cost, then people first have more visibilityand then other companies start building additional service on top of it now,okay.

Dom Rozic: Now I have a historyof transactions. Now I can offer you credit. Now I can offer you what ishappening, Columbia savings in SDC. Now I can offer you like additionalproducts, which weren't available before. So the big problem, most of the worldis access to financial services and cash. Isn't doing a good job in that sensebecause it keeps a lot of the popul.

Dom Rozic: Visible. So thatthat's the plus side of in general. I think it can be solved with just the duetime payments. There's no need to go to a CBDC model. And as long as you have asystem where everyone is interoperable, you have this benefit for the economyfor long term.  

Mike Townsend: Is, is a place likeColumbia who use the such high percentage of cash transactions.

Mike Townsend: Are, are peoplegenerally motivated by the, the fact that they're anonymous when making thesetransactions? Or are they, are they using cash strictly because there aren'tbetter options available?  

Dom Rozic: Yeah, it's a bit ofboth. I actually had that perception when I came here and I'm like, yeah,everybody's using cash because they just wanna stay anonymous.

Dom Rozic: But then you realize,I tried to pay my next door neighbor, you know, I said like, yeah, I prefer touse my phone and send it. And, you know, for, for a $5 transaction at thattime, it was like $4 to pay for the transaction. And it didn't come was threedays still didn't arrive. So it was super inconvenient. . So I think that whenyou give people a very convenient option to digitally move money, they, theyswitch to it.

Dom Rozic: So, so convenience is,is is quite important. And especially once we had the pandemic, a lot of thebusinesses were, there was a lockdown also here. So a lot of the businesscouldn't accept cash anymore. So there was a large interest in actuallyreceiving some type of digital digital payments. So, so there is a place for.

Dom Rozic: For digital cash or Iwould say like digital transactions not to call it cash. Yeah.  

Mike Townsend: And what do you thinkis the, like, if you're designing the system, which you know, you are, andcertainly playing a large role into it, what do you think are the propermechanisms to push as a, as, as people that are, you know, influencing thedecisions of the government to build a system like this, certainly you don'twant to, it seems like you don't want to, we don't want to.

Mike Townsend: allow the governmentto be tempted. You know, you don't wanna even have them, you know, one thingapple did, right. I think was they built the iPhone. That's so much of the, theinformation, the data is stored on your phone cryptographically. So if thegovernment came to apple, they cannot access it. Like technically they can't.

Mike Townsend: So therefore the endof the conversation, you know, it's like actually on Dom's phone or on yourcomputer, is there a way that we can architect this so that the go. Can't evenbe tempted because we know given enough time pandemics emergencies, governmentstend to overreach dramatically and then they pull back 10% from that.

Dom Rozic: Yeah.  

Mike Townsend: Right?  

Dom Rozic: Yeah. I think thatthe. A lot of the conversations we have with central banks is actually goodbecause they're looking at crypto and they're looking at this ASME photography,you know, it's beautiful, you know, like ASME photography is a huge stepforward because like they say, not your keys, not your money, you know?

Dom Rozic: So if there is a wayfor people to hold their keys, even if it's a CBDC in a way, my migrating therisk, you know, because only the holder of the key can actually maketransaction and make use of the funds so they can receive all the money. It's.I was for a long time, I was wondering. why did they use this system with UT XOand, and digital signatures?

Dom Rozic: We Bitcoin realizedthat, you know receiving transactions it's most common use case and you receivethem in a bucket, you know, just receive them to my address. You don't have toworry, you actually need to sign it when you send money. So, so if, if theyadopt the idea of People being able to hold their own private keys, that thatwould be a fantastic system.

Dom Rozic: So that would be likea system because there is a need for additional layer. I think bit Bitcoinsolves the, the key point of a settlement currency. And, and I think the blocksize wars already decided that, that it's basically replacement for gold, whichis fantastic, you know, but you have layers and layers of of that that need tobe resolved.

Dom Rozic: So we. Two need toretract. It needs to be a simple way to keep track of our depth. And I thinkthis clearing layer is what is missing and it's gonna be building next year. Soit could be the central bank that builds it interoperably and using thoseprinciples only could be private initiatives, like the ones we're doing withthe ACH Columbia, which is local ACH here.

Mike Townsend: And, and what do youthink the, the chances are that it, that the mechanism for cash transactionsessentially being speed, right? Bitcoin is more expensive and slower. So ifyou're gonna buy a coffee, People are not using Bitcoin. They're thinking of it.Like you said, as a replacement's gold, is there a potential that people branchoff from government controlled currencies in the cash layer?

Mike Townsend: I mean, that, thatseems to be the whole idea that of the crypto communities like get away from thegovernment's ability to control monetary supply because that then, you know,creates inflation unnecessarily, warps the market it's really. It's like, youknow, stopping at a gas station along the way to the destination.

Mike Townsend: It doesn't seem to bein line with the destination. Do you see it being still an open debate as tohow this rolls out? Like, do you see it as an inevitability that it becomeslayer two, like a lightning protocol in Bitcoin or because this seems like tome, at least it seems like the most unsettled major aspect of the actualmonetary adoption of crypto.

Dom Rozic: Yeah, that's a greatpoint. So, so our vision is that David coexist, you know, so I don't think youcan change the hormone that we have in a, in a, not even in a 10 years or 15years, our lifetime. Not, not, maybe not even in our lifetime, but everycoexist there's more and more people actually relying on Bitcoin.

Dom Rozic: I'm probably one ofthem because I am more in a traditional payment space, but I, I'm a truebeliever that that, that is a way to be independent from the, from thegovernment control. So, so what we are seeing and, and what is our kind of longterm plan, we're doing a lot of first access to financial institutions.

Dom Rozic: So we have read. Thislast mile is the biggest problem of crypto to me, because even you have anexchange bank won, open you an account you need you need a way convert FIS to,to crypto. So what minke start is doing now in a few countries, and we're doingit in Europe, too, we are doing this last mile rails.

Dom Rozic: So we can actuallyread and write to a bank account. Once we can do that. The idea is that therecan be a bank who's willing to sponsor it, that you can actually convert thatto lightning, according to Bitcoin. So you can hold part of your. In the samewallet, part of it will be backed by Bitcoin part.

Dom Rozic: Part of it will befear, which is acceptable through the transfusion network, which we built it'scalled transfusion. So, so I think this is the direction where things will go.I, I can say for sure. I think that CBDC is still too early, but probably it'sgonna be a, a competition of both and both will coexist and they will havedifferent use cases.

Mike Townsend: Yeah. And do you thinkso CBD CBDC certainly seems like it'll be a pathway forward for governments onblockchain. They're sitting around thinking, okay, this presents a major threatto our society. I'm sure there's gonna be that narrative internally ingovernments. We need to do something about this.

Mike Townsend: We're not gonna banit's too late, you know, one. Yeah. And two is, we can actually. In, we canimprove the things that we care about, which is control over the supplyvisibility into the supply, seeing data on the transaction volume. Like there'sall sorts of maybe upsides from the government's perspective, certainly controlbeing one of them, at least overtly in China and, and probably other places.

Mike Townsend: People certainly havea conflict of interest when it comes to the, the government, because you want,like, I want people to pay taxes so I can drive on roads and we can fund policeofficers. And so on some level, like I. People to be accountable. I want thegovernment to have the ability to audit people. So people aren't, you know,avoiding taxes and collecting taxes is like the one thing the government willdie on a hill before they give up that.

Mike Townsend: Right, right. yeah.That's, that's like the animal's gonna fight to the death to breathe, you know,before everything else. So tax collection seems like it's gotta be top of thehierarchy of things that a government cares about above. Pretty much all else.So mechanisms of tax collection under crypto are a big conversation and, andthere's companies, founders I've interviewed that build companies specificallyto allow people to pay taxes.

Mike Townsend: I'm sure thegovernment's gonna spend a lot of money on. Auditing people and creating toolsto audit people in crypto Bitcoin and other cryptos are public. There's somethat are like cryptographically, private. Yeah. Like Manero and sea cash andothers. Do you think it's just gonna continue to be kind of wild west on whatdifferent currencies people use and then governments just kind of offer analternative, cuz it feels to me like, the tectonic plates are shifting mm-hmm,but we're not settled. Cause it's like, if I can use us dollar and S D C andtether, and then the government makes a coin and now I'm using like bitingBitcoin lightning network. Like, I don't know. I mean, there's some reason whythe world adopts S D as kind of the single protocol that we all agree on forcurrency exchange.

Mike Townsend: And it seems to bevaluable to be on one, one protocol. Yeah.

Mike Townsend: I don't know.  

Dom Rozic: Yeah. I think you havea point there because it's gonna be both. That's what I mentioned before. And.I think there's room for both, but, but I think what is also the positive side,maybe not to, to go deep into this anarchist idea and also the, the thing thatwe've seen the benefit from real time payments, because maybe you don't evenneed that central paying digital currency need just to go initiative private orpublic.

Dom Rozic: To make real timepayments interoperable. So as long as it doesn't matter, if you hold balancesin a blue bank or red bank and you can exchange them near without dealingwithout cost and nearly real time that, that enables money to flow. And thenthere's a huge benefit for the whole of the economy.

Dom Rozic: So, so it's, it's,there's direct correlation. You know, we look at India, Kenya is a goodexample, Brazil, Columbia now. So everywhere where you enable like a real timepayment system. There is benefit for the wild popul wider population for thefor the whole economy. So I think that's the key point. So once they see thatthey can move that into step higher and digitalize the cash, I think it'llstill coexist at least the countries where we really, but we'll see, like yousaid, the, the things are shifting and they're students sudden.

Mike Townsend: What are the factorsthat play into whether it's appealing for Minka or, or like, I think of theleap pro leapfrogging effect, where, you know, countries who haven't investedlike India in telephone system, telephone, wires, all over the place, then theyadopt cell phones and they almost have a. Strategic advantage that they haven'tinvested in all this infrastructure.

Mike Townsend: That's no longer beingused. Like, do you think there's advantages for countries who have a bankingsystem and payment network that just isn't evolved at all? That they can justbasically short run all of that stuff that we've, that we've built like in theus, for instance, and just say, Hey, let's go crypto first.

Mike Townsend: Is that something wemight see? Or are you guys thinking about that?

Dom Rozic: Yeah, we are, we aretalking. I mean, it's not just Latin. We, we are talking to a lot of countriesin Latin America. Like I said, our focus is central banks, clearing houses, andwe work with banks directly and we're talking to a lot of countries in Africaand I think that's exactly the, the, the case in the us when you look at the,the ACH and then all the layers and it's really like a non, you have like, 1520, 30 layers.

Dom Rozic: And it seems like inreal time, but actually, you know, it's, it's it's 1950s under the hood now.So, so us is a good example where everything was built layer on top labor forlong period of time through private layers, you know, but if some country,which, which just wants to leap frog, Decides to use a much more technology,lightweight integration or a protocol.

Dom Rozic: They could actually dosomething of the same effect as Venmo Z cash me or something in, in a veryshort period of time and a fraction of the cost. So, so I think that that'sthat's problems gonna be happening in the next two, three years. There will bemore and more leading houses in central banks who realize.

Dom Rozic: But there is a benefitfor the economy and we can maybe leapfrog the, the 15, 20 years of protocols inbuilding up technology stack.  

Mike Townsend: Can I ask you a littlebit about this ACH system? This is such a mystery to so many people, myselfincluded. You mentioned that in the us, the ACH system I think stands for autoclearing house.

Mike Townsend: It is a. Automatedclearinghouse. It's a file system using very old technology. So they, what kindof files are they sending? Who's sending them. And what are they? What's inthese files?

Dom Rozic: Yeah. You, you don'twanna go there. I mean, I was completely shocked when I saw it, you know, it'swhen I say pre-internet, I literally mean pre-internet, you know, so it's like,there's a standard called NACHA.

Dom Rozic: I think it's likenorth manicure standard. And it's a literal file where you have the check sum.So you have some amounts from, to then and a check sum. So it's a file that'sbeen used from the seventies. I. It was then adopted from there to the cart,use a similar system. It's right. 85, 83. No, but this file system isinteresting because what usually happens is that all the banks collect thatinformation into a file and then two or three times a day, they actuallyprepare that file and send it to a secure system.

Dom Rozic: There literally bankshere that were sending the file with couriers, you know, in, in in Columbia.But of course they're sending it now to FTPs and safe trends, but what you end upwith files from 15 banks with hundreds of millions of transactions, someoneneeds to facilitate that. So it's half manual, but the banks don't trust theACH.

Dom Rozic: So almost all thebanks in the U.S. In Colombia have a team of people who are validating thecheck. So you have actually, in, in cases of Columbia, we, we went to a bankthat had a full floor of people who are just making sure that conciliation isright. So, so that's the reality of the payment system today.

Dom Rozic: Someone is alwaysconciliated.  

Mike Townsend: Wow.

Dom Rozic: And nobody trusts the,the, the traditional system. So even for the credit cards, you have the sameprocess. Someone is conciliated each transfer for, for every car process youhave, there's either a batch or there's a person checking that that the numbersmatch.

Dom Rozic: That that's the bigproblem of the system. Yeah.  

Mike Townsend: And why, why wouldn'tit be simplified to just, you know, sum up all the totals and then onlyinvestigate if there's some. Like, yeah.

Dom Rozic: That's what most ofthem actually do now. So, so they see that if there's discrepancy between whatyou say and what I say, but still most of the banks are doing like line byline.

Dom Rozic: They're basically likecheck some everything and checking that all all, because you have to understandthat during a month there's like four or five files a day, then there's like 30days in a month. It's a big volume when. Builds up. And that main reason forthat is that the protocol which was done with file was the only way to do it inthe seventies and eighties and changing that technology was quite hard so thatpeople just just rolled with it, you know, and for years, yeah.

Mike Townsend: Yeah. So I guess it'sa rational decision, right? We, we criticize it, but it's like, if it costsmore to overhaul it and it's more risky and you may not have the team of peopleto do it, and it takes coordination from other banks, it's like, well, justdoesn't doesn't happen. It's kind of more of a reflection of technology as awhole, right?

Dom Rozic: Yeah, yeah, exactly.Yeah.  

Mike Townsend: Last question for you.So you running this company as. Someone who's enthusiastic about crypto you'reyou're, you've removed crypto from even mentioning to the banks. It's not thecentral appeal. How do you see the way in which Minka can almost covertlyinfluence the banking world to either adopt crypto or like if you had a, a kindof mission below the mission, right?

Mike Townsend: Yeah. I'm suremainstream mission make payments 0% transaction free, easy for everyone, butthen there's also. This tension between government control and, and the cryptoworld, which gives control to the people being enthusiastic about crypto. Howdo you see the way in which Minka paves the way for crypto adoption in the world?

Dom Rozic: Yeah, I think stillone of the biggest problem is the last mile. No. So, I mean, when you look atany exchange, big exchanges make mention like, like from S to, to the ones inEurope, local ones like beat their biggest problem is like how they convertactual last mile to crypto, to fi how they convert fi to crypto and crypto tofi no.

Dom Rozic: And doing thatrequires you to connect to those old technologies and to build like longintegration process. And also the problem is that you need a good sponsor bank.So, so. We're kind of building the system from the ground up. I think that whenI saw like strip Stripe policy was like, we will build everything except forthe last mile, because reason a MasterCard already did it.

Dom Rozic: We think that the lastmile is not built in Latin America, Africa, more Southeast Asia. So we arebuilding that last mile. And the vision is that with time will have a hugeacceptance. People already used to holding them private keys, to launch a transtransaction, which is the ACH local transaction. It'll be an easier switch forthem now to actually hold.

Dom Rozic: Colombian peso and andmaybe bit control lightning. So we are building the last mile rails. It's likethe super Marios of of the, of the cliff world. Yeah.  

Mike Townsend: I love it. I love it.Dom, where, where are you? Are you active on Twitter, on LinkedIn elsewherethat you wanna throw out personally?

Dom Rozic: Yeah. It's my name? DoO M a G OJ on Twitter and LinkedIn. So if there are any additional questions orpeople wanna contract in, they can feel free to do it through, through thosemeans. Yeah.  

Mike Townsend: Awesome. And anyparticular people or books writers that have influenced you or helped you shapeyour worldview that you wanna throw out there?

Dom Rozic: Oh, there's, there'sprobably a lot there's like part of the entrepreneurship and part of theeconomy. So I, I went really deep into the Austrian economies. No, from hireto, and that's maybe the bit of an influence the way they see the opinion. Butthere's I think it's James Gleick with the two books, which is Information andChaos and I think it's super recommended just to understand, have a better,deeper understanding of technology and how it affects everything else in theworld. So I think Information probably is one of the best books that I readrecently  

Mike Townsend: I'll check that out.Thanks so much, Dom. This was awesome chat with you. Congrats on the progressof Minka.  

Dom Rozic: Thank you very much,Mike. It was great talking to you. Great questions.  

Mike Townsend: Cheers.

‍