S14 E19: Martin and Igor on Firefish, a Bitcoin-Backed Lending Platform

Firefish is an ambitious project which takes on the massive challenge to create a trust-minimized version of BlockFi or Celsius. The idea is to replace the institution in the middle with something as simple yet powerful as a multisig on the Bitcoin blockchain, accompanied by an oracle which verifies if the fiat payments have been made.

The concept of Firefish is simple: it’s a platform that connects people interested in taking fiat money loans against their bitcoin with people or institutions that may want to speculate on bad debt payers to buy more bitcoin on the cheap. Firefish treats bitcoin as an asset which becomes subject of agreements between parties and encourages people to never sell their bitcoin.

When I visited Martin and Igor at their office in Prague, they were enthusiastic and driven to create a superior service. After all, they paid Slovakian superstar Martin Habovštiak to take care of the coding and also made sure they’re covered from a legal point of view. Now Firefish is looking to expand in a multitude of territories and markets, with the intention to make it simple for anyone to use their bitcoin as a collateral for a non-taxable fiat loan. At the time of recording this interview, Firefish was still in beta. But as soon as the code receives all the audits and battle testing, market players are expected to take their swings and take part on either side of the lending deal.

Firefish: A Non-Custodial Platform for Bitcoin Loans

Firefish is a non-custodial platform that allows users to use their Bitcoin as collateral to get a fiat cash loan. It’s a marketplace that connects borrowers and investors, with loan transactions happening directly between the parties involved. The fiat transactions are settled through standard bank transfers, but Firefish is also working on additional channels for transactions.

This unique setup allows users to take fiat without selling their Bitcoin and without paying capital gains tax. The loan is paid to a specific person or institution, and the borrower repays the loan directly to the lender. The Bitcoin is locked in a smart contract on the Bitcoin network, ensuring its security.

Firefish: More Than Just a Loan Platform

While speculation is one use case for Firefish, the platform also caters to users who want to buy more Bitcoin or invest. The platform also includes a “zombie apocalypse transaction” that allows users to recover their Bitcoin in the event of a catastrophic event.

Firefish also uses oracles in the system, currently implemented by the Firefish team. They are considering implementing Discreet Log Contracts (DLC) to improve the payment workflows. Firefish’s technology replicates the functionality of covenants, allowing for specific conditions to be set for spending the escrowed Bitcoin.

Who is Firefish For?

Firefish is designed for bitcoiners who can benefit from the erosion of fiat currency purchasing power. It also allows traditional finance institutions to interact and fund Bitcoin-backed loans without needing to hold any cryptographic materials.

Firefish takes legal compliance seriously. Their loan agreements have been carefully crafted with the help of legal experts. They are a software provider and do not touch fiat or Bitcoin directly. While they acknowledge the possibility of being banned in certain jurisdictions, they believe their setup is legally compliant, especially in the European Union.

Dispute Resolution and KYC Requirements

Firefish has a resolution procedure in place to investigate and resolve any disputes between the borrower and lender in a fiat transaction. This procedure ensures that the money is properly accounted for.

Currently, Firefish does not require Know Your Customer (KYC) requirements as they are providing the software for free. However, as the platform evolves into a commercial product, they may need to implement KYC measures to comply with regulations. They are considering implementing stablecoins as an option in the future to offer more privacy and less overhead in terms of KYC.

The Story Behind the Name

The name Firefish doesn’t have a deeper meaning. It’s random, and while we joked about the possibility of changing it, Martin and Igor decided to stick with Firefish.

Join the Firefish Beta

Martin and Igor invite listeners to sign up for their beta and help improve the platform. They are building a missing piece of bitcoin infrastructure and encourage users to join their Discord channel for support and updates. They have the ambition to expand globally and serve users from around the world.

Listen to Martin and Igor talk about Firefish on Apple Podcasts, Spotify, YouTube & more!

Vlad Costea

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