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00:00:16:20 – 00:00:33:22

Richard Carthon: Hello everyone. Welcome to another episode of Cryptocurrency. Your host here, Richard Carthon. And today we got a special one for you. We have a really cool project that I learned a lot about last year, but now I’m honored to have on the show we have Eric McDonald, who is the CEO of Coin Lion. How are you doing today?

00:00:34:00 – 00:00:35:24

Eric McDonald: I’m doing great. Thanks for having me on.

00:00:36:12 – 00:00:57:28

Richard Carthon: Of course, we’ll excited to have you calling all the way off from Sioux Falls, South Dakota, the Web three capital of the world. Just kidding. It’s a it’s amazing, man to to see that no matter where you are, especially living in a in a remote world, that you really can start building some amazing companies and all kinds of locations. And so speaking to that, you have a pretty unique background. Can you tell us a little bit about that?

00:00:58:09 – 00:01:28:22

Eric McDonald: Yeah, yeah, that’s a great interest. So my background is I spent 20, 22 years building a healthcare technology company, also based here in Sioux Falls, South Dakota. And you know, everybody when I when I went and raised venture capital, private equity, they were all kind of blown away that we could build this amazing, awesome tech company in a different SF Sioux Falls, right? They’re used to the SFB in San Francisco. And, you know, so it was it was a really cool startup story.

00:01:29:12 – 00:02:03:20

Eric McDonald: I wrote all the original code in my basement. And then over the course of, you know, 22 years built it into a, you know, $1 billion organization. So last year it sold for $1.25 billion. And yeah, so, you know, to be able to be be able to build a unicorn was super, super fun. And honestly walked through all of the stages of angel investors and venture capital guys and private equity and handful of acquisitions in there. And so tons of lessons learned.

00:02:04:07 – 00:02:34:28

Eric McDonald: You know, I stepped away from that as officially being CEO in 2019, I still sat on the board, and that was after a large acquisition of one of our competitors, rebranded it. I sat on the board and that’s about the time that I got into the crypto space was right about then. So I ended into that, took a little bit of time off for myself and my family. Um, so yeah, a really fun ride in that health care technology space all built here in Sioux Falls, South Dakota.

00:02:35:16 – 00:03:05:18

Richard Carthon: Which is the real for all those who, who caught that. Um, it’s an amazing story, man. You know, from, from coding in your basement all the way to $1 billion acquisition, a true unicorn. You’ve seen it all. And as you started to look into this web3 space, you can take, I’m sure you’re taking a lot of your experiences that you just had over the last 20 years and kind of seeing the correlations over into Web3. So what caught your eye about Web3? Like, why did you pick that space like you just sold a unicorn? Like you can you can go right into the sunset. Well, start something new.

00:03:05:26 – 00:03:36:00

Eric McDonald: Yeah, no, a great questions. And part of that is I just kind of tiptoed into this. So Coin Lion already existed, didn’t start it, and the group of founders invited me in to sit on their board and start to guide them. And so just I started a tiptoe into this crypto space and started to realize, you know, how impressive the underlying blockchain technology is. And, and so then when you understand how the blockchain works and how you can move funds from point A to point B ridiculously fast, it was awesome.

00:03:36:02 – 00:04:15:05

Eric McDonald: And then I looked at how cumbersome a lot of the UI’s were. Like, if you wanted to just go buy some some crypto and it was ridiculously hard. And, and so honestly, that’s what started to plant that seed in my head of all right. It feels like there’s some opportunity here and to build something that’s super simple. And so I spent probably 6 to 9 months really working with a team, trying to hone in what their vision was. And the original vision was, Hey, we want to be an exchange like any other exchange, except we were, you know, years behind some of these other exchanges.

00:04:15:10 – 00:04:58:27

Eric McDonald: So what I did is I kind of helped narrow in this vision to like, hey, let’s find a niche within this space. Don’t feel like we have to own all of crypto. And these are a few of the lessons learned for myself when I was in the health care tech space, you know, I built a, you know, a unicorn and it was based on one really small niche within health care. We didn’t have to own all of health care. We owned just the urgent care space and we did it really well. And so we spent a bunch of time talking about, okay, well, what niche can we get into? And, and ended up landing on this idea of auto trading? How do you use bots to do auto trading, which again, bots aren’t necessarily it’s not new.

00:04:58:29 – 00:05:41:19

Eric McDonald: We didn’t invent that idea, but there aren’t a lot of exchanges that have the auto trading built into it where you don’t have to have multiple accounts. And honestly, some of those, the algorithms and configuring those bots get really complicated. And so what we also did is said we’re going to layer in a social dynamic where I can I can create account. I have no clue what I’m doing. And Richard, I’m just going to go follow you. So you’re the publisher? I’m the subscriber. I follow you and I’m going to allocate 20% of my my portfolio to follow you and the bots that you configured because you’re super savvy with it or they trade for me as well.

00:05:42:10 – 00:06:17:16

Eric McDonald: And and so, you know, when I reflect back on my my time at in the health care tech space, there was a ton of complexity and we had to figure out is how do you make this super simple for your physicians and your nursing staff? And and so there are some similarities in that the the algorithms and the configuration of all these bots is complicated, but. There are a lot of people that love doing that, that love doing that technical trading, all of the technical analysis work and figuring out what the backtesting is going to need to be.

00:06:18:01 – 00:06:34:21

Eric McDonald: But that’s not for everybody. And so we ended up landing really in this spot where 95% of our users are that simple. Hey, just want to follow somebody else in 5% of our users at this sophisticated trader that knows that algorithm kind of inside and out.

00:06:35:20 – 00:07:23:19

Richard Carthon: And I think that is a very niche thing. So something that I have referenced a lot on this show is that a lot of people come into the crypto space thinking that they’re traders and they’re investors, and when they think they can come in and immediately start trading, a lot of them unfortunately get rekt lose significant amounts of money because they’re not as sophisticated with different tools and understanding how all of this works. But if you are curious and you want to learn how to potentially follow some people who really are doing some great things and figuring this stuff out, now you can set up trading bots without really having to get technical and set up trading bots because I personally have spent time setting up trading bots before and it is a lot it’s, it’s a it’s a huge lift take away Web3 just setting up trading bots is technical generally.

00:07:23:21 – 00:07:40:11

Richard Carthon: And so if you found a way to automate that process for your everyday user to come on, follow some people or be able to research some different people and then be like, okay, I want to see what they’re about, see how how it works, and then press a button and then it does the rest. That that sounds very simple, just like you said.

00:07:41:05 – 00:08:20:19

Eric McDonald: You know, it really is. And, you know, I think one of the other things that I learned in my prior life is that this stuff just takes time. And it’s really easy to get caught up in the companies that are exploding overnight, or at least it appears and should be careful. When I say exploding, there’s a lot of banks that are exploding in the wrong way right now. Yeah, no, I’m talking about like hypergrowth mode that appears to be happening, you know, overnight. And I had the same thing in the health care tech space where there were companies that that you would hear about that were going from 0 to 60 miles an hour in like one month.

00:08:21:06 – 00:08:53:01

Eric McDonald: And in reality, that’s that’s more rare than it is common. What’s common is, Hey, I’m going to start building a really good, solid business kind of one month at a time, one quarter at a time, year over year. And so that’s honestly, that’s the approach we’re taking at coin line is just kind of, hey, heads down, stay steady, steady growth, Don’t try to do something, you know, that’s supersonic. And that’s and that’s exactly what we’re doing right now, is just doing like kind of one step at a time, building this thing out.

00:08:53:03 – 00:09:19:21

Eric McDonald: So we really do have a simple solution. Does it cover every edge case scenario that you could ever imagine? No, we aren’t running every token either. We’re honestly pretty conservative right now with the markets that we’re in. And that conservative ness has really played to our advantage, especially during the last 18 months, where the market has just been horrible.

00:09:20:14 – 00:09:52:20

Richard Carthon: Yeah. And just speaking to that. Being able to create a system that even during these last various times. So we are at the time of this recording in March. And when you look back to when the bear market was starting, it was about November of 21. So we we are now almost 15 months in. And, you know, who knows if we’re starting to get on the other side of this bear market. But all the same, you really need to have some sophistication to still be able to make money during these times.

00:09:52:22 – 00:10:24:11

Richard Carthon: And if you’re able to really crack that nut and understand how to be methodical about investments during this time when everything’s going up, that’s easy, right? That’s just like throw a dart at the wall and there’s a chance that you could have some success. But being able to refine this in this moment is extremely powerful. Well, for your users that have come on and started to use this. Walk us through what does that process look like and how do people come on in and start to fully utilize what coin line is about?

00:10:24:24 – 00:10:26:18

Eric McDonald: Yeah, you know, first and foremost.

00:10:26:20 – 00:11:00:06

Eric McDonald: So, you know, being in Sioux Falls, South Dakota, were based obviously in the US, which means that we’re going to take regulations and, you know, all this stuff super serious, most specifically and this is the first thing is your KYC. So know your customer. And we’ve partnered with a super awesome technology group that does this really well where we’re taking your government issued ID and we’re doing a live comparison against your face and ensuring that those two are the same. And so that weeds out a lot of the fraudsters super fast.

00:11:00:09 – 00:11:30:21

Eric McDonald: And we’re not here to have, you know, again, supersonic growth with a bunch of people that were not interested in. Right? And so if you’re if you’re an honest human being and go through the KYC, it’s a it’s a piece of cake. We do find there’s times where people really want to hide their identity, which is part of what, you know, lots of crypto was in. And for us, we’re just like, hey, there are so many places on the on on the web where you can hide your identity. We’re just not one of those platforms.

00:11:30:23 – 00:12:02:17

Eric McDonald: And so the very first thing is KYC. And again, like 99% of our clients, our users here, they’re in the up and up and they’re like, great. Like, it’s fine for you to verify that. I’m Eric McDonald. So we’ll run you through this KYC process and then you’re instantly on the platform and you can you can look at the subscribers that you want to follow. You can even start, you know, building out some strategies if you wanted to. You can back test those strategies even if you don’t have any dollars deposit on the platform.

00:12:03:04 – 00:12:38:05

Eric McDonald: And so then it’s like, okay, well what if I really, really want to start trading? How do I do that? Well, you have to make a deposit. That deposit can come in the form of fiat USD, or you can, you know, you can deposit crypto. So either one of those we are not in every state on a fiat level. So there’s some states that don’t allow us to deposit fiat yet. So we’re chipping away at that and we’re being wise about what states were going into. But some of those right now, every state kind of regulates their crypto.

00:12:38:07 – 00:12:55:18

Eric McDonald: There’s no federal regulation in the US that makes this super simple. And so that’s that is one of our challenges that we’d love to see overcome at some point. So the onboarding process is really pretty straightforward. Go through the KYC, deposit some cash, start following a publisher.

00:12:56:16 – 00:13:32:23

Richard Carthon: And to your point. You have a very ideal client of someone who’s not afraid of KYC. And I think that that’s going to be more critical as we continue to evolve in the Web3 space. If you look at a lot of the Black Swan events that happened last year and across a lot of different places where either your Web3 company or potential NFT Company, you have these people who are undocked, etcetera, they rug pull or something goes wrong, they disappear into the sunset and walk away and no harm, no foul.

00:13:32:25 – 00:13:40:03

Richard Carthon: And for even your users that are trying to come on and utilize something like this.

00:13:41:19 – 00:13:58:12

Richard Carthon: You want to have those protections in place, you want to make sure that you. What you’re getting into can be secure. What do you think, looking back on 2022? Like what do you think were some of the big lessons that you as a company were able to take away and that you’re moving forward as Quinlan continues to evolve?

00:13:59:18 – 00:14:30:00

Eric McDonald: You know, it was probably, um, you know, some of the lessons learned from other organizations was is really about keeping that 1 to 1 ratio. So what happens and we just we just saw this with Silicon Valley Bank right where they took users funds and banks have the ability to invest that into different opportunities. And so they did that and that and they did that, in my opinion, poorly. And when the tides shift, right.

00:14:30:02 – 00:15:01:22

Eric McDonald: So interest rates by the feds go up and deposits in their bank go down, all of a sudden they’ve gotten this really bad spot. And so we have held to this 1 to 1 standard where, you know, if I sell you Bitcoin, I have a Bitcoin. I’m not doing anything with that. If you deposit that Bitcoin, I’m not lending it out. I’m not doing anything with that. Now could we and could we make money off of that and could we find some creative ways to generate more, you know, income for the business? You know, we could we don’t do that.

00:15:01:24 – 00:15:33:24

Eric McDonald: And I think that that’s kind of proven to be a very wise choice. And so there were other organizations specifically where they took those funds and went and tried to, um, essentially, you know, I’m just going to say greed is what drove most of that. Hey, there’s this next opportunity and this next opportunity. And, and so, you know, we’re the Midwest crew. We’re pretty conservative in what we do. We also believe pretty heavily in building an awesome niche business. And so that’s, that’s proven to play to our benefit.

00:15:34:22 – 00:16:08:17

Eric McDonald: Um, you know, last year, the other lesson learned with our publishers was really making sure you’ve got the right types of stop losses in place so that as that’s market, as the market’s moving down, people get stopped, lost out on those positions. And it’s really hard in the crypto space to know, hey, where do you set those stop losses because there’s so much volatility you can get stop loss out a lot If you don’t have them in there, well, then your positions can be down as we see 60, 70 and sometimes 80%. So those are probably the two maybe lessons learned.

00:16:08:27 – 00:16:37:03

Eric McDonald: And one of them was more confirmation. We didn’t learn it the wrong way. It was validation of why we’re doing things the right way. And frankly, this week, you know, we’ve had three bank failures, you know, in the last in the last seven days. So Silvergate signature and SVB, all of those, you know, none of those we didn’t have any direct exposure to any of those. And the way we do business continues to just affirm we’re playing this the right way.

00:16:37:20 – 00:17:11:10

Eric McDonald: Yeah, I just want to spend a couple more moments on that. I think those are two great core lessons over leverage and greed. When you look at what happened last year, starting with UST Terra Luna Crash, when there was a run on the bank on the quote unquote stablecoin, there was nothing in place to stop the freefall down. Now, when you look at what just happened with Usdc as it almost pegged, it was not looking great there for a second. It pretty much stopped for the weekend and let the FDIC do its thing for SVB.

00:17:11:21 – 00:17:45:28

Richard Carthon: When that was rectified, they were able to basically essentially get their peg back. But how critical were those three days to allow the time to be able to catch up and try to get things back on track? But it goes back to the core principle around your core business model, which is don’t over leverage yourself just because you are getting money in. Yes. Could you then use that money to try to go make more? Sure. But that is risky. And we’ve seen that, unfortunately, when you overleveraged yourself, a lot of when when the when things go south, they go very south.

00:17:46:00 – 00:17:47:25

Richard Carthon: Like worst case scenario type stuff. Yeah.

00:17:47:27 – 00:17:50:27

Eric McDonald: Yeah. Agree. Yeah. 1,000% agree.

00:17:51:21 – 00:18:21:24

Richard Carthon: Yeah. And so as we are kind of looking into the rest of 2023, unfortunately with what’s happening in the traditional finance world and the banks failing, I don’t know that we’ve seen the end of it, but I do think that there’s going to be a pretty strong opportunity in the world of crypto. We’ve seen basically a short squeeze just happened where last week when the banks were starting to fail, you saw the markets start to go down pretty significantly and we’ve seen a IT go in the opposite direction.

00:18:21:26 – 00:18:48:14

Richard Carthon: And I think that this could be the beginning of traditional money starting to look at crypto as a hedge. I think this potentially could be that critical moment. Why would somebody in this moment look to coin lion to be a place of diversification potentially for their portfolio? And of course, this is never financial advice, but why is now a time to consider this type of spot trading?

00:18:49:11 – 00:18:50:04

Eric McDonald: Yeah.

00:18:52:03 – 00:19:32:28

Eric McDonald: Well, when you think about the volatility that happens within crypto, um, it can be really daunting, right? You look at to your point. November of 21 was your all time high and then you sell a lot of these tokens. Bitcoin specifically drop down and pull back 60, 70, 80 points. And so your average person who’s like, All right, how do I have any kind of downside protection? That’s where I think we come into play in that 90% of our our publishers now have stop losses all baked in so that, hey, maybe that’s at 20%, maybe that 30%, but you’re going to get stop loss out.

00:19:33:10 – 00:19:58:23

Eric McDonald: And and so you’re not going to come all the way down to the very bottom or potentially go to zero. That’s probably. I mean, it’s a huge thing in our opinion is is having some level of assurance that you’re going to get stopped, lost out and not, you know, go to zero. I don’t ever see any of these going to zero. I think that’s everybody’s concern. Right? If I’m tiptoeing into this thing and you maybe you’re in your late 40s, 50.

00:19:58:25 – 00:19:59:17

Eric McDonald: Or 60 and you’re.

00:19:59:19 – 00:20:01:02

Eric McDonald: Like, oh, how do we ensure this doesn’t go.

00:20:01:04 – 00:20:01:24

Eric McDonald: To zero?

00:20:01:26 – 00:20:31:11

Eric McDonald: Platforms like ours where you have these natural stop losses built into it, are extremely helpful to make sure that doesn’t happen. But you’re also going to still see that upside. And so we are a platform that is going to minimize your downside risk, but you probably won’t see that exact same upside risk as well. Of course. I’m sorry. The upside gain. So we minimize that risk. But you’re probably not also going to see those massive swings of like 80% on one position.

00:20:32:17 – 00:21:06:11

Richard Carthon: Got it. And I think that’s something definitely worth considering. I think that when people are looking to what what to do with their money. Right. You’re seeing like a ton of people starting to go out into banks and take out cash and and are trying to decide, okay, where can I put this? Where are places I can consider to diversify and feel safer in what I’m doing? And the more knowledge and information that you can have, the more informed you can be on the decisions that you make.

00:21:06:13 – 00:21:33:22

Richard Carthon: Because ultimately. What’s going to drive the web3 space forward is education and access to opportunities and making sure that the opportunities that you get into are as safe and secure as possible. And it sounds like coin Line is doing everything possible to ensure that. And I guess just as a final point on coin line, how are you all continue to keep security and safety at the forefront of the decisions that you all make?

00:21:34:14 – 00:22:05:21

Eric McDonald: Yeah, no, a really good question. We actually just went through a revamp of our entire wallet system and we migrated our wallet system, which is kind of that fundamental, super important. Like if you were to have a breach, it would be in that hot wallet area, right? And so we’ve just revamped that and move that over to what we believe is, you know, the most, you know, protected best wallet system in the world when it comes to crypto.

00:22:06:00 – 00:22:38:27

Eric McDonald: And so we’re constantly making upgrades like that. We were constantly doing penetration testing within within the application itself. We have a partner that we believe is just top tier, top notch when it comes to our hosting environment. Like they know that stuff cold. And so while we have a small team, I’m leveraging experts in all of these different ways, not trying to do all of that, you know, with our team specifically. So, you know, security is always a big question.

00:22:39:18 – 00:22:44:22

Eric McDonald: We’ve really done a good job of buttoning up all of those loose ends and making sure that we’re in a good spot.

00:22:46:08 – 00:23:03:02

Richard Carthon: That’s great. And it’s very important, especially after year like last year and with everything we’re seeing in the traditional finance world. But a lot of really great information over at Coin Lion. What are some other places that people can go learn more information?

00:23:03:15 – 00:23:16:11

Eric McDonald: Yeah, I mean, the best spot is our website, KOIN lion.com. And obviously you’ll find everything out there about us and it’s where you can go create an account. You can create an account without depositing cash.

00:23:16:13 – 00:23:17:14

Eric McDonald: You can get a.

00:23:17:16 – 00:23:19:12

Eric McDonald: Feel for the platform if you want to.

00:23:20:10 – 00:23:41:13

Richard Carthon: Excellent. Well, I always like to wrap up with a couple of fun questions. And, you know, coming from someone who was able to successfully go through an acquisition of a unicorn company, when you look back on life, if you could go with all the information you have right now can impart 1 to 2 pieces of wisdom. When you first started, when you were in your basement coding, what wisdom would you give yourself?

00:23:43:28 – 00:23:47:23

Eric McDonald: Um, you know, it’s probably two things. One would be.

00:23:48:25 – 00:23:51:27

Eric McDonald: Don’t don’t try to boil the ocean and try to do everything all at once, right?

00:23:51:29 – 00:23:56:19

Eric McDonald: Just take your time and execute really well on a couple of key things.

00:23:56:23 – 00:24:04:22

Eric McDonald: And the other one is kind of goes hand in hand is just don’t lose sight of relationships as, as men. It’s really easy.

00:24:04:24 – 00:24:05:12

Eric McDonald: To think.

00:24:05:20 – 00:24:07:09

Eric McDonald: And get a fulfillment from work, work.

00:24:07:22 – 00:24:08:26

Eric McDonald: And just constantly go, go, go.

00:24:08:28 – 00:24:19:14

Eric McDonald: Go, go. And we lose sight of friends, family, kids. And so you don’t get some of those, you know, those early years back with your kids. So I’ve got five.

00:24:19:16 – 00:24:20:06

Eric McDonald: Kiddos.

00:24:20:08 – 00:24:37:26

Eric McDonald: And three biological adopted two kids from China. And, you know, there are growing quickly and you don’t get those those days back. So all of this is super fun. All this crypto stuff is awesome. Don’t lose sight of some of the most important things, which is, you know, friends and family.

00:24:38:20 – 00:25:07:25

Richard Carthon: Two great gyms. Haven’t heard. I don’t think I’ve heard that one before. Like, don’t blow the ocean. That is. That’s a cool one. Keep that one with me. And it is a great reminder that, you know, it’s it’s amazing to bury yourself into work. And right now we are in a builders market, so people have been heavily building, but it’s still essential to spend time with and build those relationships with the people we care about and that we want to see in our lives. So thank you for that reminder. But Eric, as we wrap up here, what is a final thought that you want to leave with all the listeners today?

00:25:08:21 – 00:25:12:19

Eric McDonald: Yeah, I think it’s it’s it’s really that crypto’s here to stay.

00:25:12:21 – 00:25:15:07

Eric McDonald: It’s not going anywhere. And I think platforms.

00:25:15:09 – 00:25:18:04

Eric McDonald: Like ours that make it super simple for users.

00:25:18:06 – 00:25:27:20

Eric McDonald: They’ve got downside protection I think, you know keep looking at platforms like coin line. What’s awesome is we’ve got everything patented, so we’re positioned really well.

00:25:27:22 – 00:25:29:06

Eric McDonald: For securing this.

00:25:29:08 – 00:25:29:23

Eric McDonald: Market.

00:25:30:25 – 00:25:54:00

Richard Carthon: Amazing. Glad you got the patents. I also agree that crypto is here to stay. It’s not going anywhere. Thank you for dropping all the amazing information on Coin Lion and congrats on all the success up to this point. Hope you keep crushing it. Everyone listening. Make sure you go check out Coin Lion again. That’s Coin Lion And Eric, thank you again for all your information. As always, everyone stay cryptocurrency. Thank you for joining us for another episode of cryptocurrency.

00:25:54:07 – 00:26:11:12

Richard Carthon: Cryptocurrency is a cryptocurrency and blockchain education platform that’s bridging the gap between the curious newcomers who are just discovering the space and the thought leaders who are shaping its future. All opinions expressed by Richard Carthon, the cryptocurrency team and their guests on this show are exclusively their own opinions. This show and any.

00:26:11:14 – 00:26:15:07

Richard Carthon: Other cryptocurrency production is exclusively for informational purposes.