Bitcoin banks are going to happen. We already have a few of them. We’re going to have more of them. Existing legacy banks are going to start offering services. New banks are going to be founded around Bitcoin. This is completely unavoidable at this point. Bitcoin doesn’t scale. Even absent that, people value other services that inherently require other parties. Debt being the chief one.

This is an inescapable reality.

Even if we could snap our fingers and roll out every well specified opcode and covenant proposal at once, it would still take a lot of time to begin building out self-custodial layers that could compete with something like credit unions and banks offering bitcoin accounts at scale. That is not a problem that can be trivially solved overnight.

So what can we do? We need to embrace a localist attitude around making interaction with your bitcoin easy. This requires a two pronged approach, one involving technical development and the other involving, I hate to say it, lobbying.

There already exist pieces of software like LNDHub or LNBits that allow people to offer custodial accounts for Lightning. We need a lot more software like this, and we need it to be miles better. It needs to not involve tinkering around on the command line and hooking up independent software, or perusing Github to follow manual installation instructions, or fumbling around trying to fix dependencies mismatches.

It needs to just work.

Click, sync to the network, done. It needs to be something that power users who are still not very tech savvy can run safely, and not lose other people’s money. It needs to support more than basic accounts for Lightning. Ecash offers privacy, which would be something important when it comes to small groups of people who know each other. You don’t want your friend seeing what you spend your money on. It needs to support things like Unchained or Nunchuck style on-chain self custody. People aren’t going to want to hold all their friends and family’s life savings, but holding a recovery key to safeguard them from their own mistakes is another matter.

We need the software that will actually scale this type of user interaction beyond a bunch of activist nerds online.

We also need a regulatory carve out. There needs to be a clear acknowledgement that running this type of software for friends and family with trivial amounts of money, say thousands of dollars, and without charging anything for it, is an unregulated activity. Helping friends and family interact with Bitcoin safely and easily, and for free, does not make you a bank. The idea of a few thousand dollars needing to comply with the regulations banks managing billions of dollars do is frankly absurd.

This is the path forward given the current constraints of Bitcoin, and the reality of growing and accelerating adoption, that leads us away from a system that eventually becomes completely captured and neutered by legacy financial institutions.

Instead of depending on them to deal with the current scaling limitations of Bitcoin, we depend on each other. 

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

​ Bitcoiners shouldn’t sit around and wait for fiat banks and financial companies to offer services built on Bitcoin, we should do it ourselves. 

Founder: Nicolas Burtey

Date Founded: September 2019

Location of Headquarters: United States

Number of Employees: 11

Website: https://www.galoy.io/

Public or Private? Private

Last week, Galoy launched Lana, software that enables banks to accept bitcoin as collateral for loans.

Lana helps community and challenger banks (the banks with which Galoy is looking to work) to offer bitcoin-backed loans to various types of customers.

“Some banks might want to use it to sell to retail, and some might want to use it to sell commercial customers or high-net-worth individuals,” Burtey told Bitcoin Magazine.

In offering such loans to a wide array of customers, Burtey believes that the high cost of borrowing currently associated with such products will come down.

“Today’s interest rates are 12% to 15% if you want to get a loan using your bitcoin as collateral,” said Burtey.

“The rates are high because there are so few financial institutions offering this type of product. We see an opportunity now that the regulations are allowing banks to do things with bitcoin,” he added.

“We think a lot of banks will want to enter this market.”

If Burtey is correct in his prediction that banks are keen to offer bitcoin-backed loans, this will not only lower rates for such loans, but it will also introduce open-source Bitcoin software into the world of banking, which could initiate a new trend in the industry.

But more on that in just a minute. First, some background on Galoy.

Galoy’s 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 hold off on doing so due to an unfriendly regulatory environment.

So, instead, it focused its efforts on creating and supporting Blink wallet (which was originally called the Bitcoin Beach wallet and which Galoy recently sold), a custodial Bitcoin and Lightning wallet predominantly used at first in El Salvador and then in Bitcoin circular economies globally.

“Galoy’s mission was to onboard banks to Bitcoin five years ago,” said Burtey.

“But the regulatory environment was so bad during the last five years that we decided to create Blink. The reason we are now focusing on our original mission is because with the end of Choke Point 2.0 and the repeal of SAB 121, we think now is the perfect time to help banks adopt Bitcoin.”

Burtey spoke about his work in creating and growing Blink fondly and shared that he had to stop working on the project only because it would be too difficult to continue managing it while also aiming to serve a new type of clientele.

“Blink is a B2C (Business-To-Customer) play, and it’s hard as an early-stage startup to focus on too many things,” explained Burtey.

“Galoy is a B2B (Business-To-Business)-driven 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, that one thing will now be Lana.

How Lana Works

Lana is software that Galoy helps banks integrate and manage for a subscription fee. With this software, banks can issue bitcoin-backed loans under the terms they create.

“We’re not the ones deciding how much interest will be charged or anything like that,” explained Burtey.

“We give banks the platform to do this, and then they can figure out their cost of capital, the duration of the loan, the liquidation price for the bitcoin in the loan and the rate at which they want to lend,” he added.

“We’re giving you software, and helping you run and automate that software.”

Something else that Galoy doesn’t do for banks is custody the bitcoin provided as collateral for the loans they issue. Each of the banks with whom the company works is responsible for selecting their own custodian.

“You can go to BitGo or Fireblocks or each loan can have its own multisig,” said Burtey. “We’re agnostic on custody.”

With that said, Lana helps banks monitor the bitcoin in custody so that banks can be aware of whether or not collateral is nearing liquidation levels.

“A key piece of this product is risk management,” said Burtey.

“Bitcoin is volatile, and the bank will need a tool to show that it’s taking calculated risk. So, we’ll provide banks with a dashboard to monitor this risk,” he added.

Who Will Use Lana?

Galoy is targeting community banks and other smaller financial institutions with this new product mostly because they think these smaller players will benefit most from it — and because the big banks likely won’t need such a product.

“We don’t think JP Morgan will really want to work with us,” said Burtey. “They’re probably building something like this themselves, whereas a smaller bank, a credit union or small company probably isn’t.”

Burtey also understands that smaller lenders’ incorporating Lana as opposed to building something comparable themselves can save these financial institutions a significant amount of time and effort.

“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,’” said Burtey. “‘Or we have a lending product as a service for you, and you can launch it much more quickly.’”

And as Burtey and his team onboard their first round of smaller banks, they’ll not only be making history in enabling more banks to accept bitcoin as collateral for loans, but they’ll potentially be altering the trajectory of banking in general by introducing open-source software to it.

Open-Source Bitcoin Banking

Burtey’s long-term vision for Galoy is to do much more than just help banks issue bitcoin-backed loans. He’s looking to introduce open-source software into banking as more banks begin to embrace Bitcoin.

However, it’s important to note that Lana isn’t open-source just yet. It’s 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,” said Burtey. “You can go and try it, test it, and play with it on your own.

Under the fair-source license, no company other than Galoy can sell the product to a bank right now, allowing Galoy to profit while still building with auditable code.

“We sell the deployment, and we help banks to plug in to their custodian,” explained Burtey. “We’re building in the open — but we also want to generate revenue.”

Beyond helping banks implement Lana, Burtey’s wants to develop open-source “core banking software,” as he’s looking to disrupt the “core ledger” oligopoly.

“The core ledger is where banks store the account data, customer information and transaction details,” said Burtey. “It’s the source of truth for banks.”

And only three companies — FIS, Fiserv and Jack Henry — have the core ledger market cornered.

“These are all like hundred billion dollar companies that you’ve probably never heard about because all they do is focus on selling software to banks,” said Burtey.

“Our long-term goal is to disrupt this industry by making something that is open source,” said Burtey. “Today, there is no company that does core banking with the idea of open source, and so we’re working towards this.”

Burtey envisions a world in which open-source software can make it much easier for someone to start a Bitcoin bank. (For those who wince at the words “Bitcoin” and “bank” being used in tandem, might I remind you that it was the legendary Hal Finney himself who wrote that bitcoin-backed banks would serve as a scaling solution.)

“To start a bank today is a very expensive and complicated process,” said Burtey. “You have to pay $100,000 plus just to purchase the core ledger technology.”

Burtey then referenced his own experience in starting Blink wallet, essentially a bitcoin bank run on open-source code, before continuing.

“I just went to El Salvador and started what was effectively my own bank because I wanted to,” said Burtey.

“We need to reinvent how core banking software is being made in the world of Bitcoin, and I think this is where open-source becomes relevant,” he added.

“This is really why I think the world of banking and Bitcoin will be very different from the world of banking with fiat, and I think we’re one of the companies at the forefront of this.”

​ Galoy founder and CEO Nicolas Burtey wants to help more borrowers use bitcoin as collateral for loans while introducing open-source software into the traditional banking stack. 

Bitcoin’s evolution from an obscure digital currency to a global financial force has been nothing short of extraordinary. As Bitcoin enters a new era, institutions, governments, and developers are working to unlock its full potential. Matt Crosby, Bitcoin Magazine Pro’s lead market analyst, sat down with Rich Rines, contributor at Core DAO, to discuss Bitcoin’s next phase of growth, the rise of Bitcoin DeFi, and its potential as a global reserve asset. Watch the full interview here: The Future Of Bitcoin – Featuring Rich Rines

Bitcoin’s Evolution & Institutional Adoption

Rich Rines has been in the Bitcoin space since 2013, having witnessed firsthand its transformation from an experimental technology to a globally recognized financial instrument.

“By the 2017 cycle, I was pretty determined that this is what I was going to spend the rest of my career on.”

The conversation delves into Bitcoin’s growing role in institutional portfolios, with spot Bitcoin ETFs already surpassing $41 billion in inflows. Rines believes the institutionalization of Bitcoin will continue to reshape global finance, particularly with the rise of yield-generating products that appeal to Wall Street investors.

“Every asset manager in the world can now buy Bitcoin with ETFs, and that fundamentally changes the market.”

What is Core DAO?

Core DAO is an innovative blockchain ecosystem designed to enhance Bitcoin’s functionality through a proof-of-stake (PoS) mechanism. Unlike traditional Bitcoin scaling solutions, Core DAO leverages a decentralized PoS structure to improve scalability, programmability, and interoperability while maintaining Bitcoin’s security and decentralization.

At its core, Core DAO acts as a Bitcoin-aligned Layer-1 blockchain, meaning it extends Bitcoin’s capabilities without altering its base layer. This enables a range of DeFi applications, smart contracts, and staking opportunities for Bitcoin holders.

“Core is the leading Bitcoin scaling solution, and the way to think about it is really the proof-of-stake layer for Bitcoin.”

By securing 75% of the Bitcoin hash rate, Core DAO ensures that Bitcoin’s security principles remain intact while offering greater functionality for developers and users. With a growing ecosystem of over 150+ projects, Core DAO is paving the way for the next phase of Bitcoin’s financial expansion.

Core: Bitcoin’s Proof-of-Stake Layer & DeFi Expansion

One of the biggest challenges facing Bitcoin is scalability. The Bitcoin network’s high fees and slow transaction speeds make it a powerful settlement layer but limit its utility for day-to-day transactions. This is where Core DAO comes in.

“Bitcoin lacks scalability, programmability. It’s too expensive. All these things that make it a great settlement layer is exactly the reason that we need a solution like Core to extend those capabilities.”

Core DAO functions as a proof-of-stake layer for Bitcoin, allowing users to generate yield without third-party risk. It provides an ecosystem where Bitcoin holders can participate in DeFi applications without compromising on security.

“We’re going to see Bitcoin DeFi dwarf Ethereum DeFi within the next three years because Bitcoin is a superior collateral asset.”

Bitcoin as a Strategic Reserve Asset

Governments and sovereign wealth funds are beginning to view Bitcoin not as a currency but as a strategic reserve asset. The potential for a U.S. Bitcoin strategic reserve, as well as broader global adoption at the nation-state level, could create a new financial paradigm.

“People are talking about building strategic Bitcoin reserves for the first time.”

The idea of Bitcoin replacing gold as a primary store of value is becoming more tangible. Rines asserts that Bitcoin’s scarcity and decentralization make it a superior alternative to gold.

“I think within the next decade, Bitcoin will become the global reserve asset, replacing gold.”

Bitcoin Privacy: The Final Frontier

While Bitcoin is often hailed as a decentralized and censorship-resistant asset, privacy remains a significant challenge. Unlike cash transactions, Bitcoin’s public ledger exposes all transactions to anyone with access to the blockchain.

Rines believes that improving Bitcoin privacy will be a critical step in its evolution.

“I’ve wanted private Bitcoin transactions for a really long time. I’m pretty bearish on it ever happening on the base layer, but there’s potential in scaling solutions.”

While solutions like CoinJoin and the Lightning Network offer some privacy improvements, full-scale anonymity remains elusive. Core is exploring innovations that could enable confidential transactions without sacrificing Bitcoin’s security and transparency.

“On Core, we’re working with teams on potentially having confidential transactions—where you can tell that a transaction is happening, but not the amount or counterparties involved.”

As governments continue to increase scrutiny over digital financial activity, the need for enhanced Bitcoin privacy features will only grow. Whether through native protocol upgrades or second-layer solutions, the future of Bitcoin privacy remains a crucial area of development.

The Future of Bitcoin: A Trillion-Dollar Market in the Making

As the interview progresses, Rines outlines how Bitcoin’s economic framework is expanding beyond speculation and into productive financial instruments. He predicts that within a decade, Bitcoin will command a $10 trillion market cap, with DeFi applications becoming a significant portion of its economic ecosystem.

“The Bitcoin DeFi market is a trillion-dollar opportunity, and we’re just getting started.”

His perspective aligns with a broader industry trend where Bitcoin is not only used as a store of value but also as an active financial asset within decentralized networks.

Rich Rines Roadmap for Bitcoin’s Future

Final Thoughts

The conversation between Matt Crosby and Rich Rines provides a compelling glimpse into the future of Bitcoin. With institutional adoption accelerating, Bitcoin DeFi expanding, and the growing recognition of Bitcoin as a strategic reserve, it is clear that Bitcoin’s best years are ahead.

As Rines puts it:

“Building on Bitcoin is one of the most exciting opportunities in the world. There’s a trillion-dollar market waiting to be unlocked.”

For investors, developers, and policymakers, the key takeaway is clear: Bitcoin is no longer just a speculative asset—it is the foundation of a new financial system.

For more detailed Bitcoin analysis and to access advanced features like live charts, personalized indicator alerts, and in-depth industry reports, check out Bitcoin Magazine Pro.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.

​ As Bitcoin continues to dominate the financial landscape, Rich Rines of Core DAO explores its evolution—delving into institutional adoption, DeFi expansion, and its potential as a global reserve asset.