At a recent get together with my friends, the hottest topic turned out to be Bitcoin. Rather than the usual Football wars or Android/iPhone or Breaking Bad many of them were interested in knowing how to mine Bitcoins.
Circle Internet Financial was recently launched with the aim of increasing the adoption of digital currencies such as Bitcoin by enabling consumers and merchants with a payment platform. The company was started by Jeremy Allaire, who previously founded Brightcove, an online video platform. Circle received $9Mn of Series A funding through investors Jim Breyer, Accel Partners and General Catalyst Partners.
Circle says that it will provide a secure system that will enhance protection and privacy of consumer and enable them to make payments, receive and send this digital currency. For charities and businesses, the company says that it is working on tools and services which would enable them to accept both in store and online payments without any transaction fees.
"Bitcoin and digital currency represent a once-in-a-lifetime opportunity to shape the future of the Internet and global commerce. There's a tremendous opportunity to make payments easier, more secure and less costly for consumers and businesses. Digital currency can dramatically reduce the friction and costs currently experienced in the world by consumers and merchants" said Jeremy Allaire. Widening the presence of Bitcoin among merchants is the key to expanding its use according to him.
Bitcoin has been gaining a lot of momentum recently with developments such as world’s first Bitcoin ATM came up in Canada last week, legalization of the currency trading by Germany, Baidu’s ‘Jiasule’ and Walmart indirectly accepting Bitcoin.
“This is not like your typical Internet startup where you ship a product and hope people will adopt it. The barriers here are a lot higher. The Bitcoin industry lacks a certain amount of ‘sophisticated’ entrepreneurs and capital, which leaves an opening for a well-funded, experienced startup to take hold” said Allaire.
A look at other Bitcoin startups reveals that Circle’s platform competes with services such as Coinbase and Bitpay. Coinbase is a platform which allows trading of Bitcoins. Any user could create a wallet, link his/her bank details and start using Coinbase to trade Bitcoins. There are other apps on iOS platform which allow trading of Bitcoins. The most prominent one being “Bitcoin by MtGox Mobile.” The currency has been touted as the next big thing like ‘Internet’ by Andreessen-Horowitz. As you can see there are many reasons why bitcoin recently crossed $200 mark.
LTP View: Altough Bitcoin has been marred with legal problems, the lower transaction costs, better security and privacy in payments could draw more merchants. Avoiding fees and risks of fraud and chargebacks associated with credit cards is another advantage of the currency. Circle’s focus on making it easy for merchants to adopt bitcoin is a unique approach and could be a game changer. Circle may have entered the market at a perfect time when the bitcoin is all set to boom.