Alternative Finances

Bitcoin Tracker | Week 59


Circle is a consumer financial services company founded by internet pioneer Jeremy Allaire to “transform the world economy with secure, simple, and less costly technology for storing and using money.”

Allaire’s and Circle’s vision harkens back to the 1990s when the internet was a brand new idea, ready to transform and be transformed. Today the internet is central to how people and businesses communicate. Allaire sees Bitcoin and its open standards and protocols as the future of the way in which money is sent between people and businesses worldwide. Circle is building the products that will help people take advantage of that opportunity and, over time, advance the vision of “the internet of money.”

MPD CEO Karen Webster caught up with Sean Neville, Circle Co-Founder to get his perspective on the opportunity a little more than a year after Circle was launched and in an environment where the price of bitcoin has plummeted more than 75 percent since this time last year.

One thing that Sean Neville wants you to know about Circle is that it doesn’t think of itself as “a Bitcoin company.”

Rather, as Neville — Circle’s cofounder and CTO — explained to MPD CEO Karen Webster on a podcast recently, his company seeks to allow people to use cryptocurrencies like Bitcoin to take advantage of the additional security, speed, global nature and “very close to zero” fees that services like Bitcoin provide.

Neville founded Circle Internet Financial about 15 months ago to focus on consumer payments.  He concedes that the initial apps that the company has released are fairly “Bitcoin-centric”; they do allow people to send and receive money — person-to-person and person-to-merchant — directly and very simply.

Circle leverages Bitcoin technology to enable in-person and online payments in a cheaper and more secure fashion.  The company recently made news when it introduced a Bitcoin wallet that allows consumers to pay in-store.

How does it work?  A consumer provides a payment-funding source, such as a credit card or a bank account, and Circle instantly gives the consumer Bitcoin that can be immediately used to execute a payment.

Presently an Android-based technology, the NFC-enabled Circle operates as an open protocol.  When other companies like BitPay develop new technologies in the space, Circle, Neville explains, can immediately take advantage of it: “We don’t need to apply for membership in a closed network and get approval through business development; we can just implement the protocol.” He likens the process to building a product that works with SMTP for email or building something for the web that works on HTTP.

To wit, BitPay has created a POS device that allows merchants to accept payments in Bitcoin.  The merchant doesn’t necessarily need to hold any Bitcoin but it can accept it as payment and instantly have the Bitcoin amount converted into dollars.  When this POS device was introduced, Circle updated its Android application to allow it to work with the device so that customers who have Circle accounts can simply tap-to-pay at any location where the device is implemented and issue Bitcoin for goods and services.

Neville doesn’t know the exact number of merchants that are currently enabled to accept Bitcoin in the physical environment (it would be a combination of those supported by BitPay and Coinbase and others), but his “best guess” is that retail use of the blockchain has been relatively flat over the past few months.  He believes this observation underscores the reality that in-person use of Bitcoin is “still a little bit of an experiment, in its very, very early days.”

Webster points out that Bitcoin has recently experienced a decline in value, and wonders if that affects consumer appetite for using a product like Circle.

“On some level, it must,” says Neville.  He thinks that a lot of Circle’s customers (and customers of BitPay and others) could be classified as “early adopters”.  They’re people who are interested in Bitcoin simply as an asset as much as anything else.  Neville says that Circle is not really interested in that particular use case; it’s more interested in people who want to pay for a good or service and aren’t necessarily thinking about Bitcoin as an asset at all, who “think in terms of euros and dollars.”

But he admits that “we’re not quite there yet”, where Bitcoin is being used at that high of a level of optimization.  What will it take, Webster posits, for the use of cryptocurrency for go mainstream?

Neville believes that “to make it really mainstream, [the consumers] should never have to think about it at all.”  He likens Bitcoin’s best-case-scenario path to mainstream acceptance to the current use of chip-and-pin technology: a consumer doesn’t think about tokenization or where the token comes from; he simply uses a card to complete a transaction.  In order to become mainstream, the very use of cryptocurrency has to become second-nature.

As for Circle’s role in an as-yet-hypothetical world where cryptocurrency is mainstream, Neville says that will depend heavily on regulation — specifically, on companies like Circle finding champions in the regulatory world that will help make banking partners comfortable working with innovators.  “If the regulatory barriers are such that only a handful of us are allowed to innovate in the space, then we’re not doing much more than creating another Visa or MasterCard.”

While Neville admits that such an outcome could at the very least be interesting, his goals for Circle remain loftier:

“We’d really like to create the Google or the internet of money, rather than the CompuServe or the Prodigy of money.”




In other bitcoin news, the big news last week was the announcement that Coinbase would open a regulated bitcoin exchange in the U.S. On that news, the price of bitcoin shot up, only to fall back down into the low $200’s again ..At the time that this went to press, the bitcoin is trading close to last weeks price of $229.97 at $233.24 according to the Bitcoin Price index.

The other big news is that Bill Gates, along with Warren Buffett, is just not that into bitcoin. Gates says that it’s way too volatile for most people, especially those in developing countries for whom even the cryptocurrency is said to be a viable digital alternative.

And, when the going gets tough, you can always count on the Winklevoss’ Twins to turn those frowns upside down. They believe that bitcoin’s market cap could exceed Visa’s or MasterCard of Amex and they’re building the NASDAQ of Bitcoin to prove it.

As always, if you have any news you’d like to share, please send it our way at


On the Plus Side …

The Winklevoss twins are sticking to their story that bitcoin is a great investment and amazing opportunity. Just this week, they made a prediction that bitcoin’s market cap could reach the size of the major payments players like American Express, Visa, MasterCard or others. Those are some pretty big payments rails to fill.  Speaking of rails, Coinbase’s news that it will open a regulated exchange in the U.S. drove a little spike in the value of bitcoin.

  • January 29, 2015 – The Winklevoss twins are calling their recently launched bitcoin project, Gemini, the “NASDAQ or Google of bitcoin” as they believe it is just the bitcoin system that the US needs.
  • January 29, 2015 – An ex-Goldman Sachs Trader plans to open a new bitcoin derivatives exchange, LedgerX Bitcoin. Paul Chou aims to help bitcoin derivatives come closer to legitimacy by being fully regulated.
  • January 28, 2015 – USAA sees a bright future in bitcoin and is sticking their money where their mouth is by backing up their statements with cash, in an investment in Coinbase.
  • January 28, 2015 – The Bitcoin Funfair is taking place in Stockholm next month to try and encourage the use of digital currency among consumers.
  • January 27, 2015 – One of the biggest backers of bitcoin, Tim Draper, just bet about $400,000 that bitcoin will rebound.
  • January 27, 2015 – Ripple Labs is finalizing a $30 million funding round which will put the value of Ripple at about $100 million post-money.
  • January 27, 2015 – Colu, a Tel Aviv startup has launched to power bitcoin’s cryptocurrency as a new platform to bring a new level of trust to real world transactions.
  • January 26, 2015 – Coinbase secured approval to launch a regulated US Bitcoin exchange, however the exchange has not received licensure in California and New York. The exchange will have a full order book and limit orders and Coinbase hopes to have regulatory approval in all states in the next six months.



On the Dark Side … 

The Oracle of Omaha voiced his opinions on bitcoin a few weeks back and now Bill Gates chimed in with his opinion as well. On a Reddit AMA, Gates spoke about the opportunities for digital money to offer an opportunity for mobile banking tools for the poor. However, he does not believe that bitcoin will be used for two reasons: “One is that the poor shouldn’t have a currency whose value goes up and down a lot compared to their local currency. Second is that if a mistake is made in who you pay then you need to be able to reverse it so anonymity wouldn’t work.”

  • January 29, 2015 – 73 bitcoin website scams, which promised unrealistically high returns on bitcoin investments, were shut down by the New York County District Attorney’s office.
  • January 29, 2015 – An Israeli web analyst has tied bitcoin to ISIS, again.
  • January 29, 2015 – Greg Baxter, Citi’s head of digital strategy, says that the economics of bitcoin are inherently flawed and that it isn’t enough for mass adoption.
  • January 29, 2015 – Prosecutors have traced $13.4 million in bitcoins back to Ross Ulbricht’s laptop.
  • January 29, 2015 – Over $11 million has been lost in bitcoin scams since 2011.
  • January 28, 2105 – First Warren Buffet, now Bill Gates, who despite thinking that digital currency can be an important banking tool for the poor, does not think that bitcoin has the potential to be an important tool.
  • January 28, 2015 – The bitcoin company with the most funding, Coinbase, is operating without the proper financial licenses in many states. However they are working with financial regulators in New York to obtain the correct licenses.
  • January 28, 2015 – Silk Road trial lawyers are now fighting over a smiley face, trying to determine if there is a difference between “Yep” and “Yep J”. We all know that online chats can be easily misinterpreted, now here is the legal battle to back that up.
  • January 27, 2015 – 65% of respondents to a Google Customer Survey from bitcoin organization, Coin Center, are not at all familiar with bitcoin.
  • January 27, 2015 – CoinTerra, a bitcoin mining company has filed for bankruptcy.


Latest Insights: 

Facebook is a giant in the ad game, with 2.3 billion active monthly users and $16.6 billion in quarterly advertising revenue. However, its omnipresence makes it a honeypot for fraudsters. In this month’s Digital Fraud Report, PYMNTS talks with Rob Leathern, Facebook’s director of product management, on how the site deploys automated systems and thorough advertiser vetting to close the lid on fraudster attempts.

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