Buttercoin, a bitcoin startup that hoped to use the cryptocurrency to make it easier for immigrants around the world to send money home, is closing its doors on Friday (April 10), the company has announced.
For once it’s not due to legal problems or cyberattacks, but a too-ambitious agenda — Buttercoin hoped to open exchanges around the world so that customers could reliably make exchanges at both end of a remittance — and declining interest in bitcoin startups by investors after the bursting of the bitcoin bubble last year.
“It’s been a wonderful ride and we’re delighted to have created a service so many people enjoy,” the company said in a message on its site. “With the dip in bitcoin interest among Silicon Valley investors, we weren’t able to generate enough venture capital interest to continue funding Buttercoin.”
Those investors included Google Ventures and Y Combinator, and Buttercoin pulled in more than $1 million in funding in 2013. But then came the boom — with bitcoins soaring in value to well over $1,000 — and then the collapse in value to just above $200. Now most investors appear to be more interested in mainstream applications of Bitcoin’s blockchain technology than in the cryptocurrency itself.
As a result, Buttercoin is closing its doors. But customers of its U.S. exchange will get all the bitcoins or dollars in their accounts. For any remaining currency in customer accounts as of 11 p.m. on Friday, dollars will be sent to the bank account linked to the customer’s account, while bitcoins will be converted to dollars and sent to the bank account.
While that’s good for Buttercoin’s customers, it doesn’t bode well for other cross-border money-transfer startups that plan to open offices around the world such as Align Commerce. But Align may have two key advantages over Buttercoin: it’s focused on enabling individuals and businesses to pay cross-border eCommerce invoices — and it has already started pilot tests with live cross-border payments, a stage that Buttercoin never quite reached.