Purse Shut, And The Case For Bitcoin Fades (A Bit More)

It might sense to think that bitcoin — that marquee name of cryptocurrency — would enjoy a shining moment, a chance to take root in commerce in a way that shows just how far we have come in transacting digitally, in living financial lives online.

You’d be forgiven for wondering what might shutter next as the coronavirus upends daily life.

Those two seemingly separate statements seemed to mesh a bit last week when Purse, a bitcoin startup, said it was shutting down after six years.

As reported by The Register, the company made the announcement by through an email sent to customers late last week.

“We’ve made the very difficult decision to dissolve the company,” the email read. “We’re grateful for the opportunity afforded by our supporters to build products and infrastructure for the cryptocurrency community.”

The company’s business model was one predicated in part on offering discounts of as much as 5 percent at Amazon, matching buyers wielding bitcoin, or bitcoin cash, and Amazon gift card sellers who wanted to have access to crypto. Purse acted as intermediary. Bitcoin holders would deposit their crypto into a Purse account.

As reported by Coindesk, a Purse support manager, Eduardo Gomez, said via Twitter that the closure “was a business decision, nothing funky going on.”

Services will continue to be conducted through June 26, though the “shop and earn” functionality of the site will be disabled this week.

Separately, as reported by The Register, there may have been a fundamental hit to the business model of Purse, as Amazon announced that it would slash the amounts paid to affiliates that refer business to the eCommerce juggernaut.

Here, then, lies a conundrum for bitcoin. It’s still not being used as a direct form of commerce, at least in terms of scale, relying in many cases on intermediaries, several steps in the process or conversion into fiat.

That’s not to say there’s been no traction. Consider the fact that as Coinbase reports, its Coinbase Commerce, its payment portal, has been around for two years and has processed $200 million transactions. The firm has said that there are 8,000 retailers who accept crypto (in addition to other payment choices). Beyond that, Coinmap.org has estimated that roughly 19,300 ventures across the globe accept cryptos for payments (not just bitcoin).

Might it also be the case that bitcoin/crypto momentum as currency — such as it is — would be slowed by the re-ignition of the “digital dollar” proposal? The recently introduced COVID-19 legislation would issue digital dollar wallets by next 2021, and $2 trillion in digital dollars would be made available to those wallets as part of upcoming payments.

Earlier in the month, the Libra Association, the independent group (where Facebook is the most visible presence) looking to launch a stablecoin, said it has shifted its own plans.

The Libra consortium has said that it will offer stablecoins backed by individual nations’ currencies in addition to coins backed by several currencies. The individual currencies would, thus far, include the euro, the sterling and the dollar.

As noted in this space last week, a Treasury-issued digital dollar would have the full advantage of being universally accepted by recipients and a conduit to building up funds or covering bills as needed amid a rocky economic climate. That’s a high hurdle for other payments offerings to tackle including bitcoin and Libra.