Monthly Archives: September 2014

Brian Armstrong and Fred Ehrsam certainly look like the kind of guys who could help bitcoin recover from its wild years.

They are tall and textbook fit, and as poised as Swiss bankers -- Vulcan Swiss bankers. Armstrong, 31 and a former software engineer at Airbnb Inc., shaves his head. Ehrsam, 26 and a former foreign-exchange trader at Goldman Sachs Group Inc. (GS), keeps his hair short and very much in place. When they discuss bitcoin, they rarely smile. Do not try to make them laugh.

Their seriousness is understandable, Bloomberg Markets magazine will report in its November 2014 issue. Armstrong and Ehrsam are the founders of a startup called Coinbase Inc., whose mission is to convince everyone that bitcoin isnt an Internet scam or a libertarian plot against the government or a digital version of goldbuggery, as various skeptics have it. Rather, its the best thing to happen to money since the Lydians started minting coins sometime in the seventh century B.C.

Coinbase isnt a bank -- technically, its a brokerage -- but in important respects it behaves like one. Customers open accounts, through which they buy bitcoins for dollars. Coinbase holds the bitcoins. Customers spend them using a computer or a smartphone application. Coinbase makes money by charging a 1 percent fee for exchanging dollars and bitcoins. All other transactions are free.

Adam Draper, founder of the accelerator program Boost VC. Draper wants to help launch 100 bitcoin-focused companies. Close

Adam Draper, founder of the accelerator program Boost VC. Draper wants to help launch... Read More

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Adam Draper, founder of the accelerator program Boost VC. Draper wants to help launch 100 bitcoin-focused companies.

Coinbases aim is to take a curio currency that exists only as bits on the Internet and turn it into a coin of the realm -- every realm, because part of the appeal of bitcoin is that it can cross borders as easily as e-mail.

Its a big job. Reputation is everything when it comes to currency, and bitcoins has taken some hits. In 2013, the FBI busted Silk Road, an online drug market that ran on bitcoins. In February 2014, Tokyo-based Mt. Gox, once the largest bitcoin exchange in the world, collapsed, and suddenly 850,000 bitcoins, worth $500 million at the time, were just ... gone. (Two hundred thousand of the missing bitcoins later turned up.)

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Coinbase Leads Move to Bring Bitcoin to Masses

The company's service allows consumers to swap established currencies for the digital kind without the speculating inherent in trading exchanges.

Bitcoin

Circle, a startup focused on enabling average folks to convert hard currencies into the digital kind, has officially launched across the globe.

The Bitcoin-focused service, which was available only in testing over the past year, is now open to the public worldwide in seven languages, including English, Chinese, Japanese and Spanish, Circle announced Monday. The company's language support means it can accommodate 40 percent of the world's population, Circle said.

Circle was founded in 2013 and emerged from stealth mode earlier this year. Its service is designed to offer the average consumer confidence in the Bitcoin platform. Circle argues that its service will be the first to make Bitcoin mainstream.

"Our goal is to make it easy for consumers to deposit and convert currency into a digital form that they can then use globally and instantly, not offer a trading exchange where they can bet on a speculative asset," Circle CEO Jeremy Allaire wrote in a blog post earlier this year.

The fact that Circle is not a trading exchange is what sets it apart from many other Bitcoin services on the Web. Circle does not operate by offering users the option to buy into the cryptocurrency at a specific rate with hopes of trading it for more. Instead, the company simply provides a service in which users can deposit local currency in return for Bitcoin. Upon withdrawal, Bitcoin is converted to local currency. No fees are incurred for the service.

Circle's launch comes at an important time for Bitcoin. The digital currency has become an acceptable option for payment for online goods on several websites, including tech retailer NewEgg. In addition, some governments are starting to warm to the idea of accepting Bitcoin, with the US Federal Election Commission saying last spring that it would allow political action committees to accept donations in Bitcoin. Still, there is no official government consensus on Bitcoin. The US Securities and Exchange Commission has said consumers shouldn't be so quick to trust Bitcoin.

There's also the issue of Mt. Gox. Last year, the exchange, which was the world's largest at the time, was hacked, allowing attackers to steal hundreds of millions of dollars worth of Bitcoin. Most of that has not been recovered and many users were burned by the hack.

In addition to announcing the international launch, Circle is trying to allay some security fears by offering insurance. In the event of theft, 100 percent of a user's Bitcoin deposit value will be covered by the insurance.

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Bitcoin converter Circle opens to the public worldwide

Circle Internet Financial Ltd. introduced its online accounts for sending, receiving and storing bitcoins, seeking to make it easier for consumers to use the virtual currency.

The Boston-based startup, which has raised $26 million in funding to date, has been testing the service for several months, said Chief Executive Officer Jeremy Allaire.

Bitcoin has gained some traction, with an more than 75,000 businesses accepting the digital money, including Dell Inc., Dish Networks Corp. and Expedia Inc. With Circle, Allaire is betting that more consumers will be willing to invest, and pay for goods and services using bitcoin, making it more of a mainstream payment system.

Circle is designed for new users who are coming into this world, Allaire said in an interview. We introduced a product thats free to use. Weve created something thats easier to use, better economically.

Circle, which will be available globally, will compete with offerings from other startups, such as Coinbase Inc. and Blockchain.info. U.S. customers will be able to link a bank account to their Circle wallets, where they can store bitcoins for use in transactions or as an investment. The service also lets users use credit cards to make deposits and withdrawals. Both U.S. and international users holdings are fully insured from theft, Allaire said.

So far, most bitcoin users have been technophiles who download complex software to use the virtual currency and spend days waiting for transactions to go through. Allaire anticipates that Circle will appeal to young people, and the company is focused on expanding its reach onto various college campuses, he said.

Circle is available in seven languages, including Spanish and Chinese. The site will automatically display peoples account balances in their local currency. Circle is also developing new iOS and Android applications, which will make the service accessible via mobile devices.

As it works to ramps up operations, Circle plans to expand the number of full-time employees to 50 people by the end of the year, up from the current 35, Allaire said. The company may seek more capital next year, he said.

The startups investors include Breyer Capital, Accel Partners, Oak Investment Partners and Pantera Capital, a San Francisco-based hedge fund that is investing in both Bitcoins and Bitcoin-related businesses.

To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.net

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Circle Debuts Bitcoin Accounts for Mainstream Users