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.”
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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 PYMNTS.com 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 contactus@pymnts.com.
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.
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.”
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