London bitcoin vault and enterprise services company Elliptic raises the first venture round of any UK bitcoin company. Block chain analytics startup and Y-Combinator alum TradeBlock raises its Series A from Andreessen Horowitz. And Coinbase drinks BitPay’s milkshake by integrating with Shopify while Circle does the same to Coinbase via its new wallet and pseudo-exchange. An action-packed day in crypto-land.
Circle just sent out its most recent batch of invitations this afternoon and yours truly was able to (finally) take an early look at the beta product. It lived up to my very lofty expectations.
The product design itself shouldn’t be shocking to anyone who paid attention to the company’s much anticipated (and later criticized) “launch” and product demo at Bitcoin 2014 in Amsterdam. However, this is the first time that many within the bitcoin community have had any chance to actually take the tech for a spin. Within ten minutes, I was able to successfully create an account, set my 2FA preferences, deposit BTC with a credit card, transfer BTC from an outside wallet, send BTC instantly to another Circle user, and withdraw BTC to my credit card account…all from my cell phone.
Founders Jeremy Allaire and Sean Neville said they were being conservative about releasing their product to the masses because they wanted it to be as close to perfect as possible. So I ripped through a good deal of the wallet’s functionality and tried to break things for about two hours this afternoon on my cell and desktop. I only found one “bug” that could be fixed - I accidentally ordered $50 worth of bitcoin twice due to the company’s one-click purchase functionality.
Imagine that. People have been bitching about how long it takes to acquire bitcoins for years. Now a double tap on the “go” button zipped over two orders to me in milliseconds.
Circle is Coinbase’s first viable direct competitor in the battle for seamless bitcoin acquisition and hosted bitcoin savings accounts. The company keeps a full reserve of bitcoins, runs the equivalent of a pseudo-exchange (although they won’t call it that) behind its sleek front-end, and fully controls its users’ private keys. Sure, the Circle team will claim it isn’t aiming to compete directly with Coinbase and rather has its sights set on mainstream consumers curious about digital currency. But the reality is very different.
It’s open for debate who has the better UI/UX. Coinbase has set a standard that even PayPal appears to be attempting to replicate. It looks like Coinbase has the better looking trading account, while Circle has the more user-friendly looking bank account. Simple features like prioritizing dollar balances over bitcoin balances, tracking the number of confirmations a “pending transaction” has made through the block chain, and giving users the ability to hide their account balances upon sign-in are notable, if replicable, design upgrades. (A big reason I deleted my old Coinbase iPhone app was that I didn’t like pulling out a wallet with tens of thousands of visible dollars on it in order to pay for a $10 breakfast bill.)
Of course, the more noteworthy shots across the bow are in the behind-the-scenes details. User deposits at Circle are fully-insured for free thanks to the company’s coverage against theft and loss through Marsh. Users can make their first buys instantly with a credit card, whereas at Coinbase credit cards are merely held on file as a backup payment method. In addition, while Coinbase continues to offer much larger daily buy and sell limits for its “Tier 2” users, Circle has upped the ante with its allowances for “instant” transactions from new users: $2,500 for deposits and $10,000 for withdrawals, compared to $1,000 and $0 respectively at Coinbase.
In addition to these enhancements, Circle offers a $10 sign-up bonus to new users and waives all fees on buys and sales - “deposits” and “withdrawals” in their lingo. (Although users do have to pay banks’ $0.15 ACH transfer fees and credit card companies’ 2.9% interchange fees.) And when I compared buy / sell spreads at Coinbase and Circle, I noticed something interesting: not only does Circle eliminate explicit trading fees, but it also quotes deposits and withdrawals at the same price. On the other hand, Coinbase was tipping the scales at a 0.5% spread. Combined with their 1% fee, this means that Coinbase hits its users with a hefty 1.5% tax on each buy and sale relative to Circle.
All of which makes Circle a material upgrade to Coinbase for many wallet holders.
This is not to say that Coinbase is not still the 800 pound gorilla in hosted bitcoin wallets, nor that the company would find it difficult to make some of these tweaks themselves. In fact, legitimate competition likely helps them in the sense that it brings further legitimacy to the bitcoin ecosystem and thus more positive attention and new users. Furthermore, given Coinbase’s multi-pronged approach towards servicing consumers, merchants and third-party bitcoin app developers, the company has carved out a dominant position that will weather many of these competitive threats.
But its monopolist pricing on its pseudo-exchange services seems likely to erode quickly. I transferred $1,000 from Coinbase to Circle today, and as the progress bars next to my pending transactions ticked from zero to four (the number of blockchain confirmations it takes for outside transfers to complete at Circle), I thought it was an appropriate representation of how the company might siphon off Coinbase deposits in the coming months. As someone who has spent $1,000 on Coinbase fees in less than a year, and has now seen how easy it is to switch, I can’t say I’m likely to pay another 1.5% premium for a less-insured buy/deposit any time soon.
(The exception would be large buys and sales; Coinbase still gives me a hell of a lot more liquidity. That said, my reaction might come as a surprise given that I’ve been a veritable Coinbase fanboy over the past year. For what it’s worth, my bet is that Coinbase lowers its exchange fees by 50% or more by the end of the year.)
Circle’s is one of those product launches that gets you excited to be in Bitcoin, never mind the objections from purists who complain about centralization and the “bankification” of digital currencies.
The Circle beta product is legit. Get your free bitcoin while you can.
Group to Watch
College Crypto Network (@CollegeCrypto)
Back in February, CCN launched with three student chapters dedicated to promoting blockchain education and development at schools across the globe. Today they have 50 chapters, not to mention some serious corporate sponsors. If you are interested in sponsoring student bitcoin initiatives, let me know. I’m helping these kids fundraise because they are the real deal. Visittheir site to learn how you can help or check them out at the North American Bitcoin Conference!
Today’s Tid Bits
BitPay or Coinbase? Shopify Now Lets Merchants Choose
http://www.coindesk.com/bitpay-coinbase-shopify/
In November, Shopify, an online e-commerce marketplace platform, began accepting bitcoin payments through Bitpay, and yesterday the company partnered with Coinbase. Users can now elect to use either bitcoin payment processor. BitPay will charge a 1% transaction fee on standard sales and 0% fee for monthly subscribers, while Coinbase will charge merchants 0% transaction fees up to $1m in processing. Shopify has roughly 70,00 merchants, who will now have the option to integrate bitcoin processing services on their sites.
Google Search Integrates Bitcoin Price Calculator
http://newsbtc.com/2014/07/15/google-search-results-now-show-bitcoin-price/
One month after Google Finance partnered with Coinbase to launch a bitcoin price tracker, the search giant will now automatically displays bitcoin prices when certain queries are searched for. This also includes a conversion tool. However, Google warns us, the price may not reflect real-time market value.
Elliptic Raises $2 Million in Funding for Bitcoin Vault Services
http://gigaom.com/2014/07/16/elliptic-takes-2m-investment-to-help-firms-store-and-handle-bitcoin/
Elliptic, a UK-based digital asset service, has announced $2m in seed funding from Octopus Investments. Elliptic is best knows for its Elliptic Vault, the world’s first bitcoin deep-storage service, used by many businesses, including the Global Advisors Bitcoin Investment Fund. The investment will allow Elliptic to further its efforts for its vault and increase its enterprise services, which are meant to reconcile traditional finance and digital assets. Elliptic is the first UK-based bitcoin company to receive a major public venture capital investment.
Industrial Bitcoin Mine Employee Disappears After $190K in Alleged Theft, Fraud
http://www.coindesk.com/industrial-bitcoin-mine-employee-disappears-190k-alleged-theft-fraud/
A man working under the name Jon Simms has allegedly stolen 55 BTC from BTCJam users and $160,000 worth of mining equipment from Digital Mining Investments. The man acted as an independent bitcoin buyer and seller and professional mining specialist for Digital Mining Investments, in order to carry out the attack. According to Pat Kenrick, operations manager for Digital Mining Investments, the man had several identities, which he used to build relationships throughout the bitcoin community with Kenrick, local users of BTCJam, and the owner of CashinBitcoin.com. CashinBitcoin.com is offering a 1 BTC reward for information that leads to this mans arrest.
Hackers Offer Stolen CNET Database for Bitcoin in Publicity Stunt
http://www.cryptocoinsnews.com/news/cnet-user-database-hacked-w0rm-briefly-offered-1-bitcoin/2014/07/15
A group of Russian hackers, who call themselves ‘wOrm’, have stolen CNET’s user database and offered to sell the source code and database for 1 BTC. However, CNET was later told the group has no plans to complete the sale, as the entire event appears to be a publicity stunt. CNET confirmed the attack, patched the security flaw, and has not advised users to change their passwords since wOrm will not attempt to decrypt them.
First ‘Live’ Bitcoin Exchange Opens in Vietnam
http://www.coindesk.com/first-live-bitcoin-exchange-opens-vietnam/
VBTC is launching Vietnam’s first live open-order book trading bitcoin exchange. The new company VBTC is the result of a merger between BitcoinVietnam and Israeli exchange startup, Bit2C Ltd. The Vietnamese government remains skeptical about the digital currency, stating it is not legal tender and issuing a warning statement. Despite lack of existing regulation, the exchange will comply with know your customer and anti-money laundering measures, and will continue dialog with Vietnam’s Department of Public Security. VBTC also plans to offer multisig wallets, cold storage, and low trading fees ranging from 0.25% to 0.5%.
Online Gambling Payments Pioneer NETELLER Snubs Bitcoin
http://www.coindesk.com/online-gambling-payments-pioneer-neteller-snubs-bitcoin/
NETELLER, a money transfer system with a strong emphasis on the online gambling market, has explicitly prohibited the use of digital currencies. The company is based in the Isle of Man, and processes billions of dollars in financial transactions every year. Despite this decision, the Isle of Man still plans to attract bitcoin businesses. CoinCorner, a new digital currency exchange, opened on the island as did a startup incubator looking to support new, local bitcoin companies. Recent developments suggest the island will create a regulatory environment supportive of bitcoin businesses.
Upcoming Events
CoinSummit (July 10-11 in London)
This two day event is an excellent invitation-only conference which connects virtual currency entrepreneurs, angel and VC investors, hedge fund professionals and others looking to learn and network in the virtual currency industry. You can follow the action via the live stream if you can’t make the trip (or don’t make the cut list) or @coinsummit on twitter.
The North American Bitcoin Conference (July 19-20 in Chicago)
Following the success of the European Bitcoin Convention and the North American Bitcoin Conference in Miami (I was there; it was awesome), TNABC is doing an encore in Chicago. Thanks in part to the support of corporate sponsors like Perkins Coie, Blockchain and BitPay, the tickets to this one are only $100 - amongst the most reasonable rates for any of the conferences I’ve been to.
Coin Congress (July 23-24 in San Francisco)
I’m heading out to San Francisco on July 23-24 for the Coin Congress, a digital currency conference which will feature speakers from BitAngels, GoCoin, Blockchain, Coinbase, Gyft and other leading bitcoin ventures. You can use the discount code acom-u2014 for 25% off ticket prices at checkout and follow @CoinCongress for real-time updates. Let me know if you are heading out there too, I’d love to meet you!
American Banker Digital Currencies Conference (July 29 in NYC)
If you are a Wall Street type or serious investor, this might be the conference for you. Attendees will include Bitcoin industry representatives from BitPay, Circle, SecondMarket, BitReserve, and DATA, as well as executives from Fiserv, Wells Fargo, the Internet Archive Federal Credit Union and the Massachusetts Division of Banks.
Tips Are Always Appreciated
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News tips: email 2bitidiot@gmail.com