Allowing customers to use bitcoin to send money but holding it in USD (which is what's going on, Jorge - instant conversion at the time of use) and never seeing BTC is very neat. They still pay merchants in BTC, but don't need to worry about holding BTC. I can see that it might be nice for merchants to do the same. That removes a major barrier to adoption.
When you use their new service, they will take your USD, pretend to convert it to BTC, but keep the BTC as USD to avoid volatility losses, then pretend to convert the BTC back to USD, and deliver USD to the merchant.
How did you figure it out all this? Or do you suggest that's what YOU would do if you were willing to start a company that clearly supports BTC in the first place?
Please ignore my cheap shot about "the main barrier", and tell me what is wrong with my description of Circle's new service.
Circle may have intended to be a bitcoin-centered company when it was created. However, BitPay's numbers show that the market for fiat-to-bitcoin and bitcoin-to-fiat services is small and shrinking, and the chances of recovering the VC investment and making a profit out of them are slim. Circle and Coinbase must have realized this a year ago already. So Circle (and Coinbase) are adding fiat-to-fiat services, whose market is orders of magnitude larger -- perhaps using bitcoin internally, but only if and when it pays. From the quotes in teh article, it is evident that GS and IDG are interested in Circle as a digital payment processor, not as a bitcoin exchange.
In case someone is wondering, none of that 50 M$ will go into buying bitcoins. VC investors do not give money to startups for the startups to play the market with it, or invest it in something else. If GS wanted to invest in bitcoin, they would do it themselves. Charlie Lee explained that himself when he was asked how many million would Coinbase invest in BTC.
Ok, I'll humour you.
What happens when a Circle customer wants to buy something over the web from a merchant who isn't a Circle user? Maybe they use BitPay, or another service, or they're happy accepting funds in bitcoins. Do they:
1) Send a cheque, and inform the merchant by email (followed by a phone call)
2) Make a SWIFT transfer
3) Bridge the gap in some other way?
Don't you also think a
start-up company (the clue's in the phrase) might anticipate a growth in their chosen sector?
