Why Circle is banking on the bitcoin blockchain

Why Circle is banking on the bitcoin blockchain

In an interview today with Yahoo! Finance, co-founders Jeremy Allaire and Sean Neville from the U.S. based bitcoin startup Circle discussed how they plan on using the bitcoin blockchain to further advance their stake in the payments space.

Circle’s goal is pretty simple: to send money anywhere, in any currency, without the friction (transfer delays and fees) of traditional clearance options like Western Union. That is also the biggest selling point of bitcoin, and when Circle first launched, you could only deposit, hold, and send bitcoin. However, September of last year Circle announced that in the United States, you can send, receive, and hold US dollars in addition to using bitcoin for payments within the Circle app.

And last month Circle expanded to the U.K., and partnered with Barclays, making Circle the first digital currency firm to receive an e-money license from the UK Financial Conduct Authority, which enables the company to hold pound sterling, facilitate consumer and business payments, run a currency exchange and move British pounds globally.

Remittance worldwide is an astronomical number, probably ranging into the trillions of dollars if you take into account every country in the world. According to the World Bank in 2014, India alone had $70.3 billion in personal remittances. China had $29.9 billion, Mexico $24.4 billion, Nigeria $20.8 billion, Indonesia $7.6 billion, U.S. $6.9 billion, and Brazil with $2.6 billion. You can see these statistics illustrated in the chart below.

remittances-world-bank-worldwideCircle founders Allaire and Neville say they are attempting to tackle this market by taking advantage of the bitcoin blockchain. Since the blockchain enables fast and cheap payments, Circle is able to have their customers transact in a friction-less manner worldwide.

Another market Circle is trying to take on is social payments. They said that the social payments space hasn’t caught on as much in the West yet as it has in places such as China, where transactions happen in messaging apps such as WeChat. For example, Circle users can send messages with other Circle users within the Circle Pay app to instantly transact with each other.

Circle is trying to build an open global model where anyone anywhere in the world can participate to send money using the open internet. Allaire went on to tout features like cross-border payments.

“Our view is that there is no difference between a domestic payment or an international payment or a cross-border payment, those distinctions just disappear,” he says. “When was the last time you sent a cross-border email? Or had an international web-browsing session? The user doesn’t care. We’re trying to make money work that way.”

Some of the same banks that Circle has partnered with when they expanded to the UK are researching the idea of a closed permissioned blockchain (without bitcoin), away from the global public and open bitcoin blockchain Circle uses today. In response Neville said,

“They’re not necessarily mutually exclusive. We got excited about the idea of bitcoin and blockchain simply because it enabled money to work the way the rest of the Internet does. We can share photos, share opinions, but we can’t share money very easily. So bitcoin allows us to do that, without having to think too hard about bitcoin or blockchain, just like the way we don’t think about HTTP when we look at the Web.”

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david@bitcoin.com'
David is a writer, researcher, and developer who is passionate about bitcoin and blockchain. He writes for Bitcoin.com, Blockchain.com, and is the founder of Bitcoinx.io (which was acquired by Bitcoin.com). David previously used to write and curate for Myspace and has worked in the fintech and payments space for over 15 years.