4 ms·

Goldman and IDG Put $50M to Work in a Bitcoin Company

39 points by mrb 12y ago

oska 12y ago
Official Circle announcement: http://blog.circle.com/2015/04/29/new-circle-investors-new-us-dollar-account-features-china-horizons/ http://blog.circle.com/2015/04/29/new-circle-investors-new-u...
RyanKoo 12y ago
This sounds great.
bottled_poe 12y ago
Circle transactions are free... What is their revenue model?
- yc1010 12y ago
  Well bitcoin transactions are almost free (miners fee is what nowadays 1-2 cents regardless of amount?) as is. It is hard to compete with that Their aim is to grow and acquire users and become an import cog in bitcoin and financial worlds Once you get lets say to a few million to a hundred million users then you endup with all sorts of possibilities such as becoming a bank and offering loans (this alone coupled with a good database of users could be a money maker), offering checking/savings accounts, hell making it easier for users to invest in stocks etc (might be what Goldman interested...) and so on Remember the likes of Facebook and Twitter didnt have a "revenue model" at start either, look where they are now... edit: another possibility would be mobile payments (nfc or qr code) to any merchant accepting bitcoin of which there is a growing number thanks to bitpay, think of all the data that could be mined there, they can basically make the whole credit card network obsolete by bypassing it
  - ceejayoz 12y ago
    > Remember the likes of Facebook and Twitter didnt have a "revenue model" at start either, look where they are now... Facebook's doing OK (they have the advantage of not locking themselves into being a simple 140 character messaging service), but Twitter's quarterly results were fairly abysmal.
  - bdcravens 12y ago
    > Well bitcoin transactions are almost free (miners fee is what nowadays 1-2 cents regardless of amount?) as is. It is hard to compete with that You're talking sending Bitcoin from one address to another, not Bitcoin/fiat exchange. Apples to oranges.
- IkmoIkmo 12y ago
  Typical grow first, monetise later. It doesn't appear they have any business model at the moment, just churning VC money and trying to grow. They charge no fees for deposits, withdrawals, sending or receiving money, and their buy/sell spread is zero, and they're not known to advertise or sell user data nor do their terms mention it. I think it's best to think of it as someone trying to build roads all over the country in a world without cars, hoping to allow a car industry to explode. Once cars become mainstream, you can monetise the roads, sell tires especially made for those roads, offer driving schools etc. Speculating about their future... I think a Coinbase model is quite likely, Circle is known like Coinbase as a 'universal' company. Coinbase charges a bit on deposits, they have an exchange, a vault, an API. It's quite likely at some point we'll see remittance and financial products (peer to peer loans, derivatives), merchant services (payment processing), digital assets on a public ledger (e.g. replacing notary services or contracts with private-key signed documents on a public, unforgeable ledger) etc. There's lots of angles to monetise the facilitation of many products and services.
- bdcravens 12y ago
  I believe they have margin atop the Bitcoin price.
zhte415 12y ago
This is interesting, but I'd not focus on Bitcoin too much. This could be a test-bed for Goldman for something much bigger, because central banks are seriously thinking about digital, potentially Bitcoin style, currencies. From the Circle announcement oska linked, emphasis mine: "As the financial services industry continues to become more digital and open, we see significant opportunities in companies and solutions that have the promise to transform global markets through technical innovation. We think that Circle’s product vision and exceptional management team present a compelling opportunity in the digital payments space.” What is the Connection to China? IDG Capital Partners likewise brings a strategic capability to Circle as we bring our products and services to China. We believe in a hybrid digital economy in which value moves freely around the world and converts into other currencies -- including both crypto and fiat currencies -- seamlessly, safely, and instantly." I'd like to link this to the Bank of England's recent report, the One Bank Research Agenda http://www.bankofengland.co.uk/research/Documents/onebank/discussion.pdf http://www.bankofengland.co.uk/research/Documents/onebank/di... [PDF, 50 pages] posed topics related to digital currencies, including the question "Why might central banks issue digital currencies?" [on page 31] Again, emphasis mine. "The emergence of private digital currencies (such as Bitcoin) has shown that it is possible to transfer value securely without a trusted third party. While existing private digital currencies have economic flaws which make them volatile, the distributed ledger technology that their payment systems rely on may have considerable promise. This raises the question of whether central banks should themselves make use of such technology to issue digital currencies. There are two parts to this question. The first is whether there is any rationale for a central bank to issue a digital currency supported by some form of distributed ledger payment system. The second addresses the economic, technological and regulatory challenges of doing so." Goldman are getting experience at the second question with this largely before anyone else, and waiting (for now) for the first question to answer itself.
- drcross 12y ago
 |This is interesting, but I'd not focus on Bitcoin too much. This could be a test-bed for Goldman for something much bigger, because central banks are seriously thinking about digital, potentially Bitcoin style, currencies. So bitcoin without the bitcoin? Have a think about what you said and what attributes bitcoin lacks that don't qualify it for widespread adoption. The narrative that's being pushed by the media is that bitcoin is almost perfect but unfortunately the big guys can't use it. The reason is that they can't print more of it, for free, on a whim.

39 points by mrb 12y ago

oska 12y ago

Official Circle announcement: http://blog.circle.com/2015/04/29/new-circle-investors-new-us-dollar-account-features-china-horizons/ http://blog.circle.com/2015/04/29/new-circle-investors-new-u...

RyanKoo 12y ago

This sounds great.

bottled_poe 12y ago

Circle transactions are free... What is their revenue model?

yc1010 12y ago
Well bitcoin transactions are almost free (miners fee is what nowadays 1-2 cents regardless of amount?) as is. It is hard to compete with that Their aim is to grow and acquire users and become an import cog in bitcoin and financial worlds Once you get lets say to a few million to a hundred million users then you endup with all sorts of possibilities such as becoming a bank and offering loans (this alone coupled with a good database of users could be a money maker), offering checking/savings accounts, hell making it easier for users to invest in stocks etc (might be what Goldman interested...) and so on Remember the likes of Facebook and Twitter didnt have a "revenue model" at start either, look where they are now... edit: another possibility would be mobile payments (nfc or qr code) to any merchant accepting bitcoin of which there is a growing number thanks to bitpay, think of all the data that could be mined there, they can basically make the whole credit card network obsolete by bypassing it
- ceejayoz 12y ago
  > Remember the likes of Facebook and Twitter didnt have a "revenue model" at start either, look where they are now... Facebook's doing OK (they have the advantage of not locking themselves into being a simple 140 character messaging service), but Twitter's quarterly results were fairly abysmal.
- bdcravens 12y ago
  > Well bitcoin transactions are almost free (miners fee is what nowadays 1-2 cents regardless of amount?) as is. It is hard to compete with that You're talking sending Bitcoin from one address to another, not Bitcoin/fiat exchange. Apples to oranges.
IkmoIkmo 12y ago
Typical grow first, monetise later. It doesn't appear they have any business model at the moment, just churning VC money and trying to grow. They charge no fees for deposits, withdrawals, sending or receiving money, and their buy/sell spread is zero, and they're not known to advertise or sell user data nor do their terms mention it. I think it's best to think of it as someone trying to build roads all over the country in a world without cars, hoping to allow a car industry to explode. Once cars become mainstream, you can monetise the roads, sell tires especially made for those roads, offer driving schools etc. Speculating about their future... I think a Coinbase model is quite likely, Circle is known like Coinbase as a 'universal' company. Coinbase charges a bit on deposits, they have an exchange, a vault, an API. It's quite likely at some point we'll see remittance and financial products (peer to peer loans, derivatives), merchant services (payment processing), digital assets on a public ledger (e.g. replacing notary services or contracts with private-key signed documents on a public, unforgeable ledger) etc. There's lots of angles to monetise the facilitation of many products and services.
bdcravens 12y ago
I believe they have margin atop the Bitcoin price.

zhte415 12y ago

This is interesting, but I'd not focus on Bitcoin too much. This could be a test-bed for Goldman for something much bigger, because central banks are seriously thinking about digital, potentially Bitcoin style, currencies. From the Circle announcement oska linked, emphasis mine: "As the financial services industry continues to become more digital and open, we see significant opportunities in companies and solutions that have the promise to transform global markets through technical innovation. We think that Circle’s product vision and exceptional management team present a compelling opportunity in the digital payments space.” What is the Connection to China? IDG Capital Partners likewise brings a strategic capability to Circle as we bring our products and services to China. We believe in a hybrid digital economy in which value moves freely around the world and converts into other currencies -- including both crypto and fiat currencies -- seamlessly, safely, and instantly." I'd like to link this to the Bank of England's recent report, the One Bank Research Agenda http://www.bankofengland.co.uk/research/Documents/onebank/discussion.pdf http://www.bankofengland.co.uk/research/Documents/onebank/di... [PDF, 50 pages] posed topics related to digital currencies, including the question "Why might central banks issue digital currencies?" [on page 31] Again, emphasis mine. "The emergence of private digital currencies (such as Bitcoin) has shown that it is possible to transfer value securely without a trusted third party. While existing private digital currencies have economic flaws which make them volatile, the distributed ledger technology that their payment systems rely on may have considerable promise. This raises the question of whether central banks should themselves make use of such technology to issue digital currencies. There are two parts to this question. The first is whether there is any rationale for a central bank to issue a digital currency supported by some form of distributed ledger payment system. The second addresses the economic, technological and regulatory challenges of doing so." Goldman are getting experience at the second question with this largely before anyone else, and waiting (for now) for the first question to answer itself.

drcross 12y ago
|This is interesting, but I'd not focus on Bitcoin too much. This could be a test-bed for Goldman for something much bigger, because central banks are seriously thinking about digital, potentially Bitcoin style, currencies. So bitcoin without the bitcoin? Have a think about what you said and what attributes bitcoin lacks that don't qualify it for widespread adoption. The narrative that's being pushed by the media is that bitcoin is almost perfect but unfortunately the big guys can't use it. The reason is that they can't print more of it, for free, on a whim.