Circle Launches as Bitcoin for Dummies — And It’s Free
One advantage to raising gobs of venture capital is that you now have gobs of venture capital at your disposal. This fact, of course, lets you make decisions in the early days of a company’s existence that other businesses just couldn’t or shouldn’t do.
Take, for example, a new bitcoin startup called Circle Internet Financial. Co-founded by Jeremy Allaire, a well-regarded entrepreneur who created the publicly traded company Brightcove, Circle has taken on $26 million in investment prior to launch.
Today, it is unveiling its product and it isn’t charging for any of its services. Not one bitcent.
Circle is a website where people can purchase and store bitcoin. Users can also send bitcoin to other individuals or to a company that accepts bitcoin as a form of payment. Other new companies do similar things, but mostly charge for some piece of their service.
Coinbase, for example, lets people buy bitcoin, but the company charges a one percent fee to do so. A new startup called Xapo will store your bitcoin data and backup data in physical locked vaults, but charges a small fee for that privilege.
Circle is choosing not to charge for anything. Its goal is to get as many people familiar with bitcoin as possible by making it easier to sign up and use bitcoin. As for how the company will make money in the future, Allaire won’t provide any specific hints. But he did cite Skype as an example of a well-known service that started off free and later added paid features.
But free is only one of the ways Circle is trying to differentiate. The other big way is around how it markets its product. It’s essentially trying to build a bitcoin-for-dummies service by explaining what it does using terms that banks would use. (Circle isn’t a bank, but it does have to comply with the type of anti-money laundering laws that banks do.)
Instead of saying that its service enables people to buy or sell bitcoin, Circle execs use words like “depositing” and “withdrawing.” The company also often uses the phrase “digital money” when it is talking about bitcoin specifically.
“We want to make it easy for consumers to deposit and convert currency into a digital form that they can then use globally and instantly, not offer a trading exchange for investors to bet on a speculative asset,” the company said in a blog post describing its service, which is still only available on an invite-only basis.
“Our model will turn bitcoin purists off,” Allaire told Re/code in an interview. “The ones who want to overthrow the banking system and get rid of the dollar. They want to get rid of intermediaries and we’re an intermediary.”
Not surprisingly, Allaire thinks some intermediaries are necessary for bitcoin to gain the trust of mainstream people and educate them on the advantages of the currency and the bitcoin network — things like being able to send money to someone across the world for little or no cost.
There are a few other parts of the service that Allaire believes will help set Circle apart and inspire trust: A customer service phone line, guaranteed theft insurance and near-instant access to bitcoin or local currency when depositing and withdrawing funds.
But in the end, Circle stands out for two reasons. It’s free to use. And it’s marketing itself as a digital bank for bitcoin dummies — and that’s probably not a bad thing.