When it comes to Bitcoin, the fast-growing “digital currency,” there are good ideas, bad ideas and pie-in-the-sky ideas galore. All of these were on display Thursday night when more than 300 Bitcoin investors and entrepreneurs gathered at Microsoft’s (MSFT) sleek, marble-lined offices in New York City to show off their Bitcoin-based business ideas, munch on free pizza, and ruminate on the future of virtual currency in the company of other enthusiasts. The event was sponsored by Ultra Light Startups.
T-shirts featuring the Bitcoin symbol were optional but in high demand. Photo credit: Pat Chen
“Bitcoin is fascinating,” said John Frankel with ff Venture Capital, who was on hand to judge the assembled startup pitches. “It’s like investing in gold but without the gold.”
The gold-rush analogy is spot on, as Bitcoin — an open source, stateless, digital currency that is designed to ease global exchange — has inspired a range of potential businesses, from physical Bitcoin ATMs to trading platforms, to services that pay videogamers in Bitcoins. The local networking group, Bitcoin NYC, has ballooned to more than 400 members in just four months, despite the fact that this unregulated, untested market remains very much in flux. (Case in point: Just last month the largest Bitcoin exchange in the world, Tokyo-based Mt. Gox, suspended U.S. withdrawals for two weeks, citing high demand and adamantly denying rumors the company had simply run out of money.)
"Intrigued and excited"
“It’s hard not to be intrigued and excited about everything that’s going on with Bitcoin,” said Matthew Witheiler with Flybridge Capital Partners. “So I think, from a transformation perspective, the Bitcoin revolution, if you want to call it that, brings a lot to the table. [I think] it can disrupt a lot of the existing financial services companies.”
For example, one of the presenters, a startup called artaBit, is attempting to take on Western Union in the money-transfer business, using Bitcoin as the transport currency between countries, with a focus on sub-$1,000 transfers to Southeast Asia. The artaBit system would accept user deposits in one currency, transfer it to Bitcoin for the overseas trip, then convert those Bitcoins into whatever other currency is needed on the other end of the transaction. Co-founder Ayoub Naciri believes the company can offer the service at rates as low as 3%, easily beating Western Union’s flat-rate service charges, which can range as high as 30%, he says, on small transactions.
“We’re removing exposure to Bitcoin to the customer,” Naciri said. “Neither the sender nor the receiver needs to know about Bitcoin or even be aware of its existence to use the service. We don’t want to have the barrier of having to explain to people what Bitcoin is.”
Bitcoin without the “Bitcoin”? What a time to be alive.
Photo courtesy: Cris De Luca
What do you think? Is Bitcoin set to revolutionize the financial services sector or it just too risky to go mainstream?