BitPay wanted to be the most important service among cryptocurrency companies. But it is probably nothing that hyped start-up is in crisis. This shows that Bitcoin is not a good payment mechanism, says TR-author Tom Simonite.
2014 Bitcoin start-up BitPay recruited 30 million US dollars from investors and was then quickly explained by the press to "PayPal for Bitcoin" - also because the young company Microsoft should help the first time to accept money in the digital currency ,
But a year later, it looks less good for vielgehypte start-up. In September BitPay announced that they would be separated from a larger number of employees. Shortly before, the company had to admit that Bitcoins were stolen in the value of 1.8 million dollars. In my opinion is Bitpay a prime example of why Bitcoin surprisingly little is good as an alternative currency and payment solution.
Problem number one: There are those who really want to pay with Bitcoin few people - and that should not change so quickly also. The business model of BitPay consisted in helping merchants to accept Bitcoin and they often convert even equal in dollars. There were then a percentage as a fee to the start-up. Thus allowing the company such as Microsoft, the e-commerce provider Newegg and many other online sellers to accept the crypto currency.
Unfortunately, however, few people (or companies) have so far been paid in Bitcoin - and there is little real reason to buy Bitcoins only to pay. For the cryptocurrency is surprisingly uncomfortable. Those who have the best reasons for paying so are investors who have entered several years ago in the digital currency and now want to spend their money - after they have benefited from the increase in value.
BitPay CEO Stephen Pair admitted in June compared to "Business Insider" that after one looking for a new business model . "We get more and more dealers in the boat - now there are over 60,000 - but they always sell to the same pool of Bitcoin early adopters."
Gavin Andresen, who was chosen by the mysterious creator of Bitcoin in 2010 to continue working on the code for the cryptocurrency, told me recently that this will probably not change anytime soon. "As long as not a part of the salary is paid regularly in Bitcoin, I do not know how it is to be mainstream."
That BitPay lost 5000 Bitcoins worth $ 1.8 million was fromcourt records known - and this is a further problem of crypto currency. The thieves had managed to persuade the head of the company for transferring the sum in which he imitated the Chief Financial Officer by e-mail.
That speaks for poor compliance mechanisms in BitPay. And it prolonged the increasingly growing list of spectacular Bitcoin theft. This in turn suggests that the design of the currency is not suitable particularly as a conventional digital cash.
Although Bitcoins are digital, they work like cash - transactions can not simply be undone if something goes wrong. The researcher Nicholas Weaver from the International Computer Science Institute holds for the "fatal flaw" in the design of crypto currency. Conventional electronic transactions such as credit card payments and bank transfers can be reversed if fraud is detected.
BitPay prepare all these problems big business headaches - and many other people and companies that have bet that Bitcoin is a widely used means of payment, it is similar. In addition, the Bitcoin community soon some important for the design of cryptocurrency decisions must be taken in order to keep it sustainable.
An e-mail that sent the BitPay CEO to his staff, saying that the company has to reduce costs in order to "better adapt the growth rate of Bitcoin industry". This could be imminent even other companies.
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