What do you enjoy the most about what you do every day?
What do you enjoy the least?
I got into bitcoin because I loved the technology. I started thinking about how you could create a purely electronic form of money back in the 1990's as a fan of DigiCash. With BitPay I created the job I always wanted and love coming to work. I most enjoy the product work. It's a constraint problem where you have to match the needs of our customers against the resources at our disposal. The biggest challenge is often deciding what not to do. I suppose the thing I enjoy least is the time I need to spend on legal and regulatory matters. That's an aspect of this company that I've never had to deal with in previous software start ups (at least not to this extent).
May I ask what was the first ever business establishment that started accepting bitcoin using BitPay?
Amazingly enough, I had to go look this up. We had a handful of merchants sign up on the day we launched. But among the first to do real transactions were Bees Brothers (http://www.beesbros.com) and the 2011 NYC Bitcoin Conference (who processed ticket purchases as well as admission using BitPay).
In hindsight would you have sponsored the Bitcoin Bowl, or do you think the funds could have been better spent elsewhere?
Are you working on any future sponsorship deals?
Who would be your ideal client win and why?
The Bitcoin Bowl was a great event and the city of St. Petersburg was a great host. It was amazing to be able to walk into most any store downtown and be able to make a purchase with Bitcoin. It gave us a lot of experience with setting up merchants to accept bitcoin in person and we incorporated a lot of what we learned back into the product. While it was a great event, it took a lot of our time. We won't be doing another one in the near future and we aren't working on any future sponsorship deals. As for ideal clients, I like the ordinary businesses that simply find utility in our platform and aren't just doing it for marketing reasons. We've been seeing a lot more of those types of business' this year.
What has been BitPay's greatest challenge so far (whether it be regulatory, technological, social perception, etc.)?
What more do you think can be done to encourage small businesses and merchants to accept Bitcoin through BitPay, and do you have any tips for the man on the street to help them do so?
I think the biggest challenge has been staying focused. There is so much opportunity in this space that it's easy to let yourself get distracted. We spend a lot of time discussing what we won't do. For small businesses (and really all businesses), the most important thing is to demonstrate the value of accepting Bitcoin. Whether that's faster payments, cheaper payments, or reaching new markets, you have to understand their needs and determine whether Bitcoin can add value. The individual Bitcoin enthusiast can simply try and find more ways to incorporate Bitcoin into their daily or weekly spending routines. They can ask businesses they frequent to accept Bitcoin, but you don't want to be pushy and try and force them to do something they aren't interested in. I think at the end of the day, the most important thing is to keep improving the infrastructure and ease of use of Bitcoin.
I know, it is a tedious but important subject: Do you have a deadline for Bitcoin/Core consensus on Bitcoin blocksize? Are you intending to push the BIP101 fork eventually, should no agreement be reached? Are there plans to manage a Bitcoin implementation and/or development team from your side as representing the payment/exchange side of the ecosystem?
We believe in the Bitcoin vision as a purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another. We would like to see a consensus regarding larger blocks soon and we decided (with a handful of other companies) to try and push for that by December. Our hope is that this brings a sense of urgency to the topic and the community can arrive at a consensus on how to move forward sooner rather than later.
Did the pattern of "people spend more bitcoin when the price is rising" hold with the latest price increase?
Yes it did. These price rallies are helpful to our business because it's a catalyst for people to look for ways of spending their Bitcoin. After the rally is over, volumes tail off again, but they usually settle at a higher baseline than before the rally. That's because people that have found new ways of spending Bitcoin tend to become repeat buyers even after the rally has subsided. Some people say that the only spending in Bitcoin is by people wanting to cash out their Bitcoin, but I think this is a flawed way of thinking about it. When people buy things with USD, we don't tend to say they are cashing our their USD, even though that's exactly what they're doing.
Someone of reddit asked: "Can you ask him if he prefers BIP101, BIP100, no change, side chains, or lightning, and post back here pls? "
I think BIP101 is a simple code change and as a result is less risky (though I wouldn't be opposed to a shorter and less steep curve). It sets a maximum upper bound on blocks, beyond which another hard fork would be needed while allowing miners to reach their own consensus about block size limits as something below the BIP101 curve (a miner soft limit if you will). I like the concept of a consensus about the block size limit in the chain as proposed by BIP100, but I think it could have been done in a simpler fashion. The code changes required for BIP100 make it more risky IMO. We are fans of both side chains and lightning (we've been working on these problems internally for quite some time as well). I do think that for Bitcoin to be adopted as a settlement platform, it needs to first achieve sufficient adoption as a payment platform.
How are things going with the Incognito Terminals?
I assume you mean Ingenico Terminals...but the idea of an Incognito Terminal is intriguing. The integration is done and it works great...the task now is to find some merchants that want to turn it on. Bitcoin is a great payment platform, but we have realistic expectations that widespread adoption for in-person payments will take some time. Bitcoin is by far more useful right now for eCommerce transactions where the risk of fraud and the need to span geographies is much greater. Having said that, the payment experience with the Ingenico terminal is fantastic.
How/where/to whom do you sell the coins you get from merchants?
To clarify, we sell coins that are sent to us from the customers of our merchants. Without being specific, we sell on a number of exchanges where we are satisfied with their management and regulatory compliance. We also sell to some direct commercial buyers (usually an investment fund), but that's less convenient as it requires us to negotiate a price (and not surprisingly, they are always looking for a good deal). It's usually more convenient for them and us to use an exchange instead.
what do you think of what sounds like Coinbase's commitment to proceed with 101 come December?
I think it was good for Coinbase to take a very clear position on the subject.
why is it that Tony's role in the company seems to be deprecated compared to what it was? what is his current role?
Tony is the Executive Chairman and focuses primarily on sales, marketing, and operations. He is also very active in managing our board and investor relations. Tony has reduced his travel and conference activity to focus more on sales and operations of the company.
I used to work hard to get new 501(c)(3) organizations to accept bitcoin donations. I sent all I could to your BitcoinLiz. Now I haven't heard from her in a long time, and I've lost track of how actively you're still engaged in serving non-profits. Can you comment on this, please?
We still serve non-profits, although we don't automatically offer free services to companies that are on the IRS 501c3 list. We now make the determination to offer free service on a case by case basis (which also means that an organization doesn't necessarily need to be a 501c3 to qualify).
do you remember that podcast you did about 4yrs ago with that kid with the high pitched girly voice when we were deep in a bear mkt with price in the low single digits?
i'll never forget emailing you and Tony to keep your chins up as it was kinda a depressing interview. you both responded immediately seeming so relieved that there was at least one person listening; me. lol.
Yes! It was a kid. We were happy to do the interview and help him get his podcast going.
How do you see international adoption of bitcoin payments in developed countries by region?
Is there more growth for payment services in developing counties for BitPay? What type of plans are there to continue expanding services?
US and Europe are neck and neck, but Europe is growing faster. South America is small by comparison, but growing fastest. While we offer services in Asia, we aren't proactively targeting that market at the moment. As for expansion, we look to countries within those regions where we can offer fast and cheap settlement options before we start proactively seeking customers.
Now my question: What are you doing to help mold consensus around BIP101 (or if not that, some other block size solution)? Are you flying out to meet with miners? Are you calling up other people in the ecosystem? If you have been doing this, how have those conversations been going? What sort of counterarguments are you getting?
We've been talking to other companies, miners and core developers about it. I also went to the Scaling Bitcoin conference in Montreal (which I thought was one of the best Bitcoin conferences I'd ever attended). We had hoped that a consensus would be reached among core developers and we would follow that consensus, but it got to a point where we thought we needed to make our views known. The counter arguments are generally along the lines that if you increase the resource requirements on a node, less people will run nodes and bitcoin will become centralized. People also state that bitcoin can/should be used as a settlement layer. We of course agree that bitcoin must remain decentralized. While an increase in resource requirements for a node will discourage more nodes, an increase in throughput will accommodate more adoption, which will encourage more nodes. The economic decision to run a full node has to do with how much you value the ability to independently and trustlessly validate transactions. That ability is worth a lot if you assume Bitcoin enjoys widespread adoption. In addition, there is a lot of room for optimization that would reduce the resource utilization of a node. Regarding the settlement layer arguments, I don't think Bitcoin is compelling as a settlement layer unless it enjoys widespread adoption as a payment network. Bitcoin's utility as a payment system is its intrinsic value. If it's not useful for that purpose, it doesn't really have any value. If it doesn't have any value, it has no value as a settlement system. To put it in other words, if it cannot be practically used to pay people for things, then why would you have any interest in using it for settlement?
Edit: I would like to add just one more idea here. Miners need to be aware of their customers and market. I think Bitcoin miners should target a typical transaction fee of ~$0.05 or less for Bitcoin to be competitive. This is by no means a scientific threshold, just my gut feeling. Most electronic transaction systems charge a fee of some where around $0.25 or $0.30. This could actually become a matter of a formalized consensus (like difficulty or the BIP100 block size consensus)...miners could agree to a consensus around minimum transaction fees and refuse to build upon blocks that don't observe those minimums. Regardless of Bitcoin's properties of censorship resistance and immutability, I think cheap transactions will be essential to Bitcoin's survival (principally because I think it's achievable while maintaining Bitcoin's essential properties of censorship resistance and immutability). I should also note that I don't think it's likely that an altcoin will ascend to the throne should Bitcoin fail in this regard...rather, it will be some fork of Bitcoin. Miners face competition not only from other, non Bitcoin systems, but also from other actors within the Bitcoin economy that have motivation to ensure the availability of relatively cheap transactions.
Yesterday I got a letter from TigerDirect a BitPay customer. In short I payed for an order using Bitcoin. TigerDirect's letter was to tell me that I hadn't paid and the account was now 30 days overdue. (payment was made in bitcoin via BitPay and goods shipped)
Where do I start with this problem, do I contact BitPay - I have a payment receipt from them, or do I contact TigerDirect who obviously think they dont have the money?
If you haven't done so already, open a support ticket with us and we can contact TigerDirect. If you already have a ticket, I'll check on the status of it and make sure we're actively working to get it resolved.
It seems to me that the strongest use case of bitcoin is in the types of organisations most susceptible to charge back loss/fraud , and to enable cross border payments. Are you finding this is actually the case or are most of your merchants pretty typical e-commerce companies?
Yes, that's true, but we also have a lot of pretty typical e-commerce companies who simply use it to reduce their payments costs. I would add that after you're over the learning curve, a well done integration is quite a nice payment experience. We're working on making that even better...to the point where the actual act of payment is practically invisible. Going forward, I think more and more companies will choose to offer bitcoin as a payment mechanism because it offers a great user experience (and payment scenarios that simply aren't possible on other platforms).
Hello Stephen , i live in Greece a country under capital control laws . A country where there are only 2 bitcoin atms at the moment , a country whose citizens due to financial difficulties haven't followed the birth and explosion of bitcoin , whose citizens just aren't educated enough about bitcoin . Personally i have been following BitPay in social media since its birth and i am thrilled with the solutions it can bring to merchants and business. What is your advice /suggestion to someone like myself that would like to promote your company;s services in a region that growth can be achieved but only if problems like the ones i listed above are overcome ? thank you and best of luck
I would suggest spending your energy on people that are already receptive to the idea of Bitcoin. There's no point in wasting time on people that aren't ever likely to adopt it (or will only adopt it once 90% of the people around them use it). It's also important to set and manage expectations. It really is a shame that more people in Greece aren't up to speed on how to use Bitcoin though. Greece won't be the last country to have these problems with their banks.
Thanks for answering my earlier questions; one more for you, if you don't mind! In your opinion, what are the greatest advantages for merchants and consumers to using BitPay over traditional payment processors (such as Visa or Mastercard)?
For merchants, it's a much lower cost of payment, especially when you consider the cost of fraud and international forex fees. For consumers, you don't have to deal with the hassles of many of the fraud prevention measures that go with a credit card payment (or the hassles of getting issued a new credit card when fraud does occur). You also have more control over the personal information that you allow to be shared in the transaction. Bitcoin is also an option for people that for one reason or another cannot obtain a bank account or credit card.
I was wondering if you thought it was a possibility that in the future... if enough merchants adopt the bitcoin payment of option it opens up certain pathways: There is a chance that two merchants who use your services actually owe money or debt to one another. Your platform could bridge this gap but only if you connected them and told them of each others existence. Company A uses bitpay. Company B uses bitpay. Company B owes some money to A. They are informed of their mutual interest. What it allows is that settlement could start skipping over the banking system between them. When company B gets an incoming bitcoin payment it could actually be settled to the account of A and the debt reduced.
This might come as a surprise, but actually our objective is not to interject ourselves as an intermediary in financial transactions (even though we currently are such). Our objective is to find solutions where we don't take possession of any funds except those which are paid to us for our services. We view our invoices as a kind of smart contract (even though they aren't currently very smart). It's a contract that obligates us to pay a certain amount in a certain asset to the merchant upon payment sent by their customers. Ultimately we would like to architect that in such way that the funds owed to the merchant go straight from their customer to the merchant by way of some decentralized exchange. We would charge a fee by way of a payment attached to the transaction that creates a BitPay invoice. If you've seen the 21,inc demonstration of how commerce transactions might work in the future, you might have a better idea of what I'm describing here. In this scenario, the merchants never have a balance so to speak with BitPay, so what you describe above wouldn't work. However, what the merchants would have are assets which can be directly exchanged or transferred between each other without needing BitPay as a intermediary (or perhaps they create BitPay bill and use that as the mechanism to make a payment to each other).
Bitcoin makes payment processing cheaper (for the individual). Companies like yours offer affordable merchant services (when compared to Paypal and Stripe for example, especially for small transactions). Why isn't the option to pay with Bitcoin (via Bitpay) equivalent to a 2-3% discount on everything people buy?
For international online transactions the discount could be even larger.
I would imagine that to be a huge boost for the currency and I don't understand why that's the case everywhere at the moment. What is holding companies back?
That's a great question. I think that despite the direct savings that companies realize, the volume of bitcoin transactions is still so small that the savings doesn't move the needle enough that they see a need to spend the time offering discounts. There are a few exceptions where merchants have run Bitcoin specials, but by and large they haven't offered substantial and permanent discounts. But this might change as more people start paying with Bitcoin and the savings begin to add up to something more visible to their finance people. It might be more common that merchants offer better incentives in terms of loyalty points or rewards for paying in Bitcoin rather than direct price discounts.
Assuming you hold a lot of BTC in reserves, can you share your strategy for hedging?
Our BTC holdings are probably much less than you might imagine and have more to do with operational needs than an investment strategy. Most investors in BitPay have their own substantial investments in Bitcoin. That makes an investment in Bitcoin by BitPay redundant. People invest in BitPay for our business model, not our BTC holdings. Having said that, investments in USD carries its own set of risks. ...We view a BTC holding like a highly speculate growth stock that might go to zero. We don't use leverage and we don't put ourselves in a position where we would ever be forced to sell. The derivatives market in Bitcoin is immature to say the least...in most cases the counterparty risk of a derivative contract negates any potential hedging value.
I'm curious to know the volume of BTCs Bitpay is handling. Is this something you are willing to share?
We don't share this number, but I will say that our monthly transactions have been steadily and substantially increasing every month for the last 7 or 8 months and we are at all time highs in monthly transactions.