Coinpayments values itself at $200m but should Bitcoin payments be free?

[JollyGood]

From what I can see Nakamoto Satoshi wanted to bypass merchant services allowing seamless and free transactions to take place between two parties (buyer and seller or sender to sender) with no need for any merchants to take chunks of transactions fees.

Coinbase, Bitpay and so many others that provide merchant and/or exchange facilities have raised hundreds of millions for expansion.but the news I read today about Coinpayments brought back a lot of memories.

Coinpayments is currently looking to raise $10 million by giving away 5% equity of its business, so that gives it a valuation of a staggering $200 million. They claim on their fund raising page they have carried out $1 billion in transactions since going live back in mid-2013. It was purchased by a Bitcointalk user (Alex Alexandrov) in mid-2014 for an undisclosed amount and the terms were never made public.

Nowadays there are many options if people want to accept Bitcoin or altcoins as a method of payment on their websites but once upon a time it was not that easy.

So Coinpayments.net is doing very well as a company today, it has been doing very well since day one but it was two Bitcointalk users called pr0d1gy and MrData that created the original project and only sold it because they were on the verge of closing down. They even made an announcement telling all clients to make alternative arrangements because of impending US regulations. That was when Alex Alexandrov the now CEO of Coinpayment made an offer to buy their project because he was based in Canada and there was no crypto regulation there at the time.

It seems Alex Alexandrov was there in the right place at the right time and the two founders and creators of Coinpayments sold up to Alexandrov rather than close down their business. The smart idea probably would have been to 'relocate' the business themselves by registering a company or LLC elsewhere (maybe across the border in Canada or several places offshore in Caribbean or Europe) and trade as normal but they sold up. I never understood the logic about that move when it happened and still do not understand it. I am disappointed to read the 'team' and 'about' links on coinpayments.net and coinpaymentscoins.com with no mention of these two pioneers who were well ahead of their time.

pr0d1gy and MrData might not be as well known as laszlo from the great pizza event of 2010 but they have contributed a great amount through their vision of crypto payments. Maybe in future people will understand how pioneering their vision was.

The idea that readymade plugins for popular (and not so popular) shopping carts including Prestahop, Wordpress, Woocommerce, Xcart and Magento could be downloaded and immediately allow customers to pay at checkout using Bitcoin and other coins was a huge step forward in crypto-technology. Yes a few others were providing an almost identical service too but the ease and simplicity along with the number of supported coins by Coinpayments were unmatched. pr0d1gy and MrData were way ahead of their time.

Thanks to pr0d1gy and MrData for paving the way for other crypto enthusiasts to follow in the crypto payment processing field. I hope they both retained some portion or stake in the company because it was their innovation, hard work and efforts that got Coinpayments off the ground.



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A great alternative is BTCPayServer because it is a great step forward to allowing fee-free transactions. Over time the system will become more simple and eventually there will not be a need to pay fees to merchant service providing companies such as Coinpayments, Bitpay, Bitcoinpay, Coingate, SetGetGo and so many others. It will fulfill the vision of Satoshi having P2P payments without third parties taking commission or fees.

BTCPayServer is accepting several coins including Bitcoin, BGold, Bitcore, Dash, Dogecoin, Feathercoin, Groestlcoin, Litecoin, Monacoin, Polis, UFO and Viacoin. These will probably increase as time goes by and the service is more widely used and becomes more popular.

The down-side is most merchants probably never used command line coding and in some cases those that can get this running on a low cost server will incur mini-costs on hosting and the whole blockchain when syncd which might result in it not being a viable option for some.

A third-party solution for merchants to use BTCPayServer for free on hosted providers who basically ask for donations to offer the free service can be found here: https://github.com/btcpayserver/btcpayserver-doc/blob/master/ThirdPartyHosting.md

 

[BitMaxz]

A great alternative is BTCPayServer because it is a great step forward to allowing fee-free transactions. Over time the system will become more simple and eventually there will not be a need to pay fees to merchant service providing companies such as Coinpayments, Bitpay, Bitcoinpay, Coingate, SetGetGo and so many others. It will fulfill the vision of Satoshi having P2P payments without third parties taking commission or fees.
 

Are you sure that they are not taking any fees? Look at their coinpayments pricing from here https://www.coinpayments.net/help-fees

Almost all 3rd party crypto payment gateways have fees there is no free except for payment gateway from our bitcoin clients like electrum through RPC.

However, the fees are not as big as fees from PayPal or other USD payment gateways.

I'm using Coinpayments in my one of my woocommerce website but it still underdevelop so I don't know if how safe they are.

[JollyGood]

A great alternative is BTCPayServer because it is a great step forward to allowing fee-free transactions. Over time the system will become more simple and eventually there will not be a need to pay fees to merchant service providing companies such as Coinpayments, Bitpay, Bitcoinpay, Coingate, SetGetGo and so many others. It will fulfill the vision of Satoshi having P2P payments without third parties taking commission or fees.
 

Are you sure that they are not taking any fees? Look at their coinpayments pricing from here https://www.coinpayments.net/help-fees

Almost all 3rd party crypto payment gateways have fees there is no free except for payment gateway from our bitcoin clients like electrum through RPC.

However, the fees are not as big as fees from PayPal or other USD payment gateways.

I'm using Coinpayments in my one of my woocommerce website but it still underdevelop so I don't know if how safe they are.

I wish you success in your woocommerce business when it goes live.

All merchant providers charge a fee but BTCPayServer do not because they supply the code and want you to run it on your own server which you will pay hosting fees for. A third-party option running BTCPayServer will not charge you if they are accepting donations therefore all you do is use their Woocommerce plugin. That was you will not pay any fees to anybody. If a customer sends you for example 0.25 BTC as payment you will receive the full 0.25 BTC. If you use a merchant provider such as Coinpayments then they will charge you.

If I remember correctly Coinbase do not charge you for the first million US$ of sales but then do 1% onwards but that is only when you convert crypto to FIAT to send to your bank. Maybe they have changed their rules now.

[JollyGood]

Below is an announcement that Coinpayments has received $10 million in funding and are looking for investors up to $30 million.

I wonder how the original owners and developers of Coinpayments feel about this expansion? Was it really necessary to go this far with this much investment raising?

Bitcoin was supposed to be P2P transactions without the need for paying tx fees to third party merchants. Somehow this does not feel right.


===========================

Hi,

We are happy to announce that we have reached our soft cap of $10 million in our equity raise on accredited investment platform Bnk To The Future!

However, we did not contact you just to inform of this great milestone for our company, but to let you know that we will STILL be accepting accredited investors up to $30 million until February 1st!

Since opening our doors in 2013, CoinPayments has grown exponentially year over year to produce close to $1 billion in business transaction volume and an additional $1.3 billion in consumer transaction volume in 2017 alone! Today, CoinPayments supports over 1,000 altcoins for a userbase of over 2.3 million businesses and users across 182 countries.

This new funding will help us further our vision to support global adoption of cryptocurrencies by:

    Expanding and improving the CoinPayments platform and mobile app
    Integrating fiat settlements directly into the platform to allow businesses to overcome price volatility
    Implementation of multi-signature wallets
    Decentralizing the storage of private keys to create two independent but interoperable systems
    Simplifying the conversion of cryptocurrencies for users via a one-click instant conversion feature
    Creating a global decentralized marketplace bringing together merchants and buyers to transact in cryptocurrencies

So what are you waiting for? This is your last chance to be part of the future of CoinPayments, as our equity raise ends on February 1st!

Join us by heading over to our official listing on Bnk to the Future at the link below:

https://bnktothefuture.com/pitches/coinpayments-2

We are looking forward to a bright and prosperous future with you!

Sincerely,

The CoinPayments team


CoinPayments Inc
C/O Gateway Technologies
236 Eastern Avenue,
P.O. Box 10315
Grand Cayman KY1-1003,
info@coinpayments.net

[JollyGood]

People that use Coinpayments please provide some feedback

[JollyGood]

Well, this thread originally did not gain much traction so trying again especially now that Bitcoin is on the verge of breaking the $30,000 barrier.

Are there any members that use Coinpayments can post here?

[magneto]

No way they are worth $200m. They don't have significant market share compared to other more well-financed and established payment processors like Bitpay and Coinbase, and their entire infrastructure is built on a completely free, decentralised bitcoin network.

Their net assets consist entirely of IP and existing lines of code, which I suspect can be replicated by anyone for way less than $200m. If you're buying for growth and future cash flow, I sincerely doubt that any established institution is going to have much reason to select them over the aforementioned alternatives.

It's like the perfect counterexample to give when someone mentions "value investing", imho.

[LeGaulois]

That's not just providing a unique URL to the buyer, it's a lot more complex than that in the back end. But they haven't invented anything new, the system already exists.

The success of the business is the fact it was one among the very few to provide such services and to respond to a demand. Over the years they have been able to obtain a good portion of the market. There is not much alternative when it comes to choosing a payment service provider. They still have a bright future ahead of them

And unlike what one might think, Coinbase is not that much of a hit with merchants.

[JollyGood]

With the price of Bitcoin rising above $40,000 what would be the value of Coinpayments then? Does anybody know the market share they have against Coinbase, Bitpay and so many other crypto payment processors out there?

No way they are worth $200m. They don't have significant market share compared to other more well-financed and established payment processors like Bitpay and Coinbase, and their entire infrastructure is built on a completely free, decentralised bitcoin network.

Their net assets consist entirely of IP and existing lines of code, which I suspect can be replicated by anyone for way less than $200m. If you're buying for growth and future cash flow, I sincerely doubt that any established institution is going to have much reason to select them over the aforementioned alternatives.

It's like the perfect counterexample to give when someone mentions "value investing", imho.

[The Sceptical Chymist]

Even for peer-to-peer transactions bitcoin usually isn't free--it can get close to that when the network isn't severely congested and very far away from free when the network is all jammed up (like it has been for the past month). 

Those payment processors like BitPay and Coinpayments (I'd honestly never heard of them before) are necessary to mitigate bitcoin's price volatility for both merchants and customers, not to mention that most merchants probably wouldn't even accept bitcoin if they had to take possession of it outright.  Businesses generally don't want bitcoin; they want fiat, and so those payment processors are absolutely necessary IMO. 

I'm not even sure Satoshi thought bitcoin payments should be entirely without cost, just that they should be low-cost.  Most of the time they are, but just take a look at how long you have to wait nowadays to get a payment through if you don't bump the fee to something like 100sats/byte.

[JollyGood]

Maybe Satoshi thought the transaction fees were enough for the sender to pay therefore P2P transactions should be free from third party fees. I guess we will never know. After reading what you wrote I am not sure how payment processors mitigate Bitcoin or other crypto price volatility simply by using their service.

Coinpayments was one the first payment processors to offer multiple mass-crypto options for receiving payments, they created various shopping cart plugins and were soon looking up when the US announced laws which made it difficult for them to continue as they could not afford to get the appropriate licence. Others with financial backing managed to pass various audits and are now doing well such as Coinbase. Coinpayments decided to close their operations in order not breach US laws but then took an offer from a Canadian based forum user that registered the company in Canada first then offshore later. This was back in 2014 I think.

Even for peer-to-peer transactions bitcoin usually isn't free--it can get close to that when the network isn't severely congested and very far away from free when the network is all jammed up (like it has been for the past month). 

Those payment processors like BitPay and Coinpayments (I'd honestly never heard of them before) are necessary to mitigate bitcoin's price volatility for both merchants and customers, not to mention that most merchants probably wouldn't even accept bitcoin if they had to take possession of it outright.  Businesses generally don't want bitcoin; they want fiat, and so those payment processors are absolutely necessary IMO. 

I'm not even sure Satoshi thought bitcoin payments should be entirely without cost, just that they should be low-cost.  Most of the time they are, but just take a look at how long you have to wait nowadays to get a payment through if you don't bump the fee to something like 100sats/byte.

[DaveF]

As has been stated, if you want to do it yourself, then it can be free.

Except for the hardware needed to run the server, the time to keep it up and secure, apply patches and updates, do backups (and store and test them).
If you want to take many coins line coinpayments, you have to then make sure all the daemons are running and synced and the APIs you are using to talk to all the exchanges are up and running and accurate.

Lets run some numbers.....
You are running a business that does $200,000 a year in crypto sales.
coinpayments charges 0.5%
So that is $1000 a year.
Do you think you can do all the above for $1000 a year?....Do you WANT to do all the above for $1000 a year?

-Dave

[squatter]

Lets run some numbers.....
You are running a business that does $200,000 a year in crypto sales.
coinpayments charges 0.5%
So that is $1000 a year.
Do you think you can do all the above for $1000 a year?....Do you WANT to do all the above for $1000 a year?

Of course not, but where did "$200,000 a year" in sales come from? According to their pitch, they've done $1 billion in sales over 7.5 years. That works out to around $130 million in sales and $660,000 in revenue per year.

A $200 million valuation still seems grossly overvalued. Coinpayments just isn't competitive with firms like BitPay. Their whole niche is processing payments for hundreds of little known altcoins. I just don't know how big of a future there is for that.

The owners are probably making the right move by cashing out some equity.

[DaveF]

Of course not, but where did "$200,000 a year" in sales come from? According to their pitch, they've done $1 billion in sales over 7.5 years. That works out to around $130 million in sales and $660,000 in revenue per year.

I pulled it out of the air to show that even if you were doing that much in crypto it's still probably better to have someone else do it then do it yourself.
If you were just doing BTC then possibly at that point running a BTCPay server would be worth it. But would you really want to?

I have a BTCPay server, I run it for other people.
It's a royal pain in the ass. And if I was not running a few lightning nodes anyway would probably trash the entire thing and go to coinpayments

-Dave