Bitcoin startup Circle unveils no-fee digital currency banking

[usamakhalid961]

Bitcoin is a hot commodity in the tech community, but its complexity is turning off many consumers.

Circle, a Bitcoin currency services startup founded in 2013, emerged from stealth mode on Friday with the launch of a suite of consumer financial services that bank on the belief it can take the cryptocurrency mainstream. The state goal of the startup's free product is addressing "the terrifying complexity and risk" many people associate with the digital currency.

Bitcoin has been the subject of wild rollercoaster value fluctuations in the past couple of years, skyrocketing from an exchange value of $2 a share in 2011 to about $1,000 last fall. Rather than facilitating speculation in the digital currency, however, Circle's Web platform is intended to allow users to create accounts for the everyday exchange of Bitcoin.

"Our goal is 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 where they can bet on a speculative asset," Circle CEO Jeremy Allaire explained in a company blog post

As Allaire explained, customers can deposit local currency into an account that converts the funds to Bitcoin and stores it for them without incurring any fees. Funds can then be sent and received globally in their digital form. Upon withdrawal, bitcoins will be changed back into the local currency and transferred to a bank.

To increase consumers' security confidence in its platform, Circle said it has instituted several features and processes to defeat the possibility of fraud or theft. The startup says its network architecture has been pressure tested by a cybersecurity company as well as black and white hat hackers who test the system's defenses.

The company also said it is employing "military-grade" encryption keys and keep funds in offline "cold storage" vaults it says are inaccessible to cybercriminals. "We maintain several geographically distributed secure vault facilities protected by multiple layers of access control, monitoring and armed guards," Allaire wrote.

To further assuage consumer fears, the startup notes that it's a regulated money transmitter in the US and promises that deposits made to its platform are fully insured, meaning that if a security breach results in the theft of funds, its customers are protected from loss.

The company is catering to Bitcoin's growing popularity and acceptance. Cryptocurrency ATMs have begun to pop up, some casinos have said they would accept digital currency payments, and even the US Federal Election Commission has said it would allow political action committees to accept donations in the form of Bitcoin.

Despite Bitcoin's growing acceptance, Circle still faces concerns over the curency's stability and security. The prominent Tokyo-based Bitcoin exchange Mt. Gox filed for bankruptcy earlier this year after hackers stole nearly $500 million in bitcoins through a weakness in the company's system. Bitcoin bank Flexcoin also had to shut down after being hacked.

There is no official government consensus on Bitcoin's security status. One day before the FEC's decision to allow donations in the digital currency, the US Securities and Exchange Commission issued an advisory warning investors to be wary of Bitcoin and other virtual-currency related investments. Noting that the cryptocurrency is uninsured, unregulated, and volatile, the SEC said its chief concern was the risk of fraud.

[thezerg]

Anyone able to cut thru the marketing-speak (or try the service) and tell us bitcoiners what the specific advantages are?

Thx!

[whtchocla7e]

Have fun with a "digital currency bank" controlling your Bitcoins.

[MrWDunne]

Might be worth pointing out your deposit is not really insured. What it means is that if they are hacked, they are insured. It does not mean if your account is phished/keylogged etc you will get your money back.

[Ron~Popeil]

I think it is good thing. Taking some fear out of the equation and simplifying it will help new bit coin holders. I will deposit a small amount there just as a way to support them a bit. 

[vabtc]

So, do users benefit at all from future price increases?  The way i read it..

I put $450 in today, i get roughly "1 BTC"  (in quotes because you don't own anything, you've paid for access to the network)

Let's say a whale comes along and pushes price to $900 on Sunday.

Do I now control ".5 BTC" on my circle account? Or do i have 1 BTC still and more purchasing power?  Sounds like the former, and in that case, Circle has just made a killing on my deposit.

[Bit_Happy]

Anyone able to cut thru the marketing-speak (or try the service) and tell us bitcoiners what the specific advantages are?

Thx!

It is easy to use and you are insured against them getting hacked.
They claim no fees which is a big plus, but how do they make money?


@vabtc:
Upon withdrawal, bitcoins will be changed back into the local currency and transferred to a bank.
I think your BTC balance stays the same as the exchange rate changes.

[RockHound]

So, do users benefit at all from future price increases?  The way i read it..

I put $450 in today, i get roughly "1 BTC"  (in quotes because you don't own anything, you've paid for access to the network)

Let's say a whale comes along and pushes price to $900 on Sunday.

Do I now control ".5 BTC" on my circle account? Or do i have 1 BTC still and more purchasing power?  Sounds like the former, and in that case, Circle has just made a killing on my deposit.

Definately the later. Temporal, based on the time you complete transaction with them.

I actually like the Circle model and think it's good for the Bitcoin community. In near future, there maybe a way to decentralise and cut-out banks altogether, but for now it offers bitcoiners a viable solution for our businesses.

[RockHound]

Anyone able to cut thru the marketing-speak (or try the service) and tell us bitcoiners what the specific advantages are?

Thx!

It is easy to use and you are insured against them getting hacked.
They claim no fees which is a big plus, but how do they make money?


@vabtc:
Upon withdrawal, bitcoins will be changed back into the local currency and transferred to a bank.
I think your BTC balance stays the same as the exchange rate changes.

Awaiting invitation and sent support ticket, so should be able to do some beta testing, shortly.

I suspect that they'll add a premium to their spot BTC/USD or BTC/FIAT rate. Perhaps slightly higher rate than offered by Bitstamp/Coinbase

[vabtc]

Thanks guy, I'll have more time later to fully read up on it. just getting twitter/btalk updates so far...definitely sounds like a fair way to run it...even tho it may have a huge affect on my small business plans.

[Eotnak]

Anyone able to cut thru the marketing-speak (or try the service) and tell us bitcoiners what the specific advantages are?

Thx!

It is easy to use and you are insured against them getting hacked.
They claim no fees which is a big plus, but how do they make money?


@vabtc:
Upon withdrawal, bitcoins will be changed back into the local currency and transferred to a bank.
I think your BTC balance stays the same as the exchange rate changes.

watch the context:  "...Funds can then be sent and received globally in their digital form. Upon withdrawal, bitcoins will be changed back into the local currency..."

Local currency meaning another country's currency. 

Also, just because they convert it to BTC, doesn't mean you have control on it.  They could just as easily say you own $100 worth of BTC after a $100 deposit.  This gives the mainstream users an easier grasp on their accounts.  They feel more comfortable "knowing" that their $100 in BTC will still be worth $100 tomorrow (or in 5 years)

we shall soon see.

[Bit_Happy]

....They feel more comfortable "knowing" that their $100 in BTC will still be worth $100 tomorrow (or in 5 years)

we shall soon see.

You are suggesting Circle has a business plan that completely defeats the best thing BTC has to offer?
Bitcoin isn't about making sure your worthless paper is still worth $100.

[hamiltino]

If you watch the cirlce promotional video, you see the circle account with $10 in it change value to $10.05.

[LiteCoinGuy]

thats what we need! cool company.

[rjcesq]

Would anybody like to speculate on Circle's business model?  They didn't throw millions of dollars into this to have a completely free service. Is the only money they are making on the spread between exchange rates for buy and sell orders?

I suppose that could be enough to cover the credit card fees, the merchant fees, the miner fees, and their overhead.

They lose money on each transaction but make it up in volume right? 

Can the make a profit on the spread?

Or are they just trying to grow market share and then sell ancillary, yet unannounced, services?

[inBitweTrust]

Can the make a profit on the spread?

Or are they just trying to grow market share and then sell ancillary, yet unannounced, services?

Yes and yes. Initially they will be at a loss due to the 10 dollar bonus and lack of advanced products in order to play catchup to coinbase client list. Later on they will profit off the spread and fees from other yet to be announced features.

[Ron~Popeil]

I am sure the merchant services will bring a nice revenue stream as well.

I have also requested an invitation. Once i get it and get a chance to play around with it a bit I will post about it here.

[Eotnak]

You are suggesting Circle has a business plan that completely defeats the best thing BTC has to offer?

yes, but I admitted that we don't know that for sure

...Bitcoin isn't about making sure your worthless paper is still worth $100.

what does that have to do with a Bitcoin startup?

[whynotbit]

It does seem like a pretty good way to go from the crypto world to the original banking system and thus it will ease the introduction of bitcoin to the Whole global market where the average not-too focused on crypto person could benefit from the main advantages of an accessible bitcoin wallet (debit-card, secret key at relays worlwide, atm's). They probably have many potential features to add to the "bank" to attract the financial system (which is in the end the case, acceptance of bitcoin by the mass) and probably where fees might occur due to the levels of transactions.
We'll have 2 balances, to start, usd and btc, guess we'll have to choose in what form to keep them, usd to be "safe" or BTC (and benefit from market price)
For the 0 fees, I trust them to have created a profitable for everyone product, including them.
And it does seem much more serious than 90% of what is being proposed right now, safe, easy, accessible, and there is no better way to change a system than using it, always has been, bitcoin can only go mainstream through these kinds of implications, Ethereum, Nem, Circle... probably many more on the way or already out. And lots of major companies are lurking heavily on cryptos 
The cryptocoin users wanting anonimity can continue on in parallel with wallets, keys, codes, mining, beta-testing, trading, it doesn't block anyone.
An enthousiast newbie 

[Davis14]

Sounds very untrustworthy I would prefer to keep it safe with blockchain wallet.