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.

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[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.

[minimalB]

Is this US only service? Haven't found much on their website...

[molecular]

Is this US only service? Haven't found much on their website...

Allister (!) specifically says in the video it's a global service.

[newIndia]

Banking is always a NO-NO as long as BTC is concerned. Every user of BTC are their own bank.

[whynotbit]

Thx Hunyadi !  
Luckily I sent by pm a help request for a wrong password for nxt wallet, ended up I was mistyping it each time (spaces and all) would have been a fail first post !!

 

Banking is always a NO-NO as long as BTC is concerned. Every user of BTC are their own bank.

It does need some knowledge to be able to do that, competences, material, not everyone can afford having a computer never connected on internet just to back your coins on cold wallet, not talking about the manipulation in softwares, keys, it seems a lot here think all humans are born with computer skills, which is not the case, you don't skyjump alone on first time do you, so wity bitcoin it can be the same, to begin a clear system letting time for the user to develop the right skills, but abling him to have quick coins, and that's what bitcoin community wants, even if security and decentralization take a little hit, (I did hear many have a cold wallet in a safe in some bank cause a house can burn), it's not smart to be your own bank when you are worth 1000000 let's say, imagine the possible situations that could come up.
The "compliance" part is the essential difference with many stock exchanges that did ignore all legal aspects, totally not protecting the end-user,  so cryptos will spread apart, have a basis of really involved, skilled users and developers staying with their habits and the average human, finding it a good potential money, but not more, needing strong back ups in the "before cypto" world, making it simple cause it is hell not right now !!
 

[bithalo]

Jeremy Allaire, the CEO, was one of the main keynote speakers at the last NYC Bitcoin conference.  He has been involved with other projects for many years, including helping to create Adobe Flash for Macromedia, and there has been a lot of VC funding in Circle.  I personally have a lot of faith in the company.  I currently use Coinbase, but plan to try them out.

I wouldn't be surprised if they are willing to lose money up front on the $10 bonus and no fees to grab market share away from Coinbase.  

Back around 1999, before Paypal was popular, I started a small business.  Paypal spoke to us to use their services.  I recall them saying that they profit on the float on using people's deposits, like a bank will use customer's fiat deposits or checks to make interest off it.  Paypal used to/may still offer a similar free bonus deposit in new accounts, and Coinbase does too.  Thats nothing new.

But I wouldn't be surprised if Circle will have other avenues of making profit, such as through their merchant services.

[minimalB]

Allister (!) specifically says in the video it's a global service.

Yes, it's global service in a sense that anyone can create an account, but when I contacted the support, I was told it is US only for now if you want to link your bank account, credit or debit card.

[Biodom]

so far it has been...Nothing. i gave them my name and email.
This is what i've got in response:

Thanks for signing up to receive an invite to join Circle. We're working hard on exciting new digital currency products that aim to make money easier to use, more secure and friction-free. We'll be sending periodic updates on our progress and your invitation will be forthcoming. And don't forget to connect with Circle on Twitter, Facebook and LinkedIn.

i don't want to be social with my bank. What a bunch of baloney; mosolo or solomo or lomoso? Freaking gibberish (as per "Silicon Valley").
You lost me at "hello"
Forget about it.

[DooMAD]

The latest Let's Talk Bitcoin podcast goes into quite a bit of depth about Circle.  Overall it's quite balanced, but they do refer to it as a "bridge service".  Something that may be useful in the interim, but also something that could be surpassed later as Bitcoin matures.  Andreas says he'll likely use the service, but purely as an exchange to buy bitcoin, not to hold it like a bank, due to the inherent risk of them controlling the private keys.

[Alley]

Anybody received an invite yet?  Been 2 weeks with no word for me.

[Quibbler28]

Bitcoin is not complex... It really isnt.

[Alley]

Sorry but if I can get coins from them with no fees Im signing up in a heartbeat.

[molecular]

Sorry but if I can get coins from them with no fees Im signing up in a heartbeat.

If you're not paying, you might not be the customer, but the product.

[Melbustus]

Sorry but if I can get coins from them with no fees Im signing up in a heartbeat.

If you're not paying, you might not be the customer, but the product.

Much of the time yes, but Circle (and other providers of bitcoin liquidity) will often be able to make money from large off-exchange bitcoin-fiat transactions.

[tvbcof]

Sorry but if I can get coins from them with no fees Im signing up in a heartbeat.

If you're not paying, you might not be the customer, but the product.

It seemed pretty obvious to me that they are planning to make money in the 'normal' way.  That is by data mining, analytics, and advertising.  This has proven a remarkably successful business model.  So ya, the 'product' is the intel coming off the userbase which, for all intents and purpose, does make the user qualify as 'the product'.  Akin to 'eyeballs' which is not a metric which I believe to be secret.  We'll have to use some imagination (but not a lot these days) to identify Circle's actual customers.

That said, I'm having a lot of trouble with mainstream banks + Coinbase of late.  I'll totally welcome another means capitalizing on my speculation.  I'll look forward to a more concrete and less fluffy description of what, exactly, these guys can offer ME.

[CEG5952]

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

I know, I get it, but at the same time, this might be the type of "bridging the gap" sort of service that we need to get average joes involved with bitcoin.

[MrWDunne]

Sorry but if I can get coins from them with no fees Im signing up in a heartbeat.

If you're not paying, you might not be the customer, but the product.

It seemed pretty obvious to me that they are planning to make money in the 'normal' way.  That is by data mining, analytics, and advertising.  This has proven a remarkably successful business model.  So ya, the 'product' is the intel coming off the userbase which, for all intents and purpose, does make the user qualify as 'the product'.  Akin to 'eyeballs' which is not a metric which I believe to be secret.  We'll have to use some imagination (but not a lot these days) to identify Circle's actual customers.

That said, I'm having a lot of trouble with mainstream banks + Coinbase of late.  I'll totally welcome another means capitalizing on my speculation.  I'll look forward to a more concrete and less fluffy description of what, exactly, these guys can offer ME.

I think you're most likely wrong.

I would imagine they are zero fees in the same way as Coinbase. Sure they have no fees but they do have a hefty spread.

[tvbcof]

Sorry but if I can get coins from them with no fees Im signing up in a heartbeat.

If you're not paying, you might not be the customer, but the product.

It seemed pretty obvious to me that they are planning to make money in the 'normal' way.  That is by data mining, analytics, and advertising.  This has proven a remarkably successful business model.  So ya, the 'product' is the intel coming off the userbase which, for all intents and purpose, does make the user qualify as 'the product'.  Akin to 'eyeballs' which is not a metric which I believe to be secret.  We'll have to use some imagination (but not a lot these days) to identify Circle's actual customers.

That said, I'm having a lot of trouble with mainstream banks + Coinbase of late.  I'll totally welcome another means capitalizing on my speculation.  I'll look forward to a more concrete and less fluffy description of what, exactly, these guys can offer ME.

I think you're most likely wrong.

I would imagine they are zero fees in the same way as Coinbase. Sure they have no fees but they do have a hefty spread.

One would be at a disadvantage to one's competition if one neglects to monetize an information stream as rich as that coming off something like Bitcoin.  I've never had any doubt that Coinbase shares whatever info they have about me at least as liberally as needed to stay on the right side of LE and our internal corporate/government intelligence bodies.  Just like any other internet based player these days.  There is no reason to believe that they wouldn't take advantage of other revenue streams other than the possibility that it would alienate their users if/when the scope is discovered.  But a brief skim of this board indicates that very few people give a shit about that kind of stuff.  Even in the ratified Bitcoin ecosystem.  This is particularly pronounced among the more recent participants in this forum.

Time will tell if I'm right on this.  My projections are skewed somewhat by having spent some time working in related environments.  At this point it is pretty difficult to understand what Circle are even expecting to offer in terms of services.  Their site is characteristically opaque about this, and most observers seem only to be able to guesstimate about it.  Probably it is still a bit unclear even to them until they work through some agreements about how they'll be allowed to operate.

 - edit: spelling.

[JohnFromWIT]

Just sent a request. Just to see what it's all about.
There really isn't much information.

[Ron~Popeil]

Still no invitation. I think their business model at some point will incorporate merchant services as well. Just speculation obviously but it would make sense. 

[mel2000]

I'm still trying to understand any advantage this service has over Bitstamp or Coinbase.

Does this service allow clients to keep their assets in either BTC or $$ like Bitstamp?
Does the service allow selling BTC and holding the $$ proceeds in their Circle account, like Bitstamp?
Does the service allow selling BTC and depositing the $$ proceeds directly to one's bank account, like Coinbase?
Does the service allow one to sell their BTC for $$ without fees (not sure if Coinbase charges a fee upon selling)?

[adamselene]

I'm still trying to understand any advantage this service has over Bitstamp or Coinbase.

Does this service allow clients to keep their assets in either BTC or $$ like Bitstamp?
Does the service allow selling BTC and holding the $$ proceeds in their Circle account, like Bitstamp?
Does the service allow selling BTC and depositing the $$ proceeds directly to one's bank account, like Coinbase?
Does the service allow one to sell their BTC for $$ without fees (not sure if Coinbase charges a fee upon selling)?

Circle's advantage is that you can sign up and instantly buy and sell without fees. No waiting like Coinbase, Circle assumes all of the risk.
Also all of your BTC are fully insured against hacking for free.

As for your questions:
-You keep your money in BTC.
-It is not an exchange, it is a wallet service / broker. Your funds are credited to your bank / credit card immediately.
-See above.
-Coinbase charges a fee, Circle does not (for now)

[scribbles]

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.

Got the email that they received my request and stay tuned, as others did.
I'm curious about what their service will offer, and I'm all for increased visibility of bitcoin and multiple competing services. However, I'm not sure why they bring up volatility of bitcoin price since they cannot affect that. I also want to see how this differs from services like coinbase where I'm already not charged ongoing fees and can use it to buy, sell, and spend bitcoin.

[birr]

Coinbase charges 1% to buy and the same to sell.

[tvbcof]

Near as I can tell, Circle is going to operate much like Coinbase.  I went ahead and asked for an invite as well.  Just as I would not expect anything resembling privacy from Coinbase, it would be even more the case for Circle.  I personally don't mind privacy violations as long as I am aware of them because A) I'm not trying to cheat on my taxes, sell stolen BTC, etc, and B) even if I were it's actually advantageous in some ways to be spied on.  It is a pretty workable to throw algorithms off of one's scent (which is why it's complete hogwash that the NSA spying has much to to with catching nefarious people...or those with some functional brain cells at least.)

Anywhoo, I'll update this or some other thread to relay my experiences.  If any.  I'm apparently a big enough fish that Wells Fargo is fucking with me fairly strongly, and Coinbase themselves is asking about the nature of my stash in less than totally friendly terms.  How much communications these various entities have, and if any, through what channels is a very interesting string to tug on.  Not that I don't have other things I'd rather be doing, but one takes what life throws at them I suppose.

BTW, my aformentioned issues are outlines here: https://bitcointalk.org/index.php?topic=577378 for anyone interested.  I also became aware of 'operation choke point' through the Lets Talk Bitcoin podcast #110 linked in this thread.  It is pretty interesting (and awesome news for alternates to federal reserve notes + mainstream economic activity) and I wonder if it has some relationship to the problems I'm experiencing.

[tongjiufbiyv305]

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.

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

[ShakyhandsBTCer]

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

This is a bad concept for most bitcoin users, but for someone just learning about bitcoin this concept can be a good one.

[PalmerLaura]

It's early days. I'm expecting great things from them given their funding. Fee free is a positive start