Hi, this is Wayne again with a topic “These are Bitcoin’s true believers — CES 2015”.
Hi, my name is Natasha Teague. I am a senior writer with a verge and I’m here with Tony gallupi, the co-founder and executive chairman of bitpay hi Natasha hi nice to meet you, so this is bitcoins biggest presents at CES. Ever right. Bitcoin also happens to be in the news a lot right now.
It started a few days ago with a drop in stock price and then recently the second largest exchange was hacked and 5.1 million dollars is is in the either somewhere. So it’s kind of a strange time to have like this more professionalized presence and then yet, like the headlines are different. So how do you feel about that going into it? Well, you know, Bitcoin is a new industry and there’s certainly lots of challenges, and you know: we’ve had to really reinvent a lot of our inner workings and accountings to be able to function and survive in this new digital currency age, because you know when you work With digital currencies, when they move, they move and you can’t get them back and you can’t really trace them. So you really have to be very careful about everything you do from a security perspective. Everything that you build every server that your that your your code is written on or deployed on. You need to understand, you know who has access to that and and who potentially could could get into your system, so we’ve been coming to CES for four years. This is our fourth year here and the first couple years there were two or three Bitcoin companies, and then this year we have ten. So there’s a tremendous growth from last year to this year in terms of the the types of Bitcoin companies that are growing up to the point where they have a marketing budget and they’ve gotten some venture funding and and they can get out so there’s a great Variety here we’ve got two exchanges, two wallets a couple of merchants. You know an ATM of course bitpay the leader in merchant service, so, and so the other big difference is the amount of investment that these kinds of companies are getting.
Bitpay, in particular, has funding from a number of high profile individuals, Ashton, Kutcher Matt Moll founders funds, which is Peter Thiel’s venture capital fund. Can you talk a little bit about how the infusion of venture capital has affected me in the street yeah? So when you compare, let’s say 2013 to 2014 in 2013, there was, I think, about eighty or ninety million dollars in venture capital invested in Bitcoin companies in 2014 it was almost four hundred million dollars so about a four times: growth in one year and kind of Mimics, the early days of the internet, around 1994 1995, when companies like Amazon and eBay and Dell we’re really getting started and we’re starting to build their teams and build their products. So we’re kind of at that stage in in bitcoins lifecycle. Now, but you know, venture capital does a couple things right.
It allows us to hire really good engineers. We have to develop software because we’re a software company and just talent is extremely limited. Every software company from top to bottom is short on developers, so you need to be able to recruit and and and find and retain the best talent you can. We also have sales marketing compliance.
You know finance all the things that you need to run a business, especially a business and handles money. So all that takes time and resources, so it surely, if this is a showcase, it couldn’t have felt, I mean from the people I’ve talked to. It seems like this is just a hiccup. Like you said, it’s a new market there’s a long term trajectory, but surely it can’t feel good to have a showcase right before a bunch of little to 5.1 million dollar hiccups right before you go in yeah yeah I mean look, bitcoin is a young industry there’s Going to be these hiccups and and the best thing we can do as a company is to try to build our service to you, know absorb as many of these speed bumps as you can, and certainly we want to insulate our customers insulate our merchants from any.
You know drama of the day that that happens in Bitcoin right, so we’ve we try to do that as best we can. You know we, you know, try to make sure that that our systems are as good as they possibly can be. You know in the events that happen this week, our service was just fine, there were no interruptions to our service. You know some of our merchants were getting questions from reporters and we said yeah. You know we. We insulate you guys from that.
There’S nothing to worry about, so you know, as we’ve seen these incidents take place, the entire industry learns from every mistake right. So whatever the root cause of this incident was this week, we’re all going to understand the root cause and we’re all going to improve our platforms to make sure that doesn’t happen again. So over time, you’re going to start to eliminate a lot of the probable causes and possible causes of errors that can be made. If you look back three years ago seems like every week, something was going wrong, we’re not making any of those same mistakes again well, but you know they’re they’re different, so I think. Well, you know, we don’t know the details of what happened this week, but apparently it was only you know: 1 % of the funds that they have now it was customers money right.
So we know if they have reached out to a few people, and it seems that their intention is to go ahead and make those customers hold their up their adventure back to company right. They have enough it reserves to absorb this right. Yes, it’s not like Mount GOx where 90 % of their, so so people have learned well we’re only going to put 1 % at risk and – and they may have even had insurance on this – like we don’t know so, there’s lots of opportunities or lots of details. Still to come out, but if you compare just the event of this one compared to mount docks, it’s you know several automatic Mateusz less in in severity and right, and I think that would probably be the difference between a good actor and a backpack. So say you had bit like.
Would you if somebody had a you know their position in Bitcoin right now, would you say hold sell, buy? What’S your recommendation, you know bitcoins been up and down. If you look at it two years ago, when we were at CES, it was 13 dollars. Last year we were here was around $ 700 right. It’S.
It was on my way in yeah, okay. So so it’s it’s been volatile. It’S it’s kind of what you expect from an early-stage tech stock or a newly discovered commodity. If you look at the early history of oil, when we first discovered petroleum right, it was really volatile. You know if you were to be able to to track the minute-by-minute valuation of Twitter when it was a start-up right. It would just be bouncing all over the place. Their stock is not doing so much yeah, but they’re they’re a more mature company now.
So I think that you know when you look at the potential for Bitcoin. I think there’s a tremendous opportunity to really start to gain market share and open new types of payments that weren’t possible before doing micro payments and tipping online. You know doing peer-to-peer payments of small amounts anywhere in the world, but you can’t do that with anything today, but there’s huge markets that are available well, you seem like the way you’re describing it is as a is tamp down from you know, some of maybe the Early panels, I would go to one Bitcoin where you know: Charlie Shrem, for example, described it as cash with wings, and you know like change the world potential which which start-ups have a predilection to to claim that can change the world. So do you like? How has that adjusted like there’s a big difference between like an alternative and an an entirely an alternative cryptocurrency and an entirely new system? Yeah I mean it. Bitcoin is a big deal. It’S probably the biggest innovation we’ve seen since the invention of the Internet. It’S going to change a lot of things it’s gon na take, I think, a lot longer than some people expect. Some people think it’s gon na change the world overnight. It’S gon na take a lot longer than them.
How on earth I mean with all of these Falls filled with. Basically, companies that have some connection to the internet would Bitcoin be even more impactful than than that than the invention of the Internet. Well, it’s interesting. You know we see a lot and even at this show people are talking about the Internet of Things where machines and devices can now. You know, start to be connected with Bitcoin.
Now each device can actually have its own. You know wallet in its own payment to be able to make decisions and buy things. You know credit cards, don’t really work for that. There’S a t-shirt that one of the engineers at one of these companies has, and he wears it in the office, and it says in the internet of things: nobody knows that you’re a refrigerator. So you know bitcoin has a digital currency.
It makes sense for digital devices to be able to communicate with each other. You know it’s it’s easy to transact anywhere in the world. You know I can send a nickel worth of Bitcoin from here to China instantly that’s not possible with any other technology. I’M okay! One last question like who you know: how did the connection between Silicon Valley and Bitcoin get started? Is there one? Was it the fact that these well-known figures like Matt, long wig from WordPress or Ashton, Kutcher who’s, also an investor in your company? Did they help make the connections like how did those yeah so some of the some of the early companies that got some very early venture funding in 2012? Maybe early 2013 we’re on the west coast to a Seattle in San Francisco, you’re typically had an investor that saw the potential for Bitcoin and saw a startup which may have been two or three guys with a little project and said yeah. I want to give them a couple hundred thousand dollars to see if their project can take off. You know, then you know in late 2012, you know you mentioned Matt Mullenweg.
Well, WordPress was a customer of bitpay. Yes, they were probably the first like major household name, that everybody would recognize. That said, we’re going to accept Bitcoin and we’re gon na do it worldwide and they chose bit so WordPress was actually a customer of us and they were using it and a lot of it was driven by Matt he’s like well yeah. He said you know, I.
I have a service that really anybody in the world with internet access can come to WordPress and create a blog. But I have a problem in that. I can’t take a payment from two-thirds of the world and I have to give my service away for free and I have to really limit it. Just because PayPal and credit cards don’t work with two-thirds of the world’s population, so he’s almost two-thirds of the world have access to Bitcoin they’re getting there and actually bitcoin is growing in the developing world more in wet areas. South America, Asia, are are growing very large. For Bitcoin, so he said, look you know, even if maybe only a fraction of 1 % of people have it at least it’s better than nothing, and he sees the potential.
I said yes, I mean if somebody from Africa wants to upgrade their bought blog and buy more storage or more bandwidth in a better design. Pack, I’d like to be able to take their money, and I can do that with Bitcoin. So Matt was a customer of ours with WordPress and then he invested – and you know we kind of pulled together – an early syndicate of guys, like Shaquille Kahn, who you know, and that was our early seed round and that helped us, you know, really start to hire. Some more engineers and continue to build the product beyond the you know the the early service that my co-founder and I bill okay.
Well, thank you for talking to me. I really appreciate it. Yeah .