As Bitcoin Companies Mature, More Take Talent from the Mainstream
Bitcoin companies are getting more recognition as serious contenders, and as they grow they are filling their ranks with people who established their careers in the mainstream payments industry.
"The Bitcoin space offered technology innovation, flexibility and creativity," says Andy Goldstein, who worked at Visa for 16 years before taking a job at BitPay, a Bitcoin merchant services startup.
At Visa, Goldstein was most recently senior business development leader in the merchant sales and solutions group. He is now a regional sales manager at Atlanta-based BitPay, focused on integrating large enterprise merchants in the eastern U.S. and eastern Canada.
Goldstein resigned from Visa but left the company on good terms. "Some of my fellow co-workers were excited that I was pursuing my passion as I did not keep it a secret that I was very into Bitcoin and cryptocurrencies," he says.
While moving from an international card brand to a startup is a big jump, Goldstein says, "when I was pondering the move, I gave it careful consideration; I soon realized that I would forever regret not taking a risk and trying to participate to grow Bitcoin acceptance."
When Bitcoin and other digital currencies took off, their initial appeal was in niches where mainstream payment companies wouldn't go. For example, many WikiLeaks supporters sent bitcoin donations after the major payment providers blocked transfers to the organization. Over time, Bitcoin became a payment option at large businesses like Overstock.com and was legitimized by regulators, fueling the cryptocurrency's popularity.
"A lot of individuals from the more traditional payment companies do not understand the [Bitcoin] technology and view it as an existential threat, but don't fully appreciate what it can do for many areas," says Goldstein. Bitcoin has the opportunity to lower the costs associated with the international remittance industry and alleviate poverty, he says.
Other Bitcoin companies drawing talent from mainstream financial services include Xapo, the recently launched Bitcoin wallet provider, which is headed by Wences Casares, who founded the mobile payments companies Lemon and Bling Nation; and Ripple, a payment network headed by Chris Larsen, who was previously CEO of lenders Prosper Marketplace and E-Loan.
Circle Internet Financial, a digital currency startup, added Goldman Sachs director M. Michele Burns to its own board of directors in January. It also added PayPal and American Express veteran Michael Barrett and Google senior security engineer Mike Hearn to its advisory board.
And one of BitPay's first full-time employees was a veteran of the processor Global Payments.
BitPay was one of the first Bitcoin payment processors that guarantees payment in U.S. dollars immediately rather than require a merchant to hold a balance in bitcoins. Exchanging the funds right away reduces the risk of losses from the digital currency's volatile price swings.
The company has grown substantially, seeing its transaction processing volume double from September 2013 to December 2013. It works with a growing number of large companies, including the Sacramento Kings basketball team and gaming company Zynga.
"Credit card technology has existed since the Diner's Club, and Bitcoin (the currency, the payment network and the protocol) is leaps and bounds the most revolutionary idea in the payments arena and finance in general for over 60 years," Goldstein says.
Other traditional payments companies have acknowledged Bitcoin's disruptive potential, but have yet to accept the digital currency. PayPal's president David Marcus said last year that his company was considering whether it would accept bitcoins as a funding instrument.
And many of the biggest financial institutions have recently published research on the digital currency that was created in 2009 as a way to transact and authenticate those transactions without the third party clearing providers.
"We may vilify some of these large logos or big financial institutions but the people that run them are just as geeky about payments," says Jordan Lampe, marketing manager at Dwolla, an alternative payments provider based in Des Moines, Iowa.
Dwolla has faced difficulties from its earlier work with Bitcoin. Last year the Department of Homeland Security seized funds from accounts held at Dwolla by MtGox, a large Bitcoin exchange that recently filed for bankruptcy.
Dwolla has been distancing itself from the Bitcoin market, focusing instead on its "core competency," which is allowing low cost real-time payments in U.S. dollars, Lampe says.
But Lampe gives credit where credit is due. "Bitcoin has really captured the imagination," he says. "Bitcoin has done a really great job of highlighting some of those secondary and tertiary pain points and friction of the current system."