During his trips to Washington D.C., Jonathan Johnson, president of Medici Ventures and former gubernatorial candidate in Utah, always talks to cab drivers in his travels around the city. Most of the cab drivers are Ethiopian who travel back to their native country infrequently, he says, adding that they send money to their family via Western Union, he says. “The percentage that Western Union takes from that transfer is obscene,” he says. Bitcoin offers a cheaper alternative, according to Johnson. Sensing a market opportunity, his firm Medici Ventures, which is a wholly-owned subsidiary of online retailer Overstock.com, recently launched a cryptocurrency wallet with Bitsy, a portfolio company.
Bitcoin First, And Then Beyond
According to Johnson, the Bitsy acquisition will offer customers a chance to send money across borders at a fraction of the cost that conventional money transfer services charge. Medici Ventures has other companies in its portfolio that offer similar services in other geographies. “We think Bitsy’s technology will be useful to other Medici portfolio companies too,” says Johnson and names Ripio, a bitcoin and digital payments company for Latin America, and Bitt, a money transfer platform for the Caribbean, as companies which have synergies with Bitsy’s platform.
He also said Overstock.com will market Bitsy next year to make it easy for customers to purchase products using cryptocurrencies. “We have a pretty loyal base (at Overstock.com). We think that can expand if there is an easy interface for people to buy cryptocurrencies,” he said. The company is also planning to add support for other coins on its platform in the future. “Bitcoin first, and then beyond,” says Johnson.
A Biometric User Interface
While the market for remittances and money transfer is massive, Bitsy is entering a space that has already seen some action. BitPay has already signed major clients for its merchant payment service. Apart from incumbents, Bitsy will also have to contend with startups all over the world, including in Asia and Silicon Valley, which are using bitcoin’s technology to make money transfer cheaper.
Johnson is banking on the crypto wallet’s user interface to edge out competition. “Once you have an online wallet, you have to remember 12 magic letters,” he says, referring to the private key that is used to access bitcoin. But those 12 letters can be lost or hacked. Bitsy approaches the security problem from another perspective. It has simplified the user interface to provide wallet access through biometric information. This means that users can access their bitcoin using face recognition or other biometric technology. “You don’t have to be an IT geek to transfer money using Bitsy,” says Johnson.
Other crypto wallets also have confusing policies that spring surprises on unsuspecting customers. As an example, Johnson refers to Coinbase’s April suspension of the account of whistleblower firm Wikileaks. The suspension effectively blocks Coinbase customers from donating bitcoin to Wikileaks. Bitsy has no such restrictions. “If it’s your money, you should be able to spend it where you want,” says Johnson.
Bitsy’s innovative approach may also help it deal better with regulation, which has stymied progress of bitcoin and cryptocurrencies in various financial jurisdictions throughout the world, and make it more secure as an online platform. Johnson says Bitsy is “revolutionary” technology because it adheres to existing anti-money laundering laws in an innovative fashion. During the initial phase, it acquires customer identification information as well as proof. Subsequently it uses biometric information and destroys the former, thereby ensuring privacy as well as bitcoin access. “There is no honeypot of information for hackers to go after,” he says.