Education Is Number One Problem For Bitcoin: Rolf Haag From BitPay

“If you are in fintech, you need to be paying attention to this space,” says Rolf Haag, who recently joined BitPay, a bitcoin payments company, as its head of business solutions. Having previously worked at Western Union and PayPal, Haag has extensive experience in fintech and describes his new assignment as “ground zero” for cryptocurrency adoption. “I am seeing how ancient small businesses are indeed (in terms of technology),” he says.

According to Haag, bitcoin’s blockchain is “fundamentally very different” from fintech due to its decentralized architecture. That setup contrasts with the regular client server tech architecture, in which a centralized server is responsible for propagating data and processes to client systems. On the other hand, each node in bitcoin’s network is responsible for storing all data and contributing to consensus for a transaction.

Haag previous served as director of global mass payments for Western Union Business Solutions. That experience will come in handy at BitPay, which has increasingly found a market for international wire transfers for small businesses using bitcoin. Sonny Singh, chief commercial officer at BitPay, said the Atlanta-based company did wire transfers worth $1.3 billion for small businesses last year. This year, it has ramped up the target for that figure to $4 billion.

Despite a drawdown in prices for bitcoin and cryptocurrency markets this year, the effect on BitPay’s business has been minimal. “What we are really seeing is that B2B mass payments (for small businesses) has not really taken a hit even though prices for bitcoin have crashed dramatically,” says Haag, adding that he is at BitPay to “further that adoption.” Singh and Haag both tout their product’s speed (transactions are settled in a single business day) and low charges of 1% processing fee.

“We are a bridge between the cryptocurrency and fiat worlds,” says Haag. Thus, the company facilitates the process of sending, receipt, and exchange of cryptocurrency to fiat for small businesses. In Haag’s terminology, this amounts to abstracting the complexity associated with cryptocurrencies.

As an example, he says the current wire transfer process for small businesses involves multiple steps, from verification of bank accounts associated with the transaction to coordination between banks to making physical trips to the bank to produce proof of identity, that are time- and resource-consuming. That difficulty is multiplied when several geographies and regulations are involved. BitPay offers ease of processing by ensuring that the transaction takes place using a single wallet and a single phone number. “We are collapsing pain and the number of steps involved for everyone,” he says.

While that pitch sounds attractive, bitcoin has several practical problems associated with it in its current form.

For starters, the cryptocurrency has achieved infamy with a parade of headlines detailing scandals and unsavory characters associated with it. Volatility in its prices hasn’t helped matters. Small businesses and individuals view it as an unstable and risky entity that might be wiped out of existence soon. To that end, Haag says educating small businesses about the benefits of wire transfers using bitcoin is his number one priority. His team is taking a “methodical” approach to outreach and focusing on speaking engagements, conferences, webinars, and partnerships to reach out to their target audience and explain bitcoin’s utility to the payment ecosystem.

Bitcoin’s technology also has scaling problems. Transaction times and fees within the cryptocurrency’s network skyrocketed last year on the back of a surge in trading activity in its network. While BitPay processes small business wire transfers for next day delivery, the company trades bitcoin in the markets to ensure immediate access to liquidity. As such, it is dependent on bitcoin’s blockchain and it is not difficult to imagine scaling or price problems on bitcoin causing problems to its business. Haag compares the bitcoin’s current nascent ecosystem to that of the Internet in 2001, when it was on the cusp of taking off. According to him, bitcoin’s “global and vibrant developer community” will improve bitcoin’s scalability in the coming years.

Finally, there’s the regulation problem. Bitcoin’s claims to being a borderless and international currency has resulted in a smorgasbord of pronouncements and confusion about its regulatory status. BitPay’s business spans multiple borders and could be at risk with an adverse regulatory stance from governments. “BitPay is playing the long game,” says Haag and adds that regulatory compliance is built into the company’s products. But he does not provide detail or examples.