Peter Thiel Gets the Bitcoin Bug

Interesting news out today in the Bitcoin world.  As you may recall, last week I highlighted how the highly respected venture capital firm Union Square Ventures (Fred Wilson, early investor in Twitter) invested in Coinbase.  Today we learn that another very high profile investor has plunged into the Bitcoin pool.  In this case it’s Peter Thiel, and his investment is in BTC merchant processor Bitpay, a company I have highlighted previously on several occasions.  Back in March I noted that the company was putting up mind-boggling growth rate numbers.  Incredibly, the tremendous growth rate continues as they added another 1,900 merchants in April and are currently signing up around 100 additional merchants a day.  Max Keiser, one of the earliest proponents of Bitcoin and a celebrated bankster fighter is also involved in the investment.  From Coindesk:

Peter Thiel’s Founders Fund is leading a group of investors into funding the merchant services firm BitPay.

BitPay, which offers corporate Bitcoin services, said it had not been looking for funding but the opportunity was too good to turn down.

BitPay founder and CEO Tony Gallippi said: “We raised seed funding in January and February and still had some left so we weren’t looking for money. They approached us, which was a nice surprise because we’d heard that they’d got as far as due diligence with another company in this space. We were really impressed with their experience and energy.”

Asked about yesterday’s action against Dwolla Gallippi said much of the coverage was wrong and once you looked at the actual warrant it was clear it was a very specific problem of non-compliance – “the shell company was not licensed to do what it was doing.”

BitPay claimed 1,900 new merchants signed up in April and it continues to sign up over 100 new customers every day. It is currently processing around $5m of Bitcoin transactions per month.

Joining Founders Fund is ‘Mad Max’ Keiser’s Heisenberg Capital – a London-based fund focussed on Bitcoin investments.

As if all this isn’t enough, there’s additional interesting news on Bitcoin recently, in this case with regard to the partnership between Bitpay and Gyft.  This story is getting some mainstream media traction as CNN Money covered it today.  The article notes how you can now spend Bitcoins at 50,000 merchants versus 8,000 before this deal.  But yeah, BTC is the same as beanie babies…

Full Thiel Bitcoin article here.

In Liberty,
Mike

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5 thoughts on “Peter Thiel Gets the Bitcoin Bug

  1. Bitpay is not all good. It gets the job done but there are design or intentional flaws. The way they allow you to move USD out of your Bitpay account is extremely weak. It’s sort of fraudulent in that you can’t pinpoint the timing of selling your bitcoins nor the resulting wire of USD to your bank account. You have no idea when it will happen or even IF it will happen because their admin center gives you no details or confirmations when you initiate this action whatsoever. In fact, you don’t even know IF you initiated this action. That’s how bad this functionality is in Bitpay.

    This means if you think you are selling bitcoins today, NOW, because you clicked a link to do this it WILL NOT BE SOLD IMMEDIATELY, might not be sold today, tomorrow or who knows when. This is not good and an obvious design flaw. Anyone who actually uses Bitpay for merchant services will know this issue. By the time they actually sell your bitcoins the price could move against you dramatically and resulting in a huge loss. If this flaw was intentional because it allows Bitpay to play the float to their advantage it’s an obvious fraud and should be investigated.

    If the company is real they will resolve this issue by implementing different functionality in their admin center that gives you exact confirmation on when you are selling your bitcoins and exactly when it gets wired to your account. These two pieces of information are a known entity and should be exact. Until they fix this issue you should look for another company to process your merchant bitcoin payments or just do it yourself. The risk of loss because of this timing issue is just too great to accept if you are doing any real volume of bitcoin sales.

  2. that doesn’t sound good, I thought the point of bitpay was that sales could be converted straight away otherwise you may as well use an exchange.

    • You can choose how you want to receive payment in your Bitpay account. In USD or BTC or some % combination of the two. If you choose 100% USD, it is supposed to get swept to your bank account every day. There is no “wire now” or withdraw functionality like there is at exchanges like mtgox or btc-e.com. I think the issue is Bitpay doesn’t want to hold any currency longer than a day. Which makes sense. Since Bitpay is located in the USA, they are a target for the gov. If they have none or little cash, there is nothing for the gov. to go after. You can be sure if they at some point have a large cash position that will be very attractive for the gov. to go after.

      Let’s say you choose to receive your payments from merchant transactions in USD. At the moment of purchase of your service with BTC through Bitpay it is converted to USD. Since that happens in real time you know the conversion rate and you also know the date/time stamp. Everything is known and you have USD in your Bitpay account. Whether that gets wired today or tomorrow is not as relevant as the USD amount doesn’t change from day to day.

      The problem is when you choose to hold BTC in your account. At some point, when you want to convert to USD, there you have the problem. There is no link to “convert” to USD. You have to change the setting in the account for how you want to receive payment to 100% USD. After you do that there is no confirmation message or anything. You just changed the setting in the page. It doesn’t take affect until the next BTC payment is made to your account. Hence the unknown timing issue. If you do not receive a BTC payment for a week after you changed this setting then your BTC account conversion to USD does not occur for a week! This is the problem!

      When you receive that next BTC payment then the system realizes the account is now set to 100% USD and it converts the BTC to USD at some point in the day which you have no idea about and eventually it shows up in your bank account on some day. But the exact timing is unknown as I explained previously. When the BTC market is moving rapidly your date/time of the conversion is a big unknown which needs to be remedied.

    • I just thought of one solution to this issue. When you have BTC in your Bitpay account and decide you want to convert to USD, you can send that BTC to your account at MTgox or another exchange and sell it for USD there. But once you do that you will have to wire the money out and you get wire fee costs. With Bitpay there are no USD wire fees so you save that expense. Bitpay just needs to fix this issue so there are no unknowns with conversion rates and timing.

  3. Why Bitcoin Will Fail as a Permanent Alternative to Digital/Paper Fiat Currency:

    1. Bitcoins derive their value from fiat currency, and the creation of fiat currency (by loaning it into existence) is categorically controlled by the ruling class (lazard-brockcapitalgroup-bcg-booz-intelligence-community-et-al nexus) of human velociraptors so politely called oligarchs on this website. The implications for Bitcoin of such value-derivation are obvious.

    2. Bitcoin is being bought out by investors strongly associated with the just-mentioned ruling class so it can be cleverly brought under the control of said ruling class.

    3. Bitcoin is being strategically assaulted by ruling class’s governance apparatus to ensure it is either brought under control or destroyed: http://arstechnica.com/tech-policy/2013/05/feds-seize-money-from-top-bitcoin-exchange-mt-gox/

    —————————————————————————–

    While Bitcoin will fail as an alternative to ruling-class-creation-controlled fiat currency, other digital alternatives will arise to replace it; in order to be successful, at least one such digital currency alternative must:

    1. CATEGORICALLY DEMOCRATIZE the loaning of purchasing units, AKA digital currency, into existence while simultaneously

    2. controlling the creation of the CATEGORICALLY DEMOCRATIZED digital currency so it remains scarce enough to retain its value as a liquid representation of real-world economic goods and services.

    It will be extremely difficult for any group of persons to create a CATEGORICALLY DEMOCRATIZED digital currency that meets condition 2 above; however, some group of very intelligent persons will eventually succeed in doing so. And when it does, the ruling class will have lost its main tool of control and oppression, and, consequently, it will no longer be able to rule.

    Modern finance, as represented by the people comprising the sociopathic rulingclass-commercialbanking-centralbanking nexus, is a yet-unrecognized grouped institutional anachronism soon to be relegated to the sewers of history; I like to think of it as a used piece of toilet paper.

    If it is not relegated into non-existence, then, nation-by-nation and city-by-city, humanity will eventually be placed in the purportedly sustainable technofascist green gulag mentioned here

    http://www.youtube.com/watch?v=nGQu1y4BZSs&feature=player_embedded

    by this elite grouping of closet sociopaths

    http://www.forumforthefuture.org/

    I consider such a future for humanity to bleak to even imagine.

    Sincerely,
    Anon Y. Mous

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