Spark, New Markets, App Messaging, and Bitcoin Changes | Hacker News Reader

Spark, New Markets, App Messaging, and Bitcoin Changes

blog.circle.com

132 pointsbdcravens77 comments

The headline might as well read "Circle announces imminent closure"; unless they have some real winner of a business model they haven't disclosed yet, that's the end result here.

Looks like they've shut down their trading platform and are shifting their entire focus to the money transfer side of the business, which allows them to purely compete against other virtual currency money transmitters like Ripple who can operate in all US states (including New York which has been problematic for many virtual currency businesses[1]).

My unfounded and completely wild speculation here is that dropping their trading services will reduce their expensive compliance costs, in-house development (or platform licensing) costs, and headcount.

[1] https://en.wikipedia.org/wiki/BitLicense

Cutting their trading will also reduce their risk too, right? Trading desks need to hold reserves against their risk. (Whether for legal reasons, or just to reassure counterparties) If your capital is provided by people making bank deposits, that's cheap. If your capital is provide by VCs, that's expensive.

Expensive VC capital[1] being the biggest factor for this move makes much more sense. Upon reflection, the other cost savings I listed are simply ancillary, or side-benefits, after addressing the underlying driver that you identified.

[1] http://www.coindesk.com/circle-raises-50-million-with-goldma...

Wow, big shame this was definitely the easiest way I found to buy BTC. Also the fact it was on iOS I felt much better about giving them my details than just some random website.

Can't really see the point in them now when so many other services offer similar stuff for non-crypto.

Sad, and no notice given to us. We pay one of our employees via BTC. Circle was the only place that let us buy enough BTC from our corporate account.

I would really love to know why the employee is paid in BTC. Are they out of the country, a felon, or something else entirely?

Some people just prefer to be paid in BTC because they like and support the platform and its concept and want to be all in with it.

They're out of the country and their country's currency is unstable.

I wonder if this has anything to do with the IRS going after Coinbase[0] and them seeing the writing on the wall trying to avoid that issue or minimize any potential "wrong doing"?

[0] http://www.forbes.com/sites/kellyphillipserb/2016/11/30/cour...

What on earth is the point of rolling your own messenger when you've supported iMessage integration from day 1? (and presumably could integrate with other major platforms).

How does Circle make money? They claim they don't charge for deposits, withdrawals, or sending money. Hidden fees? Future price increases? Stealing customer funds?

Interest for holding money? I know when they sold Bitcoin, they charged a small markup, similar to what Coinbase charged.

Most likely on the spread.

It's like currency exchange booths that have "0% fees" but the buy price is different from the sell price.

Circle doesn't have a spread. There is only one price for both buy and sell.

I'm guessing they were just burning VC money.

Their spread was buy only

They don't. They will be acquired eventually with their ever growing user base. Acquirer will have costs. Retain x% of users. Profit.

Dunno why this is being downvoted. The answer is apparently "they don't".

That's good to know. The combination of "We hold your Bitcoins" and "no fees" has a very bad track record. Over half of Bitcoin exchanges and "hosted wallets" turned out to be "take the money and run" operations. It's thus good that they're getting out of Bitcoin.

The long term goal might have been to get businesses onboard and charge them to accept money.

I don't see why they're doing this now, what caused this?

Also, I hope this doesn't put downward pressure on BTC. There is already mounting pressure as the world invests in dollars considering widespread conservative political movement across the globe, and no one quite knows what's going to happen. As the dollar goes up, I'd think that would have another negative effect on BTC.

I see BTC crashing very soon, but in the meantime, I'm waiting cautiously.

Circle has been putting distance between themselves and Bitcoin for a while now, branding their service as a type of social money, even while still using Bitcoin behind the scenes.

> putting distance between themselves and Bitcoin for a while now, branding their service as a type of social money

Anyone remember dwolla? Probably not. They tried to do the same thing, but it turned out the only reason anyone cared about them was bitcoin-friendliness.

I'm not sure why anyone in their right mind would want to compete in the "social money" market right now given that it's saturated with low- or zero-margin projects, often sponsored by large companies. Square cash, venmo, Facebook cash, snapcash. The only one of the bunch I use is square cash because it's the least "social".

Dwolla is also semi closing this month. I used them a lot because it was the only service with recurring transfers. Not sure what to do now

Dwolla has other problems. In May The Consumer Financial Protection Bureau claimed that Dwolla lied about security (1):

From December 2010 until 2014, Dwolla claimed to protect consumer data from unauthorized access with “safe” and “secure” transactions. On its website and in communications with consumers, Dwolla claimed its data security practices exceeded industry standards and were Payment Card Industry Data Security Standard compliant. They claimed also that they encrypted all sensitive personal information and that its mobile applications were safe and secure.

But rather than setting “a new precedent for the payments industry” as asserted, Dwolla’s data security practices in fact fell far short of its claims. Such deception about security and security practices is illegal. Specifically, the CFPB found, among other issues, that Dwolla misrepresented its data-security practices by:

Falsely claiming its data security practices “exceed” or “surpass” industry security standards: Contrary to its claims, Dwolla failed to employ reasonable and appropriate measures to protect data obtained from consumers from unauthorized access.

Falsely claiming its “information is securely encrypted and stored”: Dwolla did not encrypt some sensitive consumer personal information, and released applications to the public before testing whether they were secure.

As for the change in business model, they announced (2) on a Friday afternoon after the U.S. election, with less than one month before the switchover. Some people were left in the lurch. (3)

1. http://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-...

2. https://www.dwolla.com/updates/focus/

3. https://discuss.dwolla.com/t/the-changes-this-dec-7th/3209/7

> Square cash, venmo, Facebook cash, snapcash.

We don't have anything like any of those in Canada, if someone wants to try :)

we have interac e-transfer which is offered by virtually every bank and credit union in canada and requires only an email address or phone number to use

Nobody uses it though.

It costs $1.50 per transaction so it's not practical for paying your friend $5 to split a burrito etc.

your bank sets the rate. mine charges nothing for transfers under $100 and $1 for anything over that

> even while still using Bitcoin behind the scenes.

Are we sure they were even doing this?

Circle isn't a major player in the cryptocurrency space, so I doubt this will impact the price much, if at all. Maybe the feature wasn't getting enough use?

Also over the past year or so it has primarily been China pushing the price of Bitcoin higher. So that also minimizes any effect this could have in my opinion.

BTC price seems to be determined primarily not by the dollar but by the RMB, and especially demand for its use in evading currency controls. Bitcoin trade in the West is a tiny influence on the price.

(If anyone has stats on the spread between Chinese prices and Western exchange prices, that would be good to see.)

well, damn. I went through all the hoops signing up with Circle already, I heard Coinbase was worse. Does this make Coinbase the only game in town for buying bitcoin with a debit card?

Using cash via localbitcoins is easy in any reasonably populated area. You pay maybe 3-5% premiums over market price to buy from a professional high-availability seller. You can buy at or below market price if you're not in a rush.

I was going to do this but there is only one local seller and he had a huge markup.

You can trade using online banking on localbitcoins, you don't actually need to be local. In fact I've done over 70 trades on localbitcoins, and never met in person for any one of them.

oh wow, I didn't realize that at all. I might do this, I appreciate the advice.

How on earth do you verify security for that?

What do you mean? The BTC goes into escrow with Localbitcoins, then the buyer sends the money to the seller's bank account, and then the seller releases the BTC from escrow.

Because business deals in parking lots are famous for working out well.

There are others, though not all apply to US buyers: https://en.bitcoin.it/wiki/How_To_Buy_Bitcoins_With_Your_Cre... (it lists some that accept debit card)

According to https://coinmarketcap.com/exchanges/volume/24-hour/ the two biggest markets are Poloniex and Kraken. I can recommend Kraken - looks very well thought out and professional.

Worth noting is Poloniex is purely for trading between different cryptocurrencies.

Personally I'd add that they appear quite technically competent albeit somewhat controversial.

Bitstamp announced instant buying with credit card some time ago, don't know the terms though.

This blog article changed substantially from last night - odd.

What is that quote about how every application will eventually implement user-to-user messaging? Can't find it out there :P

Well, http://www.catb.org/jargon/html/Z/Zawinskis-Law.html and a more recent formulation: http://www.lukew.com/ff/entry.asp?1696

That's it, thanks :)

It seems that they've pivoted to a Venmo-like model. Here in the UK, we don't have single app that has the wide network like Venmo does in the US (there are plenty of apps, just with small networks.) Myself and my friends have found Circle to be a good option. I'd encourage other folks to give it a try.

What are the advantages of using Circle or other apps over just transferring money? UK bank transfers are free and instant, I can't see what an app could add to that?

The idea is you just need the person's phone number/email to send money as opposed to bank info.

Phone number is sufficient in the UK for banks as well.

In the US at least, the info needed to transfer money to an account is the exact same info needed to silently transfer money from an account.

All of it.

At once.

I found it really surprising hearing similar anecdotal stories about banking in the US.

But how does it really work? Is it done on a requester side - i.e. I can request money to my bank account having details of someone's else bank account wholly without their permissions? How could such lax security be allowed in modern age? When paranoid EU banks decline my transactions to my own accounts with other banks, confirmed by 2-factor auth, it's impossible to fathom how one can electronically take money from someone else's account.

You need the account number and the routing number. Both are printed in plain text on your personal checks.

In theory they should also be verifying your signature but I have never actually seen that happen.

I suspect if someone in another state cleaned out your account it might trigger some fraud alert, but nothing is really stopping it.

What does one actually do with the account number and routing number? The UK system has account number and sort code but does not seem to have an epidemic of this problem, because you can only use those for direct debits.

You walk up to the bank, fill out a withdrawal slip (http://www.handsonbanking.org/financial-education/wp-content...), and hand it to the teller.

Or sign up for a PayPal account and fill in both of those numbers, and transfer money from your account to your PayPal balance.

  > the info needed to transfer money to an account is the exact
  > same info needed to silently transfer money from an account

If I wanted to transfer money to an account, would I need the username/password/credentials for that account?

If I wanted to transfer money from an account, would I need the username/password/credentials for that account?

In the US, it seems the answer is no and no.

Online, yes. In person at a branch, no.

No, just the account number and routing code. It's how you associate an account with PayPal as well.

Fun bonus, both of those numbers are printed clearly on every check you write, too.

Well, that's bloody stupid. How does that work?

(The UK system of account number/sort code does allow you to set up malicious direct debits against other people's accounts e.g. http://hoaxes.org/weblog/permalink/clarksons_account_gets_ha... - BUT the direct debit guarantee system is supposed to make them all reversible, and you can't DD to arbitary accounts, you have to be a verified merchant.)

Your credit card number is both your public key and your private key!

http://www.icanbarelydraw.com/comic/2702

That's a credit card number, whereas I was asking about bank transfers? And credit card transfers are supposed to be reversible in the event of fraud.

All you need is a routing number and an account number to initiate a transfer of funds in either direction. PayPal and others use this as verification of account ownership by initiating a small deposit and withdrawal, prompting you for the amount.

No secrets involved.

Aaaaaand the two bits of info necessary are on every check you write and hand off to complete strangers. Hell of a system.

Granted this a rather provincial point of view, but Circle and Coinbase are the only two companies I'm aware of allowing residents of the state of New York to convert bitcoins to cash and vice-versa. This is because the state of New York instituted a virtual currency license called BitLicense[1] that treats commercial bitcoin transactions as "money transmission"[2].

Ripple was also issued a Bitlicense[3] recently, but their virtual currency is not bitcoin. Haven't seen word on Coinbase's Bitlicense approval, but they applied last year sometime and are expected (or perhaps already have received) their license.

[1] https://en.wikipedia.org/wiki/BitLicense

[2] https://en.wikipedia.org/wiki/Money_transmitter

[3] http://www.coindesk.com/new-york-bitlicense-ripple/#

Circle's interface is much easier to use than the banking apps and websites I've used. You don't need to enter the sortcode/account number, like you typically need to with the banks. And the fact that it's so easy and fast means that people typically pay each other instantly (at the bar, restaurant, cinema, whatever) rather than waiting and potentially forgetting. I like it because you don't need to remind people, or be reminded yourself.

Obviously, consumers care less about Bitcoin today than ever. I don't understand why the price does not reflect this. Oh, well, Chinese Commies need ways to sneak money out of the country and this pretty much is the only use case for Bitcoin. But! Blockchain (without Bitcoin) will live.

A bit surprised as they quite recently emailed me to let me know EU customers can now buy bitcoins.

Wow. No notice at all? That's terrible. I just transferred out my BTC. Deleting the app.

This makes me sad. RIP Circle.

This link is much better at talking about their plans.

https://blog.circle.com/2016/12/06/spark-new-markets-app-mes...

Thanks, we've updated the link from https://support.circle.com/hc/en-us/articles/217972003.

Seems a bit odd to change to a substantially different blog article; bigger strategy is important, but the original article focused more on the decision to stop exchanging Bitcoin, which is bigger IMHO than their other initiatives.

I know you work at Brightcove; are you involved with Circle at all? (for the benefit of others, both have same founder) Personally I think all of Circle's initiatives combined are less of a story than the decision to stop trading Bitcoin.

They might as well close

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