Bitpay became the world's best funded Bitcoin startup in 2014 when it raised $30 million (£19.2 million) — but a year down the line, it's having to rethink its business.
The four-year-old US company lets businesses accept Bitcoin as payment and has signed up 60,000 retailers including Dell and Virgin Galactic (Sir Richard Branson is an investor).
But Bitpay has a big problem — ordinary people aren't paying with Bitcoin.
Bitpay's co-founder and CEO Stephen Pair told Business Insider at MoneyConf in Belfast: "We keep adding merchants — we're up to over 60,000 now — but they're selling to the same pool of Bitcoin early adopters."
"At Bitpay we've never thought there'd be this overnight adoption where you get people using it this year or even next year. It's going to take some time. In the industry there’s a realisation that yes it’s an incredible technology but it’s going to take a while for it to mature."
As a result of this realisation, Bitpay has shifted its focus from letting businesses accept Bitcoin to getting people interested in Bitcoin in the first place. The company is doing this by building the infrastructure and tools to make Bitcoin more accessible. In the process, they've stumbled on a new market — big banks.
Pair says: "They’re very excited. What we’re building we started building because we needed to secure our own accounting system. Turns out that’s the same problem that banks face when they need to do clearing and settlement between each other."
Clearing is the process of actually moving money from one account to another to "settle" the transaction. When you swipe your card to pay for a coffee, the money isn't moved immediately. The bank just notes down that it needs to shift cash from one account to the other and sorts out all these thousands of transactions across all its accounts at the end of each day.
But with Bitcoin, the so-called "blockchain" software underpinning it makes transfers instant. When you buy something with Bitcoin the digital token is moved immediately to the other party's account and the deal is recorded in the blockchain, which acts as a public ledger shared across thousands of systems.
Banks are desperate to figure out how to apply this technology to mainstream currencies and the likes of Citi, UBS and Santander are all looking at blockchain technology.
"We’re talking to quite a few banks," Pair says. "They’re very serious, they want to do pilot projects and they can’t start working on them fast enough.
"There are so many use cases in a bank that this technology can address and make better. There are some use cases that almost all of them want to do, like how do you do clearing and selling between banks more efficiently. Just being able to transfer a balance between banks, to have that happen instantaneously and settle immediately."
Bitpay has built its own payroll software, which it uses to pay its own staff, and a third of employees take all their pay in Bitcoins. Bitpay has also developed a digital wallet, which lets people make transactions with bitcoins.
"I think we’ve got the most engineers working on these problems of any Bitcoin company," says Pair. "We're looking at new features or products that can expand the use cases. We're hoping that will get more bitcoins out there to more people's wallets so they can use that to pay for things."
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