The bitcoin ecosystem has seen a lot of development since it was introduced in 2009. The world witnessed a surge in the number of bitcoin startups soon after 2012. Most of the startups that came up during that time were bitcoin exchanges, wallet services and few payment processors. However BitPay was one of the early movers in the bitcoin industry.
BitPay is a famous bitcoin payment processor started in the year 2011. The company is better known as the PayPal of bitcoin world inside bitcoin circles. The company also raised over $30 million in funding last year. BitPay’s bitcoin payments processing services is used by companies like Microsoft and Warner Bros. Records. In spite of having a positive outlook, the company is currently involved in implementing cost cutting strategies. The cost cutting move by BitPay is seen as a sign of a slowdown in the number of bitcoin transactions.
A recent article in MIT Technical Review attributes BitPay’s woes to falling bitcoin transactions. According to the article, bitcoin was never a viable payments option due to various reasons. In the current scenario, bitcoin is not being widely used by everyone because, not many people are being paid in bitcoin and it doesn’t make sense for someone to buy bitcoin only to spend them again.
Except for a small percentage of people, most of the bitcoin transactions come from those who had accumulated bitcoin in its early days. The fact was agreed upon by the CEO of BitPay, Stephen Pair recently where he mentioned that the company has mostly been catering to a pool of early bitcoin adopters who have been liquidating their stash at a way higher value than the time they got it.
To make matters worse, the company recently reported that they lost about 5000 bitcoins valued at close to $2 million to a hacker. The bitcoin theft has further compounded BitPay’s losses, forcing the company to take dire steps. BitPay is currently exploring new business and revenue models to generate more revenues. How it is going to pan out, only future can tell us.