On the heels of closing on a $1 million funding round to accelerate its bitcoin commerce footprint globally, CEO Andrew Lee spoke with BTCMANAGER about Purse.io’s background in the Bitcoin industry, Lee’s perspective on Bitcoin and e-commerce, Bitcoin’s global role and its potential future growth.
Purse.io, which fueled the alignment between Amazon and cryptocurrency, is now in the midst of putting together a new project that’s shrouded in mystery. Known as Tritium, this initiative will capitalize on Purse.io ‘s robust e-commerce ecosystem to deliver new value to its consumers and partners. While the details have yet to be revealed, many in the bitcoin community are buzzing in anticipation of the launch.
Andrew Lee, CEO of Purse.io:
I began as an engineer before stumbling upon the world of entrepreneurship. A friend of mine was involved in payment processing in Atlanta. We noticed that a lot of small and medium size businesses coming online were having a hard time accepting payments. Once they got too big for PayPal, they needed a more robust merchant account solution. So we began building API’s for them.
ON MOVING INTO THE WORLD OF BITCOIN E-COMMERCE
We sold off this business and I took a job at Merrill Lynch. While there I spent a lot of time looking at innovative payment solutions that were coming on the market – from Apple Pay to Google Wallet. At the time, I began to hear about this thing called bitcoin. I began playing around with it and realized that it could offer a fresh approach to these others systems that were all dependent on banks and other processors. The fact that it was a decentralized, secure way to accept and make payments was very appealing. From there, I became obsessed with it.
ON THE LAUNCH OF PURSE.IO
Over a year and a half ago, a flash of insight came to me pertaining to how bitcoin processors were essentially mimicking the same functions as traditional payment processors. I thought ‘there’s got to be a better way to use bitcoin that provides real value to consumers without these redundancies.” So my co-founder and I began working off of a hunch while sitting in a San Francisco coffeehouse. This led to the creation of a prototype that we honed through a business accelerator called “Plug and Play” in Sunnyvale. Lo and behold, we were up and running with an online marketplace in partnership with the world’s largest retailer Amazon, offering some of the best deals on the Internet. Over time people grew to love it and use more of it. Today we are considered by many to be the largest consumer marketplace for bitcoin in the world.
We’ve been around for nearly two years and have grown at a rapid clip over time. That took us by surprise – even in light of our incredible value proposition. Our user community has really stepped forward to engage with us in terms of offering feedback on the platform. That’s been very refreshing.
ON PURSE.IO’S VALUE PROPOSITION
There are two ways to shop on Purse.io. One way is to use Instant, a super easy portal for bitcoin commerce. Basically, you search for the items you want on Amazon, click and select it, and then pay in bitcoin. It’s a “One Click” experience very similar to that used by Amazon.
We also have a tool called, “Name Your Discount” where you go to the “Wish List” on Amazon and make your selections before paying on Purse. There is this magical bar which allows you to set the discount you want, typically a 5-50% discount on any item that you want. And again, all of the transactions occur in bitcoin.
ON UNUSED GIFT CARDS AND GLOBAL REMITTANCE
There are an approximate $15 billion unused Amazon Gift Cards in the world. That is far in excess of the amount of bitcoin out there. A huge chunk of these exist internationally in places like India and the Philippines. What many people are surprised to hear is that these gift cards are often used as the incumbent digital currency for remittances overseas.
While it’s certainly common to hear of someone receiving an Amazon Gift Card for their birthday, what’s even more interesting is that people working through a site like Mechanical Turk or even international contractors have various means of earning a living through these gift cards. Unfortunately, Amazon is not integrated with every single bank overseas which is a problem for those who want to convert these cards to cash.
An example of this is in a place like India where there’s not much you could purchase on Amazon.com U.S. because the shipping alone would be $30-40. So many of these workers end up accumulating hundreds of dollars of cards. And while they might elect to purchase an item like an iPad and then turn around and sell it to a friend for their local currency so that they can pay rent and buy food, we came up with a way to simplify this horrible process for them.
Because these people want liquidity, we developed a peer-to-peer exchange where these unused Amazon Gift cards can be purchased at a discount with bitcoin. The card owner can then convert their bitcoin credit into cash for day-to-day living and other uses.
ON PURSE.IO’S BLOCKCHAIN ESCROW SERVICES
We’ve gotten great feedback on our payment process from our users. The underpinning of all of this our blockchain escrow system. This has become a very important element for us because as you think about bitcoin commerce today, it consists of these irreversible transactions that occur through various processors. From a commerce standpoint, that’s not a safe way to shop. With escrow, consumers can confidently shop on Purse.io because their funds won’t be released until the order is received. They can confidently pay for an item because if they get a shipped or damaged product, or don’t receive it, then they can get their money back.
At the same time, our escrow model opens doors to all kinds of entrepreneurs globally who are seeking to enter the e-commerce space by giving them direct access to consumers with Purse.io serving as the intermediary. In this sense, we function kind of like PayPal except that we don’t take custody of any of the funds of our users or businesses. All we do is help facilitate the transaction between them.
ON CAPITALIZING ON BITCOIN”S UNIQUENESS
Many disruptive technologies in their early stages are often no better than what already exists. In this sense, when a business accepts bitcoin it’s technically no better for them or the consumer. For if you just mimic a credit card transaction flow where the processor takes bitcoin and deposits it into the merchant’s bank account, the process essentially is no different than what credit cards can provide.
When I look at the Bitcoin space today, I see a lot of misguided attempts to force bitcoin into situations where it’s not necessarily better. In fact, I would argue that there are various scenarios where bitcoin as a payment system is far inferior to existing legacy systems. Over the past 6-7 years very little consideration has been given to how bitcoin is better than its incumbents. Instead there has been an attempt to compete with incumbent solutions that are actually better than bitcoin. When I think about bitcoin and where it’s future lies, it’s really involves taking a critical look at the way in which bitcoin is better than these legacy technologies. Develop these use cases though will take time.
ON WHAT’S NEXT FOR BITCOIN
I’m excited to see bitcoin evolve in a way where we can really take advantage of why it is better than existing solutions. I’m optimistic that we will discover opportunities for bitcoin to become mainstream and truly find it’s place. I do think that all of the talk in some circles about replacing all the banks or VISA and Mastercard with it are misguided. To me, this is a view being perpetuated by people who haven’t really thoroughly thought about bitcoin. The same with those who try to disassociate bitcoin from the blockchain. If you take the bitcoin element out of the blockchain then you are left with a crappy version of a server or relational database. Instead what’s really unique about bitcoin and the blockchain is that they work together. So the focus should remain on bitcoin’s blockchain value versus what we hear when prices fluctuate – “the oh wait, the currency sucks so we should focus exclusively on the blockchain.” And when the currency goes back up, they start saying the opposite. I’m confident that as more successful use cases occur, bitcoin will grow in its value. I think it will take some time for people to come to these conclusions.