While BitPay and Coinbase are bringing Bitcoin solutions for merchants in the United States and other western nations, BitPagos is focusing on a part of the Bitcoin ecosystem that may actually be more important in the early days of Bitcoin adoption. Many Bitcoin critics like to point out the fact that most merchants immediately exchange their bitcoins for dollars after receiving them as payment, but BitPagos is actually working on a system that would help merchants move in the opposite direction. Instead of leaving the Bitcoin ecosystem as soon as a payment is made, BitPagos wants to assist merchants who are trying to turn their credit card payments into bitcoins. In other words, BitPagos is the opposite of BitPay.
A Different Use Case in the Developing World
Most people in the United States understand a few perks of the Bitcoin payment system, but a completely new form of money that is outside the control of government is not that appealing in a country where the currency is relatively stable. While Americans, Europeans, Australians, and other members of developed nations are not trying to flee their local currencies to find a safe haven for their savings, there are plenty of people in South America and other parts of the world where the local currency has detrimental effects on the well-being of the individuals in that country. BitPagos is focusing on South America right now, although their services can be used in almost any part of the world where bitcoins could be viewed as an alternative to the local fiat currency. Many people believe that the bitcoin will not be able to compete with the dollar or euro at any point in the near future, but that does not mean that it won’t be able to compete with the Venezuelan bolivar or the Argentine peso. The bitcoin may seem extremely volatile to people in countries with relatively stable currencies, but the fact of the matter is that the Venezuelan bolivar lost 50% of its value in 2013. People in places like Venezuela are looking to flee the local currency and get into bitcoins, not the other way around. This is the aspect of Bitcoin adoption in developing nations where BitPagos can help the most.
Bringing Bitcoin to Developing Nations
When talking with Sebastian Serrano, the CEO of BitPagos, he is quick to point out that many of the early bitcoins were not mined in places like South America. This means that the developing nations where Bitcoin could have the biggest impact actually don’t have many bitcoins to trade with at this time. BitPagos can bring bitcoins into developing nations by allowing merchants to sell their goods and services for the cryptocurrency. Most people think that buying bitcoins on an exchange is the best way to gain access to the currency right now, but the reality is that accepting bitcoins for goods or services is always the best option. BitPagos can help merchants accept Bitcoin payments in the developing world, but they can also allow merchants to get paid in bitcoins after accepting credit card payments. The perks of lower fees and faster payments are obvious in any part of the world, but the idea of getting payouts in bitcoins rather than the local currency is also an attractive option for certain parts of the developing world.
The Key to Bitcoin’s Success
If Bitcoin is going to be a success story in five or ten years, then the story needs to begin in places like Argentina, Kenya, and India. The countries who have the largest level of friction around payments and capital are going to receive the most powerful benefits from cryptocurrency. Bitcoin is still somewhat of a novelty item in the United States, but it’s starting to make sense as a viable alternative to fiat currency in countries with heavy capital controls and inflation. In reality, companies like BitPagos who are looking for Bitcoin use cases in the developing world are doing some of the most important work in the Bitcoin space. If Bitcoin cannot takeoff in these parts of the world where a new currency option is desperately needed, then the argument for Bitcoin in other parts of the world becomes even more difficult to make.