News

Goldman Sachs Spent $50M and All It Got Was This Lousy (Fiat) Startup

William Suberg | Dec 08, 2016 | 07:00

---

Developers and commentators have hit back at Circle CEO Jeremy Allaire after he announced his startup is permanently divorcing itself from Bitcoin.

CEO Allaire: Bitcoin ‘Essentially Gridlock’

Allaire’s payments provider, once the darling of Blockchain investors, will instead focus on using the Blockchain for fiat money transfers.

“The story is one of essentially gridlock amongst core developers, while mainstream companies are using this technology,” he told the Wall Street Journal Wednesday. “We’ve been deeply frustrated with that lack of progress, and we want to move it forward.”

The move has already been met with surprise, not least due to Circle’s previous giant investments as a Bitcoin-focused startup. Since its inauguration in 2013, the company has secured more than $135 million in funding, $50 million of which came from Goldman Sachs.

Bitcoin Big Names Rebuff Comments

Reacting to Circle’s Bitcoin withdrawal, commentators were quick to cry foul over what they see as Allaire’s ‘hands-off’ approach to Bitcoin from the outset.

“The email boxes I use for Bitcoin development have never had an inbound email from Circle.com, not directly and not on any of the development lists,” Bitcoin expert Greg Maxwell wrote on Reddit. “…I’m sure the same is true for all the other active developers. I find it odd, but considering the history, not surprising.”

A poll surveying user reactions has so far received over 500 votes, with 63% of respondents saying they would abandon or delete their Circle account.

Speculation is also rife about the company’s next move. Allaire confirmed to the Journal that Blockchain-based payment processing would remain its core focus.

“This seems pretty obvious that their intentions are to create their own Blockchain,” another Reddit user commented. “Goldman Sachs dropped out of R3 and now probably wants to develop their own platform.”

Core developer Luke Jr. meanwhile took issue with Allaire’s comment about development “gridlock” in Bitcoin, reiterating Circle’s involvement had only come from a distance. He wrote:

They’ve never really even interacted with Bitcoin development, [as far as I know]. 

Business is Business

“If they want things to move forward, you’re right: they should hire people to work on Bitcoin. But Bitcoin has been moving forward in any case – just not dedicated toward their business’s private interests,” Luke Jr. added. 

The Journal meanwhile notes that statistically, the focus on fiat payments over Bitcoin makes financial sense. Circle has witnessed a 300% growth in its cross-currency fiat payment volumes in the last six months, it says.

Bitcoin volumes, in contrast, “grew just 50% in a year.”

It added that in the payments arena, Circle’s operation was still “tiny” compared to giants such as Paypal’s Venmo and, of course, banks. This means that Circle will be now fighting an uphill battle against payment giants. 

What do you think about Circle’s change of direction and Jeremy Allaire’s comments? Let us know in the comments below!

Images courtesy of shutterstock, circle.com