In this entry in CoinDesk’s “Bitcoin Milestones” series, Beauregard looks back on the day PayPal began accepting bitcoin – giving its stamp of approval to a technology many believed had the potential to disrupt it.
It’s a Monday in Bitropolis, but not just any Monday.
For nearly three months, the GoCoin team had kept painfully silent on the most important bitcoin news article within the industry so far . In 12 short hours, the press embargo would lift, the news would jolt the financial world and GoCoin would be cemented in history alongside BitPay and Coinbase because the startups that ushered one among the world’s largest payment companies into cryptocurrencies.
Yet, on the eve of that very announcement, our inclusion was faraway from certain.
When I founded GoCoin along side Brock Pierce in mid-2013, we discussed that we could also be too late.
BitPay had been offering payment services to online merchants for overflow a year, touting that they had signed up 10,000 merchants. Coinbase announced that they had signed up the primary major retailer, Overstock, to simply accept bitcoin.
GoCoin had raised a modest seed round and was “heads down” in development while BitPay and Coinbase continued to at least one up one another with increasingly impressive announcements – Gyft, CheapAir, Virgin Galactic and Dell.
It felt like a day GoCoin wasn’t live would mark another major merchant lost to BitPay or Coinbase.
In response, i used to be putting intense pressure on the event team to compress the Go Live schedule. My system architect, Margot Ritcher, and lead developer, my nephew Kevin Beauregard, agreed we could cut a month out of the schedule if we compromised on the multi-blockchain, multi-coin design. The downside of taking the shortcut, would be a serious software rewrite.
As you’ll see later within the story, taking the additional time to stay the multi-blockchain design proved to be the proper decision.
Finally, in December 2013, GoCoin announced that it had been taking donations for the Boys and Girls Club of Santa Monica. We were finally within the race, and that i ramped up my Series A fundraising efforts. With the worth of bitcoin having gone from the $100 to over $1,000 within the previous months, booking VC meetings on Sand Hill Road was never easier.
In early 2014, GoCoin firmly planted a flag on the cryptocurrency moon by announcing support for litecoin and dogecoin payments. The bitcoin purists lost their minds: “You are ruining bitcoin, altcoins are a joke!” On Reddit, people decreed: “You are scammers taking these scam coins!”
Those were the nicest comments I can publish here.
While the GoCoin team learned to work the business, I already had $2.5m committed of our $5m Series A funding with about $1m already within the bank.
But our fundraising efforts came to a screeching halt when news broke that Mt Gox, the most important bitcoin exchange, had been the victim of a serious heist where about 25% of all bitcoin in circulation had been stolen.
The entire industry was during a state of shock and chaos, funding options instantly dried up and even people who had committed to our round never funded. My board decided, instead of fight the market, to only close our Series A, which along side the seed capital came to a thin $1.5m.
Despite the modest raise, GoCoin was still the simplest funded LA bitcoin startup at the time. We had negotiated a really favorable top floor lease overlooking Santa Monica’s Third Street Promenade.
GoCoin also sublet space to fellow blockchain startups, developers, lawyers, accountants and provided space for meetups and therefore the first bitcoin ATM in LA.
We named the space ‘Bitropolis’.
In the months that followed, GoCoin gained steady traction with our strategy of supplementing bitcoin payments with other alternative digital currencies.
In many cases, we convinced early adopters like CheapAir, KnCMiner and eGifter to feature GoCoin so on not “limit their customer to only bitcoin”. We also continued to shake things up by announcing Larry Flint’s Hustler brand as a high-profile merchant.
By 22nd September, 2014, the GoCoin directors assembled in offices of embedded Bitropolis attorney Adam Ettinger. Perhaps more importantly than the impact the large announcement would wear financial institutions, we were finally getting validation that our naysayers were wrong.
Bitcoin isn’t “only employed by drug dealers”, “a Ponzi scheme” or a “joke”!
Why the emergency meeting? On the eve of the announcement, an email with the heart-stopping subject line “GoCoin AML Compliance” hit my inbox.
At the 11th hour, they’re requesting a “full assessment” from our attorney and that we had to make a decision the way to respond.
The questions were flying round the room, did one among our competitor’s investors pull some strings to knock us out? By “full assessment”, did they need a legal opinion? Were they trying to find an excuse to dismiss us? Was this simply a routine checklist and a box remained unchecked?
In the previous months, GoCoin had stealthily worked with engineers, business development, marketing, PR and, of course, the legal department of PayPal. The technical hoops to integrate GoCoin’s payment platform into PayPal’s PaymentHub were trivial compared to the due diligence process.
We had a full opinion from a top Isle of Man firm . They reviewed our compliance program extensively, requesting we stiffen aspects of our on-boarding procedures and add payment monitoring features. most significantly , we had to satisfy their legal team that our compliance program wasn’t only solid, but that we were continuing to enhance it.
Even thereupon , BitPay had raised $30m from Index Ventures and Coinbase $25m from A16z. it might not are surprising for PayPal to discard our small scrappy undercapitalized startup.
At 9pm, our attorney sent a carefully worded “assessment”, but certainly well in need of a opinion . The response came back from PayPal: “Thanks. That’s all we would have liked .”
On the morning of 23rd September, PayPal announced it might begin accepting bitcoin, litecoin and dogecoin payments via GoCoin, and bitcoin payments via Coinbase and BitPay. Within minutes, the worth of all three coins spiked.
Reddit was buzzing, and because of the superb strategy of my PR goddess Amanda Coolong, my phone was ringing off the hook with reporters asking about the GoCoin affect PayPal.
History was made.
Yet, soon after signing this milestone agreement, parent company eBay announced they were spinning off PayPal. As a result, PayPal’s blockchain ambitions were pushed to the back-burner.
As I reflect thereon , in terms of mainstream merchant adoption for online payments, i might need to say late 2014 to early 2015 was the primary big peak. At the time, GoCoin was signing up about 750 merchants per month, including top brands like MovieTickets.com, Lionsgate Films and Re/MAX.
Even though many of the merchants didn’t get the quantity of transactions that they had hoped for, their brands were now considered innovators.
Bitcoin exchanges and merchant processors were the bitcoin 1.0 trailblazers that brought bitcoin out of the shadows of the dark web and began to lift the reputational stain left by Silk Road .
After four years at the helm, I even have stepped down as CEO of GoCoin, yet I remain on the board of the parent company. GoCoin has been profitable for nearly two years now, and that i still believe there’s a bright future for the corporate and blockchain merchant payments. That said, the industry must mature so as to ascertain the type of growth we envisioned back in 2014, and that i feel I can affect more change outside of GoCoin than I can from within.
Recently, I join the Bloq team founded by Matt Roszak and former Bitcoin core developer Jeff Garzik. I’ve always had tremendous respect for both, and I’m thrilled they need welcomed me in as a partner.
My thesis for merchant payments is that the most important and most successful companies will likely implement their own payment systems.
While it’s not exactly clear what those systems will appear as if , I still believe today, as I did once we were designing the GoCoin platform, we paved the way for a multi-network, multi-chain and multi-token world.