Sooner this year, Radu Georgescu, founder of GECAD Group and reputed entrepreneur, having founded companies such as Avangate and ePayment, joined forces with Diwaker Singh and Manuel Heilmann to create Coinzone, a global payment gateway for Bitcoin and other cryptocurrencies, dedicated to European and emerging markets.
The founders of Coinzone are spearheading the efforts of bringing the Bitcoin payment gateway solution to merchants across Europe and the globe. We’re thrilled to have Manuel Heilmann, Co-founder & CEO of Coinzone, at How to Web Conference this year, where he will be part of “The crypto-currencies ecosystem” panel on the main stage.
How to Web: Bitcoin and crypto-currencies took the Internet by storm, beginning five years ago as a fast growing phenomenon, but haven’t yet reached the status of mainstream tech. What are the causes and what obstacles need to be overcome for mass adoption of crypto-currencies?
Manuel Heilmann: I think there are five main reasons.
1. The volatility of Bitcoin makes consumers nervous for understandable reasons. A stable exchange rate will be important to give people the confidence that they can buy Bitcoin today and that they still have the same value tomorrow. I also don’t think that a steady rise will give people confidence because such rise usually comes with the fear of a price correction.
2. People usually trust banks because they are regulated and controlled by the government or central bank. We can argue that this isn’t always the case but in principle it is. In case of Bitcoin, there aren’t applicable regulations that could give consumers the same level of confidence. I believe that reasonable and responsible regulations are necessary for mass adoption to build the trust in Bitcoin as a currency and payment method. I also see an opportunity for banks to embrace Bitcoin and offer services tailored to the Bitcoin industry. Consumers, the Bitcoin industry as well as the banks would benefit. Most banks aren’t there yet but there are a few European banks which have started to embrace Bitcoin and to develop innovative solutions. I am sure that more banks will follow.
3. Most Bitcoin wallets and services were built for the tech-savvy people. They aren’t very user-friendly. The killer app hasn’t been developed yet and making a payment is often still a little inconvenient with existing wallets. Coinzone is working on some interesting concepts to make it more seamless for users to make payments.
4. Romania is the most advanced country in Europe if not worldwide in terms of Bitcoin infrastructure. It is easy to buy Bitcoin in Romania because you have about 1,600 kiosk terminals that dispense Bitcoin, an ATM in downtown Bucharest and a local exchange. In other countries such as Germany you don’t find the same infrastructure yet. It will take some time to build it. We at Coinzone are committed to collaborate with other players in the Bitcoin community to build and promote this infrastructure.
5. There are still very few places where people can spend Bitcoin. This is one of our main goals to change it as soon as possible and we are pursuing a threefold strategy to accomplish this. You will see a lot more places in Romania very soon that will accept Bitcoin. I believe that mass adoption will be accomplished through merchant adoption.
Bitcoin was the first of its kind, but what makes it still the most popular crypto-currency by far? What are the main benefits of using Bitcoin and what are the main drawbacks?
Is Coinzone dedicated only to Bitcoin? Why (not)?
At this point we focus on Europe and other cryptocurrencies have no adoption in Europe. Diluting our efforts to promote Bitcoin doesn’t seem to be smart. The situation in other markets may be different. There are Asian markets where LiteCoin is strong and where it makes sense to support it. I don’t see it in Europe yet but we monitor the trends and we built our platform in a way that allows us to react quickly and add support for other currencies immediately if needed.
During the last couple of years, we’ve witnessed the rise of many Bitcoin e-commerce platforms. What sets Coinzone apart?
Coinzone offers the only fully localized Bitcoin payment solution tailored to the European market. We know Europe and we know that a “one-size-fits-it-all” approach isn’t going work here. We will continue to localize our solution on all levels and offer a unique experience to all merchants in Europe. We will approach market by market and launch whenever we are ready to provide a localized experience. Additionally, we make it very easy and seamless for merchants to accept Bitcoin payments without trying to be a full-service e-commerce platform. Unlike other solutions, we will not offer all the bells and whistles of an e-commerce platform because we neither intend to replace or compete with them nor will we replace all other payment methods. Ease-of-use, true localization and integrations with European partners set us apart.
What would be the advantage of accepting Bitcoin payments for retailers and why use a platform such as Coinzone?
Right now, I see three main reasons for businesses to accept Bitcoin payments:
1. Lower Transaction Costs: Merchants pay about 1% for processing a Bitcoin payment vs. 3-4% for a credit card payment. Micro-transactions can easily cost 8-10% due to fix fees per transaction.
2. No Chargebacks: Bitcoin eliminates the risk of chargebacks and the risk of getting shut down by credit card companies as a result of chargebacks
3. Publicity: Bitcoin is a great opportunity for early adopters to get a PR boost because of its newness. It is hip to accept Bitcoin because there are still very few businesses doing it. A business still sticks out when it accepts Bitcoin. This will draw attention, new customers and potentially an uptick in revenue.
A business could simply use a wallet to accept Bitcoin payments. However, businesses need frictionless payment solutions in order to focus on their core business. They neither want to deal with exchange risks, regulations and security nor can they afford a clunky payment process that takes too much time. They leave it to experts like Coinzone to handle it for them. Moreover, Coinzone provides merchant tools including a Google and iPhone/iPad app that makes it very easy for merchants to accept Bitcoin payments without taking any risk while offering the best user experience to their customers
The rival Bitnet just rose a $14.5 million funding round led by Highland Capital Partners. What’s Coinzone’s growth strategy? How do you plan to fund this growth?
Europe is an untapped market for Bitcoin and long-term it will be bigger than the US market because Bitcoin offers more benefits to Europeans than it does to US consumers and merchants. This being said, it is much harder to succeed in Europe because every country is different, speaks a different language, has different user preferences, banking system, etc etc. In Europe it takes more than to offer a platform that works well for the US market. We are working on innovative solutions specific for the European market but we are also keeping an eye on opportunities in growth economies but I can’t share any details yet.
Many say that Bitcoin has the potential to disrupt established payment systems. Why do you bet it will fulfill its potential and how will it do that?
Bitcoin is a user-friendly, cost-effective and risk-free alternative to other payment methods for merchants if they take advantage of Coinzone’s service. Europeans tend to be more conservative when it comes to spending, which is the reason why more than 80% of all transactions are still paid in cash. Europeans like to keep control over their spending. Bitcoin caters for this need because consumers are in full control. They won’t get surprised by a huge credit card bill at the end of the month.
How can the crypto-currencies ecosystem avoid other crashes and frauds like GBL closing and Mt.Gox’ bankruptcy? How can merchants and users protect themselves from such crashes?
I think that the Bitcoin industry learnt from the Mt Gox crash and you can see that more professionally managed companies, including exchanges have emerged over the last 8 months. These companies are trying to do the right thing in the current regulatory environment and become as compliant as possible, applying for money transmitter licenses wherever it is possible and build trust this way. Ultimately, Bitcoin businesses need to be regulated in a reasonable manner in order to gain trust and to reach mass adoption.
How will the public learn to trust Bitcoin and other crypto-currencies? How can such a volatile currency become an established means of conducting online (or offline) transactions?
The more people and merchants adopt Bitcoin the less volatile it will become. This will take time and won’t happen over night. Theoretically, Bitcoin should become less volatile than other currencies because it isn’t tied to any government and therefore it suffers from less political risk.