Circle is a peer-to-peer payment technology company founded in October 2013 by Jeremy Allaire and Sean Neville. Backed by Goldman Sachs Group, it is currently the largest cryptocurrency startup due to several initiatives and acquisitions. The Boston-based startup recently raised $110 million in a funding round that pivoted its valuation to a whopping $3 billion.
Bitmain led the funding round, they’re China’s largest mining company and included old investors like Digital Currency Group, Breyer Capital, General Catalyst, IDG Capital, Accel, and Pantera. First-time investors, Blockchain Capital and Tusk Ventures, also participated in the round. Before the funding round, the company was backed by around $135 million in venture capital and was focused on trading Bitcoin. However, with time, the company diversified and switched to traditional fiat currencies.
Circle has made it clear that rather than focus on Bitcoin, the company wants to build lasting financial infrastructure in the cryptocurrency industry. Like other big corporations, it is looking to leave its mark on the industry by pioneering useful applications of blockchain technology. Circle currently has several functioning verticals including Circle Pay, Circle Trade, Circle Invest, Circle Assets, Poloniex, Center and USD coin.
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Circle Pay
The Circle pay app enables financial transactions between several users including sending and receiving money and is available for use on both iOS and Android. The app trumps other similar applications because money can be sent and received anywhere in the world with no hidden charges.
It also allows users to send messages, stickers, and gifs while transferring money, which makes the whole process a lot friendlier, social and fun for users. To use the Circle Pay app, users have to download it on their mobile phones. After signing up at first, a user may not need to link a bank account to the app. However, to use the full service, a bank account must be linked to facilitate fund transfer, request, and withdrawal.
Circle Trade
Initially, Circle claimed to be a social payment company with competitors like Square Cash and Venmo, but now, its focus has shifted to cryptocurrency. Its trade arm, Circle trade, operates one of the largest cryptocurrency over-the-counter trade operations for equally large cryptocurrency exchanges and investors. The trading arm handles monthly transactions worth over $2 billion and can provide liquidity for its users as well as manage large orders. Circle is different because it allows for better exchange rates than any other money transfer service available.
Poloniex
On the 26th of February, 2018, Circle acquired Poloniex, one of the largest cryptocurrency exchanges for $400 million and became the largest Fintech startup in the cryptocurrency industry. A leaked acquisition document showed that the company plans to turn Poloniex into “The U.S’s first regulated crypto exchange” through its mutual understanding with the SEC.
Circle Invest
Circle recently launched Circle Invest, a simple mobile app for users who want to invest in cryptocurrencies without bothering with the technicalities. It is tailored to the U.S market and gives users the option to buy and sell Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, Litecoin, Monero and Zcash in just a few easy steps. The app may become a close competitor for Coinbase in the long run as its popularity gradually increases.
Center
Another recent initiative by circle is center, a platform on which a common framework that connects all electronic wallets will be built. The company defines Center as a foundation, even though it has not been incorporated and is still solely under the umbrella of the payment company.
Although the platform hasn’t formally launched, it has raised $20 million through the offer of Simple Agreement for Future Tokens (SAFT). These tokens are a form of the promise that investors will receive their tokens later. Once completed, Bitmain may be the first company to join the platform. Until then, Circle has implied that it will be the only company on the platform when it is launched.
The protocol may allow users to send money despite different wallet providers. For example, users may be able to send money from a Square cash wallet to user who has an Alipay wallet. If eventually, this functionality is realized, Center may be a direct competitor to Ripple (XRP), Stellar Lumens (XLM) and any other cryptocurrency platform that offers similar services.
Circle Asset Framework
Circle recently launched an Asset Framework that allows the company to understand the potential of every asset. Questions concerning technology, people, fundamentals, business models, and market dynamics are asked to make accurate estimations. Each project is scored based on the collected data, and its potential is measured. This way, as the number of Circle projects grow, their performance can be measured efficiently.
USD Coin
Cryptocurrency markets are volatile, with prices often fluctuating wildly. This can be seen in the case of Bitcoin which reached a peak of almost $20,000 in December 2017 before falling to a current price of $6,100. As a way to fix the problem of cryptocurrency volatility, Circle has announced its new US dollar backed cryptocurrency known as USD Coin or USDC.
The coin will function as a better digital version of the US dollar, and each token will be pegged to $1. Typically, this type of coin is called a Stablecoin and Tether is one example of a currently existing stablecoin. According to Allaire, USD coin provides an alternative to Tether. He also claims that it is essentially a blockchain-based dollar.
Similar to how the US dollar was tied to gold reserves, each USD coin will be tied to $1 so that for every token issued, a dollar will be added to Circle’s reserve. According to Allaire, after U.S dollars are converted to USD Coins, blockchain technology enables their fast confirmation and movement. He also revealed that tokens pegged to the Euro and Pound might be released later. However, it is unlikely that Asian currencies will be pegged because of the currently existing competition in the market.
The USD Coin will be hosted on the open-source framework of the Center foundation who will also oversee the Coin offering. It will run independently on the Ethereum blockchain but may change depending on whether better platforms emerge in the future. Currently, the Ethereum platform is the best option for a stablecoin because of its app-driven structure. For now, that structure remains solid enough to house several significant cryptocurrency applications.
Final Thoughts
Backed by the likes of Baidu and Goldman Sachs Group, Circle is currently one of the most well-funded blockchain startups. Bitmain has also shown that apart from mining interests, the company would like to support blockchain applications through its funding. Circle has been making moves to capitalize on blockchain technology for a long time, evident in Circle trade and the acquisition of Poloniex.
The USD Coin is an exciting venture, but it may be too early to know how it will fare in future. While several things can go wrong, there are also several positive outcomes that a USD-backed stablecoin can offer. The market is mostly unpredictable, and experiments are still going on to collect and study market trends. However, if Circle succeeds, it will boost the cryptocurrency ecosystem as a whole.
About Carson Derrow
