Friday, January 28

Open Letter: Why your fintech should adopt Bitcoin

The Bitcoin network is a rapidly expanding technology, with an adoption curve (in user X year numbers) that follows the pattern of the internet’s adoption curve. This means that nowadays Bitcoin is in the internet maturity stage of the late 90’s (1998-19998), with somewhere between 100-200 million users.

Would you like to have your business associated with the internet in 1998? Now is your chance.

Comparison between the Internet adoption curve and the cryptocurrency market.

Following the comparison with the Internet, it is important to note that the Bitcoin network is the base layer, just as the TCP/IP protocol is the base layer of the internet. Which means all the giant companies (Amazon, Facebook, Google and so on) from the univeBitcoin rso are still waiting to be built or are at an early stage.

This means that hundreds of billions are still on the table for those who innovate more and better in this sector. A sector that grows and tends to continue growing with the same rate of adoption as the internet grew.

Illustration of the protocol base layer concept and applications that will be built on top of this base layer
Illustration of the protocol base layer concept and applications that will be built on top of this base layer

The Bitcoin network (via the Lightning Network) allows instant payments (like pix) between citizens all over the world. This means that Brazilians living in the United States are able to send money remittances to Brazil without paying fees (nowadays these fees are high, and may exceed 20% depending on the value of the remittance).

In 2020, more than US$ 3 billion were sent from abroad to Brazil, and this entire market could be simplified using Bitcoin.

This is at the heart of El Salvador’s adoption of Bitcoin, where a significant portion of the country’s GDP was lost in international remittance rates.

In Brazil, for now only the Bipa uses Lightning (Biscoint is also in the testing phase), so it is still a great competitive advantage to focus and implement this network ahead of competitors. It’s anticipating the wave rather than being drowned by it and having to run after the loss.

Bitcoin adoption is already a trend among the main international fintechs. CashApp, a company from Square, PayPal and Mercado Pago already offer a savings account associated with Bitcoin, which makes these savings better than those offered by banks.

Bitcoin savings mean that the equity is subject to such “volatility”. What critics forget to put in the account is that in most cases this volatility is up, and Bitcoin presented a CAGR (compound annual growth rate) of more than 200% in the last decade, against fixed income that presents incomes below inflation currently.

The Bitcoin network is a network that the user only needs internet access to use, so it is the best alternative to bankroll the unbanked. This is one of the reasons why El Salvador is betting on the adoption of Bitcoin: there, up to 80% of the inhabitants are debanked. Today, there are already more bitcoin wallets than bankrolled in El Salvador.

The Bitcoin network is also the future of fintechs in Brazil. First, because everything that starts abroad arrives here with some delay. And this phenomenon is already happening there.

Second, because the sector in Brazil is maturing quickly, and players who do not take a stand will be left behind. Examples that the sector is already starting to have a certain consolidation: a) Meliuz recently bought 100% of Alterbank for R$ 25.9 million and b) the Bitcoin Market received a contribution of US$ 200 million from Softbank, reaching a valuation of US$ 2.1 billion.

Alterbank is a digital account that allows the user to use both real and bitcoin in a simple and intuitive way. I’ve personally been using Alterbank for 6 months because of cryptoback, a cashback that is converted directly into Bitcoin on my wallet.

I stopped using Itau and XP’s cashback because of this Alterbank digital account and would just exchange it for some other service that offered the same things and was integrated with Lightning Network, making my withdrawals cheaper.