Bitcoin for Corporations 2022 Strategic Vendor - BitPay (02/01/2022)

Nice to be here, Phong. And you know, thank you to yourself and MicroStrategy for putting on this event. It's been great.

Yeah, so I'm the co-founder and CEO of BitPay. We are actually the oldest cryptocurrency company in the world. We were founded back in 2011 and you know, I've been processing Bitcoin payments since then. And we were happy in those early days to do five or 10 transactions in a day and have grown quite substantially since then. So, you know, basically what we do is we enable companies to either you know, accept payments from their customers in cryptocurrency, Bitcoin being the predominant one, or initiate payments. So, paying out affiliates, paying out employees, we tie into most of the major payroll platforms that you can imagine, and make it very easy for companies to offer as a benefit to their employees the ability to get paid in crypto. And we built that for ourselves. Our own employees love to get paid in Bitcoin.

And you know, so we built that from the earliest days of the company and turned that into a product. So, in terms of the payment acceptance, we do e-commerce and point of sale. Recently, we announced a joint venture with Verifone. So, if you're a Verifone customer, you can turn on crypto payments and we power that. And so, it's e-commerce, terminal, point of sale. We also do billing and invoicing. So, a lot of what we do is with professional services type companies that need to send out a bill via email and allow their customer to pay in crypto. But the company was founded back in 2011. I got into this, you know, coming at it from the technology side and was very fascinated by something called DigiCash way back in the day. You're going back to the early 1990s and you know, I just got really interested in this concept of, you know, a true internet protocol for payments and I was, you know, drawn to a number of different projects over the years and then, you know, late 2010, read the Satoshi white paper and just was captivated that, you know, it lined up well with you know, in terms of my career and wanting to get back into a small company and found Bitcoin and decided I needed to do something around that and that led me to conversations with my co-founder and we started the company back in 2011.

No. No, actually, I don't come from a payments background at all. I was fascinated by DigiCash and then later in the early days of Bitcoin because of the sort of the permissionless nature of these platforms. So, you didn't have to be, you know, form a company, you know, get licensed to do all this. You can just start writing code. So my background is computer science and I was just really, you know, fascinated by this idea of how do you take, you know, something in a physical form like physical money and replicate that in the digital realm, yet do so in a way that didn't require like a centralized company, you know, or a central bank to manage it. And, you know, I was just fascinated by that topic and there was lots of discussion prior to Bitcoin about how to do that. But no, I didn't come from a traditional payments background. Most of my computer science background is in telecommunications, actually. So, did a little bit with a banking software company in my career, but just a brief stint. So, yeah, anyway.

Yeah, so any company that needs to conduct payments and wants to tap into this new world of Bitcoin, they're our customer base. So, we have, you know, practically every vertical represented, but we've gained traction in a number of verticals where you pretty much at this point have to offer Bitcoin as a payment option. You know, a lot of luxury goods companies are, you know, our customers. Clothing, you know, companies like PacSun, companies like, you know, APMEX that sell, our bullion dealers. That industry pretty much universally accepts crypto at this point. But, you know, we also do a lot on the B2B supply chain, you know, space. And so, think about, you know, a vendor receiving payment in crypto from a customer that's overseas. And so, we do a lot of that business as well. So, it tends to be cross-border, tends to be international in nature. And many of these companies find it easier to pay their vendors using Bitcoin than a lot of their traditional payment options that use the correspondent banking system and whatnot. There's a lot of cost and inefficiencies in that system.

Well, you have to get licenses. Within just the United States, you have regulatory requirements at the federal level as well as all the states. So, you need to get a money transmitter license. We all know about New York where there's the BitLicense, which we have. So, pretty much we have the US covered, we have Europe covered, and then, you know, different capabilities in different countries beyond that. But on the receiving end where it's a merchant and a customer receiving payment, you know, most of those customers tend to be in North America, South America, and Europe. We haven't penetrated too much in Asia, even though we do have capabilities in parts of Asia, but most of our concentration is North America and Europe.

Yeah, so taking the first use case, which is a company that wants to accept payment. That can be, you know, and by the way, you hit right on it. It's customers demanding to pay this way and it's employees demanding to get paid this way. That's happening. But for the merchant, it can be as simple as sign up for an account and put a button on your website and you're done. Some of our larger customers like Microsoft, AT&T that have their own custom e-commerce platforms, they're tying directly into, you know, our APIs. We have great robust client-side libraries that they can utilize. That may be a couple weeks. I think Paxos, they actually said soup to nuts they did it in about two and maybe three weeks. And they said if they had realized that it was only going to take that long, they would have done it years ago. So I think we've got the process really down to make it very simple for companies to integrate. On the employee side, it's really the same story. And in fact, probably even simpler. Like I said, whether you're using ADP or some other one of the other major payroll services, we can tie into that and integrate with that and allow your employee to just sign up and put in their Bitcoin address and they can start and define how much Bitcoin they want out of their paycheck and it'll just automatically start showing up in their wallet every week. Or even every day if you want to pay that frequently.

Well, I would say there are no real... we addressed all of those issues, right? Whether it's on the compliance side through our licenses or on the accounting side, that's a great question, too, and you know, what you're pointing to is a lot of questions that businesses will have and their accountants will want to walk through it, their lawyers will want to walk through it, and make sure it's all okay. And we've done this a million times, right? So, we know the answers to these questions. On the accounting side, usually a company is going to conduct their payments in whatever their accounting currency is. And so, what Bitcoin becomes for them is simply a new payment rail. And so, money's going to come onto their balance sheet in dollars as they process those payments. Now, if in addition to that, they want to make a balance sheet investment, you know, we recommend keeping that separate from their payment flow. And do your payments in whatever your accounting currency is. And BitPay will handle all the currency exchange and deal with those accounting complexities for you. That's why it's really valuable for companies to use BitPay. We can make all that very simple. And it's no different than accepting a credit card payment.

That's correct. Of course, we support settlement in all of the currencies that we support, whether it's cryptocurrencies or fiat currencies, but yes, dollars, euros, whatever the company wants to receive for settlement. We push that to them and that way their accountants don't have to deal with gains and losses. It's a great payment option for their customers and as I said, it works much like a credit card payment from the perspective of the accounting job. So, you're seeing those payments come in, those settlements come in every day. You're reconciling all the transactions and yeah, from an accounting perspective, it's really no different than a credit card payment.

Yeah, I think we're seeing more and more companies that recognize the value of accepting crypto, allowing their customers to pay in crypto and in Bitcoin. And we really partner with our customers to, you know, to market and sell their products and services to, you know, people that have cryptocurrency. And our goal with every customer is to, you know, get to a significant portion of their checkout. If we can be 5 to 10% of their payments, then we're a significant form of payment. So, trends, we're starting to see Bitcoin and crypto emerge as really the second most popular form of payment. And the number one alternative payment method. There are certain industries that we're in where I'm mentioning that you have to, if you're a company in that industry, you now have to accept Bitcoin as a form of payment. It's not an option, and it's table stakes for the companies in those industries, and we're seeing that in more and more industries. And so, you know, in a number of the industries we are the number one alternative payment method. And that's huge. And when you say number one alternative payment method, that means you're larger than gift cards, you're bigger than, you know, cash payments, you're bigger than basically everything except for the credit cards.