Last week, Circle announced major changes to its application and platform. While many focused on Circle’s decision to cut its users’ ability to buy and sell Bitcoin, the breaking news may have been its decision to create a payments platform called Spark that is akin to Paypal or Venmo, but for Bitcoin users. Circle described it as a “blockchain-based protocol to facilitate trusted, compliant money transfers between participating individuals and institutions over the Bitcoin network.”
Expanding the use of Bitcoin to more traditional financial arenas has long been an elusive goal of digital currency, and Circle’s announcement may make that goal a little bit easier to reach. Spark “uses a combination of Bitcoin, other blockchains and traditional settlement rails to further its mission of promoting a global, social payments platform. ” The goal is to give more traditional banks and fintech platforms confidence in the Bitcoin currency, and to make it easier for them to use it by including tools such as “know-your-customer (KYC) and anti-money laundering (AML) compliance and exchange rate negotiation.” Spark is on an open-source platform, and its first innovation is permitting consumers across the world to send Bitcoin to others in Korea and the Philippines quickly and easily, where they can change the Bitcoin into local currency, with low exchange rates, and while maintaining the security of KYC and AML. As the new project continues to grow, Circle hopes to have other international partners create similar user experiences.
Some critics of Circle have argued that its new move is not actually an expansion of Bitcoin’s reach, but a narrowing, due to Circle’s decision not to continue allowing users to buy and sell Bitcoin on its platform. Indeed, users can sell any Bitcoin they have into a more traditional currency of their choice, or keep the Bitcoin deposited in their Circle account. And, Circle is promoting its new image as a pivot away from the Bitcoin exchange that it was once known for. Still, Circle has maintained that it will continue to use “Bitcoin as a settlement token and network behind the scenes” whose focus will be “on getting more digital wallets to adopt public blockchains as open transaction settlement networks.”
Spark has permitted Bitcoin transfers to be more secure, and compliant with international laws in a way that had not been done before and with open source technology that others can help develop. But whether it expands Bitcoin’s reach or undermines it is yet to be seen.