Charles Allen is the CEO of Bitcoin Shop, a publicly traded US bitcoin company that leverages Amazon’s affiliate program to sell a wide selection of e-commerce products for bitcoin, litecoin and dogecoin.
Bitcoin Shop is now seeking to expand its industry goals, recently making strategic investments in key partners, including California-based bitcoin buying service expresscoin and digital currency processor GoCoin, with the goal of using e-commerce to build a universal bitcoin company.
Allen recently spoke about his company’s ambitions at The North American Bitcoin Conference, held last weekend at Chicago’s McCormick Place convention center. CoinDesk sat down with Allen to learn more about his company, the pressures of being public and why he believes Bitcoin Shop is the most misunderstood company in the space.
CoinDesk: You’ve said that Bitcoin Shop is one of the more misunderstood companies in the bitcoin industry, and that you’re not simply an e-commerce play. Can you introduce us to your vision for Bitcoin Shop and its goals?
Charles Allen: Yeah, that’s not what we’re building. Just to give you an idea where we started, the company was founded by two engineers from NASA in June last year. We launched our initial website in September and basically realized that there are bitcoins, but nowhere to spend them. That’s not a business, that’s a short-term solution to a problem. No one accepts bitcoins, now there’s someone to do it. That’s not sustainable. I joined in January and have shifted the direction of the company.
In February, we were a lead investor in GoCoin, and we use them as a payment processor, so we now accept bitcoin, litecoin and dogecoin. We also just invested in expresscoin. What we want to do is use digital currency as an onramp to digital currency adoption, and the first step in that is redoing the website. Everyone was part-time until February and we haven’t touched the website since going public.
We need to be able to take bitcoin out of the equation and that e-commerce model needs to be a standalone business.
No one’s ever done this before [...] Conceptually you could shop from all the big-box retailers you trust and we would find you the best price and they would ship it to you.
We believe if we create a solution where we connected to all these people, there’s a good reason people should shop on our site as opposed to [just] bitcoin.
Do you see Bitcoin Shop evolving to become more of a traditional e-commerce company, and less focused on bitcoin, over time?
You’re still thinking about e-commerce as the core of the business, and it is now, but we want to tie all the other service offerings in. If you think about it, it doesn’t make sense to have a wallet that isn’t integrated with a payment processor or that isn’t integrated with a merchant. It’s not all tied together. You need a universal solution, then a customer can have one point of access and do all their transactions.
If you have a wallet, now you have to connect your wallet to your exchange or your payment processor. You have all these different usernames and passwords and logins, and you’re building this ecosystem of different providers that you have to manage and deal with.
We believe that we can create a unified solution through partnerships, where you can do everything in one stop, where you can shop and exchange, and you could buy products, you can get bitcoin, collecting all of the pieces, but e-commerce is the onramp.
The nice thing about e-commerce: business models are unproven at bitcoin companies. If you’re a wallet, how are you going to make money? Should a wallet be a free service that’s offered by a company?
If you start thinking about all these pieces its very difficult to transact and work in bitcoin, because no one has come out with a very elegant solution. Coinbase has done a very good job, and the fact that they have an ACH [Automated Clearing House] relationship, so they can connect to your bank account, is a great lead, but it’s not a long-term competitive advantage.
E-commerce is nice because no one is going to complain about us getting affiliate fees from the merchants we purchase from, whereas people may complain about paying for a wallet service, so a lot of the models that are being built are just untested. What is a consumer willing to pay for versus what are they not willing to pay for?
So you see Bitcoin Shop and its partner ecosystem becoming like a Coinbase, Circle-type consumer solution?
Yes, our investing in expresscoin is the step in that direction. They don’t have the ACH connection, but they’re connected to ATMs, they can wire money in, they have agents. But to be able to seamlessly offer that for our website is where I want to go.
We’ve raised just under $2m, so we’re partnering with other companies in the space that we believe we can connect with to offer a seamless solution over time. Right now the core team is putting the new website out the door and once that’s done we’re going to work to integrate expresscoin.
Our competitive advantage today is that we’re the only public company in this space.
I know you’ve said that an advantage to investing in Bitcoin Shop is the exposure investors get to companies like expresscoin and GoCoin. Do you see Bitcoin Shop becoming almost like an exchange-traded fund for investors?
I would say it’s more like a public private equity fund or like a BT6 [equity fund]. So right now, you’re right. For investors in our company, we trade anywhere from $400,000-$500,000 a day in stock. So, if you bought $10,000 worth of stock you could sell that quite easily at current volumes. When you think about for the general public, if you want to be exposed to bitcoin, you can buy bitcoin or you can buy my stock.
If you buy my stock, you get exposed to GoCoin and expresscoin, and we have an option to invest $1m in expresscoin at its current valuation. I’m not looking to be a publically traded fund; the investments I’ve made to date are strategic because I want to integrate with these companies.
For now, Bitcoin Shop is still an e-commerce company. How affected are you by new merchants that enter the bitcoin ecosystem? Is good merchant news for bitcoin bad for Bitcoin Shop?
I think it’s a positive in that the more big merchants come on, the more people want bitcoin. I think most of the merchants coming online are doing it because it’s free PR.
Dell accepts bitcoin. I’m sure they’ll talk to you or be on Bloomberg. They can be in the media to drive awareness and their customer acquisition [costs] are lower, which is great. The more adoption there is, the more its going to force regulators to make decisions.
Do you feel like Bitcoin Shop will need to rebrand in order to better communicate its goals of becoming a universal bitcoin company?
You’ll notice we bought BTCS.com. That’s our stock ticker, so there may be a point where we’ll think about rebranding when the time is right. Right now, I think it needs to be reflective of the business model we have in place.
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