“This is a fraud, they are crazy,” family members and investors told the young entrepreneurs behind Bitso, the Mexican platform for buying and selling cryptocurrencies founded in 2014. A coin that cannot be tossed into the air, that does not tinkle in the pocket: what future can it have? Seven years later, the company has just raised 250 million dollars in investment and has been valued at 2,200 million, the second startup Mexican to overcome the billion dollar barrier. Now it is preparing the jump to Brazil and seeks to diversify its offer in the face of volatility in a sector that continues to grow, but is not spared the omens of imminent collapse.
Without a central bank to regulate movements, the value of cryptocurrencies is at the mercy of the market. Bitso, as an exchange platform, is an access key, one of the most important in Latin America. The interested party opens an account, deposits an amount of 100 pesos upwards, about five dollars, and from there he can buy and sell more or less large fractions of nine different currencies and exchange the famous bitcoin for other less known ones. You can also check the fluctuations of a market that has exploded in recent months: ethereum rises and stands at 83,191 pesos; Litecoin falls to 7,480 and bitcoin, to 1.1 million. The vertigo of cryptocurrencies.
It took Bitso six years to reach the one million user and less than 10 months to achieve the second, a goal achieved just a few weeks ago. The number and volume of transactions has followed the same path. From registering 1.5 million operations for a value of 1,400 million dollars in the first quarter of 2020, in the first months of this year 7.9 million exchanges have been reached for a total of 4,814 million dollars. Bitso, which does not disclose billing data, obtains its profits from applying a rate of up to 0.6% on transactions.
“In this world you don’t even know what day it is,” says Daniel Vogel, a 35-year-old economist and systems engineer and CEO of the company. A frenzy that has little to do with the beginning. When Vogel first read about bitcoin while studying in the United States, he thought the invention made no sense. And in Mexico, where only 47% of the population has a bank account, even less. “When we were going to make presentations, the banking regulators, of competition, had not heard of the digital currency. It was quite a challenge to create awareness ”, he acknowledges.
The recent boom of bitcoin has helped clear up some doubts. Its value soared in mid-April to $ 63,000 per unit, eight times more than in the same month of 2020. A day after the record, Coinbase, the largest exchange platform in the United States, debuted on the Nasdaq in New York and its stock market value reached over 100,000 million dollars. Investor Diego Serebrisky, co-founder of the Dalus Capital fund, believes that these events have contributed to the interest in Bitso, which he considers a “Coinbase for Latin America”. “The cryptocurrency has begun to be seen as another asset like gold and silver and is tied to an appetite of more institutional investors,” he points out.
Recognized funds from the sector have participated in Bitso’s investment round fintech such as Kaszek Ventures and QED Investors. Both had already led another injection in the startup of 62 million dollars last December, until then the largest venture capital investment in the field of cryptocurrencies in the region, according to the Association for Private Equity Investment in Latin America (Lavca, in its acronym in English). The $ 250 million raised in May, just five months later, illustrates the rapid rise in the value of the company in the eyes of investors.
The volatility, however, is still there. Since the April record, the value of bitcoin has fallen by around 11% through mid-May, although it remains at high levels, and Coinbase shares are also down from their early days. A dynamic that illustrates the communicating vessels between cryptocurrencies and buying and selling platforms. Vogel is confident. “The volatility in the exchange model helps us because it creates volume, and that volume creates income,” he says. “Any new technology has its ups and downs, as it was at the beginning with the internet. Every time there is a bubble and it bursts, the ecosystem comes back stronger ”.
Even so, Bitso wants to stop depending on speculation around cryptocurrencies and give it more practical and day-to-day uses, such as transfers between friends to, for example, pay a restaurant bill. “Half of our clients are just speculating, buying and selling, but the other half are not,” says Vogel. “The exchange is not where we want to be as a company. From now on, the objective is to be able to achieve all the part of financial products, savings accounts, credits … ”. A goal that is not easy to achieve, according to Diego Serebrisky: “To the extent that the value of cryptos is very volatile, it is less attractive as a means of payment. We are hardly going to have prices set in digital currency ”.
In addition to broadening the business model, the startup They are looking to use the recent capital injection to strengthen their presence in Argentina and expand in Brazil, where they landed last week. Although around 80% of its current clients are Mexican, Bitso hopes to make the Brazilian giant its main market. Vogel prefers not to give projections for 2021: “The industry has this volatility, suddenly you grow very fast and suddenly you don’t. The important thing is to bet on the long term ”. You have to stop worrying, he says, and check the price of bitcoin as soon as you wake up.
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.