BitPay, One of the best funded bitcoin startups based in Atlanta is running into trouble as it has scaled down its operation a big deal.
According to the latest updates which have been gathered by coin desk, the company has cut down on about twenty positions and this coincidentally happened a day after the offer for free and unlimited for new merchants ended. People even rumored maybe it experienced a huge loss due to the offer but on an interview with the BitPay CEO Stephen Pair, confirmed that they cut down on the positions in order to increase efficiency. Just like many other companies, cutting down on costs increases the efficiency. The CEO also stated that they wanted to be well aligned with the pace of growth in the industry.
BitPay is one of the high profiled bitcoin companies in the US that lets businesses accept bitcoin as a form of payment and has experience a tremendous growth apart from what it is facing in the recent past. It has many investors such as Microsoft, PayPal, and Virgin Atlantic among many others and last year alone it raised more than $30 million. It’s been in operation for four years and through the period has received positive regards.
According to a business insider report in June, Stephen Pair stated that the company is working on doing different changes on the business model to shift from payment processing to building tools while using the bitcoin technology for products such as accounting and clearing. This is because Bitcoin is not really addressing its main mission. According to him, even though they have a large pool of merchants, over 60 000 presently, they all sell the bitcoins the same place, which is to the initial adopters. He believes that Bitcoin is going to take a while to mature even though it is an incredible technology.
During last year, the company lost $1.8 million in a phishing attack according to records. This may also have contributed to its down scaling as much as they receive a lot of funding from different companies. There is a probability that they had to cut down on the positions to recover on the losses that they experienced.
With all this information it is clear that even though bitcoin now is a big thing that is taking the market by a storm, there are still many risks in investing in the currency. For startups which in this case are Kenyan startups such as Bitpesa, they are not exempted from the risks that are likely to be faced from bitcoin technology. It is common for every company to face its own fair of risks and bitcoin is not very different.
The following are measures that companies can take to make sure that they remain relevant in the bitcoin industry despite the risks:
Research: This is important in order to remain relevant in the bitcoin industry. Bitcoin itself is a high end technology product. Even though before starting the startup vast research was done, research is still needed in order to identify how the company can improve on the products and what changes they can make to meet the needs of the consumers.
Strategy: Just like many other startups, strategy is key. The right strategy will ensure success of the company. Because Bitcoin is a slow growing currency with increased number of users every day, strategy will ensure that the products are rolled out at the right time and to the right market niche. Just like BitPay which had a strategy of cutting down on positions in order to increase the returns, the company involved should have the right strategy that is relevant and will ensure that the company does not experience losses. The company should also have strategies of dealing with the changing trends that might affect the company. In making the strategy on should acknowledge that what works for one company may not necessarily work for another.
Risk management: Bitcoin is a currency that is associated with a lot of risks and every startup should acknowledge that in its dealing and thus come up with mitigation measures of dealing with the risks. There should always be different measures of dealing whatever may come up. This calls for always updated information in order to be informed in advance of the possible risks and how to deal with it on time before affecting the company.
Right management: The right management will ensure that a startup is successful. It will always be prepared for any changes any time and how to deal with the changes to remain relevant. The right management will make sure that there is optimization as well as efficiency and smooth running of the company.
Security: Bitcoin is a virtual currency that is web based. The fact that it is web based means that it is exposed to a lot of attacks. It may experience attacks from cyber criminals, malware, among many others and this may lead to huge losses and close down of the company. It is important that the right security measures are used to ensure uptight security. These calls for daily updates on ways of increasing the security of the company to make sure that no bitcoins are stolen or the website is not attacked. For the case of BitPay, there was phishing which led to a lot of losses and Kenyan startups can work to avoid this.
All this measures are however not effective without proper planning. Planning is the backbone of success and is very vital in the whole process. This will ensure that the company progresses forward without interruptions.