Bitcoin startups have raised $375.4 million for the first half of 2015 in comparison with $339.4 million for the whole 2014. Thus it’s quite fair to call the sphere one of the most best-funded. Many financial companies have immersed into studies of blockchain, believing that this technology can completely change the way we see payment process.
Align Commerce is known to use bitcoin not as a digital currency directly, but as a means to provide an improved financial service. It offers small businesses cross-border payments. Thus Align doesn’t use bitcoin openly.
Its customers don’t even need to deal with the cryptocurrency. Align accepts payer’s paper money, exchange it in bitcoin and then the same way back. Marwan Forzley, company’s CEO and founder, says that “in this way the startup can avoid the cumbersome bank wire transfer process.”
Typical wire transfers include four types of fee: from the initiating and recipient’s banks, intermediaries and the foreign exchange fee. Thus according to Align small business waste $50 billion for fees. On the contrary Align only requires 1.9% foreign-exchange rate.
Wire transfers have one more pitfall. Since this process usually means several banks (intermediaries) passing the money from sender to receiver, it increases chances to lose the money along this way. International wire transfers are going through large correspondent banks with a help of SWIFT messaging system created in the 1970s. “The world is becoming more global than local. Yet the underlying payment systems were designed fundamentally to be local in construction” – says Forzley.
Align has developed a new way to transfer money using blockchain. The process in general looks as follows: the company picks up the payment from the sender’s bank, converts it from the local currency to Bitcoin, transfers the money over the Bitcoin blockchain, converts to the recipient’s currency and transfers the money to their bank. It allows to move money all over the world reliably, transparently and almost instantaneously (the transfer can still take up to three days because not only blockchain but traditional banking system as well is used in the chain).
Randy Komisar, Kleiner Perkins’s general partner who will also join Align’s board, explained why they preferred to invest in Align, a young startup which is already present in 60 countries: “We were looking for applications of the blockchain for the last couple of years in ways that could build real businesses and add real value that weren’t at the mercy of the currency valuation which will move up and down and all over the place. And of those blockchain companies, we invested in Align, because we believe it’s a market that’s underserved, with a CEO who understood it well and early traction from customers who reinforced that value.”