Brazil-based cryptocurrency fintech Bitfy announced on Thursday that it raised $2.5 million in a Series A round led by US fund Borderless Capital, with participation from investors already known to the industry, such as Algorand and Dash Investment Foundation, as well as US angel investors.
The startup‘s first round was nearly BRL 1 million. Now, with Series A, Bitfy is worth BRL 120 million.
The company’s CEO, Lucas Schoch, has been a programmer since he was 14 years old. But his first contact with cryptocurrencies was in 2012 when he played World of Warcraft and bought and sold items from the game. “If you wanted to buy the item from someone in Brazil you would send a TED (Brazilian banking transfer) to the person and they would send the item. But if it was out of the country, you wouldn’t send money because [the fee for the] swift was much more expensive than the value [of the transaction],” he tells LABS.
To solve the cost problem of these international transactions, Schoch started running programming scripts mining bitcoin to send and receive cryptocurrencies. “That’s how I spent more than 1,100 bitcoins I ever had on items in World of Warcraft,” he says. A year later, one bitcoin would be worth $1,000.
“It was practically a quarter of a billion reals at today’s rate. That’s how I got started in the cryptocurrency world. I had spent all the money on grotesque items in the game, but that already made a lot of sense to me because this was going to be used as technology and as currency. So I went to study the world of cryptocurrencies in depth.”
In 2017, Schoch created a cryptocurrency checkout that paid in crypto but allowed the shopkeeper to receive in reals. “The idea was really cool, but how many times have you gone to the market and said ‘too bad you can’t pay with bitcoin?’ None. So it was a business that didn’t get traction because people didn’t have that need,” he says.
Bitfy emerged in 2019 to be a wallet for simpler and safer cryptocurrency use, i.e. to facilitate the buying and selling of cryptocurrencies. The platform, however, does not compete with brokerages or exchanges like Mercado Bitcoin, as it is not a platform for traders. Although Bitfy operates buying and selling cryptocurrencies with its technology, the startup‘s focus is not on generating speculation on top of these transactions. According to Schoch, the main goal of the wallet is to bring security and a better user experience to the investor who wants to own cryptocurrency but is not a trader.
Currently, the platform operates with eight cryptocurrencies and will announce two more in the coming days. According to the CEO, Bitfy is expected to announce at least one new coin every month by 2022.
The new investment will be used for team expansion, products, and marketing actions. “Our focus is on product creation. Our main performance indicator is not revenue, but team and product. We want to make a product that is really much better than all the others like it in the next twelve months. Billing and the entry of new customers are consequences”, he points out.
The company expects to triple its customer base by the end of 2022 and transact at least BRL 500 million. Bitfy has already transacted about BRL 130 million in almost two years of operation.
The wallet does not charge its customers for use. Bitfy’s remuneration happens when converting cryptocurrencies to Brazilian real, for example, or when the user sells cryptocurrencies or uses them to make boleto (banking slips) payments. Bitfy’s fee on these transactions is 1.5%.
Today the fintech company has just over 30 employees. By 2022, it should reach 70, 40 of whom will be in the technology area. Bitfy also intends to develop products for decentralized finance. “Cryptocurrencies were born to throw out the traditional financial system and create a new financial system that is independent of governments and borders. Imagine if I can take a loan from the bank and that bank is within the cryptocurrency system, lending will compete with the whole world, so the rates are going to be much lower and my loss of capital in the middle of the road is going to be much lower. So the service tends to be much better than the services offered within a country.”