Medici Ventures, Overstock’s blockchain technology company, has invested an undisclosed sum in a Utah based company called Bitsy that specializes in bridging cryptocurrencies with fiat.
The investment marks one of several that Medici Ventures has made in recent years as its parent company, under the leadership of CEO Patrick Byrne, continues to tout blockchain technology’s long-term prospects.
Medici Ventures believes Bitsy’s ability to bridge cryptocurrency and fiat will make global cryptocurrency transactions more secure and support other blockchain businesses the company has invested in, such as tZERO, Bitt, Ripio.
“Bitsy and the work it is doing dovetails perfectly with Medici Ventures’ goal of investing in companies that are democratizing capital by eliminating middlemen and re-humanizing commerce,” said Jonathan Johnson, an Overstock.com board member and the president of Medici Ventures, who has joined Bitsy’s board of directors.
Empowering Crypto Users
Bitsy enables cryptocurrency users to maintain control of their money when making international transactions while complying with U.S. anti-money laundering laws. Steve Hopkins, Medici Ventures chief operating officer, realized that most companies in Medici Ventures’ portfolio were not able to operate in the U.S. on account of anti-money laundering requirements. Customers could not make international transfers because centralized exchanges did not give them control of their own funds.
In order to make international bitcoin transactions, customers had to rely on vendors that actually transferred the bitcoins, Johnson told CCN. These vendors often had questionable reputations and in some cases were arrested for unlawful money transmissions.
“So, Steve set out to create a bridge between fiat currency and cryptocurrency that would give users absolute control over their own money but still comply with U.S. law,” Johnson said. “Overstock CEO Patrick Byrne was quick to recognize the value of this approach and to support Bitsy with investment and access to Medici’s world class blockchain developers.”
Bridging Crypto And Fiat
Bitsy is unique in the way it bridges cryptocurrency and fiat. Where centralized exchanges like Coinbase and Kraken hold users’ keys, Bitsy provides them their own private keys, removing the need to police whom users send money to.
“Recently, Coinbase reminded us that its users don’t actually control the funds in Coinbase by announcing that users could no longer send funds to Wikileaks from their Coinbase accounts,” Johnson said. “Bitsy’s decentralized architecture fully complies with all anti-money laundering laws and still allows users to send bitcoin to anyone in the world without permission from Bitsy or anyone else.”
Biometric security removes the need for passwords, thereby closing a security risk. “With Bitsy, your face and your fingerprint will be your password,” Johnson said. “And you will always be the only person with your face and fingerprint.” Such security is especially relevant in light of the more than 2.6 million identity records were stolen last year, he noted.
The key recovery system allows customers to recover lost funds, should the need arise. The company’s multi-key generation process allows its management and an independent third party to assist customers who have lost or destroyed their wallets to recover their funds.
“Bitsy doesn’t hold customers’ keys and does not have access to them,” Johnson explained. “We simply don’t want to be the target of hackers like so many other centralized exchanges are. So, there’s no need to worry if you lose or forget a password.”
Supporting Other Medici Companies
The acquisition bodes well for the company in light of some of its other blockchain acquisitions, such as Bitt and Ripio, in ways that will strengthen customers’ remittances overseas.
“Current remittance conduits are very expensive and most hurt the poorest among us,” Johnson said. “A link between Bitsy, Bitt and Ripio could offer low cost methods to send funds internationally to places where most people don’t have a bank account. We are optimistic that Bitsy will serve as a regulatory bridge between U.S. consumers and their relatives living overseas, including places such as the Caribbean and Latin America where Bitt and Ripio are located,” Johnson said.
He further noted that the Bitsy wallet could support tZERO’s plans to develop the next generation of securities markets.
Also read: Overstock’s Medici Ventures posts $3.3 million Q2 loss
More Acquisitions Possible
When evaluating a blockchain investment opportunity, Johnson said Medici Ventures focuses on whether or not it is based on a good reason to use blockchain technology, the company’s industry expertise, the quality of the technology and the management’s ability to execute its business plan.
He sees blockchain’s greatest impact on the payments, capital markets, voting and supply chain industries in the next two years.
Johnson was unable to project when Medici Ventures will become profitable. “Right now, our focus is on advancing blockchain technology,” he said. “We think we’ve got some great early stage companies in our portfolio.”
He chose not to disclose how much Medici Ventures invested in Bitsy.