While innovative ideas aren’t in short supply in the bitcoin community, bootstrapping a bitcoin business remains a risky proposition no matter how promising the market.
For example, despite the widespread perception that Argentina has emerged as the leading bitcoin market in Latin America, the country still poses a significant challenge for entrepreneurs given its lack of regulatory clarity and history of capital controls.
Despite these challenges, however, Argentina’s entrepreneurs are seeking to bring the benefits of bitcoin to the market. One such entrepreneur is Matías Bari, CEO and co-founder of bitcoin brokerage SatoshiTango, a Buenos Aires-based business that styles itself as a Coinbase for the country’s bitcoin users.
A former chemical engineer and e-commerce industry veteran, Bari first learned about bitcoin in 2013 upon reading about the then-unfolding saga of Silk Road. Like many, Bari’s initial interest soon blossomed into a fascination with cryptography. Bari told his friend and current partner Mariano Craiem about bitcoin, and both were soon hooked on its potential.
“For three to four months, everyday we were saying let’s do something with bitcoin, we have to do something with bitcoin, so we started to learn, we bought bitcoin, we sold bitcoin, we lost money, we made money, then we said ‘OK, let’s do this, let’s start a business.'”
Together with two additional partners, Bari and Craiem launched SatoshiTango with the goal of making bitcoin buying and selling easy for the average Argentinian, putting their savings on the line in the process.
The power of prepaid
For SatoshiTango, Bari is seeking to create a user-friendly system that avoids the clutter and financial jargon of a traditional bitcoin exchange, while leveraging financial tools that are more familiar to Argentinian shoppers.
One notable design aspect is that users don’t buy bitcoin directly from the SatoshiTango website. Rather, they order a prepaid card featuring a 16-digit code that they can then use online to purchase bitcoin.
“We believe that if people are familiar with prepaid cards, why not use these? People are very happy because they understand when they buy a prepaid card, the card is ready to buy bitcoin, and the exact amount they have in their hands is what they can buy.”
Argentinian consumers, Bari said, are used to pre-paying for purchases, and that such buying behavior is common among cellphone users, who pay for minutes as needed, rather than on a monthly basis.
Notably, the idea to use prepaid services as an onboarding tool is not unique to SatoshiTango. Argentina-based merchant processor BitPagos, for example, recently launched Ripio, a service that allows bitcoin users to make purchases using a popular mobile phone recharging service.
Sellers, in turn, can choose to receive their money by wire transfer or in cash, although the cash delivery service is available only to residents in Buenos Aires. SatoshiTango charges a 2% fee for all transactions.
Of course, given the difficulties of operating in Argentina, Bari indicated that the SatoshiTango service is not yet as advanced as it aspires to be.
For example, he notes that while he is happy with SatoshiTango’s prepaid payment system, his company is currently barred from more advanced solutions like those in the US that might be more consumer friendly.
“We cannot do the same thing that Coinbase does. We cannot take money with an ACH [automated clearing house transaction], with an automatic debit from a bank account, it’s not legal in Argentina,” Bari explained.
As a self-funded startup, Bari also noted the challenge of handling legal costs to ensure his service is compliant with local laws. However, Bari said, his startup intends to shoulder this burden using their personal funds, adding:
“You can really spend a lot of money on advising, but we’re willing to spend that money, we’re using our savings and trying to figure out how to make the next step.”
In spite of the company’s efforts to offer an introductory service, Bari suggests that mainstream user adoption of bitcoin is still far off, noting that most of the company’s users are early bitcoin adopters.
Real risk remains
Bari acknowledged that Argentina’s government is still learning about bitcoin, and that his belief is that its officials still harbor certain reservations about its use.
In part, Bari said, this is due to misconceptions about bitcoin that the community can take action to help dispel. Referring to the recent restrictive policies embraced in Ecuador and Bolivia, he said:
“We need to help the authorities to understand that this is not a way to launder money. […] I think that most of this banning takes place because of fear and misinformation.”
When asked about fellow Argentina-based bitcoin exchange Unisend and its issues securing a bank account, Bari acknowledged the possibility that his business could face similar operational challenges.
Still, he chose instead to focus on the benefits that persevering through this period of uncertainty would bring, saying:
“It’s a challenge, but once you succeed in Argentina, you can go to other countries in Latin America. It’s much easier. You get trained here, you have to work so hard for things that in other places are not that hard.”
Sweat and struggle
Bari said that SatoshiTango is currently a four-man operation and, for now, the founders plan to keep it that way, although they do recognize they will need the capital to realize their goals down the road.
Working at a bootstrapped business means all four members juggle multiple tasks, speaking to customers, adding new features to the site and keeping up to date on an evolving industry.
Here again Bari emphasized the positive aspects of working in such an operation where the founders’ “sweat and blood” are the main ingredients for success.
“I wake up earlier than before, because I like to start my day with SatoshiTango, and I believe that is the great advantage. We really enjoy this.”
Images via SatoshiTango and Shutterstock