Why Circle’s “conversion” to Bitcoin isn’t what it seems

Rage Review : Circle announced this week that it would shut down its Bitcoin trading service. In this regard, mainstream media reported that this was an "unexpected" change in Circle's abandonment of Bitcoin. Noelle Acheson expressed a different view in an article published in CoinDesk Weekly. Acheson reviewed Circle's series of activities since its establishment and concluded that Circle has always been a cryptocurrency agnostic, denying the view that it has abandoned Bitcoin. In addition, Acheson also clearly stated a trend in the development of blockchain in the article, which is to focus on applications rather than the technology itself.

Translation: Flora

Noelle Acheson is a 10-year expert in company analysis, corporate finance and fund management and is a member of the CoinDesk product team.

The following article originally appeared in CoinDesk Weekly, a reader-controlled, members-only current affairs newsletter updated every Sunday.

You may have heard that Circle announced this week that it would shut down Bitcoin trading. Mainstream media reported Circle’s move as an “unexpected” turn away from Bitcoin and a fatal blow to cryptocurrency.

The reaction is understandable given Circle’s importance in the Bitcoin space.

But this response is wrong in many ways:

1. Circle’s behavior is not unexpected;

2. This behavior is not a transformation;

3. Circle did not reject Bitcoin;

4. This action is not bad news for the blockchain field.

Let’s now analyze these points in order and take a good look at the trends in the blockchain space highlighted in the news.

Review

Circle’s move was not what people expected: Circle has always focused on payments. When the company announced its first set of products in March 2014, its focus was on “deposits and withdrawals” rather than “buying and selling.”

As early as May 2014, the company had begun to ignore Bitcoin and defined itself as an "Internet-based consumer finance company."

Circle was undoubtedly “born” from Bitcoin, but even when the company was founded in October 2013, CEO and co-founder Jeremy Allaire believed that standards would evolve and Bitcoin might not ultimately be the dominant digital currency.

In other words, from the beginning, Circle was agnostic about cryptocurrency simply because Bitcoin was the only important digital currency at the time.

In November 2014, Allaire told CoinDesk that Circle’s primary focus was on how people use money, not bitcoin. The latest news only confirms Circle’s previous strategy.

“Why” instead of “How”

Circle is not “ending Bitcoin business,” as most media outlets have reported.

Users can still store bitcoin in their accounts or transfer it to others. Bitcoin is still a settlement token. Spark, a new protocol announced this week, is based in part on the Bitcoin system.

Circle is doing this just to convey its belief that Bitcoin will not be an important payment method in the future.

While this is disappointing news for Bitcoin enthusiasts, it is not an unexpected blow. Bitcoin’s slow progress is frustrating many. However, its price has risen. Innovation continues to be focused on protocol changes. There has been some progress in scalability solutions, sidechains, and more.

Bitcoin’s growth may be hampered, but it won’t end.

From a global perspective, Circle’s decision is indicative of a fundamental trend in the blockchain space, which is to focus on applications rather than technical structures. This trend has already begun quietly.

While protocols like Bitcoin, Ethereum, Corda, and others will continue to play a role, the real action is already happening elsewhere.

Startups like Circle are putting blockchain efficiency in the hands of users. The technology is important, but users are more interested in what these protocols can do.

The impact of “why” is much greater than “how”. Attractive applications (rather than professional terms) are more helpful for the public to accept blockchain and accelerate the promotion of this technology.

Therefore, Circle's discontinuation of Bitcoin trading services is not major news in the development of blockchain technology. What is major news is the improvement of functions and the fact that more people will enjoy the services brought by this technological advancement.