From three Guys and a Dog to a Global Player in the World of Cryptocurrency, or: The Story of Bitwala
14 September 2023
The Story of Bitwala is an example of how startups emerge from the smallest of ideas and grow into companies that can change the way we live. About how that sometimes isn’t enough when the time isn’t right yet.
Bitwala - Unraveling the Beginnings of a Promising Startup
It all started in 2013 when three Bitcoiners that grouped together as “Bitcoins Berlin" walked into an open-source only coworking space in an uprising area of berlin. They had a simple idea: Bitcoin has enormous potential, but nobody is really using it. Let's get people to use it. They went to some of the biggest firms in Germany and pitched the powers of Bitcoin - fungibility, borderless and trustless transactions, cost savings… However, nothing came of it. So, they decided to take matters into their own hands and create a product that would help people buy anything online with Bitcoin. That's how All4btc was born.
All4btc was a simple web form that allowed people to buy anything online with Bitcoin. The team did everything manually, including clicking through the checkout to buy the item on the customer's behalf. The big learning was that you don't need complex tech to have a startup. However, a concierge-style service for bitcoin whales could not scale.
The team recognized their customers' desire for more than just buying TVs with Bitcoin and sought to empower people with complete autonomy and freedom in the realm of finance. That's when they decided to create Bitwala, a bridge between cryptocurrencies and traditional banking. The value proposition was simple: Provide people with the financial control and freedom they deserve and remove unnecessary intermediaries when it comes to payments and the storage of wealth.
Bitwala offered a prepaid credit card that people from more than 120 countries could use online, offline, and to cash out at ATMs. Bitwala's business grew as did the Bitcoin price. People used Bitwala for bill payments, fast cash-outs, and remittance.
Bullrun vs. Wavecrest Fiasco: A Setback for Bitwala
During Bitcoin rallying to higher highs in 2017, Bitwala's user base expanded rapidly, placing increased demands on its services. However, the meteoric rise of cryptocurrencies also exposed vulnerabilities within the crypto banking ecosystem. In 2018, Bitwala, among other crypto card providers, was dealt a severe blow when its card issuer, Wavecrest, faced regulatory issues. Wavecrest's partnership with multiple crypto card companies was abruptly terminated by Visa, leading to the suspension of these companies' card services overnight. Bitwala was forced to halt its debit card offerings, leaving its users unable to access their crypto holdings through traditional payment methods.
The Wavecrest incident cast a spotlight on the precarious regulatory environment surrounding cryptocurrency-related financial services. As traditional banks navigated the complex regulatory landscape and grappled with concerns regarding money laundering and fraud associated with cryptocurrencies, some crypto-focused companies, including Bitwala, found their bank accounts being unexpectedly closed. This left them scrambling to secure new banking partners to ensure the uninterrupted operation of their services.
The Bitwala experience during the Bull Run and the Wavecrest fiasco underscores the need for resilience and adaptability in the cryptocurrency space. While the Bull Run brought unprecedented growth opportunities, it also revealed the importance of scalable infrastructure and robust customer support to accommodate surging demand. The Wavecrest incident, on the other hand, highlighted the regulatory uncertainties that still persist in the crypto banking sector and the potential pitfalls of relying heavily on third-party providers.
German banking laws are your friend: Teaming up with Solaris
As rules got stricter and due to the evolving needs of its user base, Bitwala made a strategic decision to partner with Solaris, a German-based banking platform with a full banking license. This partnership proved to be a game-changer, as it allowed Bitwala to leverage Solaris' regulatory compliance infrastructure and banking capabilities. This was particularly crucial in an environment where navigating complex regulations was becoming more challenging for crypto-focused companies.
The partnership between Bitwala and Solaris was set to provide an additional layer of assurance. Specifically, the alliance ensures that the Euro funds residing within the bank accounts will enjoy comprehensive protection, extending up to an impressive 100,000 Euros through the protective umbrella of the German deposit protection guarantee scheme. Moreover, the watchful supervision of BaFin and Bundesbank, Germany's esteemed banking overseers, adds an extra level of credibility to this collaboration.
Bitwalas Rebrand to Nuri
After successfully navigating the ups and downs of the cryptocurrency landscape for several years, Bitwala's management decided it was time for a refreshing new look and a brand-new name for the company.
That’s when Nuri was born. Apart from the obvious - the name - it signaled that the company has matured into a prominent player. Nuri aimed to be more than just a crypto banking platform; it strived to be a holistic financial ecosystem that empowered users to take control of their finances, irrespective of their location or background.
One of the central pillars of Nuri's enhanced vision was financial inclusion. Cryptocurrencies and blockchain technology have the potential to bring banking services on-chain and in-pocket. Nuri aimed to play a relevant role in this process by providing a user-friendly and accessible platform for individuals to access financial services, send and receive cross-border payments, and invest in cryptocurrencies with ease.
Nuri, announced with a vision of revolutionizing digital banking and cryptocurrency services, made a splash in the market. With innovative products and an ambitious leadership team, the company rapidly gained traction and secured substantial funding from investors eager to back the next fintech unicorn. However, in their quest for rapid expansion and chasing ever-increasing market share, Nuri overlooked some crucial aspects. As the finance and crypto industry evolved, so did the challenges for the company. Intensifying competition and shifting market dynamics posed hurdles that required swift adaptation. Regulatory compliance became a focal point, and Nuri encountered legal challenges related to its cryptocurrency offerings. Additionally, the company faced the complexities of scaling, putting strain on their once-praised customer service and resulting in dissatisfaction among their user base.
These challenges culminated in financial pressure on Nuri's resources, with slowed revenue growth and their ambitious expansion plans putting pressure on cash flow. Additionally, 2022 was marked by significant instability and uncertainty in the financial and economic landscape, eroding investors confidence worldwide. It was no different with regards to Nuri's investors. Nuri's leadership team now faced some tough decisions. The insolvency of one of Nuri’s main business partners Celsius worsened the situation significantly and was the last nail in the coffin - Nuri had to file for temporary insolvency in August 2022.
Bitwala's journey from three guys and a dog to a global player in the world of cryptocurrency failed. For now.
While the journey to insolvency was undoubtedly painful, Co-founder Jan Goslicki and Head of Trading Dennis Daiber took a mature and introspective approach to the situation. Rather than yielding to despair, they chose to view the experience as an opportunity for growth and learning and started… Bitwala!
With an eye on the past and a commitment to the future, the two freshly baked founders have extracted insights and lessons to guide their path forward:
Focus on core business: Bitwala learned that diversification, while important, should not come at the cost of diluting resources and attention away from the company's primary offerings.
Scale Sustainable: Due to fragility exposed by financial instability, Bitwala had to sincerely reevaluate its budgeting strategies and burn rate to mitigate risks and ensure a more secure foundation for future endeavors.
Raise if you can: Ambition alone cannot shield a business from financial realities. When opportunity knocks, secure your venture's future by aligning vision with sustainable capital.
Investor Influence and Advisory Independence: Maintain a balance between taking on external capital and preserving decision-making autonomy. The involvement of investors can greatly impact a company’s path while there’s also an independent advisory board to provide unbiased guidance.
Moreover, they realized that maintaining open and honest lines of communication during difficult times would not only have preserved customer trust but also have generated valuable support and understanding from their community.
With Bitwala reemerging into the market, it does so with a sense of humility and a deep commitment to its customers, armed with their lessons of the past but also not to forget to keep pushing the boundaries of what is possible. Here’s to a new chapter. Here’s to Bitwala.