Various Bitcoin startups around the world have been attempting to bring this new technology to the masses for years, but consumer adoption is nowhere near the levels that some venture capitalists predicted a couple of years ago. However, Abra may have finally figured out the proper design for a bitcoin wallet that can be used by a mainstream userbase.
During a recent interview with Reason’s Jim Epstein, Abra CEO Bill Barhydt explained how this new bitcoin wallet hides the complexities of the technology so everyone’s mothers will be able to use it, in addition to how Abra could have powerful utility for international payments.
“You can hold, for the first time, dollars on a phone in the US and send RMB to a phone in China, and the money magically shows up on the phone,” said Barhydt. “So, think of it like Venmo but crossborder.”
Although Barhydt claimed he did not set out with the intention of creating the world’s first mainstream bitcoin wallet, he and the rest of the team at Abra may have done just that.
Hiding the Complexities of Bitcoin
According to Barhydt, all of the complex technical details that Bitcoin users have been forced to learn over the years need to be hidden if this technology is going to go mainstream.
“The litmus test is: Can my mother use it?” said Barhydt. “My mother can use Abra. My mother cannot use an off-the-shelf, pure bitcoin wallet app, but she can use Abra [with] no problem.”
Abra has almost completely hidden the fact that their app is built on Bitcoin.
“We completely hide the complexity of all of this tech mumbo jumbo for the average consumer, so that they’re just seeing a really slick, clean interface that looks just like they’re sending dollars, euros, pesos, or yen without having to understand all the tech,” said Barhydt.
Barhydt explained that adding money to the Abra app from a bank account may look like — to the end user — a transfer from their personal bank account to a bank account owned by Abra; however, what is actually happening in the background is the user is purchasing bitcoin with his or her bank account and that bitcoin is then hedged to the user’s local currency.
“There’s no banks involved in the process,” said Barhydt. “There’s a whole bunch of magic in the background to make this work . . . What Abra has done is that it has masked the complexity of that in a way that still preserves the core tenets of this regulatory arbitrage that you’re getting, which means that you’re holding your own money. There is no middleman in any digital currency transaction that uses this model.”
Abra can also avoid the headaches that come with Know Your Customer compliance through the use of Abra tellers. These tellers are effectively just Abra users who are willing to trade physical cash for digital cash on the app. According to Barhydt, Abra onboards new tellers into their network in a manner similar to how Uber adds new drivers to their platform.
“If you load bitcoin into the Abra app and send bitcoin from here in New York to somebody in Mexico in pesos, there’s no ID required for that because you’re doing a P2P transaction that is effectively the equivalent of taking cash out of your pocket and handing it to the person standing next to you,” explained Barhydt. “It’s just that we use this digital magic to convert it to pesos in between. And if the person on the ground in Mexico went to a teller and just converted that on the ground to paper pesos via a teller transaction there would be no ID required.”
Who is Using Abra?
In the past, bitcoin users usually only send money between each other because their friends, family, colleagues, and other associates don’t know how to use Bitcoin. According to Barhydt, Abra enables bitcoin users to send money to anyone in the world without them knowing that Bitcoin is being used in the background.
“With Abra, bitcoin is just another currency, so I can send money from my bitcoin wallet through Abra to somebody who receives dollars, euros, yen, or pesos,” said Barhydt. “And they don’t even know that I sent them bitcoin . . . We have a lot of people doing that.”
In addition to traditional bitcoin users, Barhydt claimed that Abra is currently being used for cross-border money transfers between the United States, the Philippines, and India. According to Barhydt, Abra is also being tested by some businesses for cross-border payroll.
When asked which markets are particularly of interest to Abra, Barhydt specifically pointed to India, Colombia, Brazil, and Mexico.
“Ultimately, our core belief is that access to commerce is the only known tide that raises all boats, and the ability to use the phone to get access to commerce at global scale, I believe, changes everything,” said Barhydt. “It may be the single biggest factor affecting the future of growing people out of poverty that the world has ever seen, and Abra is all about providing that access.”
Barhydt Didn’t Set Out to Make Bitcoin More User Friendly
Surprisingly, Barhydt also claimed during the interview with Reason that he did not set out to create the world’s most user friendly bitcoin wallet — that was not his original intent.
“I was really trying to solve a very specific problem,” explained Barhydt. “I just couldn’t figure out another way to solve the problem. [The problem being] sending money between any two smartphones in the world with no bank [or government] in the middle.”
According to Barhydt, the increasingly high transaction fees on the Bitcoin network are “an enormous issue” for Abra right now, and he pointed to the SegWit2x proposal as a potential solution for the short term. For now, Abra pays on-chain transaction fees on behalf of its users.
“As a result, Abra has been paying very high mining fees to guarantee that the transactions get accepted very quickly, so that our users have a good experience,” said Barhydt.
Barhydt believes that transaction fees with plummet once a block size limit increase via SegWit2x activates on the network, but he also believes layer-two scaling options, such as the Lightning Network, will be needed for the long term.
“I believe that we will have no choice [but to use the Lightning Network], to be honest,” said Barhydt.
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