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“By continuing the process of inflation, governments can confiscate secretly and unobserved an important part of the wealth of their citizens.” – John Maynard Keynes, writing about the effects of a seemingly small amount of inflation every year.

Circle: Possibly the Best Bitcoin Service?

Circle Internet Financial has unveiled a new Bitcoin service that includes a digital wallet for securely storing Bitcoins. The company also offers Android and Apple iOS apps to manage the wallet as well as a web-based interface. Circle is a FREE service aimed at general consumers to allow them to seamlessly import traditional currency from a linked bank account or credit card and convert the funds to Bitcoins stored in a Circle Bitcoin account. The consumer then can send and receive Bitcoins to and from anyone.

Unlike most other Bitcoin services, Circle will even transfer money to and from your banking account at no charge! That makes Circle a very cost-effective method of buying, selling, and storing Bitcoins. In short, Circle is looking to operate in a gap between the Bitcoin-savvy world and the traditional world.

The biggest advantage of all appears when a Circle customer wishes to send money to or from someone in a foreign country. Unlike banks, Western Union, and other traditional money transfer services, Circle does not charge fees to send money overseas.

Circle is taking security seriously. There’s a heavy emphasis on security and on Circle’s role as a trusted custodian of its customers’ assets. The company says it has invested in military-grade hardware as well as in sophisticated multiple-signature architecture for authorizing transactions and cold-storage wallets. It will also provide customers with free insurance from theft.

Circle is a digital currency company founded in 2013 by Internet entrepreneurs Jeremy Allaire and Sean Neville and backed by leading venture capital investors Jim Breyer, Accel Partners, General Catalyst Partners, and Oak Investment Partners. The service is offered free of any charges, according to Jeremy Allaire, CEO of Circle Internet Financial. The company isn’t looking to turn a profit for some time. All customer money will be held in reserve (although not in segregated accounts), and the business is regulated as a money transmitter. “We can’t invest customer money,” Mr. Allaire said. The company has several ideas for paid products that it can offer down the line and, with about $26 million in venture capital, “’we have a lot of runway’ to absorb the costs of this initial product.”

Bitcoin links to bank accounts and to credit cards. Circle never charges a fee for transactions although the linked bank and/or credit card may do so. Most banks do not charge fees to transfer funds but Visa and MasterCard both charge cash advance fees to make deposits into another service, such as Circle. In most cases, it is better to make deposits from a linked bank account where you will not be charged cash advance fees.

Circle helps customers keep track of their Bitcoin holdings in order to comply with the IRS guidance issued this year that ruled Bitcoin is a commodity and subject to capital-gains taxes. Your current balance in the Circle account may be displayed either in Bitcoins or in a number of other currencies. I chose to display my balance in both Bitcoins and in U.S. dollars. The funds are actually kept in Bitcoins and the balance that is to be displayed is calculated by using the current exchange rate.

I downloaded the Circle app for iPhone and quickly configured it. I have used several other Bitcoin apps before and the Circle app was loosely similar. I did have to provide my full name, address, email address, and cell phone number (so that I could receive text messages concerning Circle deposits, withdrawals, and similar notices). I then linked my checking account by entering the account name, routing number, and account number. A message appeared stating that two tiny deposits would be made to my checking account and that I would have to verify them once the deposits appeared in my checking account. This is expected to require one to three business days.

Not wanting to wait, I then transferred a small amount of Bitcoin from a different Bitcoin wallet I have to the new Bitcoin address created by Circle. The Circle app created a new QR code which I scanned in with my other wallet and then touched SEND. The funds appeared in my Circle app within a few minutes.

Funds can be sent to another person by scanning a QR code or by specifying a Bitcoin address or an email address. The funds are always sent in Bitcoins so it is up to the recipient to receive the funds and to convert the Bitcoins to his or her local currency, if desired.

Circle appears to be a well-thought-out application. I found it to be extremely extremely easy to use. Perhaps the best feature of all is the ability to send funds anywhere in the world free of charge. There are no transfer fees or currency exchange fees. This makes it much, much cheaper than Western Union or bank transfers or purchasing checks written in foreign denominations. In fact, it is also cheaper than most other Bitcoin services. I plan to use Circle to make all future withdrawals from my checking account simply because there are no fees to do so. Once the funds are available within Circle, the Bitcoins can be transferred to any other Bitcoin wallet or used to make payments to anyone or any company that accepts Bitcoins.

Circle’s security statements claim the service uses state-of-the-art hardware and software, similar to that used by most banks when storing and transferring funds. I have no method of verifying the claims. However, I suspect that time and perhaps a few audits will eventually determine if the company can live up to its claims. Of course, the same is true of all other Bitcoin services.

If you wish to hide your Bitcoin transactions, Circle is probably a poor choice. It is a U.S. company and must fully comply with all U.S. laws and any subpoenas issued by U.S. courts. However, law-abiding U.S. citizens should have nothing to fear when using Circle.

You can learn more at

Categories: Crypto Currencies

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