Bitcoin remittance service Abra's global expansion strategy

Rage Review : Abra, a blockchain remittance application company, has always been known for its low profile in the field, and therefore became one of the top ten highlights of the 2016 Consensus Conference. However, Abra, which has always been low-key, has brought us a rapidly expanding global strategy, which has attracted a lot of attention, and of course there are doubts. In many interviews with reporters, Abra CEO Bill Barhydt ambitiously planned the company's future, using his powerful words and expertise to tell people that Abra's success is inevitable.

Translation: Annie_Xu

Bill Barhydt speaks very quickly, occasionally spewing out long, abstract professional terms.

He told reporters: "We hope to achieve global expansion of Abra as soon as possible."

In a phone interview, his voice sounded like it was traveling through time and the wind seemed to whirr around him as he spoke about Abra, the peer-to-peer money transfer startup he has been CEO of since 2014.

Barhydt speaks very quickly, but his words seem to be a shout from a distance from this silent enterprise.

Although Abra has raised $14 million in two rounds of funding, the company’s Weibo has been quiet since September and has made few statements. Abra currently operates in only one market; however, for Barhydt, this is just the calm before the storm.

Bill Barhydt

He said:

"You'll see Abra in a lot of places this year, launching a lot of amazing partnerships and market expansions; Abra is moving forward in a big way."

Barhydt quickly outlined Abra’s expansion blueprint, which is full of complexities; however, it skips signing a money service application agreement with global merchants, adding many money service businesses to the company’s network, and reducing local regulatory constraints.

He said Abra is the first company to provide customers with a blockchain technology consumer experience and is committed to providing customers with payment capabilities that have never been available before.

Whether it’s liquidity management or the final decisive sprint, Barhydt always believes that Abra can leave these challenges behind.

Media reports echoed his ambitions, noting that Barhydt had outlined a grand expansion blueprint to investors, with the company's operations set to expand to more than 20 countries in Australia, Asia, Europe, the Middle East and across the Americas by September 2017.

It may seem like this pace of development is too fast, but Barhydt doesn’t think so. He says Abra already has two years of development experience.

"The Philippines is just a microcosm of a larger market, it's just our small-scale test field, and we don't actively market; you will see our changes soon."

Focus on a single market

So what is Abra doing in the Philippines? It’s hard to tell; on the Google Play app store, the Abra app has only about 70 views, and despite having four-star reviews, most of the positive reviews come from users who are on the app’s shortlist.

One of the most prominent issues seems to be what Barhydt is eager to solve, that is, users cannot realize cross-border value transfer. But he believes that the company's application will perform as well in the larger market as in the Philippines, and this experience will be a valuable asset for this new enterprise.

“Our goal is to use a small test to make sure the app works as well as it does when we expand to more countries,” he said, adding that he expects the Philippines to become Abra’s “primary gateway,” although Abra would rather call itself a peer-to-peer network, as people might associate it with a remittance company.

Barhydt said the Abra network allows users to cash out digital currencies and deposit them into bank accounts around the world, but four banks offer digital currency purchase channels. The Bank of the Philippine Islands (BPI), Metrobank, and UnionBank allow Abra users to convert fiat currencies into digital currencies.

As for whether Abra has direct relationships with the three banks, Barhydt said that partnerships with financial institutions are not a core strategy for the company.

“Our relationship is simple, our third-party partners act as payment gateways and try to make the process transparent; Abra itself does not require any formal partnership.”

Build a network

Barhydt acknowledged that banks are only part of the story, and that merchants are just as critical to the company’s future as they are to the modern money network.

“We believe Abra’s ability to conduct cross-border trade, P2P or B2C, is a big competitive advantage.”

Therefore, Barhydt claimed that Abra is also exploring the possibility of unifying the wallet applications for consumers and merchants; in this way, both consumers and merchants on both sides of the transaction can use Abra’s smart contract technology to obtain any form of currency.

Attracting merchants is challenging, but Abra has always been picky about its technology choices. For example, it took several years for chip card technology EMV to be widely used in the United States, but it still failed to avoid complaints from merchants and consumers, and EMV subverted the POS experience they were accustomed to.

But Barhydt believes that Abra will have the biggest impact on online commerce, where users can enter their phone number on a website, get a notification, and then use the bitcoin blockchain to transfer funds to the merchant's account. This is conducive to high-risk trade activities.

However, the process is complex; for example, Abra consumers and merchants must buy and hold digital currencies, and tellers must also see providing services to both as a business opportunity.

Master tellers also need to join the network of companies, provide regulation and compliance for other companies, interact with exchanges, and convert funds into fiat currency. The exchange then maintains the bank accounts of merchants, master tellers, and tellers.

The company hopes to simplify the front-end user experience.

"From the merchant's perspective, these cash transactions are settled in local currency at a near-instant speed, with no chargeback risk or foreign exchange risk."

Experience First

Like its peer Circle, Abra is focused on user experience; Barhydt believes that users will directly adopt new technologies such as digital currencies rather than storing fiat currencies.

"I know the benefits, but the angle is wrong."

Many observers in the space question its ability to execute on this strategy, but Barhydt asserts that the company has found a way around it.

“Think of the money a merchant or consumer holds on Abra as synthetic fiat, which is essentially arbitrage crypto, but it’s hard to get right. As far as I know, Abra is the first company to do it successfully.”

The document shows that the working principle of the Abra network is to borrow Bitcoin from the mining pool and sell it to the exchange, creating a short situation that is beneficial to Abra's currency liquidity; closing the position will not bring liquidity risk, and Abra tellers will eventually need to sell Bitcoin.

The company noted that a short dollar could even lead to long-term profits for the company.

User strategy

Details on the exact user flow are still unclear, but Barhydt noted that users don’t need to understand how value is managed, just as they don’t need to know how information is transmitted around the world.

"Once Abra is rolled out globally, it will enable the first P2P payment app between any two phone numbers. There is no such app yet. Abra is the WhatsApp of payments."

Therefore, Barhydt said Abra has a unique opportunity to differentiate itself from its competitors - Abra's products have the potential to spread quickly to every corner of the world. But how long it will take to achieve this goal remains to be seen.

After that, the conversation with Barhydt paused, the wind around him seemed to disappear, and everything became quiet. It seemed that Barhydt had achieved at least one goal for the time being.

Barhydt did not express an opinion on when Abra’s future would be clarified.

"I don't know if the hockey stick effect will happen, but the chances of it happening are very high; we are getting closer to our ultimate goal."