Would you invest in BitCoin?
Most people would probably be hesitant to do so, but Juan Pablo Cappello – owner of a boutique law firm that focuses on Latin America and who has been very involved in Latin America’s budding tech scene – answers that question with a resounding “yes.”
BNamericas spoke to Cappello to find out why and how he expects virtual currency to develop in Latin America.
BNamericas: You say that your boutique law firm, Private Advising Group, accepts BitCoin (BTC). How do you define the price for service, given the BTC’s price fluctuations?
Cappello: I had the good fortune of buying some BitCoins back in early 2013. I was the general counsel of patagon.com [in the late 1990s], and the mobile payments space has been of interest for years.
BTC’s price has been fairly stable as of late – around US$600. We simply ask clients who pay with BTC to pay us the dollar equivalent of our bill. I actually have my hourly rate tied to half a BTC. This is about a 50% discount at today’s value. But I want to support BTC payments, so I’m happy to discount the value of my time when a client pays with BTC.
BNamericas: What percentage of your revenue comes from BitCoin?
Cappello: About 5%. I never expected to be paid so frequently in BTC. It’s an awesome surprise.
BNamericas: You’ve said that BTC is a viable alternative, particularly in controlled economies such as Argentina and Venezuela. Do you see BTC, or any other virtual currency for that matter, as going so mainstream as to make a big difference?
Cappello: My view is that BTC will be like your PayPal account – one of several payment methods that will be mainstream for tech-savvy people. PayPal hasn’t replaced your credit card or cash. It’s is a compliment to that. The same with BTC; it will become a complement to the more traditional payment methods.
Also, BTC is already putting pressure on more traditional payment methods to lower fees and finally make some innovations.
BNamericas: There’s an obvious underside to the whole BTC movement, with the payment system being associated to illicit trade. Will it always be like this due to its nature, or is there some way for the currency to clean up its image?
Cappello: Cash gets used for a lot more illicit trade than BTC. BitCoin has been a great innovation, but has done a terrible job with its PR. Every week another major retailer announces that it is accepting BTC. [Most recently], it was Dell.
BNamericas: BTC has its detractors, while you are a proponent. Critics may look to your experience with LatAm financial services portal Patagon, which was sold for nearly US$1bn to Santander to only go belly up a couple of years later, and say that BTC is just another expensive example of a hyped up IT craze. How would you respond to that?
Cappello: Patagon was bought by a large bank that did not know what to do with it, and the Nasdaq [shares] fell 90%. It went from US$5,500 to below US$600. I’m not sure how Patagon is relevant. BTC is a once-in-a-generation innovation.
The threat of BTC going mainstream is already pushing traditional payment methods to realize that [unless] they start innovating and changing, BTC will run them over. Traditional payment methods and wire transfer companies will push down their fees to be more competitive, in large part thanks to the perceived threat of BTC.
BNamericas: Where do you see BitCoin going in Latin America? Do you have any predictions as to BTC’s price at year-end?
Cappello: Companies like Xapos are focused on addressing the major concerns of most people who have considered buying or using BTC, namely, how do I store them safely and use them safely?
As these issues get resolved, BTC will become a very attractive alternative to hoarding cash under the mattress as many, many people do in LatAm today.
I have no idea where BTC’s price will end up, but I suspect the price will fluctuate around the US$500-800 range for a while.
About Juan Pablo Cappello
Juan Pablo Cappello is the founder of Miami-based boutique law firm Private Advising Group. He was previously a principal shareholder in the Latin American group of international law firm Greenberg Traurig.
Earlier in his career, Cappello was a partner in and a director of Patagon.com, which was sold to Banco Santander for a transaction value of over US$750mn. He has co-founded several companies including idea.me, the LAB Miami and urbita.com, and considers himself a “serial seed investor” with a portfolio of over 25 investments.
Juan Pablo CappelloFounder Private Advising Group By Christian Molinari – Monday, August 4, 2014