Bitcoin Wallet Provider 37Coins Bites The Dust

Despite most of the recent Bitcoin news being primarily dominated by BitLicense regulatory woes and tribulations, there is some other news to report as well.  Unfortunately, not all of that news is positive, as online Bitcoin wallet provider 37Coins has shut its doors for good.  Traditional issues, such as funding and overseas issues, are the alleged causes for this decision.

37Coins: Text Messaging To Transfer Funds Not As Lucrative As Expected37Coins

Making a third-party Bitcoin wallet service stand out among all of the other options is not an easy feat these days.  Most Bitcoin users will stick to a select circle of preferred applications, whether it is on mobile or on computer.  37Coins had a great solution to tackle this problem head-on though: a hybrid system of text messaging and Bitcoin transfers.

Using the pre-existing SMS infrastructure around the world and tying in Bitcoin payments to this system sounds like a very good idea on paper. However, pulling it off successfully is a different matter entirely, and this is where the first problems started to arise for 37Coins.

Whenever companies are forced to rely on third parties to run their business model, problems will ensue sooner or later.  In the case of 37Coins, issues arose when it came to deliver text messages outside of the United States.  Most third party providers offer this functionality, yet finding a reliable service without any hiccups is nearly impossible.

But that was not the only issue for 37Coins, as the project the company had set to undertake is both time and money consuming to say the least; despite finding some investment funds in the early stages of launching their product, money dried up rather quickly without additional funds coming in from other investors.

“The decision to cease operations and to shut down our service was difficult despite the best of intentions, we were unable to deliver a quality product that showed product-market fit.  We also found that SMS delivery between different carriers in countries outside the USA is unreliable.  Lastly, our initial objective was not possible to achieve with the amount of capital raised.  That is the most regrettable and we apologise”

Is Decentralized SMS Communication The Key To Success?

Funding issues aside, the key problem remains that mobile service providers are still unable to provide a qualitative service all over the world.  Granted, there are some areas where there is less coverage, but even continents such as Africa have major telco’s competing for market share.  Even though the quality of this coverage might not be up to the standards of the Western world, failing to deliver SMS messages should not be occurring in this day and age.

Whether or not it will ever be possible to decentralize the entire SMS system, remains to be seen in the years to come.  Blockchain technology allows developers to achieve many great feats, but this might be a step to far right now.  Then again, a properly decentralized SMS service could be the service Bitcoin needs to gain mainstream adoption.

Despite 37Coins shutting down their service, there are alternative options available to this very date.  BitGive, and ChangeTip are all offering a semi-similar service, allowing users to quickly transfer funds all over the world by using existing infrastructure.  The 37Coins SMS Wallet will remain in operation until December 31st, after which it will go dark for good.

“It has been a privilege getting to know all the bitcoin supporters around the world and to work together toward a fair and balanced financial system.  Thank you for being such passionate supporters.”

Source: 37Coins Blog on Medium

Images courtesy of 37Coins, Shutterstock