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Latin America Facebook Rival to Use Bitcoin to Pay for Content

Latin America Facebook Rival to Use Bitcoin to Pay for Content

Posted by PanamericanWorld on April 24, 2015

Launched Tuesday by Taringa!, whose 75 million unique users  puts it second only to Facebook FB -0.06% in the region, the project combines an ad revenue-sharing model akin to that of Google Inc.’s YouTube with the Argentine-owned site’s unique ranking system to incentivize popular content. The system was developed in partnership with Xapo, a Palo Alto, Calif.-based bitcoin wallet and custodial service provider.

Taringa! co-founder Hernán Botbol said his firm had been wanting to introduce a revenue-sharing model to add to an existing, non-financial incentive system that encourages popular content and helped his firm achieve rapid network growth. However, Latin America’s “horrendous,” underdeveloped financial system made it impossible to deliver funds, he said. Credit-card networks aren’t developed enough and bank account penetration isn’t deep enough for users to receive payments in their traditional currencies.

“We have had this on our mind, mainly because we think we can bring more people to create great content and also because we think that it’s fair, given that all this that we have is just because our users are creating the content,” Mr. Botbol said.  “But we never were able to do that because the infrastructure is horrendous – even if you send someone a check, [without sufficient banking services] they don’t know what to do with that.”

Taringa!’s agreement with Xapo is also designed to give content providers the opportunity to use and share their earned bitcoins within the community. They will have the capacity to send tips to one and another and Taringa! itself will facilitate purchases of consumer goods – starting with digitally delivered virtual products such as games, said Mr. Botbol.

On Friday, Mr. Botbol outlined the project to a small luncheon gathering of venture capitalists and bitcoin businessmen at venture firm Andreessen Horowitz in Menlo Park, Calif.  There, it prompted discussion about how such projects might expand the transactional use of bitcoin, which after rapid growth among a mostly tech-savvy core of early adopters has struggled to make a sizable dent in developed-country payment markets, where bank-issued credit and debit cards dominate. Bitcoin enthusiasts’ hope is that projects such as the Taringa!-Xapo partnership – which focus on ways bitcoin can be used where the traditional financial system is unable to deliver – could be an impetus for wider adoption in the developing world, where many believe digital currencies have their best chance of success.

The deal is part of a new emerging-markets-focused strategy for Xapo, which has become the biggest custodian of digital currencies in the world, mostly by developed economy-based long-term investors in bitcoin. In an interview, Xapo CEO Wences Casares said he sees fresh opportunities in the developing world, “where people are using bitcoin not as a store of value or an investment but as a way to spend on online.”

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