Channel Titan Wilkins Makes Game-Changing Cryptocurrency Bet With Ziftr

Robert Wilkins, the channel visionary who has started more than six companies including two successful mail-order IT reseller startups and built PC Connection into a solution provider behemoth, is making his biggest and boldest bet yet as the founder and CEO of cryptocurrency upstart Ziftr.

"The technology behind what we are talking about is incredible," said Wilkins, who in the past four months has overseen the launch of ZiftrCoin, a mass-market cryptocurrency; ZiftrWallet, a virtual wallet; and ZiftrPay, a product that allows online retailers to accept all forms of digital currency including Bitcoin. "When I first looked at this opportunity, I thought, 'Oh my God, this is going to change the world.’ "

Wilkins has covered a lot of technology ground over the past 30 years, but as far as he is concerned the block chain technology powering the Bitcoin/cryptocurrency phenomenon is every bit as revolutionary as the Internet. "I got shivers thinking about this when I first looked at it," he said, speaking about the block chain technology that is at the heart of the Ziftr cyrptocurrency offensive. "I looked at my wife and told her I couldn't sleep. It was like the day I saw Mosaic was launched and the World Wide Web started happening. It is that big."

[Related: Cryptocurrency And The Channel: Brother, Can You Spare A Bitcoin?]

Wilkins sees cryptocurrency technology completely reshaping world monetary markets (Ecuador recently put out a request for proposal to eliminate paper currency) as well as other critical financial documents such as stock certificates, titles and deeds. "You are looking at the first time ever in the world that you can have a transaction that is completely verified without a central authority to do it," he said. "Our peers, the network, our neighbors, automatically verify the transaction. From a security and networking point of view, this is how transactions are going to be done."

Wilkins began devouring any and all material he could get his hands on related to cryptocurrency earlier this year and soon after began building out a full cryptocurrency product portfolio with Ziftr. Today, the Milford, N.H., company's mission is no less than to revolutionize the shopping experience from consumer adoption with ZiftrCoin, ZiftrWallet and ZiftrShop to retailer adoption with ZiftrPay and ZiftrCart. One of the company's big advantages is its shopping search engine roots as myVBO, which has provided it with a customer base of 1.5 million users comparing products from the likes of Amazon and other major online retailers.

That online retailer legacy combined with Wilkins' channel roots give Ziftr a big advantage as it looks to disrupt standard credit card payment systems. In fact, Wilkins, who cut his teeth as the original founder and CEO of both mail-order IT product resellers Zones and Mac's Place, sees the channel as critical first adopters of cryptocurrency. That's in large part because tech-savvy solution providers grappling with razor-thin IT product margins are sure to be the first to embrace the economics associated with cryptocurrency.

Next: Disrupting Standard Credit Card Payment Systems

Wilkins said online retailers can immediately slash as much as 3 percent in credit card fees associated with online purchases and another 2 points associated with the sales, general and administrative overhead associated with those credit card purchases. "What's driving this is the much lower transaction costs associated with cryptocurrency than with credit cards," said Wilkins. "That's the reason you are seeing companies like Microsoft and Dell get into this." And that is not even considering the security benefits of moving to cryptocurrency, which eliminates credit card theft since credit card numbers are not used with the online payment system, said Wilkins.

"This is way more secure than credit cards," he said. "There is no personal information exposed with cryptocurrency. That is why you are seeing so many people and companies moving in this direction." Retailers also can circumvent some of the hefty costs associated with attempting to prevent credit card information breaches, he said.

Over the next year, Wilkins expects 10 percent to 15 percent of tech-product-based online retailers, solution providers and channel companies to start dedicating resources to cryptocurrency. "It is coming fast," he said. "There is money coming in. There is capital being used. It is a tech play. There is so much other technology that is going to come out around this technology in the next two to three years."

Wilkins, in fact, expects a number of large channel players to take the cryptocurrency plunge by building systems integration capabilities around the market opportunity. "There has been a lot of smaller players, but now we are seeing established companies looking at integrating all sorts of different high-level systems," he said. "It is going to take experience in systems integration for companies to do it. That is where the flood is going to come from. There is a lot of hardware involved in this opportunity. We are talking millions and millions of dollars poured into facilities that are dedicated to one thing: mining these coins to make the networks work. This is the highest-end technology out there right now."

As part of the drive to bring on channel players, Ziftr last month brought on board former BurstPoint Networks CEO Patrick Clark as its new executive vice president. Clark, who successfully sold video streaming company BurstPoint to Avaya, said he sees cryptocurrency as the next big technology tsunami. "There is always a coming tsunami in this industry," said the 30-year veteran who has piloted high-profile startups forced on big tech transitions including intelligent modems, local area networks and email. "When I looked at cryptocurrency I knew this was the next big tsunami. I wanted to get into a company that can innovate in that market, and grab the wave and ride it. That is what we have got going on at Ziftr."

Next: Creating A Digital Currency Mass-Market Phenomenon

Ziftr has got all the ingredients to make digital currency a mass-market phenomenon including its own ZiftrCoin that makes digital currency palatable to consumers. Ziftr launched a presale for ZiftrCoin on Dec. 9 with a goal of on-boarding the next 10 million cryptocurrency users. Ziftr is even giving away 300 million ZiftrCoins with a maximum of 100 ZiftrCoins per individual to kick-start the market.

"What Ziftr has created is tools and applications that address both the consumer side for the adoption of cryptocurrency and the retailer side to make it palatable and enable them to adopt it with many, many benefits," said Clark. "Giving away ZiftrCoins is going to show the average user that it is easy to use as a good alternative to the dollar or credit card. This is going to revolutionize the way people shop."

ZiftrPay, meanwhile, has opened the door for retailers and channel players to support the wide range of cryptocurrencies or credit cards. "With ZiftrPay, consumers can use whatever payment method they want," he said. "If they want to use both crytpocurrency and credit card, they can. It is all hidden from the retailer. When you use ZiftrPay there are no monthly fees, no setup fees, no fraud protection fees. It eliminates chargebacks from the credit card side."

The big initial carrot for many retailers is the windfall associated with eliminating credit card fees. "The retailer can make three to four points additional on every transaction," said Clark. "What is the average gross margin for a retail sale? It is usually less than 1 percent."

Clark's message to retailers and solutions providers alike regarding cryptocurrency adoption: "Call Ziftr and drop another 10 points to your bottom line. Have the conversation. If you are going to be in the game, you are going to need to accept cryptocurrency. There is going to be a big benefit for those that adopt this early on and execute. They are going to become market leaders. Those that don't are going to lose market share. Now is the time to act."

Clark, in fact, sees 2015 as the turning point for the cryptocurrency market. "2015 is going to be a big year for cryptocurrency," he said. "Up until now, it hasn't been easy. That all changes in 2015. If you want to catch the wave, you better catch it in 2015. If you catch it in 2016 or 2017 you are going to be the third man out."

John Gargasz, a managing member of 10X Venture Partners, a Merrimack, N.H.-based investment firm that has invested in Ziftr, said the cryptocurrency opportunity is every bit as big a game-changer as the Internet. "This technology feels like the early days of the Internet," he said. "I think the upside potential is huge. It's a fundamental change to a really big market. Ziftr could be $1 billion company. It is that kind of space. You are talking about disrupting a market with trillions of dollars that go through credit card companies and exchanges. It's a big play that is not going to come with a lot of big fights. There are going to be some really big winners. There will be a lot of losers just like there was with the growth of the Internet, and a lot of consolidation."

Next: 'A Once-In-A-Lifetime Opportunity' For The Channel

Ziftr is taking on the cryptocurrency "holy grail," which is moving beyond the early adopter boundary to a mass-market consumer phenomenon, said Gargasz. Key to that is the 2 million user base that was the foundation of Ziftr in its early days as the myVBO search engine site providing alerts to consumers on the best price for products they are looking to buy.

Gargasz credits Wilkins with pivoting the myVBO offering into what is a cutting-edge market opportunity. "It's phenomenal to see what Bob has done with ZIftr," he said, adding that Wilkins has built a world-class team of developers and marketers. "He has put together a hard-core team of developers to build the online stuff and marketers that understand how to market for online commerce. This is the absolute perfect team. Bob is a hustler who has reshaped the business and generated the cash to do it. That takes a lot of fortitude, optimism and raw talent. Bob has all of those things."

Gargasz said there are simply not many executives that have both the entrepreneurial vision and the management and operational skills to adjust to fast-moving markets. "Within the entrepreneurial community there are only one in a 100 that possess those skills," he said. "He has both talent sets. He is able to get into the trenches with employees and take it from the earliest days and get it to grow, and he also knows how to run a company at scale and take it public. I wish the executive teams at the other companies we work with had the same genetic makeup."

Mark Gavin, the former CFO of PC Connection, who worked side by side for six years with Wilkins growing the solution provider from $700 million to $1.4 billion, said it would be a mistake to bet against Wilkins as he moves to bring cryptocurrency to the masses. "What I love about Bob is he never gives up," said Gavin. "He is an entrepreneur who is always looking for new ways to engage and grow the business. A lot of guys move on to something else if their original idea doesn't pan out. Bob has that ability to fine-tune and make it work. That is probably his biggest strength."

For the channel, Gavin said, Ziftr's cryptocurrency offering represents a once-in-a-lifetime opportunity to add an unprecedented gross margin boost to the business. "If you can improve your overall business by a couple of hundred basis points, that is huge," he said. "I have never seen the ability for the channel to take that much out as a percentage of overall margin. What Ziftr is doing is very disruptive."