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Bitcoin bags jackpot $25million Coinbase investment

BusinessNews
by Chloe Albanesius, 13 Dec 2013News
Bitcoin bags jackpot $25million Coinbase investment

Bitcoin wallet and platform Coinbase has received a large infusion of cash from well-known venture capital firm Andreessen Horowitz.

Coinbase announced a $25 million (£15.2 million) series B funding round led by Andreessen, with participation from existing investors Union Square Ventures and Ribbit Capital.

Andreessen Horowitz's Chris Dixon and Union Square Ventures' Fred Wilson will join the Coinbase board, while Gavin Andresen is now a Coinbase advisor.

Coinbase said the investment is the largest for a bitcoin operation to date, bringing its total funding to $31 million (£18.9 million).

"We see it as a key moment to show the opportunity of bitcoin and the dramatic impact it will have on the global economy," Coinbase said.

The company will use the money to hire more employees, and spread the word about bitcoin. "We'll also expand our referral program, where you can give and get $5 in bitcoin for free when you refer a friend who buys or sells at least $100 of bitcoin," Coinbase said.

Coinbase now has more than 600,000 consumer bitcoin wallets, and it is averaging 10,000 new customer sign-ups per day. About 16,000 businesses use Coinbase for bitcoin transactions, including OkCupid, Khan Academy, and Reddit.

"We are making it easier for consumers to buy, merchants to sell, and developers to build, and we can't wait for our next chapter," Coinbase said.

Bitcoin faces a bit of an uphill battle in terms of mainstream acceptance. It's often mentioned in conjunction with sketchy or underground transactions, like Silk Road or secret bitcoin mining, and there are concerns about rapid fluctuations in the price of a bitcoin, which now sits at about $850 (£519).

Though making physical bitcoins might seem to defeat the purpose of the virtual currency, this year saw the arrival of the first bitcoin ATMs.

China recently banned its banks from using bitcoin as currency in an effort to prevent money laundering and maintain financial stability.

The Bank of America, however, was a bit more hopeful, writing in a 5 December report that bitcoin could "become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers."

The bank acknowledged concerns about illegal activity related to bitcoins, but said the fact that "all bitcoin transactions are publically available and that every bitcoin has a unique transaction history that cannot be altered may ultimately limit its use in the black market/underworld."

In a blog post, Andreessen Horowitz's Dixon said that in Silicon Valley, "bitcoin is generally viewed as a profound technological breakthrough."

"But to proliferate widely, bitcoin needs a killer app the same way HTTP had web browsers and SMTP had email clients," he said. "The founders of Coinbase, Brian Armstrong and Fred Ehrsam, have worked closely with banks and regulators to ensure that the service is safe and compliant. We think Coinbase can significantly accelerate bitcoin's proliferation, and as that happens the Internet will enter a new phase of invention and opportunity."

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