Virtual currency Bitcoin got its biggest shot of serious investment and arguably most legitimate backing to-date this week, with a $25m round of funding by digital account firm Coinbase lending more respectability to the controversial tech. Coinbase, which holds the virtual Bitcoin accounts for around 600,000 investors, not only manages virtual wallets but also the merchant tools required to accept Bitcoin as payment.
The latest funding round, led by Andreessen Horowitz, brings Coinbase’s total funding to $31m, the firm told SFGate. However, more broadly it’s the biggest single investment in a Bitcoin-focused company so far.
The investment itself will therefore go in part to continuing legitimizing Bitcoin as a viable, lasting alternative to more traditional payment methods. According to Coinbase co-founded Fred Ehrsam, the new investors have green-lighted spending “a good chunk of money” on getting the business licensed across states, in preparation for the expected tightening of the industry as it broaches the mainstream.
That may come sooner rather than later, with financial institutions like Bank of America weighing in, while the currency is now being accepted in a broad range of locations. Virgin Galactic announced it would accept Bitcoin for space flight tickets, for instance, while last month Bitcoin became an official payment option at a university for the first time.
The DoJ, SEC, and the Fed have all described Bitcoin as legitimate, though the confidence in the currency hasn’t been quite so positive abroad.
In China, for instance, banks prohibited its use, leading Baidu and China Telecom to remove it. Questions have also been raised about the relative lawlessness of the industry as it stands, particularly given the shortcomings on regulation.
Nonetheless, Coinbase says that its user-base is growing by almost a third each month, and Andreessen Horowitz predicts that will only increase as the general public becomes more aware of Bitcoin.