In amongst the various Bitcoin news stories filtering into the mainstream press so far in 2015, without doubt it’s today’s confirmation of a $75 million C Round investment into Coinbase that’s leading the way.
As a so-called ‘universal’ Bitcoin services company, the size of money going into Coinbase is big news – even outside the Bitcoin ecosystem. This is serious money. It represents 23% of the total monies invested into the entirety of the Bitcoin sector during the whole of 2014. Which in itself was a record-breaking year. The investment is way beyond the previous record single round investment ($30.5 million into Blockchain.info last year). It takes the total funds raised so far by the company formed in June 2012 to $106million.
Coinbase does many things. When it comes to merchant services, they’ve been involved in the lion’s share of the dozen or so big (i.e. $1 billion+) integrations over the past twelve months. They provide one of the most popular wallet and exchange services around. And all at the same time as building out their developer platform to provide tools which lets others build upon Bitcoin services upon their foundations.
However, it’s important to not get misled by the money. After all, it’s not unheard of for vast sums of investment to be wrongly allocated over the course of history. No, the real story here is the list of investors who’ve stepped forward to take part in this round. In addition to the existing Bitcoin champions from venture capital industry (Andreessen Horowitz, Union Square Ventures, Ribbit Capital etc), let’s take a look at some of the others that have joined the party:-
- The New York Stock Exchange
- USAA – Fortune 500 financial services group
- BBVA – large, multinational bank
- NTT Docomo – Japan’s largest telecommunications operator
- Valar Ventures – Peter Thiel’s VC firm
- Vikram Pandit – former Chief Executive of Citigroup
- Tom Glocer – former CEO of Thomson Reuters
Think about it for a minute. Each of these individuals and groups has had reason to think about Bitcoin and ultimately come to the conclusion that this ‘thing’ is not going away. Think of the implications here for a second:
- the NY Stock Exchange – presumably they hold a positive view on the inevitable regulation promised any day now in the form of the revised BitLicense?
- a telecommunications company in the world’s third largest economy seeing the opportunity for mobile payments?
- a multinational bank discovering the potential for cheaper money transfers?
The reality is that the individual motivations matter less here than the collection of names that put collective hands in pockets and pen to paper to finalise this deal. These are in no way shape or form ‘traditional’ Bitcoin cheerleaders. Not by any stretch of the imagination. I’m in no doubt that this represents the start of moves by the traditional financial services industry which will only accelerate during 2015. I didn’t really expect this to happen until the first regulations were finalised.
Of course, if they were to invest in any business within the Bitcoin ecosystem, it was always likely to have been Coinbase. They’ve always been relatively open to regulation and allowing the traceability of customers’ actions in a way that many (smaller) businesses in the scene haven’t. But any way that you frame it, this is big, big news for the industry.
The money’s likely to be spent on executing the next stage of that plan for global domination. It’s great to hear CEO Brian Armstrong’s goals to scale the services up to 30 countries by the end of 2015. So it’s as good a time as ever to leave you with the recent talk by co-founder Fred Ehrsam in which he quickly sets out Bitcoin’s potential.