Blockchain lures big investment
Silicon Valley is placing big bets on Bitcoin, even though there are concerns over the crypto currency’s staying power, venture capitalists are not shying away from investing in Bitcoin startups.
The latest of these, Blockchain, which is a Bitcoin wallet provider and software developer has raised close to $30.5 million in a fundraising effort that was led by Lightspeed Venture partners and Wicklow capital. This investment is the biggest that has been made in the digital currency industry to date.
Blockchain is based in Britain and since its founding it has gained respect in the cryptocurrency market for adhering to the basic principles and philosophies of Bitcoin which are anonymity and decentralization.
The very first backer of the company was Roger Ver who is a libertarian and known in some circles as Bitcoin Jesus.
The price of Bitcoin reached its highest peak last year when it was trading at $1,150 but fell over the weekend to its lowest point of the year after tumbling 20 percent, to about $286, according to CoinDesk, a virtual currency website. Bitcoin was trading on Monday evening at about $330.
Despite the volatile price and failure of a number of Bitcoin related sites, coupled with a number of new regulatory challenges, more than $250 million has been invested in companies that are created for Bitcoin with a large percentage of that number having been invested in the past 6 months according to Wedbush securities which is a financial services firm.
“Over the course of the next 10 years, Bitcoin is going to have a big impact,” said Jeremy Liew, a partner at Lightspeed who will join Blockchain’s board. “Where is the central nexus of value creation in this whole industry? It has to be the wallet,” he said.
Blockchain’s financing round was precipitated by a spate of large investments in Bitcoin companies. This has been particularly for companies that offer storage services. For example, CoinBase raised $25 million through venture capital firm Andreessen Horowitz last year while Xapo, another Bitcoin company is said to have raised $40 million from investors.
In the developed countries, virtual money is still considered a plaything for technology enthusiast as well as speculators. In emerging markets and growing economies, Bitcoin has enormous potential to provide a monetary system for populations where the infrastructure simply does not exist.
Mainstream adoption of Bitcoin has been slow though a number of companies are now accepting the digital currency as payment for goods and services.
For Bitcoin to gain mass acceptance, the cryptocurrency must find a unique application that takes the coin from being a speculative currency to a usable currency , which is what Blockchain aims to do.
Blockchain says that it is trying to make it easy for people across the globe to use Bitcoin . Currently, 2.3Million wallets have been created by Blockchain, making it the most popular wallet provider currently.
Blockchain has also developed a search engine which allows users to verify transactions in the public ledger. The company charges a small fee, but most of its revenue is in the form of advertising.
The company says it intends to use the funding to expand so as to invest in developing markets. “it’s not enough for Bitcoin to be tantalizing, but it also needs to be useful”