Despite the fact that Bitcoin was named one of the worst investment of 2014 and that the price of Bitcoin has recently dropped, fluctuating from $226 to about $170 during the first part of January, 2015, bitcoin enthusiasts and entrepreneurs are still investing in digital currency.
According to a report of Coinbase, a bitcoin wallet and exchange service, the company has just closed a $75 million round of funding, the largest one ever for a bitcoin company.
“Today we are pleased to announce that Coinbase has raised $75 million in Series C financing, the largest funding round to date for a Bitcoin company. This brings our total capital raised to $106 million. The round was led by DFJ Growth, with participation from our existing investors, including Andreessen Horowitz, Union Square Ventures, and Ribbit Capital. Three of the world’s most respected financial institutions – The New York Stock Exchange, USAA, and BBVA (a large multinational bank) – also invested in the round alongside personal investments from former Citigroup CEO Vikram Pandit and former Thomson Reuters CEO Tom Glocer. This marks the first time that financial institutions have made a major investment in a Bitcoin company.”
Launched in 2012, Coinbase has now raised $105 million in venture capital funding. Investors in this most recent round include the New York Stock Exchange, banks USAA and BBVA, and former Citibank CEO Vikram Pandit, as well as Andreesson Horowitz, Reddit Capital and Union Square Ventures.
Coinbase’s platform is used by several major Bitcoin-accepting mainstream companies including Overstock and Expedia. The service also has almost 2 million customers.
Fred Ehrsam, the company’s co-founder, told Fortune that Coinbase has grown extensively over 2014, despite the plummeting price of bitcoin:
“Price volatility isn’t good for certain uses of Bitcoin,” Ehrsam said. “But, in that same time period, we went from 600,000 users to 2.1 million users.”
Moreover, the company aims to develop applications on top of the Bitcoin platform, and make the digital currency more straightforward to ordinary people.
Speaking at the TechCrunch Disrupt Europe conference, held in the UK, CEO and co-founder of Coinbase, Brian Armstrong called bitcoin “the most exciting technology since the internet” and admitted that Coinbase faced an increase in bitcoin transaction volume.
“If you look at the data over the last two years, the number of transactions has continued to grow up. When it comes to the USD volume, bitcoin has gone through three bubble periods,” Armstrong said. But Coinbase also has internal metrics that are deeply related to mainstream bitcoin adoption. “Are deposits growing? Are more people signing up? Are people using bitcoin for commerce? All these numbers are going up month over month,” he said.
Armstrong is sure that despite the recent downturn, there is nothing to be worried about:
“We are just seeing a classic hype cycle. The Internet in 2001, the NASDAQ crashed down. In many ways, bitcoin is the most exciting technology since the Internet, we think.”