Coinbase exchange for the Bitcoin virtual currency raised $5M of investment from a pool of investors led by Union Square Ventures Fund together with Ribbit Capital, SV Angel, and Funders Club. This is the largest Bitcoin-related investment to date.
According to Union Square Ventures’ partner Fred Wilson, they have considered investing in Bitcoin ecosystem for the last few years, as this e-currency can become a kind of new open and distributed P2P protocol with its openness and architecture similar to such protocols as SMTP , HTTP, RSS and BitTorrent. This new protocol can be modified to become more accessible and safer in the future.
Coinbase provides exchanging Bitcoin’s virtual e-coins for real money and vice versa, charging a 1% fee. In addition, Coinbase offers its users virtual wallets for coins, and a platform for websites to accept Bitcoin as payment. The founder of the service is Brian Armstrong, software engineer at Airbnb renting website. Earlier in the autumn of 2012, Coinbase received its first $600M investment from a consortium of investors.
Coinbase was created by Paul Graham’s Y Combinator. It invests up to $20K in promising teams in exchange for a 10.2% stake. It enables startups to develop their product to the stage when it can become interesting to venture capital funds.