Bitcoin Startups Begin to Attract Real Cash
The credibility of Bitcoin is growing through millions of dollars in investment capital raised by startups such as Coinbase, CoinLab, and Coinsetter in the past year. Coinbase runs an online service that lets users purchase Bitcoin, store it in a digital wallet, and use the virtual currency to pay merchants for goods and services. Coinbase reaps profits from charging users a 1 percent conversion fee, and the startup’s co-founders reported in April that Coinbase had some 116,000 members who converted $15 million of actual tender into Bitcoin, up from $1 million in January. Union Square Ventures’ Fred Wilson says a $5 million investment in Coinbase announced today is expected to trigger a cascade of venture money into Bitcoin. Bitcoin is gaining favor among some small retailers and others who want to cut credit card acceptance costs. However, critics of Bitcoin say the currency’s volatility and its abuse by hackers are areas of concern, and they doubt it will emerge into a mainstream currency given the many technical and regulatory obstacles in its way. But these challenges are not discouraging venture investors, especially those who see in Bitcoin the potential for enabling zero-cost micro-transactions that would be too small for other forms of electronic payment.
From “Bitcoin Startups Begin to Attract Real Cash”
Wall Street Journal (05/08/13) Needleman, Sarah E.; Ante, Spencer E.