The Washington Post

Bitcoin startup raises a record $25 million. Is this a Bitcoin investment bubble?


Coinbase, a start-up that helps both consumers and businesses conduct Bitcoin transactions, has raised $25 million from the venture capital fund Andreessen Horowitz and other investors. This represents the largest venture capital investment in a Bitcoin start-up to date.

Several other Bitcoin startups have raised capital this year, but none of the investments has been as large as Coinbase's. Bitpay, which accepts payments on behalf of merchants, raised $2 million back in May. Coinbase itself raised $5 million the same month.

Another Bitcoin startup, Circle, raised $9 million in October. itBit, which plans to launch a new Bitcoin exchange raised $3.25 million last month. Also last month, China's largest Bitcoin exchange, BTC China, raised $5 million.

If this is starting to seem like the dot-com boom of the 1990s, that's probably not a coincidence. Bitcoin supporters believe that the open payment network will become an important new platform for technological innovation, disrupting the financial industry in much the same way the Internet disrupted the communications industry two decades ago.

People remember the dot-com boom as an era of irrational exuberance and frivolous investment, and there was a lot of that. But it's important to remember that many of the early dot-com stocks succeeded. While Webvan and failed, Amazon, eBay, and Yahoo all succeeded.

More importantly, the massive rush of investment capital helped build the fundamental infrastructure we all take for granted today. It took thousands of entrepreneurs experimenting with new Internet technologies—and many of them failing—to produce the successful online services that millions of people rely on today.

Something similar may be happening in the Bitcoin economy. Eventually speculative excesses may push the value of Bitcoin start-ups, and of bitcoins themselves, up to unsustainable levels. But if Bitcoin succeeds, some of these Bitcoin intermediaries have the potential to be big, profitable companies. And in the process, they may transform Bitcoin into something that's useful to ordinary consumers.



Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Show Comments
Most Read



Success! Check your inbox for details.

See all newsletters

Your Three. Video curated for you.
Next Story
Brian Fung · December 12, 2013

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.