Marc Andreessen recently revealed that the firm (Andreessen Horowitz) had been meeting with lawyers to discuss the possibilities of investments in the Bitcoin area. Earlier Marc had said that Bitcoin feels like the early days of Internet showing enthusiasm about the potential of the currency which has been widely misunderstood as an investment tool. On 12th December 2013, Andreessen Horowitz led a $25 Mn Series B investment in Coinbase, the San Francisco based platform/app that enables buying, selling and trading of Bitcoins. This could be the biggest investment by any firm in a Bitcoin based company.
Coinbase was co-founded in June, 2012 by Brian Armstrong (CEO) and Fred Ehrsam with Mark Peter Davis as an investor. The company has received a total funding of $31.9 Mn from investors Alexis Ohanian, Y Combinator, Greg Kidd, Garry Tan, FundersClub, Union Square Ventures, Ribbit Capital, SV Angel, Red Swan, Interplay Ventures and Andreessen Horowitz. With the latest round of funding, Andreessen Horowitz’s Chris Dixon along with Union Square Ventures’ Fred Wilson will join Coinbase’s board.
Let me tell you this, I downloaded Coinbase app long back, its pretty simple and straight-forward. It charges 1% fees plus $0.15 for the bank. So there is clear revenue model and upside for banks as well to work with them. I believe that companies and governments who bring legitimacy and security to Bitcoin transactions stand to gain from it and Coinbase has given an app/system that just does that. They have worked hard with the banks and financial institutions to provide a secure channel for buying and selling bitcoins.
“This funding solidifies our position as the largest and fastest growing Bitcoin service in the U.S. We plan to use the funds to expand our team, continue to educate the market, and promote the mainstream adoption of Bitcoin. We’ll also expand our referral program, where you can give and get $5 in bitcoin for free when you refer a friend who buys or sells at least $100 of bitcoin” stated Coinbase in a Blog post.
About the Coinbase Platform:
Coinbase lets any consumer to create a Bitcoin wallet and start buying /selling Bitcoin instantly by connecting their bank account.
It also provides a series of merchant tools that support some of the most highly trafficked sites on the internet.
Coinbase processes the first $1,000,000 of merchant orders for free, with a simple 1% fee after that.
Combined with no chargebacks by nature in Bitcoin, this provides significant savings to merchants who are paying 3% plus to credit card fees.
So far Coinbase has found that about 80% of its Bitcoin wallet customers see the Bitcoin as an investment, since they have simply been storing the currency, according to co-founder and CEO Brian Armstrong. But Armstrong and co-founder Fred Ehrsam are betting that in around five years, 80% will be using it for commerce.
On August 1st 2013, Coinbase reached a milestone of 200,000 users. That was quickly followed in mid-October by the news that they had reached 300,000 users. In December 2013, there are more than 600,000 consumer Bitcoin wallets on Coinbase. The company says that they are averaging 10,000 new customer sign-ups a day, and are now working with over 16,000 merchants including Khan Academy, OkCupid and Reddit, who use Coinbase to accept Bitcoin.