BitPay wants to make it easier to accept bitcoin
The volatility of bitcoin and its recent regulatory and legal troubles hasn't been enough to discourage some high-profile venture capitalists from investing in the digital currency-or at least the industry that supports it.
Earlier this week, a group of investors led by Index Ventures and including Virgin Group Chairman Richard Branson, poured $30 million into BitPay, an Atlanta-based startup that processes $1 million in bitcoin payments every day. Other investors in the financing round include venture firms Felicis Ventures, Yahoo co-founder Jerry Yang's AME Cloud Ventures, PayPal Peter Thiel's Founders Fund, RRE Ventures, Horizons Ventures and TTV Capital.
The funds will be used to expand globally and create more than 70 jobs, tripling BitPay's workforce. The majority of the positions will be developers. In addition to BitPay's core merchant acquiring products, the company is also developing open source projects around Bitcoin such as Bitcore, Insight, and Copay.
Bitcoin is an open source software created in 2009. The digital currency, which is not issued by a central bank but instead maintained on a peer-to-peer computer network, is created, or mined using high-powered computers. The bitcoin is traded, much like a commodity, and are accepted as payment for a growing number of products and services. Branson's Virgin Galactic accepts bitcoin (via BitPay) for tickets to space. Internet retailer Overstock.com, small businesses and startups accept bitcoin. The U.S. Federal Election Commission has determined that political campaigns are allowed to accept bitcoins as well.
The value of bitcoin skyrocketed to more than $1,100 in December, only to fall to under $350 today. That turbulence hasn't scared away Index Ventures. In a statement posted on their website, the venture firm says:
While Bitcoin's value as an investment asset or a traded commodity- rather like the publicity surrounding it - may ebb and flow, the infrastructure that enables usage of the digital currency and allows these frictionless transactions to happen, is not only a necessary part of the ecosystem, but also fast becoming a critical part of the Internet's own infrastructure.
The firm, which also backed Skype, says the emergence of bitcoin parallels the rise of VOIP. Index Ventures backed Skype as a wide-ranging communication channel built on top of the protocol, indirectly placing a bet on the underlying technology. In the case of BitPay, Index Venture says its investing in the infrastructure and tools that will help drive Bitcoin into the mainstream.
Flickr user Zach Copley
Related:
- UK's first retailer accepts Bitcoin: Stunt or support?
- Why governments are keeping an open attitude toward Bitcoin
- Bitcoin ATMs to open in Seattle, Austin
- Bitcoin exchange Mt. Gox shuts down amid insolvency claims
This post was originally published on Smartplanet.com