Coinbase, a year-old Bitcoin wallet company, received the largest venture capital funding round for a Bitcoin company to date, with $25 million announced Thursday.
According to The New York Times, Coinbase has some of the heaviest hitters in the venture capital world backing it, including Union Square Ventures and Andreessen Horowitz.
Coinbase, which is based in San Francisco, lets customers and merchants trade, hold, and accept the cryptocurrency Bitcoin in a digital wallet. The company has experienced rapid growth--it now hosts 600,000 online wallets, up from 200,000 in August.
The company told The Times that it will use the $25 million series B funding to bolster its staff and "promote the mainstream adoption of Bitcoin."
Coinbase says the world's economy is "nearing a tipping point for broad adoption of Bitcoin," The Times reports. Last week, Bank of America Merrill Lynch became the first bank on Wall Street to release its opinion on Bitcoin. Its report stated Bitcoin may "emerge as a serious competitor" to cash in e-commerce and digital money transfers, if the current volatility diminishes.
Nicholas Colas, the chief market strategist at New York-based financial services firm ConvergEx Group, says Coinbase's funding round signals that it's time for small businesses to start taking Bitcoin seriously. "It's getting ready for prime time," Colas tells Inc. "In terms of small business adopting Bitcoin, there's been rightly a lot of caution in terms of security. But there are a lot of benefits, like lower transaction fees."
Colas says in order to see worldwide adoption, Bitcoin exchanges, wallets, and merchant software all need major upgrades, but the Union Square Ventures and Andreessen Horowitz investments definitely help Bitcoin's image in the public's eyes.
But should small businesses start adopting the currency now? It depends on who you are and where you live, Colas says.
"If you're a coffee shop in Portland, Oregon, which has a very forward-thinking community, or in Manhattan, yeah, you better start accepting Bitcoin," he says.