Bitcoin virtual currency hits record high after exchange deal
With $500,000 in VC funding and a bank partnership, Seattle-based startup CoinLab agrees to handle the U.S. and Canada operations of the world's largest exchange for the virtual currency.
Bitcoin has staged a dramatic comeback in the past two months, more than doubling its value against the dollar in that time and trading at record levels.
The virtual currency was trading above $32 a share today after languishing in the mid-teens in January. The record was reached on the same day that Mt. Gox, the world's largest Bitcoin exchange, reached an agreement with CoinLab to manage the exchange's operations in the U.S. and Canada.
Bitcoin sprang up in 2009 as a peer-to-peer currency that intentionally avoided the prying eyes of law enforcement officials. In order to acquire Bitcoins, users access exchange sites to transfer actual currency, such as U.S. dollars, into the digital option.
However, after struggling to crack the U.S. market, the Japanese exchange hopes its arrangement with the Seattle-based startup, which has a partnership with Silicon Valley Bank and $500,000 in VC funding, will increase customer confidence.
"There are two major difficulties Bitcoin exchange customers have traditionally faced: banking troubles for the underlying exchange, and security of their coins," CoinLab CEO Peter Vessenes wrote in a company blog post announcing the partnership. "Since we believe in Bitcoin, we'd like to solve these problems."
The currency has experienced a rollercoaster ride in the past two years, setting its previous record of $31.90 in June 2011 before plummeting to $2 later that same year. Its exchange rate began to improve in mid-November when the popular blogging platform WordPress announced it wouldfor upgrades such as custom designs and ad-free presentations.