Startup raises $500K to create Bitcoin trading platform
Coinsetter hopes to capitalize on recent interest in the virtual money by creating a platform that will allow investors to short the currency, which has appreciated 1,500 percent since January.
Bitcoin got a boost of confidence of sorts today from a group of investors interested in creating a trading platform for the virtual currency phenom.
The decentralized peer-to-peer currency traded as high as $240 per Bitcoin today before closing at $233, up nearly $45 for the day, according to Mt. Gox, the world's largest Bitcoin exchange. Overall, Bitcoin has appreciated more than 1,500 percent since January, a meteoric rise that observers credit largely to financial uncertainty in Europe and nascent investor curiosity.
Coinsetter is hoping to capitalize on that interest with the launch of a Forex trading platform that will allow investors to short the Bitcoin market by using borrowed assets for margin trades -- essentially betting that its value will decline. The New York City-based startup announced today that it had completed a seed round of financing totaling $500,000 led by SecondMarket CEO Barry Silbert and Jimmy Furland, an entrepreneur who has also invested in BitPay, a Bitcoin-based payment service provider.
Coinsetter founder and CEO Jaron Lukasiewicz said the company is focused on creating a secure, reliable platform for investors.
"This financing round places our company in a position to build this highly demanded platform the right way," Lukasiewicz said in a statement in a company blog post. "We now have multiple developers working to bring a high quality product to market, and we have even more people performing security-intensive code reviews on it."
Lukasiewicz noted in an interview with CNET that there was a good chance that Bitcoin valuations could decline in the near term but said he believes Bitcoin's current valuation was "completely justified."
"The Cyprus banking crisis and the subsequent movement toward Bitcoin was a very real demonstration of Bitcoin's intrinsic value to society as a currency worth over $1 billion," Lukasiewicz said. "There is also a lot of big money moving into Bitcoin, which would suggest that it will continue to keep trending upward."
Lukasiewicz said his company would serve an important role in the Bitcoin economy, adding stability to the market.
"Markets without shorting and other financial instruments tend to be highly volatile, and Coinsetter will help make the market more efficient for everyone," he said.
Launched in 2009 to intentionally avoid the prying eyes of law enforcement officials, the virtual currency has been gaining traction with investors in recent months as acceptance has grown. WordPress announced last November that it would beginon the popular blogging platform. The currency platform gained more backing in February when Mt. Gox reached an agreement for CoinLab to .
Some analysts also believe that Bitcoin's growing popularity in recent weeksin Europe that resulted in Cypriot banks being closed for nearly two weeks last month.
While the platform has proved popular lately with investors, it has also been a frequent target for criminal activity including thefts, hacks, and scams.in one such virtual heist last year. A hack at Instawallet earlier this month forced the Bitcoin wallet company to suspend its service "indefinitely."
Updated at 8 p.m. PT with CEO comments to CNET.