Bitcoin processor Bitpay scores $30 million in funding
An investor group that includes Virgin Group Chairman Richard Branson and Yahoo co-founder Jerry Yang is betting that Bitcoin has a bright future despite recent setbacks.
Bitcoin is alive and well. At least, that could be the takeaway from a huge cash investment in a company that processes bitcoin payments.
Bitcoin processor Bitpay has received $30 million in funding from an investor group with such major players as Virgin Group Chairman Richard Branson and Yahoo co-founder Jerry Yang. Thanks to the cash influx, Bitpay is now valued at around $160 million. That's the largest venture-capital investment ever in the digital-currency industry, according to the Wall Street Journal.
Following the announcement of the deal on Tuesday, Branson outlined his reasons for the investment in an email to the Journal.
The Virgin Group chief said that "[b]anking as we know it is in the midst of enormous change and innovation" and pointed to Bitpay as a service that "continues to build trust, legitimacy, and momentum in this exciting currency revolution." Branson's Virgin Galactic operation accepts bitcoin as payment from those who'd someday like to take a trip into outer space.
The show of faith in Bitcoin comes amid tough times for the virtual currency.
Bitcoin exchange Mt. Gox filed for bankruptcy in February following a loss of almost $500 million worth of the currency. Mt. Gox CEO Mark Karpeles has contended that hackers stole almost 750,000 customer bitcoins, as well as 100,000 of the exchange's own bitcoins, by taking advantage of a weakness in the company's exchange technology. In March, a Canadian bitcoin bank was forced to shut down after hackers stole all of its digital currency.
Some of powers-that-be in Washington have also issued warnings about the Bitcoin movement.
In February, Democratic senator Joe Manchin called for a bitcoin ban, contending that the currency is "highly unstable and disruptive to our economy." Earlier this month, the US Securities and Exchange Commission issued an advisory warning investors to be wary of any virtual currency, including bitcoin.
"A new product, technology, or innovation -- such as Bitcoin -- has the potential to give rise to both frauds and high-risk investment opportunities," the SEC said. "Potential investors can be easily enticed with the promise of high returns in a new investment space and also may be less skeptical when assessing something novel, new and cutting-edge."
Despite these setbacks, entrepreneurs and venture capitalists clearly still see a strong role for bitcoin. Time will tell if Bitcoin can move past its early growing pains and criticisms and emerge as a currency that's here to stay.