Signup for our free newsletter:

Rising Bitcoin Investments Bode Well

Written By Brian Hicks

Posted December 13, 2013

Bitcoin continues to grow at increasing pace as professional start to invest their money in the virtual currency.

The most recent investor is Marc Andreessen of Andreessen Horowitz. The firm has invested $20 million into Coinbase, a company that enables users to have virtual wallets for Bitcoin, buy and sell Bitcoins, and make purchases with them.

BitcoinBitcoins are not just for hobbyists anymore, that’s for sure.

For Coinbase’s Series B round of funding, it was able to raise $25 million with the help of Andreessen Horowitz along with Union Square Ventures and Ribbit Capital.

Add this to the first round of fundraising, and Coinbase has been able to collect $31 million.

The startup wants to use the money to increase staff and its overall capabilities for wallets. Right now, the system works much like PayPal in that people can keep track of their funds. The company currently manages 600,000 wallets – a significant increase from just 130,000 in May.

Coinbase expects the use of its wallet system to grow rapidly in the next few years as more merchants begin accepting Bitcoin as a form of currency. Using Bitcoin means merchants save 2 to 3 percent on credit card fees.

So far, there are about 16,000 merchants that accept Bitcoin as a form of payment. While the thought of accepting Bitcoin may be a bit nerve-wracking now, once everyone becomes more comfortable with seeing it used in more places, more merchants will start accepting it. And as more merchants accept it, more people will want to have it – and they will need to use wallets with Coinbase or other companies in order to store it.

Coinbase is the most successful Bitcoin wallet company so far. Some startups have failed already, such as BitInstant and Tradehil, mostly because they weren’t able to find a bank willing to back them up.

And there are still many people who aren’t convinced Bitcoin is going to go anywhere. They believe the Bitcoin fad will pass, and they don’t want to burst along with the Bitcoin bubble.

But you can’t rely on the critics because there are just too many big influences in the mix. Bank of America is on board with it according to a recent announcement in which the company stated it sees the potential of it.

Some of the other startups that are on a good path include Buttercoin and Ripple Labs. Google (NASDAQ: GOOG) recently decided to invest money into these company, so who knows what will come from that. Google has a large hold on the Internet industry, and virtual currency may just be its next conquer.

Wallet systems aren’t the only things that will flourish with the rise of Bitcoin. Bitpay is a company that handles transactions for merchants. It accepts payments and then forwards them to merchants. The startup raised $2 million in May, and it is an attractive concept to merchants who don’t exactly understand how to manage Bitcoin on their own.

The others you may want to keep in mind as you research Bitcoin-related companies are Circle and itBit.

Investing in Bitcoin-related companies such as Coinbase can be a lucrative way to get your slice of this pie, but there are other ways to invest in it.

You can buy Bitcoins or even mine them yourself. Buying them now means you’ll pay a hefty price, so keep that in mind. Right now, one Bitcoin is worth around over $900 on the Mt. Gox exchange.

Mining them, however, also means you’ll spend a lot of money on equipment, and it can take time to discover even one because the supply is dwindling. There are only 21 million Bitcoins available, and about half are already mined.

Another option is to invest in the future of Bitcoin with SecondMarket. It has a fund called Bitcoin Investment Trust, which enables investors to bet on the future price of Bitcoin. This provides an easy way for people to invest in Bitcoins without having to buy them or sell them. People can simply sign up, invest, and hope for the best. However, you do have to be an accredited investor to go this route.

As you decide how you want to invest in this digital currency, keep in mind the volatility of it. It’s not regulated, and with all of the news surrounding it – with some authorities favoring and others criticizing it – it’s important to realize that it could plummet or it could soar.

If you love a risky investment, this is the one for you. However, if you feel as though you’ll have a heart attack if you lose most of your investment in it, you may want to turn the other way.


If you liked this article, you may also enjoy: