Coinbase Raises $5 Million Led By Union Square Ventures
Coinbase is a startup that makes it easy to buy, use, and accept Bitcoin. Coinbase has raised $5 million in funding led by Union Square Ventures. Founded by Fred Ehrsam and Brian Armstrong, Coinbase plans to use the funding to hire engineers, designers, and other business support staff. The company raised $600,000 in a seed round this past September.
Ehrsam is a former trader at Goldman Sachs and Armstrong used to work as an engineer at Airbnb.
Around 300 merchants have partnered with Coinbase including Reddit and OkCupid. The company has about 116,000 users that have converted $15 million of real money into Bitcoin. This is up from $1 million in Janaury, according to the WSJ.
Coinbase generates revenue by charging users 1% to convert dollars into and out of Bitcoin. Based on the $15 million volume for converting to Bitcoin, Coinbase has made $150,000 from that service alone since the company started eleven months ago.
Coinbase launched out of Y Combinator where Ehrsam and Armstrong met with Union Square partner Fred Wilson.
Bitcoin is a very risky currency to trade. Within the last year, the currency went from being as high as $266 in April down to around $108 this month. There is also possibility that another virtual currency could come along and take attention away from Bitcoin. In fact, OpenCoin raised $2 million last month in seed funding and is developing a new virtual currency called Ripple. However, Coinbase’s investors believes that Bitcoin is still a very disruptive market and that the company is on track to be successful despite potential competition.This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at +AmitChowdhry