Bitcoin is slowly moving away from being just a commodity to being a true currency, due, in part, to a massive $25 million funding received by Coinbase from a handful of investors, led by venture capital firm Andreessen Horowitz, which alone has invested $20 million. Coinbase provides "wallets" to people to help them buy and sell and also spend Bitcoins.
We understand that this is the largest investment made to date on a Bitcoin start-up; it is actually more than what all the venture capitals have invested in Bitcoin in the last 15 months and brings the total funds raised by Coinbase, so far, to $31 million.
If everything goes according to plan, Bitcoin will become a global currency, though it is not certain at this stage, if that could do more harm that good.
At the moment, much of the excitement that surrounds Bitcoin is focused on its role as a commodity. People are mainly buying and holding Bitcoin in hopes the value will increase. In the past twelve months, value of Bitcoin has risen from a mere $13 to a gigantic $1,200, which more that proves the reason for the enthusiasm that surrounds this virtual currency.
"Coinbase has become a critical piece of the Bitcoin infrastructure in the U.S., giving people a trustworthy and easy way to buy, sell, trade and store bitcoins," says Gavin Andresen, head developer of Bitcoin as an open source software project. "The best part of my job as Chief Scientist of the Bitcoin Foundation is interacting with the brilliant people at Coinbase and other startups all over the world who are working hard to make Bitcoin accessible to everybody."
Still, despite the heavy interaction with Bitcoin by Coinbase, over 80 percent of its 610,000 customers are holding Bitcoin in their personal wallets. The remaining 20 percent actually use these coins to make purchases along with other ventures. It is a clear sign that the commodity status of Bitcoin is quite strong in the world, and maybe the decision to turn it into a global currency might change that perception and help get the stagnant 80 percent to spend what they have.
Furthermore, Bitcoin could become the first successful economic protocol for the Internet, and this could mean bigger things in the future.
"The designers of the Web built placeholders for a system that moved money, but never successfully completed it. Bitcoin is the first plausible proposal for an economic protocol for the Internet," according to Chris Dixon, a partner at Andreessen Horowitz.