Technology

Bitcoin start-up raises $25m venture capital funding

A Bitcoin payment terminal in a pub
Image caption Bitcoins are starting to be accepted for some real-world goods and services

Coinbase, a start-up that lets people trade Bitcoins, has raised $25m (£15m) in venture capital funding - the largest by a Bitcoin start-up.

Bitcoin, a virtual currency, has been attracting a lot of interest and its value surpassed $1,000 recently.

Backers of the currency, which is not controlled by regulators, have been pushing for its increased usage.

Coinbase said it will use the funding to "educate the market, and promote the mainstream adoption of Bitcoin".

"We are nearing a tipping point for broad adoption of Bitcoin - what we at Coinbase believe to be one of the most important shifts in the global economy in our lifetime," the firm said in a blogpost.

Mixed response

Confidence in Bitcoins has grown after a US Senate committee described it as a "legitimate financial service" at a meeting in October.

However, on Friday, the European Banking Authority (EBA) warned about the potential risks of using Bitcoins.

"In particular, consumers should be aware that exchange platforms tend to be unregulated and are not banks that hold their virtual currency as a deposit," the EBA said.

"Currently, no specific regulatory protections exist in the European Union that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business."

China, the world's second largest economy, has also banned its banks from handling Bitcoin transactions, saying they had no legal status and should not be used as a currency.

At the same time, there have been concerns that the rise in Bitcoin's value has been triggered by speculators looking to cash in on its popularity.

Alan Greenspan, former US Federal Reserve chairman, has called the rapid rise a "bubble".

'Easier for consumers'

Despite these concerns, some establishments across the globe have started to accept Bitcoins as a form of payment, just like cash or credit cards.

Coinbase said the number of people who use its Bitcoin wallet had doubled to more than 600,000 in the past two months and almost 10,000 new people were signing up every day.

It said it was also working with 16,000 merchants to provide Bitcoin payments.

"We are making it easier for consumers to buy, merchants to sell, and developers to build," the firm said.

Chris Dixon, of venture capital fund Andreessen Horowitz - which led the Coinbase funding, said in a blogpost that the Bitcoin platform could be used to develop new technologies.

He said the potential applications of Bitcoins include "machine-to-machine payments to reduce spam" and offering "low-cost financial services to people who, because of financial or political constraints, don't have them today".

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