8 ms·

Coinbase Raises $75M from DFJ Growth, USAA, NYSE, and More

297 points by arnauddri 12y ago

comboy 12y ago
Things are so unpredictable. That's regarding the whole Bitcoin (r)evolution. I believe what's currently happening and has happened is great. All these random events that pushed its price down are giving enough time for any interested entities to acquire them at reasonable price - if they understand it and think it may be a good value storage. And it may turn out to be a really good value storage indeed. Regarding Coinbase I would assume they are convincing their investors that the company has a huge value and expertise even assuming total Bitcoin collapse / switch to another digital currency.
- onion2k 12y ago
  There are 8 names on the press release, and probably a few more smaller investors. This doesn't represent a huge amount of money for any given fund - at most probably US$20m or so for the lead. The payoff should BTC prove useful will be in the realms of Facebook/Google/Apple valuations. Even if you think there's only a fraction of a percent probabilty that they'll be successful it'd still be worthwhile putting a few million in (assuming you can afford to lose it). Personally, I think BTC is going to be OK because there's already a decent ecosystem growing around it. Enough people are keen on it succeeding that it'll do something useful. The real question is whether it'll be a multi-trillion dollar industry that replaces money or a multi-billion dollar industry that's used for secure value transactions or proof of work or something, not than whether or not it'll fail entirely and disappear.
  - valevk 12y ago
    > Enough people are keen on it succeeding that it'll do something useful. Exactly. I am personally convinced it will succeed, but I don't know in which way. It could be anything that benefits of proof of work. Are there actually libraries, or clients which create a P2P network, that is generic? I mean the client synchronization is the same as in BTC, but the data exchanged is generic.
    - Aqueous 12y ago
      Namecoin (http://namecoin.info http://namecoin.info) might be of interest to you.
      - valevk 12y ago
        That's what I was looking for.
clarkm 12y ago
Interesting to see an investment by USAA. They've really stepped up their tech game lately, partnering with some very cool companies (e.g. TrueCar), so I wonder if some type of Coinbase integration is in the works.
- ashergm 12y ago
  I totally agree, especially considering USAA's reputation as a conservative player in the Banking world
antr 12y ago
Wow... Vikram Pandit is in this round. I can't think of a worst person to bring into a financial services startup. I come from the industry, and this to me, is Coinbase's Condoleezza. I don't know how much everybody knows about him (I'm pretty sure his Wikipedia profile won't tell the entire story), but this finance executive has a bad reputation. Pre-financial crisis, he was COO Morgan Stanley, and later went off to create a hedge fund 100% based on hyped market bluffs. He sold the fund to Citigroup ($800m) in 2008* as a condition for him joining as interim CEO of Citigroup... and just a few months later, Citigroup wrote-off the entire fund. As per his role at Citigroup, I'll let you do the research and news digging. I sometimes don't understand the tech's sector hypocrisy: tech wants to become a solution to the problem, and they go on to finance and advice themselves with the problem. I really don't get it. * edit from 2007 to '08
- digisth 12y ago
  This might be covered by Putt's "Law of Failure": "Innovative organizations abhor little failures but reward big ones" and its corollary "Failure to fail fully is a fool's folly." His point was that innovative orgs will look at someone who "went big" and failed as someone who now knows a problem inside and out, and has walked through the fire so is now better equipped to deal with than anyone else (and so might succeed this time.)
  - antr 12y ago
    My comment is not about failure, it's about what is wrong with wall st's crony capitalism. this has nothing to do with failure, but about the lack of values, and the damage this has done to the world economy at so many levels.
    - digisth 12y ago
      Certainly not arguing with any of your points; I'm saying the things that happened could rightly be construed by investors as types of failure (e.g., "Citigroup wrote-off the entire fund") which is one of the reasons the law might apply. I'm talking about perception from a particular perspective, not the ethics.
rubyrescue 12y ago
Huge congrats Brian!
rrggrr 12y ago
Confirms for me that Bitcoin is on track to disrupt credit card payments, possibly ACH/Wire, and not to be a replacement currency. Credit cards handle about 3.6 trillion/year in transactions. With 3% per transaction fees, chargebacks and equipment costs -- there are plenty of reasons for merchants to increasingly accept BTC provided companies like Coinbase are prepared to take the BTC market risk by sweeping BTC into local currency.
- pjc50 12y ago
  .. and how much does Coinbase charge in fees and order spread? How do they make their money in this environment?
  - EC1 12y ago
    Their business model runs exclusively on draining the accounts of people that forgot their wallet keys!
- boling11 12y ago
  Plenty of reasons for merchants to accept BTC, still not a lot of reasons for consumers..
  - CyberDildonics 12y ago
    Have you ever had your credit card stolen? Have you ever had it frozen and not been able to spend your own money? These things happen constantly but never happen when paying with bitcoin. The more you have to deal with banks the more of a breathe of fresh air it is to pay in btc. Credit card fraud is incredibly rampant and the security measures in place by banks and sites is so over the top it becomes difficult to even use them. Use ghostery? Your transaction won't go through with an unknown error. Use a VPN? Your transaction won't go through with an unknown error. Paying from a different computer? A different IP? Using a different address? All these things are a recipe for being on hold with your bank for 45 minutes when you all you wanted to do was order $50 of stuff from NewEgg.
Cthulhu_ 12y ago
Funny how apparently the biggest Bitcoin company is a bank for centralized storage and management of Bitcoins, which was the exact opposite goal (according to the idealists) of bitcoins. Next up they'll probably offer interest and loans/mortgages.
- WillNotDownvote 12y ago
  Possible it's just the easiest model for establishment investors to understand. Doesn't necessarily imply anything about future bitcoin business models, or even current ones that still fly beneath the mainstream investor radars.
- valevk 12y ago
  Well, people are familiar with banks, and they know how to use them. I think that's the only way to get widespread adoption at this stage. Sure, everybody on this site would prefer to see a more decentralized solution, but to get the attention of more people that's the only way. Copy the big guys.
- jasonisalive 12y ago
  Even if you just rebuilt banks as they exist today on top of Bitcoin, you'd still get some pretty huge advantages, potentially massively increased security, speed, reduced costs, among others. Another big one is that these banks can service the entire global market, massively increasing competition among and hence quality of banking services.
  - CyberDildonics 12y ago
    This is totally true I'm not sure where the down votes come from. HN seems to really hate bitcoin.
    - majugi 12y ago
      Where do these massive increase in security, speed, and cost reductions come from in a banking system built on bitcoin?
dylanz 12y ago
Congrats Brian, Fred, and team! Quite an interesting funding round, and, quite a blooming market. Keep up the good work! I have to say, this sector is one of the most interesting to watch.
antidaily 12y ago
As Regina says in Mean Girls, "Stop trying to make (Bitcoin) happen. It's not going to happen."
- nawariata 12y ago
  Bitcoin has already happened for a lot of people.
- oafitupa 12y ago
  "...because I hate it for no reason"
deleted 12y ago
[deleted]
Aqueous 12y ago
It certainly seems like Bitcoin is dead.
- deleted 12y ago
  [deleted]
- deleted 12y ago
  [deleted]
- Aqueous 12y ago
  To the sarcasm-impaired: http://bitcoinobituaries.com http://bitcoinobituaries.com
jypepin 12y ago
I would be really interested to have more info about Coinbase vision and plans to make bitcoin more mainstream, etc. Some of those institutions are obviously signs of opening BTC to stock exchange or more hedge founds, and traditional investments assets. Would have been nice to hear more of where they see/want to put bitcoin in the future.
stevewepay 12y ago
That's a pretty impressive lineup of investors. With that kind of funding, I imagine that Coinbase isn't just setting themselves up as a Bitcoin company, but they should be able to create infrastructure that processes/handles any sort of cryptocurrency. So even if BTC loses favor, they'll be one of the few companies that have the infrastructure to support whatever the up-and-coming cryptocurrency is. Regardless of which specific cryptocurrency is in vogue at the time, I do believe that cryptocurrencies are here to stay, and Coinbase is aiming themselves up to be the market leader. This is an investment that even I'd be willing to buy into as well, if there were ever an opportunity.
- jnks 12y ago
  More likely: a push to become the next PayPal, but using the Bitcoin network rather than the standard ACH banking network. Here's one step towards that: http://avc.com/2015/01/feature-friday-us-dollar-wallet/ http://avc.com/2015/01/feature-friday-us-dollar-wallet/
  - mathattack 12y ago
    Is this a sign of how little PayPal has innovated lately?
sgt101 12y ago
There's one (or 10) born every minute. If I were a scammer I'd want these folks email addresses.
Animats 12y ago
Maybe with this capital infusion, Coinbase will get an actual business address. Right now, their mailing address is a PO box in San Francisco's homeless district, their SSL cert is a cheap "domain control only" SSL cert, and their SEC filing gives the address of an apartment on Bluxome St. That's a violation of California B&P code section 17538. (http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=17001-18000&file=17530-17539.6 http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&gr...) (d) A vendor conducting business through the Internet or any other electronic means of communication shall do all of the following when the transaction involves a buyer located in this state: (1) Before accepting any payment or processing any debit or credit charge or funds transfer, the vendor shall disclose to the buyer in writing or by electronic means of communication, such as e-mail or an on-screen notice, the vendor's return and refund policy, the legal name under which the business is conducted and, except as provided in paragraph (3), the complete street address from which the business is actually conducted.
- pilgrim689 12y ago
  ... (3) The complete street address need not be disclosed as required by paragraph (1) if the vendor utilizes a private mailbox receiving service and all of the following conditions are met: (A) the vendor satisfies the conditions described in paragraph (2) of subdivision (b) of Section 17538.5, (B) the vendor discloses the actual street address of the private mailbox receiving service in the manner prescribed by this subdivision for the disclosure of the vendor's actual street address, and (C) the vendor and the private mailbox receiving service comply with all of the requirements of subdivisions (c) to (f), inclusive, of Section 17538.5.
claypoolb 12y ago
Ben Horowitz predicted on 11/19/14 that Bitcoin is going to be one (of two) of the next massive disruptors in technology. He compares Bitcoin with the revolutionary impact of the internet. It is gaining momentum. http://ecorner.stanford.edu/authorMaterialInfo.html?mid=3369 http://ecorner.stanford.edu/authorMaterialInfo.html?mid=3369

297 points by arnauddri 12y ago

Things are so unpredictable. That's regarding the whole Bitcoin (r)evolution. I believe what's currently happening and has happened is great. All these random events that pushed its price down are giving enough time for any interested entities to acquire them at reasonable price - if they understand it and think it may be a good value storage. And it may turn out to be a really good value storage indeed. Regarding Coinbase I would assume they are convincing their investors that the company has a huge value and expertise even assuming total Bitcoin collapse / switch to another digital currency.

onion2k 12y ago
There are 8 names on the press release, and probably a few more smaller investors. This doesn't represent a huge amount of money for any given fund - at most probably US$20m or so for the lead. The payoff should BTC prove useful will be in the realms of Facebook/Google/Apple valuations. Even if you think there's only a fraction of a percent probabilty that they'll be successful it'd still be worthwhile putting a few million in (assuming you can afford to lose it). Personally, I think BTC is going to be OK because there's already a decent ecosystem growing around it. Enough people are keen on it succeeding that it'll do something useful. The real question is whether it'll be a multi-trillion dollar industry that replaces money or a multi-billion dollar industry that's used for secure value transactions or proof of work or something, not than whether or not it'll fail entirely and disappear.
- valevk 12y ago
  > Enough people are keen on it succeeding that it'll do something useful. Exactly. I am personally convinced it will succeed, but I don't know in which way. It could be anything that benefits of proof of work. Are there actually libraries, or clients which create a P2P network, that is generic? I mean the client synchronization is the same as in BTC, but the data exchanged is generic.
  - Aqueous 12y ago
    Namecoin (http://namecoin.info http://namecoin.info) might be of interest to you.
    - valevk 12y ago
      That's what I was looking for.

clarkm 12y ago

Interesting to see an investment by USAA. They've really stepped up their tech game lately, partnering with some very cool companies (e.g. TrueCar), so I wonder if some type of Coinbase integration is in the works.

ashergm 12y ago
I totally agree, especially considering USAA's reputation as a conservative player in the Banking world

antr 12y ago

Wow... Vikram Pandit is in this round. I can't think of a worst person to bring into a financial services startup. I come from the industry, and this to me, is Coinbase's Condoleezza. I don't know how much everybody knows about him (I'm pretty sure his Wikipedia profile won't tell the entire story), but this finance executive has a bad reputation. Pre-financial crisis, he was COO Morgan Stanley, and later went off to create a hedge fund 100% based on hyped market bluffs. He sold the fund to Citigroup ($800m) in 2008* as a condition for him joining as interim CEO of Citigroup... and just a few months later, Citigroup wrote-off the entire fund. As per his role at Citigroup, I'll let you do the research and news digging. I sometimes don't understand the tech's sector hypocrisy: tech wants to become a solution to the problem, and they go on to finance and advice themselves with the problem. I really don't get it. * edit from 2007 to '08

digisth 12y ago
This might be covered by Putt's "Law of Failure": "Innovative organizations abhor little failures but reward big ones" and its corollary "Failure to fail fully is a fool's folly." His point was that innovative orgs will look at someone who "went big" and failed as someone who now knows a problem inside and out, and has walked through the fire so is now better equipped to deal with than anyone else (and so might succeed this time.)
- antr 12y ago
  My comment is not about failure, it's about what is wrong with wall st's crony capitalism. this has nothing to do with failure, but about the lack of values, and the damage this has done to the world economy at so many levels.
  - digisth 12y ago
    Certainly not arguing with any of your points; I'm saying the things that happened could rightly be construed by investors as types of failure (e.g., "Citigroup wrote-off the entire fund") which is one of the reasons the law might apply. I'm talking about perception from a particular perspective, not the ethics.

rubyrescue 12y ago

Huge congrats Brian!

rrggrr 12y ago

Confirms for me that Bitcoin is on track to disrupt credit card payments, possibly ACH/Wire, and not to be a replacement currency. Credit cards handle about 3.6 trillion/year in transactions. With 3% per transaction fees, chargebacks and equipment costs -- there are plenty of reasons for merchants to increasingly accept BTC provided companies like Coinbase are prepared to take the BTC market risk by sweeping BTC into local currency.

pjc50 12y ago
.. and how much does Coinbase charge in fees and order spread? How do they make their money in this environment?
- EC1 12y ago
  Their business model runs exclusively on draining the accounts of people that forgot their wallet keys!
boling11 12y ago
Plenty of reasons for merchants to accept BTC, still not a lot of reasons for consumers..
- CyberDildonics 12y ago
  Have you ever had your credit card stolen? Have you ever had it frozen and not been able to spend your own money? These things happen constantly but never happen when paying with bitcoin. The more you have to deal with banks the more of a breathe of fresh air it is to pay in btc. Credit card fraud is incredibly rampant and the security measures in place by banks and sites is so over the top it becomes difficult to even use them. Use ghostery? Your transaction won't go through with an unknown error. Use a VPN? Your transaction won't go through with an unknown error. Paying from a different computer? A different IP? Using a different address? All these things are a recipe for being on hold with your bank for 45 minutes when you all you wanted to do was order $50 of stuff from NewEgg.

Cthulhu_ 12y ago

Funny how apparently the biggest Bitcoin company is a bank for centralized storage and management of Bitcoins, which was the exact opposite goal (according to the idealists) of bitcoins. Next up they'll probably offer interest and loans/mortgages.

WillNotDownvote 12y ago
Possible it's just the easiest model for establishment investors to understand. Doesn't necessarily imply anything about future bitcoin business models, or even current ones that still fly beneath the mainstream investor radars.
valevk 12y ago
Well, people are familiar with banks, and they know how to use them. I think that's the only way to get widespread adoption at this stage. Sure, everybody on this site would prefer to see a more decentralized solution, but to get the attention of more people that's the only way. Copy the big guys.
jasonisalive 12y ago
Even if you just rebuilt banks as they exist today on top of Bitcoin, you'd still get some pretty huge advantages, potentially massively increased security, speed, reduced costs, among others. Another big one is that these banks can service the entire global market, massively increasing competition among and hence quality of banking services.
- CyberDildonics 12y ago
  This is totally true I'm not sure where the down votes come from. HN seems to really hate bitcoin.
  - majugi 12y ago
    Where do these massive increase in security, speed, and cost reductions come from in a banking system built on bitcoin?

dylanz 12y ago

Congrats Brian, Fred, and team! Quite an interesting funding round, and, quite a blooming market. Keep up the good work! I have to say, this sector is one of the most interesting to watch.

antidaily 12y ago

As Regina says in Mean Girls, "Stop trying to make (Bitcoin) happen. It's not going to happen."

nawariata 12y ago
Bitcoin has already happened for a lot of people.
oafitupa 12y ago
"...because I hate it for no reason"

deleted 12y ago

[deleted]

Aqueous 12y ago

It certainly seems like Bitcoin is dead.

deleted 12y ago
[deleted]
deleted 12y ago
[deleted]
Aqueous 12y ago
To the sarcasm-impaired: http://bitcoinobituaries.com http://bitcoinobituaries.com

jypepin 12y ago

I would be really interested to have more info about Coinbase vision and plans to make bitcoin more mainstream, etc. Some of those institutions are obviously signs of opening BTC to stock exchange or more hedge founds, and traditional investments assets. Would have been nice to hear more of where they see/want to put bitcoin in the future.

stevewepay 12y ago

That's a pretty impressive lineup of investors. With that kind of funding, I imagine that Coinbase isn't just setting themselves up as a Bitcoin company, but they should be able to create infrastructure that processes/handles any sort of cryptocurrency. So even if BTC loses favor, they'll be one of the few companies that have the infrastructure to support whatever the up-and-coming cryptocurrency is. Regardless of which specific cryptocurrency is in vogue at the time, I do believe that cryptocurrencies are here to stay, and Coinbase is aiming themselves up to be the market leader. This is an investment that even I'd be willing to buy into as well, if there were ever an opportunity.

jnks 12y ago
More likely: a push to become the next PayPal, but using the Bitcoin network rather than the standard ACH banking network. Here's one step towards that: http://avc.com/2015/01/feature-friday-us-dollar-wallet/ http://avc.com/2015/01/feature-friday-us-dollar-wallet/
- mathattack 12y ago
  Is this a sign of how little PayPal has innovated lately?

sgt101 12y ago

There's one (or 10) born every minute. If I were a scammer I'd want these folks email addresses.

Animats 12y ago

Maybe with this capital infusion, Coinbase will get an actual business address. Right now, their mailing address is a PO box in San Francisco's homeless district, their SSL cert is a cheap "domain control only" SSL cert, and their SEC filing gives the address of an apartment on Bluxome St. That's a violation of California B&P code section 17538. (http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=17001-18000&file=17530-17539.6 http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&gr...) (d) A vendor conducting business through the Internet or any other electronic means of communication shall do all of the following when the transaction involves a buyer located in this state: (1) Before accepting any payment or processing any debit or credit charge or funds transfer, the vendor shall disclose to the buyer in writing or by electronic means of communication, such as e-mail or an on-screen notice, the vendor's return and refund policy, the legal name under which the business is conducted and, except as provided in paragraph (3), the complete street address from which the business is actually conducted.

pilgrim689 12y ago
... (3) The complete street address need not be disclosed as required by paragraph (1) if the vendor utilizes a private mailbox receiving service and all of the following conditions are met: (A) the vendor satisfies the conditions described in paragraph (2) of subdivision (b) of Section 17538.5, (B) the vendor discloses the actual street address of the private mailbox receiving service in the manner prescribed by this subdivision for the disclosure of the vendor's actual street address, and (C) the vendor and the private mailbox receiving service comply with all of the requirements of subdivisions (c) to (f), inclusive, of Section 17538.5.

claypoolb 12y ago

Ben Horowitz predicted on 11/19/14 that Bitcoin is going to be one (of two) of the next massive disruptors in technology. He compares Bitcoin with the revolutionary impact of the internet. It is gaining momentum. http://ecorner.stanford.edu/authorMaterialInfo.html?mid=3369 http://ecorner.stanford.edu/authorMaterialInfo.html?mid=3369