An ultra-stealth bitcoin company by the name of 21 Inc. (formerly 21e6, a reference to the total number of bitcoins that will ever exist) announced the close of a whopping $116 million funding round this week. The company is tight lipped about what exactly they plan to do, but there’s a lot of speculation that it has to do with bitcoin mining and building an “internet of things” infrastructure. The list of investors is pretty interesting, too:
21’s lead investors include U.S. venture-capital heavyweights Andreessen Horowitz and RRE Ventures, along with Chinese private-equity firm Yuan Capital, with a strategic stake going to chipmaker Qualcomm Inc. through its venture-capital unit.
Additionally, Khosla Ventures and Data Collective have invested in 21, as well as chief executives and founders from various tech companies, including PayPal co-founders Peter Thiel and Max Levchin, eBay Inc. co-founder Jeff Skoll, Dropbox Inc. CEO Drew Houston, Expedia Inc. CEO Dara Khosrowshahi and Zynga Inc. co-founder Mark Pincus.
To date, this is the biggest funding round ever for a bitcoin company (second is Coinbase’s $75MM raise announced earlier this year), and puts the amount of VC money invested in the bitcoin space in 2015 at around $200MM, already nearly two thirds of 2014’s totals. I think it’s very likely that 2015 will see more than half a billion dollars of investment into companies in this space.
+ Watch this really good talk Srinivasan gave at Y Combinator’s Startup School 2013 on the topic of “Silicon Valley’s Ultimate Exit.” [16:29]
OTHER SIDE OF THE COIN
As tensions continue to rise in Europe and a new 60bn EUR QE round began on Monday, the Euro edges closer to US dollar parity, sitting at just under $1.05 at the time of this writing. This is continuing a year-long downward trend that has seen the EUR lose more than 25% of its value. Other major world currencies such as GBP (-11.4%), JPY (-16.5%), and CHF (-13.2%) have also seen their USD exchange rates tumble over the past year, while the Chinese yuan has remained relatively stable. Many are quick to point out bitcoin’s volatility, but even major world currencies are not immune to dramatic swings in price. Chart
As the BRICS countries look to knock down the global US Dollar hegemony, China gears up to launch its own international payments network to rival SWIFT.
+ Meanwhile in New York, SWIFT hosted a panel on the disruptive power of digital currencies earlier this month. There’s nothing concrete to report, but it’s interesting to know that many of the world’s top financial institutions have their eyes on bitcoin right now. SWIFT is also hosting bitcoin panels in Copenhagen and London.
One of ApplePay’s main selling points was supposed to be its security, but it turns out that storing your payment credentials (your private keys, if you will) in the cloud is a bad idea: As many as 6% of ApplePay transactions may be fraudulent. I like what Marc Andreesen had to say about using credit cards on the internet in this 2014 interview with the Washington Post:
E-commerce would’ve gotten built on top of this, instead of getting built on top of the credit card network. We knew we were missing this; we just didn’t know what it was. There is no reason on earth for anybody to be on the Internet today to be typing in a credit card number to buy something. It’s insane, because — which is why you have all these security problems, the Target hack and all this crazy…. And these high fees, this high fraud rate. It doesn’t make sense online to have a payment mechanism that requires you to hand over your credentials to make a payment. That’s just an invitation to fraud and identity theft. It’s just stupid.
Bitcoin is going to the moon! Or at the very least, to low-earth orbit. Bitcoin core developer Jeff Garzik finally signed a deal this week to build the first 24-unit constellation of “BitSats,” small cube satellites that will host bitcoin full nodes in space. These nodes can play an important role in helping to make the bitcoin network more secure.
“For individuals, threshold signatures allow for two-factor security, or the ability to split signing control between two devices so that a single compromised device won’t put your money at risk. For businesses, threshold signatures allow for the realization of access control policies that prevent both insiders and outsiders from stealing corporate funds. As I mentioned previously, and as discussed at length in our paper, Bitcoin’s built in multisignatures are insufficient as they have serious anonymity and confidentiality drawbacks.” A new paper released this week by Stanford & Princeton researchers outlines a new way to increase the security of bitcoin transactions and key storage.
“The Bitcoin protocol has proven itself to be a versatile platform for innovation, yet there are still limits to what we can do with it. As an example, we cannot send arbitrary messages across the network. This is by design ― we want it to send value from person A to person B as efficiently as possible and not be bogged down storing information that is not needed for consensus.” Here’s an interesting new protocol to keep an eye on. Subspace is an online messaging project that seeks to be secure and anonymous (no metadata), using a P2P network similar to Bittorrent or Bitcoin.
Cryptosteel is a durable way to store a private key (or any other information written in alphanumeric characters). It’s not available yet, but I had a chance to see one in person last week, and was very impressed.
Partnering up with Polish bitcoin payment processor InPay, T-Mobile Poland now accepts bitcoin for the purchase of mobile phone credit. And, doing it totally right, they even give users who pay with bitcoin 20% more credit for the same amount of money.
Intuit launches PayByCoin in Australia, a service which will allow small businesses using the QuickBooks accounting software to accept bitcoin payments from their customers, and integrates with BitPay to convert the BTC into AUD.
A partnership between Bitcoin ATM manufacturer BTCPoint and Spanish bank Banc Sabadell has turned 10,000 existing ATMs into bitcoin cash-out machines overnight. It seems that currently the ATMs only offer single-directional service, but whereas typical one-way bitcoin ATMs have been buy-only, this new network is sell-only (for now). This could be a very good way for travelers with bitcoin to avoid expensive currency exchange fees.
BITS & PIECES
“The recent net neutrality victory at the FCC is not a silver bullet. We can expect costly court challenges, complicated enforcement, and the risks that come with entrusting a large government bureaucracy to manage a technological problem. More competition would be a better solution—and that’s where Bitcoin could help.” Opinion: Bitcoin May Be What Gets Us Real Net Neutrality | Wired
Watch this talk by James D’Angelo on the blockchain and it’s multitude of uses. This is part two of D’Angelos “Bitcoin 101 – A Million Killer Apps” series. 34 minutes & 40 seconds long.
California’s state assembly introduced a bill which, if passed, would ban all “unlicensed” bitcoin businesses. “So for the next wave of entrepreneurs building technology in the bitcoin or blockchain space, the state is poised to say that in order to start your company or release your technology, you must pay $5000 for a license and tens or hundreds of thousands in legal and compliance fees, not to mention requirements such as informing them of your educational background and 10 years of past addresses. That might be awkward for the 21 year old college dropouts working on a cryptocurrency startup.”
+ And Utah’s proposed legislation which would force the state to do a feasibility study on the acceptance of bitcoin for taxes and fees actually inches closer towards law, reports CoinTelegraph.
Keanu Reeves and Alex Winter, also known as Bill & Ted, have collaborated for the first time in more than twenty years to produce Deep Web, a documentary about the Silk Road and Ross Ulbricht/Dread Pirate Roberts. The film premieres later today at SXSW in Austin. Winter wrote, produced, and directed the film, and Reeves narrates it.
In January I wrote that I gave GAW three months before they were exposed as a scam and things came tumbling down. The nail’s not in the coffin yet, but CoinFire reveals that GAW is under investigation from multiple departments of the US Gov’t, including the IRS, FTC, and the DHS. Meanwhile, GAW’s homebrew turd “PayCoin” is down more than 90% since it’s launch 3 months ago.
A Goldman Sachs report published this week calls bitcoin “a megatrend,” says it will shape the future of finance, and cites Bitpay, Coinbase, and Ripple as the three top firms in this space. The report goes on to describe how newcomers will capture at least 20% of the consumer-to-consumer remittance business, and drive fees from 6% to around 2.5%. I’m still hunting for a copy of the actual report, but for now this article will have to do. Contrast that with another report published by Goldman a year ago, which had a much more pessimistic take on BTC.
+ Former JP Morgan global head of commodities Blythe Masters is now on board the bitcoin train, as the CEO of her own bitcoin startup. Choo choo!
Goof of the Week: Prominent bitcoin news site CoinDesk launches an online shop… that only accepts credit cards or PayPal. CoinDesk founder Shakil Khan is one of BitPay’s earliest investors, having led their first big investment round two years ago. The decision to launch without being ready to accept bitcoin payments is baffling, to say the least.
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