Posted on Wednesday, Aug 5th 2015
According to recent market reports, there are close to 14.5 million Bitcoins in circulation globally. Users have completed over 75 million transactions using these new coins. Bitcoin’s ability to scale further depends on increased consumer confidence and the development of secure services around this currency. Billion Dollar Unicorn status hopeful San Francisco-based Coinbase is helping create an environment to facilitate trading with Bitcoins.
Coinbase was founded in 2012 by former Airbnb engineer Brian Armstrong and former foreign exchange trader Fred Ehrsam. Coinbase makes it easy for consumers and merchants to transact with Bitcoins. It allows consumers to create a Bitcoin wallet and start trading or transacting in Bitcoins by connecting directly with their bank accounts. Coinbase also provides merchants with access to tools to help them manage Bitcoin transactions.
Coinbase’s offerings include a Coinbase Wallet that allows users to convert any supported currency to Bitcoin using their bank account. They offer currency exchange services using Instant Exchange which allows consumers to send and receive Bitcoins and convert them immediately to the local currency to avoid any exchange fluctuations that happen on Bitcoins. Their merchant offering allows businesses to accept Bitcoin payments globally. Merchants have access to Coinbase’s secure tools that confirms Bitcoin payments within a few seconds with zero chargebacks to eliminate chances of online fraud. Like consumers, merchants too can access the instant exchange capability and convert Bitcoins to cash to avoid exchange fluctuations. They also have an offering for the developer world that allows developers access to their banking relationships and secure wallet tools.
According to their latest figures, Coinbase has over 2.4 million users who have set up more than 3.8 million wallets. They have nearly 40,000 merchants on their tools and have released 7,000 developer apps. Their merchant customer list includes names like Expedia, Dell, Intuit, Overstock.com, and Dish to name a few.
Coinbase earns revenues by charging their merchants a fee on the orders processed. The first million dollar worth of transactions do not carry a transaction fee and all transactions after that milestone are charged a 1% transaction fee. They also charge their consumers a 1% transaction fee for exchanging Bitcoins. Their detailed financials have never been disclosed.
Coinbase is venture funded so far with $106.7 million in investments received from investors including Draper Fisher Jurvetson, Andreessen Horowitz, BBVA Ventures, Blockchain Capital, New York Stock Exchange, Ribbit Capital, Union Square Ventures, USAA, Valor Capital Group, Vayner/RSE, QueensBridge Venture Partners, Bobby Goodlatte, Interplay Ventures, Red Swan Ventures, SV Angel, Alexis Ohanian, FundersClub, Garry Tan, Greg Kidd, and Y Combinator. Their latest funding was received in January 2015 when they raised $75 million in a round led by DFJ at a valuation of $471 million. This was the biggest funding ever for a virtual currency start-up.
Bitcoins, themselves have had a tumultuous past and continue to do so. Their legal status as a currency is still not clear. While there are countries like Germany, for instance, who have accepted them as a currency, there are also the likes of China who treat is as a legal commodity and the US, which treats it like property. The currency itself has seen its market crash from a peak of $1,151 a coin in late 2013 to the latest price of $280 a coin. Coinbase’s ultimate success depends on Bitcoin’s ability to take off as an acceptable virtual currency.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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