By Pete Rizzo (@pete_rizzo_)
Everyone knows the story by now, developed in 2009 and worth pennies on the dollar, bitcoin's price has been on a meteoric rise, topping more than $1,000 in recent weeks. But, there's something else that seems to have escalated along with the virtual currency's value, the market worth of every startup with a name that includes "coin."
A closer look at recent headlines reveals the "term" coin might just be this year's answer to the quirky name, another past trend that briefly took hold among startups. TechCrunch's digital startup directory CrunchBase reveals entries for more than 20 companies with the term "coin" in their titles.
While there are a few old staples - Outerwall-owned CoinStar comes to mind, all of these startups have sprouted in the wake of bitcoin and its debut on the financial stage. The mag-stripe alternative device Coin may be the most recent and most relevant example, going from unknown to headline sensation and back to the drawing board in just a few short weeks.
Speaking to PYMNTS.com in an exclusive interview, Coin CEO and founder Kanishk Parashar, said he chose the name Coin because "it is the universal symbol for simplicity."
"Coins have been around forever and people are used to coins and what they do," Parashar explained.
But, do these startups provide any value to the payments ecosystem, or are they just riding on the coattails of another soon-to-be-expired trend? We analyze this crop of startups in our inaugural "Coin Toss" to explore.
A single device that can replace all consumer mag-stripe cards, Coin is just one current company trying to find success as a stopgap solution between smartphone-enabled mobile payments and traditional plastic cards. Loop has devised a similar way for consumers to store consumer cards in a smartphone, while iCache tried and failed to bring a similar solution to market in the mid-2000s.
However, the strong public reaction to Coin could signal that it has a chance at surviving in the market, despite criticism that it doesn't solve for friction in the payments space.
Known as the "PayPal of bitcoin," Coinbase is one of the larger and more popular bitcoin exchanges among U.S. users, boasting more than 500,000 consumer wallets and 15,000 merchants, according to its website. Started in June of 2012, Coinbase debuted as bitcoin's popularity was rising domestically, and it's rode this wave to a rising market share, albeit with some high-profile growing pains.
This November, Coinbase temporarily ran out of bitcoin during a price rise of $140. This example illustrates how heavily Coinbase is banking on bitcoin, and what could happen to the company if it should fail.
Founded in 2012, mobile point-of-sale (mPOS) solution provider Coiney received $5 million in funding on August 28 as part of its Series A round and $8 million in addition funding this October to compete against Square, PayPal and Rakuten in Japan.
Despite the name and the timing of its launch, the company does seem to have more to offer than its moniker suggests - Coiney was founded by an ex-PayPal exec and its $5 million round was led by Credit Saison, one of Japan's largest credit card companies.
This U.K.-based bitcoin marketplace specialist aims to provide a safe platform for users to transact using bitcoin, and if recent headlines are any indication, there's a market for such a service.
Coinfloor does face a crowded market of similar exchanges, but unlike its competitors its preparing early for the long haul, operating within regulatory boundaries despite the fact its market isn't regulated, according to reports.
Personal finance app CoinKeeper was founded in May of 2011, after bitcoin's founding, but before its boost in popularity. Selling for $9.99 and receiving a rating of three-and-a-half stars on Apple's iTunes store, CoinKeeper allows iPhone, Android and iPad users to set budgets, manage income and print reports on this activity.
While not in the bitcoin market, CoinKeeper does also face its share of volatility, as it is fighting against a host of competitors that provide similar solutions at reduced costs.
Introduced in 2011, namecoin is a cryptocurrency that as of December 4 is the fourth largest cryptocurrency by volume out of more than 40 available alternatives. Namecoin allows users to register domain names that are not subject to control or regulation by the Internet Corporation for Assigned Names and Numbers (ICANN) and to transact with it as a currency.
Given that namecoin is not primarily a currency, it's long-term value could be in question, especially as other newcomers look to improve upon the bitcoin model.
The second-largest cryptocurrency by market capitalization, litecoin is based on the original bitcoin protocol and released in 2011. Often referred to as "the silver to bitcoin's gold," the litecoin market recently passed a $1 billion market capitalization.
Proponents argue that litecoin would be just another payment alternative in a bitcoin world, just as PayPal and Square each spawned imitators, so if bitcoin takes off, or fails, it could quickly gain in popularity.