Jeremy Allaire’s bitcoin startup Circle has just secured $50 million in funding from Goldman Sachs and IDG Capital Partners, the company reported on its blog yesterday (April 29). Goldman and IDG join previous Circle investors Breyer Capital, General Catalyst Partners, Accel Partners, Oak Investment Partners, Fenway Summer, Digital Currency Group and Pantera Capital.
And Circle is not the only crypto-currency startup garnering attention from some very mainstream financial players – rival firm Coinbase recently finished off a large growth that saw participation from the New York Stock Exchange and USAA.
With the latest infusion of cash, Circle will now upgrade its services to allow customers to send and receive U.S. dollars as well as bitcoin. The point of the addition of this feature is to fully tap into the benefits of the blockchain, settling transactions both more quickly and cheaply than traditional online financial transactions. Circle’s bet hinges on the idea that allowing dollar-based transactions will attract customers who do not want to risk swings in the value of bitcoin.
“They can do this without knowing anything about bitcoin and without exposing themselves to price volatility,” said Allaire, who previously took video company Brightcove public, according to TechCrunch. “We really think of bitcoin as a global interoperable payment network instead of a store of value.”
IDG may be a particularly important investor here, as the East Asian firm might prove instrumental in cracking the Chinese market. The Chinese market is highly regulated and stacked against bitcoin – Chinese banks cannot directly handle transactions, though private transactions between individuals are allowed.
“This could take a long time, but there is a savings glut in China where consumers have built up a lot of wealth. And now, the economy needs to shift toward a more consumer-driven model. Part of that involves Chinese consumers interacting with the rest of the world over the Internet,” Allaire said in an interview. “So I think there’s a need for services that will make it easier for Chinese consumers to spend globally. The bitcoin network could be an attractive solution.”