
Coinbase Raises $75M from DFJ Growth, USAA, NYSE, and More - arnauddri
http://blog.coinbase.com/post/108642362357/coinbase-raises-75m-from-dfj-growth-usaa-nyse
======
Cthulhu_
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.

~~~
Mahn
Coinbase is just another company in the Bitcoin ecosystem, them being
successful does not mean Bitcoin cannot have other faces or uses. Nobody
condemns email for being too centralized because Gmail is popular, people who
care for decentralization can and do set up their own email server.

~~~
vectorpush
Well said, though, I think there is reason to be concerned about the continued
centralization of bitcoin payment processors. In a world where bitpay and
coinbase are processing the vast majority of bitcoin payments, it's easy to
imagine how a coordinated denial of service attack could temporarily cripple
the bitcoin economy from the consumer's perspective.

~~~
ThomPete
The big difference is that you don't need to be certified and so it doesn't
exclude anyone from getting into this game. Compare that with banking which is
basically impossible to even get started with properly.

The interesting thing here is that it's build on an open protocol rather than
on legislation and so this I believe will at least give the opportunity to
create all sorts of interesting solutions that are currently impossible to do
within the current banking system because technology moves faster than
legislation.

So even if we are talking centralization or clustering as I like to call it,
we are not talking exclusion.

~~~
vectorpush
Sure, the barrier to entry is lower, but that may not always be the case,
especially once the big players start to push towards regulating competition
out of the market. Even existing regulations are already a show-stopper for
any company without the considerable capital necessary to tackle the morass of
money transmission laws and licencing concerns that vary from state to state.
There is also a big first mover advantage in payment processing because there
isn't very much room to innovate beyond lower fees (hard to beat bitpay's 0%)
and a reputable brand.

I think there is a real risk that we'll see bitcoin processing completely
swallowed up by these big players.

~~~
ThomPete
How can they push toward regulation? Honest question? I could set up wherever
i want i the world right?

~~~
vectorpush
Yes, you can setup wherever you want, but if you want to process payments for
U.S. businesses then you need to act in accordance with U.S. money
transmission laws, otherwise, nobody will do business with you. Currently,
bitcoin payment processors do not fall under the purview of MSB or MTB
classification, but that could easily change, especially because
cryptocurrencies are still a relatively new concept.

~~~
ThomPete
But then it's the US businesses that will not be in compliance right? Not me?

~~~
sushid
Right, but if US (et al.) merchants are not using your service because using
your service means they're not in compliance, you won't be much of a
competitor in that field.

~~~
ThomPete
Which if the rest of the world is, is going to decrease the risk of any
legislation happening to begin with no?

~~~
moe
You are a bit late...

[http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country](http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country)

~~~
ThomPete
Unless you are being overly pedantic I don't understand what your point is.
And if it is just pedantic then oh well.

~~~
moe
The point was that Bitcoin already is regulated pretty much everywhere. If you
have pockets deep enough to exploit any of the remaining loopholes it'd likely
be cheaper to just get a regular license.

------
rrggrr
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.

~~~
thejosh
3% for very low volume maybe. Get a little bit of volume and you'll get less
than 0.7%.

~~~
aianus
How is that possible given that my credit card gives 1% cash back?

~~~
zminjie
they bank on you not paying the full balance every month so the interest alone
will more than pay for your cash back.

~~~
etchalon
That and the fees they collect from the merchants.

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clarkm
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
I totally agree, especially considering USAA's reputation as a conservative
player in the Banking world

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stevewepay
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
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
Is this a sign of how little PayPal has innovated lately?

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comboy
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
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
> 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
Namecoin ([http://namecoin.info](http://namecoin.info)) might be of interest
to you.

~~~
valevk
That's what I was looking for.

------
dylanz
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.

------
Animats
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&gr...](http://www.leginfo.ca.gov/cgi-
bin/displaycode?section=bpc&group=17001-18000&file=17530-17539.6))

 _(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
... (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.

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jypepin
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.

------
claypoolb
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)

------
antr
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
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
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
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.

~~~
antr
I understand what you mean, and agree to a very large extent with the that
line of thought. My concerns with Pandit are not so much on failure, but fraud
and mismanagement.

------
Aqueous
It certainly seems like Bitcoin is dead.

~~~
Aqueous
To the sarcasm-impaired:
[http://bitcoinobituaries.com](http://bitcoinobituaries.com)

------
rubyrescue
Huge congrats Brian!

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

~~~
nawariata
Bitcoin has already happened for a lot of people.

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sgt101
There's one (or 10) born every minute. If I were a scammer I'd want these
folks email addresses.

