Bitcoin attracts major investors

May 24, 2013

Bitcoin is gaining traction outside its existing community of enthusiastic early adopters.

An estimated 1,100 people attended Bitcoin 2013, the first large conference dedicated to Bitcoin, MIT Technology Review reports. The conference also showed that Bitcoin has begun to attract the backing of conventional technology industry investors, who have sunk millions of dollars into a handful of Bitcoin startups.

In the Bitcoin system, cryptographic operations and oversight from a peer-to-peer network of people running Bitcoin software process transactions and protect against counterfeiting without the need for a central authority.

OpenCoin is backed by Silicon Valley venture funds Lightspeed Venture Partners, Andreessen Horowitz, and Google Ventures.

CoinBase, the media sponsor of the San Jose event, received the largest venture investment in a Bitcoin business to date, earlier this month:.$5 million from Union Square Ventures, a fund better known for backing Tumblr and Zynga.

BitPay, which enables online stores — including those hosted by Amazon — to take Bitcoin payment, recently received $3 million from Founders Fund, led by Facebook’s first major investor, Peter Thiel.

Bitcoin’s earliest adopters were libertarians, cryptographers, and coders attracted by the idea of money that could operate without government oversight. They liked the idea that people could exchange bitcoins without knowing or trusting one another. Large exchanges and payments companies that operate much like existing financial institutions and follow the same regulations compromise both of those features, some argue.