Venture Capital Bets Big on Bitcoin

Silicon Valley’s bets on the digital currency Bitcoin keep getting bigger.

A San Francisco company, Coinbase, announced on Thursday that it had raised $25 million from some prominent venture capitalists in the largest ever fund-raising round for a Bitcoin company.

Since its founding a little over a year ago, Coinbase has developed a reputation as one of the most reliable players in the often chaotic world of virtual currencies.

The company enables merchants to accept digital money for ordinary purchases, and allows customers to trade Bitcoins and hold them in online wallets. Coinbase hosts 600,000 online wallets, up from 200,000 in August.

The investors behind Coinbase include some of the biggest names in venture capital, like Union Square Ventures and Andreessen Horowitz , which is investing in Coinbase for the first time in the current series B round.

Chris Dixon, a partner at Andreessen Horowitz , is joining the Coinbase board. He used the announcement to extol the possibilities of Bitcoin.

“The designers of the web built placeholders for a system that moved money, but never successfully completed it,” Mr Dixon said. “Bitcoin is the first plausible proposal for an economic protocol for the internet.”

Coinbase said it planned to use the money to expand its staff and “promote the mainstream adoption of Bitcoin.”

The company added that the world was “nearing a tipping point for broad adoption of Bitcoin â€" what we at Coinbase believe to be one of the most important shifts in the global economy in our lifetime.”

Bitcoin, created by anonymous programmers in 2009, is a digital currency produced by a network of users who solve complex mathematical problems â€" a method known as “mining.” The open-source program that created it determined that only 21 million coins would ever be created, leading to a speculative boom that has pushed the price of single Bitcoin to more than $1,00 recently from around $200 at the beginning of November.

Fraud has accompanied this surge in price, but the Bitcoin concept has been viewed as a potentially revolutionary way to move money around the world.