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A budding relationship: Bitcoin and real money

By Laurie Bennett

February 27, 2014 at 2:49pm

While attention is focused on Bitcoin’s recent setbacks, serious money continues to show an interest in the digital currency.

Last week, the Winklevoss twins, best known for their battles with Mark Zuckerberg over Facebook’s origins, released Winkdex, a new Bitcoin exchange.

Their announcement wasn’t big enough news to overwhelm concerns about the shutdown of Bitcoin’s largest exchange, Mt. Gox, or the arrest of BitInstant CEO Charlie Shrem on charges of money laundering.

Nevertheless, it was another step toward the legitimization of a system whose earliest users were gamers and criminals.

As the interactive Muckety map above shows, seasoned investors are now involved.

Accel Partners, which took an early stake in Facebook, has placed a bet on Circle Internet Financial, a developer of a Bitcoin payment processing system.

Accel’s managing partner, Jim Breyer, is a director of the company. Also on the board are Michele Burns, a director of Cisco Systems and Goldman Sachs; and Raj Date, former deputy director of the Consumer Financial Protection Bureau.

Buttercoin, a developer of Bitcoin trading platforms, has attracted investments from Google Ventures and Y Combinator.

Two other venture capital firms, Andreessen Horowitz and Union Square, have invested in Coinbase, a Bitcoin exchange. The New York Times reported last month that Andreessen Horowitz had invested nearly $50 million in Bitcoin-related ventures.

According to CoinDesk, VC firms have invested $97.5 million in Bitcoin companies since 2012.

Cameron and Tyler Winklevoss plan an IPO for the Winklevoss Bitcoin Trust, a move that would help bring the currency out of the darkness.

As Heidi Moore of the Guardian writes: “To function as a currency, bitcoins need one thing: legitimacy. The further it gets away from its shady, fantasy-currency roots, the closer it will get to practical reality.”

Yet the oversight that typically accompanies widely accepted currencies is still in the distance.

Federal Reserve Chairwoman Janet Yellen, testifying Thursday before the Senate Banking Committee, said the Fed “simply does not have authority to supervise or regulate Bitcoin in any way.”

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The relationship map to the left is interactive.
• Solid lines are current relations. Dotted lines are former relations.
• Expand items with + signs by double-clicking or by selecting multiple items in the map and pressing the "e" key.
• Move an item in the map by clicking and dragging.
• You can also delete items, separate boxes and save maps. Right-click on the map or select Map Tools for these options.
• Find out more about an item in the map by right-clicking on the item and choosing Information about...
• View map color key.
• This interactive map requires Flash player.


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