Coinbase raises $25 million Series B in largest Bitcoin startup funding round to date

Bitcoin’s price may be rising and falling day-by-day, but the virtual currency remains a hot topic for the tech industry and investors. Reflecting optimism in the space, Coinbase — a popular Bitcoin wallet service — has closed its $25 million Series B round led by Andreessen Horowitz.

The company has also announced today that its user base has reached 600,000 wallets, that’s double the number that it reached back in mid-October.

Existing investors Union Square Ventures and Ribbit Capital are the investors completing the record-breaking round for a Bitcoin startup. The round will see Andreessen Horowitz’s Chris Dixon and Union Square Ventures’ Fred Wilson — two vocal Bitcoin advocates — join the Coinbase board.

The startup says it will use the funding to increase its staff of eight and “continue to educate the market, and promote the mainstream adoption of Bitcoin.” It was one of the 400-plus companies involved in the recent Bitcoin Black Friday promotion, and it plans to expand its existing referrals program which earns users cash when friends buy and sell Bitcoin.

The startup — which heralds itself as “the largest and fastest growing Bitcoin service in the US” — says it is seeing 10,000 new users sign-up for its service each day. On the partnerships front, it works with over 16,000 merchants, which include early Bitcoin advocates OkCupid, Khan Academy and Reddit.

“We are making it easier for consumers to buy, merchants to sell, and developers to build, and we can’t wait for our next chapter,” the company says in a blog post.

Coinbase raised $5 million in March in what was then the largest funding round for a Bitcoin startup — this time around it just broke its own record by some margin. Today’s round takes Coinbase’s total funding to $31 million.

Despite all this money, the deal is still very much a risk for investors since Bitcoin remains in uncertain territory and without official recognition or regulation. National banks in China, Korea and Thailand have rejected it, and other virtual currency, as legitimate currency — though it is not illegal in these countries — while the US government is still to take a stance on it.

One thing is for sure though: with 12,111,950 Bitcoins in circulation, there’s a $12 billion dollar market opportunity up for grabs.

Image via Zack Copley / Flickr