3 key things to understand about Coinbase’s record-setting raise

Coinbase’s announcement of $75 million in Series C funding has brought bitcoin surging back to center stage, as crypto enthusiasts and financial pundits alike assess the round’s impact.

That it is significant is without questionthe financing set the record, previously held by Blockchain’s $30.5 million round last October, for the largest single venture round into a bitcoin-related company. Coinbase is now the best-financed bitcoin company in the world, and with a Series C valuation rumored to be $490 million, easily the most valuable. The round is nearly as much as the $96 million in total VC funding put into the bitcoin ecosystem in 2013, and more than 20% of the roughly $340 million put into this industry during all of last year. For something that has been repeatedly and alternatively declared dead, useless, crime-ridden and illegal, the size of the round alone speaks volumes.

The deal is noteworthy in other ways, however. The real story here isn’t how much the company raised, although it is impressive. The real story is the investor roster. Coming in alongside well-known Bitcoin heavyweights Draper Fisher Jurvetson, Union Square Ventures, Ribbit Capital and Andreessen Horowitz was, for the first time, a raft of traditional financial industry stalwarts: the New York Stock Exchange, financial services company USAA, Spanish bank BBVA, former Citigroup CEO Vikram Pandit and former Thomson Reuters CEO Tom Glocer. This is undeniably smart money, and since it’s no secret that the traditional finance industry has openly derided Bitcoin as a fad or a farce (or both), their involvement in this round suggests a fairly dramatic shift in sentiment. It adds no small amount of legitimacy to the core concepts of digital currency and the blockchain.

Secondly, the round reinforces the position that bitcoin’s price is a lousy barometer for measuring the whole ecosystem’s potential. Indeed, despite a roughly 75% decline in the dollar price of a bitcoin in 2014, metrics for the growth of the Bitcoin ecosystem in general were extraordinary: VC investment grew by 248%, transaction volume rose 50%, Coinbase itself went from 600,000 to 2.5 million users during the year, and over 300 new bitcoin-related companies were started. We’re conditioned to interpret a rising price positively and a declining one negatively, but in Bitcoin’s case, this is woefully simplistic; the price of one bitcoin has actually very little to do with the innovations that promise to fundamentally disrupt a number of legacy industries and change the way we think about, and transact, value.

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