Union Square Ventures principal Fred Wilson has led a $5 million investment in Coinbase, making one of the biggest bets on Bitcoin since the digital currency captured investors’ attention several months ago.
Wilson -- who previously invested in Twitter, Zynga (Nasdaq:ZNGA) and Kickstarter -- has not invested in a start-up in two years. Now, he's leading the charge to back the San Francisco-based platform for buying, selling and accepting bitcoins.
With Bitcoin's stock value reaching as high as $266 earlier this year, and as more companies, including OKCupid (Nasdaq:IACI), accept the decentralized digital cash as payment, this appears to be the strongest endorsement yet for the currency’s future.
“We believe that Bitcoin represents something fundamental and powerful, an open and distributed Internet peer-to-peer protocol for transferring purchasing power,” Wilson wrote in a blog post that announced the investment on Wednesday.
Coinbase’s number of users has grown tremendously over the past few months.
Earlier this week, the company announced it is now processing $15 million worth of bitcoins per month -- up from $1 million in February.
The 11-month-old company can now use the capital injection to hire more staff, expand, and address problems that arose due to its meteoric spike in users.
“Growth has been heavily constrained ... as you’ve noticed if you’ve seen the ‘sorry we’ve reached the maximum number of buys for today’ message,” the company wrote in a blog post. “Most days we’ve been reaching our maximum amount of buys within an hour or two. Some fixes for that are in the works.”
Both Coinbase and Fred Wilson did not immediately respond to emails and calls requesting comment.
Last month, when Bitcoin peaked amid breathless coverage of its rise from a mere $15 value, Cameron and Tyler Winklevoss -- the twins who sued Facebook (Nasdaq:FB) founder Mark Zuckerberg for $140 million for allegedly stealing the idea for the social network from them -- invested $11 million in the currency.
This news apparently came right as the Bitcoin bubble burst. Its value fell to about $77, though it has since rebounded.
Bitcoins were trading for about $112 on Thursday morning.