Goldman Sachs Invests In Bitcoin Start-up Circle Internet Financial

Goldman Sachs

Goldman Sachs headquarters in New York City. The investment bank made a big investment in bitcoin start-up Circle Internet 

 

Circle Internet Financial, a bitcoin start-up led by Internet entrepreneur Jeremy Allaire, said it raised $50 million from investors including Goldman Sachs Group Inc. (GS), giving the virtual currency a jolt of credibility even as it struggles to gain consumer acceptance.

Circle said the new group of investors included a major Chinese investment firm, IDG Capital Partners, to help the Boston firm’s expansion in that giant market.

We could not be happier with our new strategic investors,” Allaire wrote in a blog post on the company’s website. “They bring unique, powerful capabilities and capital that will help us continue building a new kind of global consumer finance company, one based on open platforms, open source software and ubiquitous mobile devices.”

Circle said the new investment, which follows $26 million raised from other investors in 2013 and 2014, will enable it to expand beyond bitcoins to provide services in U.S. dollars.

Customers will be able to keep accounts in dollars, eliminating the risks associated with bitcoin price volatility, while still being able to send and receive currency both in dollars and bitcoins. In the latter case, the company would automatically convert the sums from dollars to bitcoins. The dollar accounts would be insured by the Federal Deposit Insurance Corp., Circle said.

“Customers with dollar accounts gain all of the benefits of digital currency — instant, secure and free payments to anyone in the world — without holding or explicitly converting dollars into bitcoins,” Allaire wrote.

The new dollar feature could represent an important step in the bitcoin industry’s bid to make inroads in the lucrative money-transmission business dominated by big banks and players like PayPal and Western Union. As a currency created outside the reach of central banks and regulators, bitcoin has the potential to revolutionize money storage and payments by driving down costs — potentially to zero — in the way that the Internet revolutionized media and communications.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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