Venture capital gets bullish on Bitcoin

Bitcoin start-up Coinbase has raised $25m (£15m) in venture capital funding - the largest investment ever seen by a Bitcoin start-up. Founded in June 2012 by software engineer Brian Armstrong, Coinbase allows customers to buy and store Bitcoin.

The funding came from the venture capital fund Andressen Horowitz. Chris Dixon, who led the deal, highlighted many of the advantages of Bitcoin such as "low-cost financial services to people who, because of financial or political constraints, don't have them today."

Coinbase responded to the funding on its blog:

This investment represents the largest fundraise in Bitcoin to date (bringing our total raised to $31m). We see it as a key moment to show the opportunity of Bitcoin and the dramatic impact it will have on the global economy.

We plan to use the funds to expand our team, continue to educate the market, and promote the mainstream adoption of Bitcoin.

Bitcoin has had a roller coaster ride in 2013 and recently soared passed $1,000 in value for the first time a few weeks ago. The virtual currency received a boost in October, after a US Senate committee offered a cautious welcome to the cryptocurrency branding it a "legitimate financial service."

A recent note by Bank of America Merrill Lynch (BoAML) concluded that Bitcoin could become a major source of e-commerce with serious potential for growth.

However, not everyone is welcoming the rise of the private currency. The European Banking Authority (EBA) has said "consumers should be aware that exchange platforms tend to be unregulated and are not banks that hold their virtual currency as a deposit."

Last week, the People's Bank of China announced a ban on financial institutions handling Bitcoin transactions. The former head of the Federal Reserve has called Bitcoin a bubble with no intrinsic value.

Despite the recent string of criticisms, Bitcoin enthusiasts remain as bullish as ever while more and more people sign up to use the innovative currency. Coinbase confirmed that the number of people using their Bitcoin wallet doubled in the last two months to 600,000 with close to 10,000 people signing up every day.

Ever increasing numbers of retail establishments are accepting Bitcoin as payment - Coinbase works with 16,000 businesses providing Bitcoin services.