What does that mean?
In 2005, Y Combinator developed a new model of startup funding. Twice a year they invest a small amount of money (average $18k) in a large number of startups (most recently 84). The startups move to Silicon Valley for 3 months, during which YC works intensively with them to get the company into the best possible shape and refine their pitch to investors. Each cycle culminates in Demo Day, when the startups present to a large audience of investors. But YC does not end on Demo Day. YC and the YC alumni network continue to help founders for the life of their company, and beyond.
Coinbase is the first Bitcoin related company to get a shot in the arm through this funding. Totalling US$600K +, this is remarkably similar to the funding received by Facebook during its early days. Coinbase captures my attention due to its innovation and problem solving methods. Setting up shop in a fairly crowded Bitcoin space, Brian has been working meticulously on safe storage of Bitcoins, and an easy method to obtain them.
An Interview with the CEO of Coinbase Brian Armstrong
Brian Armstrong is the CEO of Coinbase and a software engineer with the disruptive Airbnb. Touted as the PayPal for Bitcoin, here are some of Brian’s views.
- Ben: Ever gave Bitcoin in India a thought? Is there a future? The biggest problem here is our inability to obtain Bitcoin.
- Brian: I’d love to see Bitcoin in India and all over the developing world – in my mind this is one of the biggest opportunities for Bitcoin, to open up international trade (with low or zero fees) and provide an inflation proof currency to everyone in the world. I agree the ability to buy/sell Bitcoin is harder there, and also an opportunity.
- Ben: What methods for adding funds are planned for Coinbase?
- Brian: We’re starting with the buy/sell piece in the U.S. since it’s a larger market and it makes more sense if you have to pick one place to start. But we have a near term plan to open up the buy sell piece in developed countries (would rather not share details on this until it’s launched), and a longer term plan to open it up in more difficult places – probably by crowd sourcing it (again probably can’t say much more here).
- Ben: How much time do you spend at work every day?
- Brian: I normally work 8-12hrs a day on it, try to take time off on weekends.
- Ben: When do you expect to move out of Beta? What more needs to be built?
- Brian: We might move out of beta in a year or so, once we have a team and infrastructure build up.
- Ben: Touted as the PayPal for Bitcoin; is that something that was on the initial drawing board?
- Brian: The general idea was to build something that was trustworthy in the Bitcoin space and made things easier to use. This is a large undertaking and will take many years and many people, but it’s a fun project so I’m really enjoying it so far.
Coinbase is the first Bitcoin Company that was awarded a VC grant from YCombinator. Similar in value to the first funding of Facebook, time will tell us how effective Brian’s vision is.
What is the difference between Coinbase and every other Bitcoin wallet service?
There are several good online wallets for Bitcoin, and open source Bitcoin clients for the desktop.
Why should someone use Coinbase instead?
Here are a few ways Coinbase tries to be different:
- They try to make Bitcoin easy to use for non-technical users. This means they avoid asking the user to deal with private keys, encryption, or any topics they might be unfamiliar to them.
- They try to make buying and selling Bitcoin with your local currency as simple as possible.
- They handle security and backups for you so don’t have to worry about losing your device, or forgetting to back it up.
(Note that all of these may not be built yet, but this is their goal for the product.) They understand there are a variety of users in the Bitcoin ecosystem from beginner to advanced, and they certainly do not claim to be the best solution for everyone.
What is the difference between Coinbase and PayPal?
Coinbase uses a different currency underneath (Bitcoin) which is a distributed, open-source protocol for transmitting money. Bitcoin is still relatively new, but they believe it is a good platform to build on top of due to the following properties:
- Low (or zero) transaction fees
- Payments arrive instantly (at about the speed of an email) and are confirmed within the hour
- Works internationally
They try to make Coinbase easy to use and help avoid transaction fees when making payments.
Coinbase does not maintain fractional reserves, and as a company that has been crowd funded to the tune of US $600K +, Brian Armstrong has demonstrated his ability to garner trust. Trust has been a barrier in creating a more viral offering from Bitcoin and Coinbase is working hard on solving this problem as well.
Through the utilisation of a cold-storage offline facility to enable secure storage of Bitcoin, Coinbase is an important step in the correct direction.
Links & Sources
Coinbase Website – www.coinbase.com
Coinbase Blog – http://blog.coinbase.com/
Coinbase FAQ & Support – http://support.coinbase.com/
YCombinator Website – http://ycombinator.com/