In its attempt to become the world’s premier Bitcoin exchange, Circle.com has just closed a massive funding round thanks to major investment banking firm Goldman Sachs. Circle has now raised a tremendous amount of capital, to be used towards innovative new features such as USD integration and entrance into the Chinese market, and apparently has wooed some top-tier partners along the way.
Goldman Sachs is one of the most prominent investment banking companies in the world, and having raised $50 million from the firm in cooperation with IDG Capital Partners, a “leading China-based venture capital firm”, according to the Circle blog. The blog post, written by Circle CEO Jeremy Allaire, continues to explain that these partnerships were not simply about the cash, but about strategic maneuvers in order to break into the Chinese market with IDG and to implement USD as a payment method.
Furthermore, Goldman Sachs isn’t just interested in Circle for the investment opportunity, but is rather interested in the cryptocurrency used by the exchange. In March 2014, Goldman Sachs published an extensive 25-page report on Bitcoin with interviews and opinion pieces, general forecasts and predictions about Bitcoin’s future. One article in particular could shed light on Goldman Sachs’ interest in investing with Circle.
A single page article entitled “Is bitcoin a currency? No.” from the report isn’t meant to shoot down any notions about Bitcoin’s rise, but rather is meant to express how the cryptocurrency should be treated as an aid for payment technology as opposed to a means for overtaking fiat currencies.
From the article’s final paragraph, we can clearly see Goldman Sachs’ opinion about Bitcoin and how that was the first step (nearly 14 months ago) towards investing in Circle:
“We would argue that bitcoin, and other digital currencies, currently lie somewhere on the boundaries between currency, commodity and financial asset. Our best definition would be that it is currently a speculative financial asset that can be used as a medium of exchange.” (emphasis added)
As Circle gains more traction within the Bitcoin exchange space, it will benefit greatly from having an investment partner like Goldman Sachs. Not just because of its reputation, but because of its stance on Bitcoin. Circle is an exchange, it’s not trying to replace dollars with Bitcoins. Having a major investment partner who believes in your game plan and overall direction is much more valuable than the millions of dollars they invested.