The Sand Hill 25 Bitcoin Innovative Disrupters
Bitcoin — the Internet currency, payment system and technology — is about the birth of a new “digital” monetary ecosystem. Bitcoin bypasses traditional banks and clearinghouses with blockchain technology. Like every innovation it creates new regulatory and compliance challenges. There is growing interest in knowing where the money has come from and at the same time the anonymity of bitcoin makes creating an data trail a tricky task, but it’s possible to say whether certain bitcoin addresses are involved in mining, or have been associated with gambling transactions.
More recently, nationally known merchants like Overstock.com, Zynga and the Sacramento Kings basketball team have begun to accept Bitcoin payments. Even political candidates are taking donations through the system. Worldwide transaction volume keeps growing, as does the number of Bitcoin users.
Bitcoin is built on some heavy and complex data-crunching. Like any ecosystem, it will have its share of winners and losers. The Bitcoin “Innovative Disrupters” are those that have the best odds at being winners.
There are several notable analogies between the Bitcoin Innovative Disrupters and the pioneers of the 1848 California Gold Rush. Individual miners from all over the world who flocked to San Francisco for the Gold Rush had varied success in creating wealth for themselves. But as a group, they created a groundswell of entrepreneurship and laid the foundation of what is today a $1.9 trillion economy – so large that, if it were a country, it would be the tenth largest economy in the world.
The first flakes of gold were discovered in Sacramento on Jan. 24, 1848, which led to $250 million of mined gold in the next few years. On Feb. 2, 1848, the United States signed a peace treaty to end its war with Mexico for a payment of $18.5 million and, among other things, ownership of the state of California – an enviable return on investment by venture capitalist standards.
Today, venture capitalists have created the foundation for innovative disruption with an investment of $667 million in Bitcoin-related companies to date. Meanwhile, entrepreneurs from all over the world will create the new Bitcoin monetary ecosystem.
As a follow on to our article, “Bitcoin: Mad, Bad but not a Fad,” here are 25 companies we’ve dubbed the Sand Hill Bitcoin Innovative Disrupters. They represent the first wave of companies leveraging blockchain-related technologies that we believe will play a pivotal role in the future.
21 – Stealth-mode startup with $116 million of funding, a new record. Very few details have been made public. It’s expected to build infrastructure technology to drive adoption of Bitcoin and potential to become a key ecosystem player.
Bitex.la – Regional Bitcoin exchange to support Latin America and Spain targeted at unbanked users and looking to build financial services. Originated in Argentina, which has a highly volatile currency.
Bitfinex – Hong Kong-based company building a trading platform. Designed for crypto assets with advanced features such as margin trading and liquidity swaps.
BitFury – Provider for transaction processing using specially designed green infrastructure. Technology includes custom-made ASIC chips optimized for low power consumption and low carbon footprint.
BitGo – Security platform based on multi-signature technology. Provides a suite of services for Bitcoin portfolio management, corporate treasury and enterprise enablement.
Bitnet – Commerce platform for merchants and developers. Built on best practices and deployment patterns for business-critical infrastructure used by companies such as Netflix. Deployed on virtual private clouds.
BitPay – Payment service provider with APIs to 22 platforms such as WordPress and Shopify. Libraries of custom integrations are available in open source.
Blockchain.com – Wallet and block explorer service to provide data on transactions, minded blocks in the Bitcoin blockchain. Facilitates deep Web transactions with a dedicated hidden service to the Tor network.
Blockstream – Innovative technology called “sidechains” for improving interoperability with blockchain. Benefits include avoiding liquidity shortages and managing security breaches.
BTCJam – Peer-to-peer lending network using Bitcoin targeted at cross-border loans to individuals in third-world countries. Uses a reputation system to build credit profiles for borrowers.
Chain – Blockchain API for developers to build Bitcoin applications. Expects to help create low-cost mobile applications with fast access to blockchain. Could facilitate payments for the unbanked.
ChangeTip – Provides a mechanism for online tipping and gifting of small amounts over social media using Bitcoin. Targeted at content creators.
Circle – Suite of consumer finance products using Bitcoin with an emphasis on quality of user experience and ease of use. Emulates a traditional banking transaction for consumers with Bitcoin “under the hood.”
Coinbase – Wallet that can link to verified bank accounts to buy, use and accept Bitcoin. Partnering relationship with Silicon Valley Bank. Record funding round of $75 million in 2014.
Coinplug – Bitcoin exchange and wallet services for Korea, which is expected to extend to other Asian markets. Designed for mobile payments between consumers and merchants in Korea with no transaction fees.
Digital Asset Holdings – Platform for cryptographically secure settlement and ledger services. Expected to help regulated banks converting cryptocurrency assets to and from conventional currencies. Recruited former executive from JPMorgan Chase as CEO.
The HOPE Gold Coin – Peer-to-peer Internet currency to enable charitable donations. The currency is backed by unmined gold reserves in the ground. Integrates Know Your Client (KYC) and Anti-money Laundering (AML) regulations and procedures into its operations.
itBit – Global exchange active in Europe and Asia, which includes regulatory features for AML and KYC. In discussion with U.S. regulators to launch a solution compliant with U.S. laws.
Mek Entertainment – Virtual reality Massive Multi-player Online Game (MMOG) with an ecosystem integrated with blockchain technology similar to Bitcoin.
Mirror – Smart contracts platform with risk-management tools based on blockchain technology. White-labeled software for financial institutions to build their own Bitcoin exchanges. Customers include broker-dealers and hedge funds.
OKCoin – Worldwide digital currency trading platform operating from Singapore. OKCoin transactions levels of Bitcoin and Litecoin in March 2014 were higher than that of any other exchange in the world.
Ripple – Offers a payment system and exchange using the Ripple protocol for a distributed ledger. Positioned to make an impact on correspondent banking. Notable partnerships with banks include Fidor, CBW Bank and Cross River Bank.
TransferWise – Facilitates international money transfers without bank charges associated with a typical wire transfer. Highlights a 90 percent savings in transaction costs.
Xapo – Wallet with insurance against theft or loss underwritten by a captive insurance company and by a third party. Enhanced security enabled through cryptography and multi-factor authentication in addition to cold storage of Bitcoins.
Zooz – Solution to reduce cross-border transaction costs across currencies. Technology solution based on a proprietary algorithm that dynamically routes each transaction to the optimal acquirer.
Shirish Netke is president and CEO of Amberoon Inc., a provider of data-driven business perspective solutions.
M.R. Rangaswami is co-founder and CEO of Sand Hill Group and publisher of SandHill.com.
(Originally published in SandHil.com)