CoinLab Attracts $500,000 in Venture Capital for Bitcoin Projects CoinLab Attracts $500,000 in Venture Capital for Bitcoin Projects

tackynonchalantSoftware and s/w Development

Dec 3, 2013 (3 years and 4 months ago)


CoinLab Attracts $500,000 in Venture Capital for Bitcoin
CoinLab Attracts $500,000 in Venture Capital for Bitcoin
In the ￿rst o￿cial venture capital raise for a direct investment in bitcoin, CoinLab secured $500,000 today
from seed stage Silicon Valley ￿rm Draper Associates and others, including Seattle angel investor Geo￿
Entress, former assistant treasurer at Microsoft Jack Jolley, and familiar bitcoin investor Roger Ver. Jolley
will also join the company as its Chief Financial O￿cer.
Apparently, seasoned investors are starting to agree. Draper Associates partner Tim Draper explains the
allure of the decentralized bitcoin, “The idea of a private currency has always been appealing to me as a
way to diversify away from holding currency in irresponsible governments. It is more relevant now than
ever.” Hopefully bitcoin will maintain its current exchange value and appreciate, especially since this
investment represents over 1% of the total $45 million worth of existing bitcoin in the world.
CoinLab intends to go into serious hiring mode as they build out their development team and launch new
bitcoin projects. Although an SMS bitcoin texting service called Bitsent was announced brie￿y on their site,
a greater focus has been on the concept of MMORPG mining, leveraging bitcoin to monetize players for the
online gaming companies like World of Warcraft and EVE Online. Two companies have already agreed to
participate in a beta for the CoinLab mining concept - Wurm Online, an independent MMO that allows play-
ers to dig, ￿atten, raise and shape the land and create the frontier world they live in, and graFighters, the
￿rst online ￿ghting game for your hand drawn characters.
The business model is clever. A few whales, or big spenders on virtual goods, make up the majority of
gaming company revenue while the infrequent casual players constitute the bottom 10%. “CoinLab wants
to grab that 80% in the middle,” says Vessenes. They intend to accomplish this by o￿ering a con￿gurable
app that players download from the gaming site which would allow bitcoin mining jobs to run on these
beefy GPU-out￿tted client computers.
Like DropBox, the CoinLab app will reside in the background so that the players are not even aware of the
mining that occurs during the gaming session. To the gamer, certain virtual items or level upgrades would
be obtained. This is a new revenue stream for online game companies as they monetize the free-to-play
gamers via cluster compute work and a win for CoinLab as they convert the mined bitcoin to dollars or
euros that are passed on to the companies after a tidy spread of course.
Vessenes doesn’t want to refer to CoinLab as ‘just another mining pool’ because they have a distinctly
di￿erent type of payout, but you can certainly imagine some non-gaming miner opportunities entering
the CoinLab platform. After all, bitcoin miners and the mining pools collectively gain clout by virtue of the
fact that a majority of miners is necessary to accept changes and slight variations to the protocol. It is easy
to view the bitcoin mining pools as guardians of the free and open monetary system of the future - power-
ful de-central bankers if you will. CoinLab is poised to earn a seat at that table.
[Source :]
Based in Seattle, CoinLab is an emerging umbrella group for culti-
vating and launching innovative bitcoin projects. Until now, they
have been relatively quiet regarding their initiatives but they are
credited with releasing a comprehensive Bitcoin Primer in January
2012. The founders are startup entrepreneurs Peter Vessenes, Mike
Koss, and Tihan Seale, each with a strong passion for the broad
advancements enabled by a decentralized currency.
CEO Vessenes said, “if there is a currency that can trade around the
world, it’s semi-anonymous, it’s instant, it’s not controlled by gov-
ernment or bank, what’s the total value of that currency? The
answer to that is, if it works, it’s gotta be in the billions. It just has to
be for all the reasons you might want to send money around the