Coinbase Leads Move to Bring Bitcoin to Masses

Brian Armstrong and Fred Ehrsam certainly look like the kind of guys who could help bitcoin recover from its wild years.

They are tall and textbook fit, and as poised as Swiss bankers -- Vulcan Swiss bankers. Armstrong, 31 and a former software engineer at Airbnb Inc., shaves his head. Ehrsam, 26 and a former foreign-exchange trader at Goldman Sachs Group Inc. (GS), keeps his hair short and very much in place. When they discuss bitcoin, they rarely smile. Do not try to make them laugh.

Their seriousness is understandable, Bloomberg Markets magazine will report in its November 2014 issue. Armstrong and Ehrsam are the founders of a startup called Coinbase Inc., whose mission is to convince everyone that bitcoin isnt an Internet scam or a libertarian plot against the government or a digital version of goldbuggery, as various skeptics have it. Rather, its the best thing to happen to money since the Lydians started minting coins sometime in the seventh century B.C.

Coinbase isnt a bank -- technically, its a brokerage -- but in important respects it behaves like one. Customers open accounts, through which they buy bitcoins for dollars. Coinbase holds the bitcoins. Customers spend them using a computer or a smartphone application. Coinbase makes money by charging a 1 percent fee for exchanging dollars and bitcoins. All other transactions are free.

Adam Draper, founder of the accelerator program Boost VC. Draper wants to help launch 100 bitcoin-focused companies. Close

Adam Draper, founder of the accelerator program Boost VC. Draper wants to help launch... Read More

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Adam Draper, founder of the accelerator program Boost VC. Draper wants to help launch 100 bitcoin-focused companies.

Coinbases aim is to take a curio currency that exists only as bits on the Internet and turn it into a coin of the realm -- every realm, because part of the appeal of bitcoin is that it can cross borders as easily as e-mail.

Its a big job. Reputation is everything when it comes to currency, and bitcoins has taken some hits. In 2013, the FBI busted Silk Road, an online drug market that ran on bitcoins. In February 2014, Tokyo-based Mt. Gox, once the largest bitcoin exchange in the world, collapsed, and suddenly 850,000 bitcoins, worth $500 million at the time, were just ... gone. (Two hundred thousand of the missing bitcoins later turned up.)

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Coinbase Leads Move to Bring Bitcoin to Masses