Blog Post

Google Ventures invests in OpenCoin, the firm behind Bitcoin exchange Ripple

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

This virtual currency thing just got another piece of validation: in the wake of Bitcoin’s spectacular rise, fall and wary stabilization, Google(s goog) Ventures has decided to invest in OpenCoin, the company behind the Ripple distributed currency exchange.

(Quick note: We’ll be hosting some Bitcoin experts at the San Jose Tech Museum on Thursday, May 16, from 6-9pm, so be there if you’re into this stuff.)

Ripple, billed as “the world’s first open payment network”, may lack the rebel allure of Bitcoin itself, but its distributed model could patch one of Bitcoin’s chief weaknesses, namely its reliance on a few sometimes less-than-transparent exchanges. Of course, Ripple will be usable for the exchange of other currencies, too, and it arguably sits alongside other new financial technology startups such as Transferwise.

In April, OpenCoin received investments from Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners, Vast Ventures and Bitcoin Opportunity Fund. The new angel round, just one month later, comes courtesy of Google Ventures (who we hear put in less than $200,000) and IDG Capital Partners.

In a statement, IDG’s Feng Li said his firm was “excited about the prospect for a global payments system that powers instant, free and secure transactions in any currency.” OpenCoin CEO Chris Larsen, meanwhile, promised using Ripple would be “as easy as sending an email.”

Speaking of emails, OpenCoin recently sent some to those who had signed up to receive “ripples”, which will be a sort-of-currency in themselves but which will mainly be used as transaction tokens on the network, to try to stop attackers from flooding the network with tiny transactions. The company promised that those who signed up before May 9 would get given free ripples by the end of the month.

Other recent investments in this space include $5 million from Fred Wilson’s Union Square Ventures for Bitcoin transaction platform Coinbase, and a $6 million Peter Thiel-led round for Transferwise (which, it should be noted, is engaged in the global payment platform space but doesn’t deal in Bitcoin). And more money seems set to flow: also on Tuesday, New York’s Liberty City Ventures announced a $15 million fund specifically for Bitcoin-related endeavors.

27 Responses to “Google Ventures invests in OpenCoin, the firm behind Bitcoin exchange Ripple”

  1. Ranjan Roy

    Transferwise has absolutely nothing to do with any non-state currency, and is disintermediating the role banks play in currency transfer. That’s a much cleaner, simpler space than Bitcoin. Weird to include them in here.

    • David Meyer

      Thank you for the comment. I did think hard about including Transferwise in this piece, and in the end decided to do so because I think it’s worth viewing the virtual currency stuff in this wider context. After all, all these players are trying to disrupt or bypass the banks in one way or another — in the end, the effect for the user should be similar.

  2. Danny Schmitz

    Ripple is a Rip off! They are trying to create a own centralized currency by fucking over the bitcoin community.

    They create 100Bil XRP and keep 50Bil XRP to themselves. They give away 50Bil XRP and people start playing with those 50Bil XRP and poof they are becoming richer and richer and we have to fuck them in the ass to get those XRP.

    Ripple is nothing more then a Centralized Bank which in order fucks people over.

  3. flakes

    I actually laughed a few times at some of the idiotic statements in these comments.

    Keep in mind that Ripple and Bitcoin are cryptocurrencies and that’s where the similarities end.

    I own a few hundred bitcoins and i can say this:

    1. Transactions are painfully slow for anything computer related
    2. I have no idea who Satoshi Nakamoto. For all I know he could be Osama Bin Ladin’s peodophile uncle.
    3. Anonymity and untraceability are built into the design. That’s nice. But if you want any kind of real world application, that is, actual merchants using it as a means of transaction, a currency has to be traceable and visible, so that both customers and merchants are protected from scams.

    Hell. For most users, to buy bitcoins, you have to transfer money into Dwolla transfer it to MT. Gox using bitinstant before you can even buy bitcoins. Then there is absolutely no place to use them. Frankly that’s a lot of bogus steps to take for a currency you to this date can’t acutally buy anything with.

    So call it like it is. Bitcoin is the Compuserve of internet currencies. Ripple may be the Geocities. I don’t know, but it is a major step forward.

    • Remus Reeve

      1/ I’m not sure what you mean by computer related… in any case, there are plenty of initiatives to reduce transaction confirmations such as green addresses. If there is a clear need for instant transactions, then implementations can be more widespread.

      2/ Satoshi could be Hitler. It’s completely irrelevant to the quality of his code. Strawman.

      3/ Bitcoin is a distributed public ledger, so it can be the basis for the most transparent financial system ever (but can also be made pseudo-anonymous if need be). In any case, cash is not traceable yet powers most of commerce. Strawman.

      Buying Ripples will be just as complicated with the Ripple network, as any interface with the fiat system has to jump through regulatory hoops. Again, strawman.

      • flakes

        Not at all strawman.

        As for point one — take your pick:

        1. Buying a bit coin takes about a week. From either going to western Union to wire money or using Dwolla with a verified account. This is unacceptable except for a true believer. Oh sure, you can do wire transfers or make a payment at CVS, but those methods use exactly the same central banking system Bitcoin is supposed to eliminate

        2. I transfered 1 bitcoin between two wallets just now. It took fifteen minutes. Better than traditional banking I suppose, but still in internet terms a snail’s pace.

        Point 2:

        Satoshi could be Hitler. That’s the point. I don’t know. Anonymity is fine for a niche market, but for mainstream use there needs to be accountability. There is no way in hell big markets (like actual stock markets, mutual funds, Amazon, or Banks for that matter would trust maybe Hitler.)

        Point 3:
        Bitcoin has a public leger. That is one of its strengths. And cash is not traceable, true. But let’s face it we wouldn’t be talking about bitcoin if Cash wasn’t broken. When everything is said and done accountants are the people who control money, and they like audit trails.

        So let’s be honest. How many Silk Roads vendors, have mysteriously up and closed? How many exchanges have up and closed? How many scams are there?

        Yes there are all of these things with cash and banks, but Bitcoin/Ripple/whatever comes next has the power to improve/fix these problems.

        • Remus Reeve

          1. What you are criticizing is the legacy banking system. This problem is no due to Bitcoin. Opening a bank account, stock trading account or getting a new credit card also takes time, but I don’t see up in arms. Once you are a verified customer of a bitcoin exchange, buying and selling is quick. And once you have bitcoins, you don’t have to deal with this anachronistic banking system.

          2. Transfers are pretty much instantaneous, what isn’t is the number of confirmations you judge necessary to wait for. That’s up to you.

          Point 2:

          Isaac Newton was a nutcase alchemist who thought he was who thought he was the second coming. It does not invalidate his gravity equations nonetheless. The code for bitcoin is public so there is nothing more accountable than this. If you have a problem with the code, change it. I really don’t see your point.

          Point 3:

          Bitcoin is a bonanza of audit trails. Again, I fail to see your point. Accountants have zero audit trail with cash, yet it’s still used.

          Thousands of banks, stockbrokers, hedge funds etc have come and gone too. There is an untold amount of scams with fiat currencies too. What is your point?

      • David Schwartz

        Bitcoin fuses the cash in / cash out process with exchanging. You can’t get cash into Bitcoin without exchange cash for Bitcoin, and vice-versa when you want to get cash out.

        In Ripple, these operations are separate. You can get US dollars into Ripple without exchanging them for some other currency. This means that organizations that are very unlikely to transact in Bitcoins any time soon (such as banks) can still be cash in / cash out pathways for Ripple. All they have to do is hold other people’s fiat currency until they withdraw it or transfer it, just like they do now.

  4. And the name of the company Opencoin is a deliberately misleading name designed to make people think it is open source in similar way to bitcoins, which it is NOT

    this is reminiscent of 100 years ago when the Federal Reserve was named so, despite not being federal.

    • Remus Reeve

      Ripple is indeed a trojan-horse.

      Centralized development (and code for now) and the investors control the majority of the currency. It does not facilitate conversion from BTC to USD, as you will still need exchanges like we have with Bitcoin already (they’ll just be renamed Gateways).

      It’s also a debt-based system, so when someone cannot repay their debts other unrelated Ripplers will be affected.

      They are just riding the bitcoin wave and trying to coopt it. If it helps people convert fiat to Bitcoin, then fine. But my guess they need to spread some FUD about Bitcoin to get a decent return on their investment, otherwise their premined XRPs will be worthless.

      • David Schwartz

        There is no way a default can affect an unrelated user. Ripple never leaves you holding an asset you didn’t specifically agree to hold.

        • Remus Reeve

          Not sure you hold assets, more like debts denominated in these assets. Does that mean you agree with my other points since you did not rebut them?

          • David Schwartz

            I agree that the “assets” you hold in Ripple, other than XRP, are obligations with counter-party risk. I don’t necessarily agree with your other points.

  5. Ripples are a trojan horse in the crypto currency realm

    Money like gold, silver and bitcoins are assets with no liability. This is money that sets you free.

    Fiat currency and ripple represent debt. The purpose is to keep you as a debt slave. The aim of ripple is to take over and replace bitcoins with promises to bitcoins, all the while pretending it is good for bitcoins. It allows the ripple controllers to inflate the bitcoin economy (and in fact any economy).

    Ripple is a scam and a danger to freedom

  6. JefffffMS

    Ripple doesn’t compete with Bitcoin as much as it does with existing centralized-currencies and transaction systems. You will be able to do Bitcoin Legal Tender transactions with Ripple. If Ripple becomes bigger, there will be true competition between all those legal-tender currencies vs Bitcoin without banks being shut down.

    However, I think Ripple is making the wrong moves to be taken seriously. And OpenTransactions project is doing a better job at solving the issue.

  7. Amos Bairn

    The downside of Ripple is that it is based on debt. If I want to send money to Bob then the system writes a chain of IOUs. I owe my friend, who owes her friend, who owes his friend, who owes Bob. Each person in the chain settles their debts individually. There will be people who get burnt by unpaid dept using Ripple.

  8. yeah ripple is the centralized attempt to capture digital currency. Stay with bitcoin and litecoin, there is nothing wrong wth them and they will always be free and for the most part anonymous if you know what you are doing. If you want to earn some bitcoins and can do some basic technical analysis check out Bitcoin Prophet. It’s a site that lets you predict not only the price of bitcoin, but precious metals and other indexes on a daily basis. No matter how much the main stream media bashes bitcoin, it really is very secure and stable when you don’t weigh it against fiat currencies.

  9. Daniel Suarez

    Ripple has some important improvements have not bitcoin as instant payment. In a future liberated the ripple code and its value will rise, now is risky in turn release the code.

    • ralph

      adterrasperapera -> Dude you need to do your research, first Ripple is not a competing currency – its a p2p payment network (which ultimately will mean it wont be centralised when its out of beta) – xrp can be used as currency but its main purpose will be used for transactions/conversions.

    • Jason Quinn

      Actually sounds like the two will complement each other wonderfully as Ripple will make it much easier to actually obtain bitcoins, which is one of the major problems with bitcoins right now. I’m tired of waiting a week or paying exorbitant fees to get my USDs into BTCs!