Blockstream has raised $55m in Series A funding to continue its work expanding the bitcoin code base for commercial use.
With the news, Blockstream's total funding rises to $76m over two investment rounds. To date, the company's signature technology has been its sidechains offering, currently in testing, which enables the creation of blockchains that can validate data from, and transfer assets to, other blockchains.
Blockstream’s round was led by venture capital firms AXA Strategic Ventures, the venture capital arm of French multinational insurance firm AXA Group; Digital Garage, the Tokyo-based online payments firm co-founded by Joi Ito; and Hong Kong venture capital firm Horizons Ventures.
AME Cloud Ventures, Blockchain Capital and Future\Perfect Ventures were among other investment firms that participated in the deal.
Given the recent interest in private and permissioned blockchains, Blockstream sought to underscore the versatility of its technology as well as its early efforts to bring added functionality to the bitcoin network through interoperable blockchains.
Blockstream CEO Austin Hill told CoinDesk:
"We were one of the first companies that painted a vision for interoperable blockchains, that there wasn’t going to be one blockchain, but many of them, all building off the bitcoin codebase to deliver the technology."
Still, Hill said the company remains dedicated to developing technology for the open-source bitcoin blockchain, which it called the "most mature, well-tested and secure" infrastructure for blockchain services.
"What we would hate to see happen is the most robust and secure blockchain protocol getting left by the wayside if people moved on to different protocols and tech stacks that bitcoin isn’t designed for," Hill continued, adding:
"We believe there is a benefit to society to have all these blockchains be interoperable."
Bitcoin and blockchain
In particular, Hill cited the recent decision by blockchain startup Digital Asset Holdings to use Blockstream’s tech as part of its Open Ledger Project, an open-source blockchain initiative being overseen by the Linux Foundation, as an example how the bitcoin codebase can become more relevant for commercial applications.
Notably, the fundraising follows the revelation that Digital Asset itself had raised more than $60m in a round from fourteen major banks. Following on the heels of this announcement, Hill acknowledged there may be an impulse on the part of the market to compare the rounds.
On one hand, Digital Asset was able to attract 14 major banks and IBM for its permissioned or private blockchain solutions, whereas Blockstream’s round includes mostly venture capital firms and its technology is targeted toward the bitcoin network.
However, Hill doesn’t see the companies as competitive or the rounds as illustrative of any gap in how global investors are reacting to the technology
"There are times when we compete for opportunities, but we collaborate with the guys at Digital Asset. They give us feedback on our code, we have meetings with them to show common architecture," Hill continued.
He went on to emphasize that the groups remain focused on very different opportunities given the backgrounds and expertise of their respective team members.
"There are some parts that they’re focusing on that are not our expertise or focus. We’re happy to see syndicated loans emerge on a blockchain, but we have a whole different background," he added.
Boost for bitcoin
Hill went on to position the round as a vote of confidence for the bitcoin ecosystem as a whole, arguing that he believes bitcoin’s code base will become widely used, even by private or permissioned blockchain solutions due to its proven functionality.
"Bitcoin is the most mature blockchain protocol. It’s had a running $2bn-$7bn security bounty, the largest bounty ever placed on a protocol, for years, and that gives people confidence," Hill explained.
As such, Hill suggested Blockstream’s value proposition will be in its ability to adapt bitcoin’s codebase for other production use cases such as Liquid, its product aimed at improving transaction speeds for traders and exchanges.
In turn, Hill said he expects bitcoin's code to be used similarly by more firms, even as they adapt blockchain tech for enterprise use cases.
“There are some people who are taking the approach of starting to code something brand new, we haven’t seen any of those in production,” he said, adding:
"We see this often when we talk to customers and investors, they see us as a great building block in developing the work in the open-source [bitcoin] community for other use cases."
Disclaimer: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Blockstream.
Image via Blockstream