Blockstream closes $21M seed round

Austin Hill Austin Hill

“Can’t be evil.” That was the first thing Adam Back and I wrote on a whiteboard at the start of 2014. I had flown out to Malta to spend a week with Adam to map out a vision for an ecosystem and a future we wanted to see built.

In the late 90’s I had the pleasure to recruit Adam after reading his Hashcash whitepaper to join the team of cryptographers we had at Zero-Knowledge Systems. Zero-Knowledge Systems was a company I co-founded with my father and brother to commercialize several cypherpunk privacy-enhancing technologies, including anonymous encrypted networking and Dr. Stefan Brands’ pioneering protocol for e-cash (still the most-flexible and powerful of the central-server protocols developed to date). While we had some amazing successes, many of which live on today, we were too early to see wide scale market acceptance of our e-cash work at that time. can't be evil

Fast forward to December 2013 the roles were reversed. Adam flew to Montreal to recruit me to join him in a vision for the future of blockchain and digital assets. A month later standing in front of the whiteboard, Adam laid out his vision for Bitcoin and blockchain technology. My last startup had focused on gift economies and I’ve always had a passion for disruptive innovation for social change. That’s what led me to write, “Can’t be evil.”

Describing how we’d use cryptography and distributed infrastructures, Adam and I rekindled a longstanding belief in how empowering crypto-based infrastructures can be. Requiring users to neither trust nor depend on someone’s goodwill could be transformative for those of us with access to mature financial systems and for the billions of people not being served by today’s transactional systems. The culmination of 20 years of work in security, cryptography, venture capital, social enterprise and economics came together in ambitious vision for an ecosystem.

Over the course of the next six months, Adam brought together some of the brightest people I’ve had the pleasure of working with to think about the second wave of cryptocurrencies. We rented a number of houses on Airbnb in Silicon Valley so we could live and work together to validate what we thought possible was, in fact, doable.

Based on those discussions, we invited a few investors to meet with us and learn more about our technology. I’m excited to announce today Blockstream closed a $21 million seed round. Our nearly 40 investors include many well-known pioneers of the Internet and financial services sectors. The round was led by Reid Hoffman, Khosla Ventures and Real Ventures, with investments from Nicolas Berggruen, Crypto Currency Partners, Future\Perfect Ventures, Danny Hillis, Eric Schmidt’s Innovation Endeavors, Max Levchin, Mosaic Ventures, Ray Ozzie, Ribbit Capital, Jerry Yang’s AME Cloud Ventures and several others.

The reason we were able to attract A-list investors is our group of founders and the promise of blockchain technology. As Reid wrote in his blog post today, “As Bitcoin evolves, Blockstream will play a huge role in helping it maintain its momentum, by making it easy to add new capabilities to the platform. And Blockstream’s success will in turn generate new waves of technical and entrepreneurial innovation — it will help make Bitcoin the kind of open, highly adaptive platform upon which a vast array of complementary products and services can be built.”

The founding team brings top Bitcoin architects together with people who have significant business, policy and open source experience. Adam is well-known for his fundamental contribution to Bitcoin, as the inventor of the hashcash algorithm. Greg Maxwell, Pieter Wuille and Matt Corallo are longtime developers of significant parts of the Bitcoin protocol. Mark Friedenbach and Jorge Timon developed one of the best approaches to asset issuance through their Freimarkets proposal. To round out the team, we brought in Jonathan Wilkins, a top-tier security and operations expert, Alex Fowler, a well-known public policy, privacy and business leader with equally strong ties to Open Internet groups and industry regulators, Erik Svenson, who has led finance for numerous startups, and Francesca Hall, our operations manager. Together, we’re the 11 co-founders of Blockstream. We all played pivotal roles in getting this company off the ground and attracting such an amazing group of investors.

Blockstream is the first startup focused on advancements to the core technology underpinning Bitcoin. The hundreds of millions invested in Bitcoin startups over the past few years have been to companies building applications and services on top of Bitcoin. Blockstream is the first company extending the capabilities at the protocol level to support massive scaling of Bitcoin and blockchain technology to a broad range of asset types. Put another way, the extension mechanism of sidechains, the company’s initial area of focus, allows any number of so far unthought of developments to happen in an open and interoperable way.

We announced our company three weeks ago with release of the “sidechains paper,” as its come to be known. It was downloaded almost 10,000 times over the course of the first few days online. The subsequent discussions on Reddit have been incredible to read, as more and more people working on cryptocurrencies consider the implications and opportunities created through sidechains.

Inspired by the early cryptographers’ edict “cypherpunks write code,” we believe that the best marketing and promotion will be Blockstream’s products and services themselves. We seek to deliver incredible software and services that allow others to build their business and realize order of magnitude greater success with Bitcoin and blockchain technology.

My co-founders and I are excited to be part of the growing technical and business community on the forefront of innovation in cryptocurrencies, open assets and smart contracts. We’ve come together because we believe in the potential of this technology to have a significant, positive social impact.