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Blockstream is going from strength to strength

Just six days after [Blockstream](https://blockstream.com) [announced](https://blockstream.com/2016/01/28/pwc-and-blockstream-announce-strategic-partnership) a strategic partnership with PriceWaterhouseCoopers (PwC), an even larger [announcement](https://blockstream.com/2016/02/02/blockstream-new-investors-55-million-series-a/) from the bitcoin software development company has been announced.

Just six days after Blockstream announced a strategic partnership with PriceWaterhouseCoopers (PwC), an even larger announcement from the bitcoin software development company has been announced. A US$55 million investment was just raised by Blockstream, the company’s second round, bringing their total investment up to US$76 million.

Blockstream CEO Austin Hill said that the money will be used “to further enhance our sidechain technology, expand our operations globally, and support new industry partnerships,” similar to the one made with PwC only days before.

François Robinet, a Managing Partner at one of the rounds key investors, AXA Strategic Ventures, stated that "Blockstream has the best technical team in the industry and we strongly believe in their approach of developing foundational infrastructure for various blockchain applications.”

Other investors in the round include Horizons Ventures, who led the funding round, Digital Garage, AME Cloud Ventures, Blockchain Capital, FuturePerfect Ventures, Khosla Ventures, Mosaic Ventures, and Seven Seas Venture Partners. Hill also announced that Frances Kang from Horizons ventures has joined the board of directors at Blockstream.

Francois Robinet“We value Blockstream’s open source approach and its sidechain technology, which will allow interoperability between different chains and provide critical long-term success in this sector. We also look forward to partnering with Blockstream to drive the transformation of insurance and asset management businesses."

  • François Robinet, Managing Partner, AXA Strategic Ventures

The investment represents the third-largest individual funding round in Bitcoin history, behind those of 21 Inc. and Coinbase. However, while a US$55 million investment certainly shows continued interest in the company, the exposure PwC is offering Blockstream is easily underestimated.

PwC is a multinational professional service provider, with US$35.4 billion in revenue last year. The company will be “collaborating on existing solutions and developing offerings” with Blockstream.

Swaak“In the last year, we have helped 443 of the companies in the FT Global 500 list and 418 of those in the Fortune Global 500 list. We also advise and work with more than 100,000 entrepreneurial and private businesses around the world.”

  • Robert Swaak, PwC Vice Chairman of Clients and Markets

The auditing firm made their intentions clear when they opened an office recently, just for blockchain research and product development. Following the partnership with Blockstream, it’s likely that they will be working closely with Bitcoin’s blockchain.

Blockstream senior VP Alex Fowler made a firm statement lately, in an interview with IBTimes: “New-fangled code and technology is not what a bank wants. It’s not what an enterprise that’s looking to put financial assets onto a shared distributed ledger wants. They don’t want to have that secured with math and science that someone came up with in the last year.”

Alex Fowler"They want the battle-tested, peer reviewed open technology stack, that when they put their assets on it they know it won’t be hacked, or be taken down because it can’t scale. And there is only one protocol that has that level of peer review, public testing and verification and that’s the Bitcoin code base."

  • Alex Fowler, Blockstream senior VP

All of this is happening as Bitcoin blocks approach saturation. The debate on whether to raise the blocksize limit has been an 18-month long argument between bitcoin developers, who fall into one of two camps. There are those who want to enlarge the bitcoin block size, which increases the number of transactions per second and potentially lowers fees, and those who want to keep the current block size, which supports decentralization and is likely to raise fees.

The latter stance is championed by the executives and developers employed by Blockstream, many of whom double as bitcoin core developers. The opposing camp, those who support a hard fork and larger block sizes, are led by the remaining original bitcoin developers Gavin Andresen and Jeff Garzik.

This far smaller team has no company behind them, nor venture capital funding, and suffered a serious blow three weeks ago when fellow big-block developer, Mike Hearn, left the effort altogether. Hearn publicly announced that bitcoin is a failed project, and that he had joined R3 CEV, a firm focused on blockchain based financial services technology.

Blockstream’s involvement in the direction of Bitcoin has raised many concerns in the industry. It appears that Blockstream has a vested interest in suppressing the number of transactions in each block, by keeping the block size at one megabyte. Doing so provides off chain solutions with a user base. Sidechains and the Lightning Network are off chain services in development at Blockstream.

In response to this concern, lead developer Gregory Maxwell announced that he and his team have a significant amount of time locked bitcoins, which cannot be accessed before a fixed future date: “We’ve arranged it so that everyone at blockstream has a substantial Bitcoin interest.”

Within hours of today’s announcement, social media channels that the Bitcoin community frequent were flooded with congratulations on the investment. A look on twitter for the hashtag #blockstream revealed nothing but positive remarks for the day, and lots of them. Barry Silbert, of the Digital Currency Group, happily tweeted about his personal involvement and investment.

Silbert blockstream quote

Jeff Garzik tweeted that the development was “Great news for the industry,” one of the few responses from the large-block camp. Meanwhile, however, he and his team are presumed to be working on the imminent release of Bitcoin Classic, the latest version of a large-block bitcoin client, requiring a hard fork to be useful.

Garzik blockstream quote

With such overwhelming support and funding in the small camps corner, the blocksize may remain where it is for quite some time.


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