A cryptocurrency company backed by early Facebook investor Peter Thiel will pump $10bn (£7bn) into a new Bitcoin exchange in a move that could threaten the dominance of Coinbase.
Block.One, a US cryptocurrency company, will capitalise the new exchange to be called Bullish with $9.7bn in Bitcoin as well as dollars and other cryptocurrencies.
The new exchange will take on the current crop of cryptocurrency companies with a fully decentralised structure, using a blockchain digital ledger to record and verify payments.
It will be the latest boost for so-called decentralised finance – financial products that run entirely using blockchain technology and are not maintained by traditional banks or exchanges.
The new exchange will run using Block.One’s EOS tokens, a cryptocurrency that will allow the exchange to verify transactions.
The company previously launched one of the largest “initial coin offerings”, a form of unregulated digital coin financing, which raised $4bn in 2018. However, the price of its EOS tokens remains well below their 2018 peak.
Block.One will also raise $300m in new equity to fund its new exchange, with investors including Mr Thiel’s Thiel Capital and Founders Fund and investment bank Nomura.
The huge tranche of funding could catapult Bullish into competition with Coinbase, the popular exchange app that was valued at $100bn when it floated last month.
The launch of the decentralised exchange follows surging prices for alternative cryptocurrencies outside of Bitcoin.
The price of Ethereum, the second largest cryptocurrency by market cap that is seen as key to the success of the decentralised finance, has surged above $4,000 and has risen 1,750pc over the last 12 months.