OpenNode, a Tim Draper-backed startup, announced it raised $1.25 million on Tuesday and it’s hoping that its new platform will change the way people view bitcoin. In most corners of the market, bitcoin is viewed primarily as a store of value, rather than an everyday medium of exchange. OpenNode is building a bitcoin payments platform with a focus on ease of use, the firm says. Its plug-and-play offerings enable merchants to sign up with an email and immediately begin accepting bitcoin.
To be sure, there are a number of firms in the bitcoin payments market. Still, the company’s offering differentiates from firms such as Coinbase Commerce and Bitpay inasmuch as it allows merchants to accept bitcoins through the Lightning Network, a second-layer solution for instant bitcoin transactions, the firm says. “We didn’t create OpenNode to create a Coinbase Commerce 2.0 or Bitpay 2.0,” Co-founder and CEO Afnan Rahman, told The Block. “These solutions have limits on their invoices; we don’t have these limits.”
OpenNode was founded by Afnan Rahman, Brandon Lewis, and Joao Almeida. Rahman and Lewis are frequent contributors to the bitcoin ecosystem. They met their third co-founder, Almeida, when the trio was contributing to the open source Bitcoin Lightning wallet, Zap.
The trio started developing OpenNode in May 2018 and launched a beta version of the product shortly after. Today they announced a fundraising round of $1.25 million led by U.S.-based venture capitalist and Bitcoin proponent, Tim Draper. “Tim Draper is interested in how Bitcoin is going to scale,” Rahman told The Block.
Since the team started building OpenNode, the capacity of the Lightning Network has grown over 15,000% to 482 bitcoins, according to Lightning Network data site 1ML. “We plan on being the driving force behind bitcoin’s adoption,” says Joao Almeida, CTO at OpenNode.
While OpenNode may be ready to jumpstart bitcoin merchant adoption, recent data suggest merchants aren’t ready to accept bitcoin. According to blockchain analytics firm Chainalysis, the value of bitcoins handled by bitcoin payment processors has dropped nearly 80% from $427M in December 2017 to $96M in September 2018.
Rahman is not deterred, however. “There are applications that are coming out that are only possible because you have bitcoin,” he told The Block. He suggests that if users want to interact with these applications, they will adopt bitcoin.
OpenNode is currently available in 19 countries and has 300 active users moving between $10k-$20k of bitcoins through its platform a month. The company charges a one percent transaction fee to generate revenue.