by Evan Sixtin
Switzerland-based ShapeShift AG, owner of ShapeShift.io (instant digital asset exchange) and Coincap.io (real-time digital asset data), has raised $10.4 million in Series A funding for future expansion. Specifically mentioned were two new "mysterious" exchange-related products which will be coming out before the end of 2017.
ShapeShift exchange does not deal in fiat currencies, it is solely a cryptocurrency/digital asset exchange. What makes ShapeShift different from other crypto exchanges is its ability to instantly exchange assets easily without any need to sign up or verify an account. In fact, ShapeShift users do not have accounts at all. They simply choose which currencies they want to swap and then send their crypto to ShapeShift's receiving address (uniquely generated for each transaction), and when this address receives the user's asset, it releases the user's desired asset to the address that the user has provided.
While other cryptocurrency exchanges pair users' buys with other users' sells and vice versa, ShapeShift trades assets from its own wallets, loading enough into hot wallets for a day's worth of trading, allowing for instant exchanges. While other exchanges require users to create accounts and deposit and withdraw funds or assets to/from their accounts, ShapeShift never holds any user funds; the user sends his digital asset directly to ShapeShift's wallet and receives his target asset from ShapeShift's wallet in an automated process. This process has been described by Erik Voorhees, ShapeShift CEO, as "kind of like a vending machine" for crypto.
Because it does not hold any user funds or user information, there is no risk to users if the exchange is infiltrated by a hacker or issued a government subpoena. Because of this protection, and its ease of use, ShapeShift has become very popular; their current monthly volume is about 50,000 bitcoin and it trades more than 1,000 asset pairs. It has grown by a monthly average of almost 50 percent over the last three years since its inception in August of 2014. Handy and practical products have also contributed to the company's expansion. Three examples of these products are:
1) ShapeShift Skeleton, which is open source and enables any website to allow instant purchase or sale of digital assets without users needing to leave the site,
2) ShapeShift Shifty Button, also open source, and allows users of any website to pay in altcoins and it will be automatically converted to bitcoin for the site owner,
3) ShapeShift Mobile which are apps for both Android and iPhone. The ShapeShift API is used by several websites and also within mobile apps like the Coincap, Jaxx, and Coinomi apps.
The lead investor for the recent Series A funding was Earlybird Venture Capital and also included seven other investors: Digital Currency Group, Pantera Capital, FundersClub, Lakestar, Blockchain Capital, Access Venture Partners, and Erik Voorhees himself. The $10.4 million raised will be directed mainly toward expanding ShapeShift's engineering team. Voorhees stated that the company plans to release two new exchange-related products later in 2017. These products have not yet been announced, but Voorhees hinted that they will be new types of exchange and that one product is built entirely around smart contracts. Looking at current trends in the crypto space, we can speculate that one of these new products might be something along the lines of the Internet of Coins.