Bitcoin blockchain company Blockstack received $4 million in financing, led by USV, with participation from Digital Currency Group and others

A new version of the internet based on the bitcoin blockchain is one step closer to reality — Blockstack has raised $4 million to help it grow, according to a filing with the U.S. Securities and Exchange Commission (SEC).

Blockstack is committed to using the Bitcoin blockchain to create an internet without centralized servers and with browsers that allow users to manage their own identities.

The New York company has already begun creating a browser for this new internet, and the team plans to use the $4 million in funding to complete a single unified platform that developers can then use to create a new network of websites.

However, the Blockstack co-founders stressed in interviews that the investment will do more than just help build their platform.

The team says the funding is also an investment in all the other companies that are already using bitcoin blockchain technology, as well as those that will help them create this new internet in the future.

Blockstack co-founder Ryan Shea told CoinDesk:

“We intend to devote all our resources to Blockstack and make our contribution to the community.”

Many companies and enterprises are already using Blockstack's technology, including a wide range of bootstrapped projects, venture-backed startups, and global software service providers.

The dozen or so companies that have announced their participation so far include decentralized marketplace OpenBazaar, blockchain record keeping startup Tierion, and Microsoft, which partnered with ConsenSys in May last year to create a decentralized identity platform that can work across blockchains.

The investment, led by Union Square Ventures (USV), will be used to grow the Blockstack team from its current four full-time employees to 10, as it continues to work on a single unified development platform and launch a new web browser in the coming months.

Other investors include Lux Capital (whose investment amount is second only to USV), Naval Ravikant, Digital Currency Group, Compound, Version One, Kal Vepuri and Rising Tide.

To date, the startup Blockstack has raised a total of $5.3 million in funding.

Blockstack Technology Stack

Blockstack was originally founded in 2013 as OneName as an identity platform that, in its early days, could be used to record verified identities directly on the Bitcoin blockchain.

Currently Blockstack’s technology is designed to be blockchain agnostic, but much of their technology is based on the company’s work on the Bitcoin blockchain.

The base layer of Blockstack is the bitcoin blockchain itself, which Blockstack co-founder Muneeb Ali calls the “base layer for discovery,” and the top layer is a naming protocol that can be used for ‘.com’ and ‘.org’ on the traditional internet.

The Blockstack technology Internet domain names are '.id' for personal user identity and '.iot' for the Internet of Things.

The 6-letter namespace costs 0.001 BTC, and to complete certain tasks, you need to store some Bitcoin first.

Above the ID layer is a verification layer that automatically verifies the user's identity, eliminating the need for the website to maintain a database of the user's personal information.

Above the authentication layer is the storage layer, where users can connect with Dropbox, Google Drive, or iCloud to achieve a complete browsing experience where the website only knows what the user wants and that the user is authorized to collect and store their own data.

So far, 67,000 people have completed the identity verification process on Blockstack. This process is required if users want to browse the Internet. Last year, the inventor of the World Wide Web (Tim Berners Lee) also created his own Blockstack ID. After a few days of experience, he expressed great interest in Blockstack's work.

Shea said:

“We are working to create a new world where users and developers can have a direct relationship and users have direct control over their identity.”

Generate income

However, USV lead investor Albert Wenger said Blockstack needs to continue to focus on building its community and launching more software before the concept can generate any meaningful revenue.

Wenger said that as more and more people use Blockstack, their value proposition will gradually become apparent.

Wenger said Blockstack’s decision not to focus on revenue at this time is part of their larger strategy.

“We don’t spend a lot of time thinking about return on investment right now.”

The key force behind Blockstack’s growth in users and release of new software is the Blockstack browser itself.

According to Muneeb, once the internet goes live in the coming months, users will be able to download and install the software, and their browser's DNS settings will automatically change to be instantly compatible with the new internet.

Muneeb concluded:

“We’re building something that’s going to be compatible with all browsers. We’re working with Brave, we’re working with Microsoft, we’re touching everything.”