Japan’s internet giant Rakuten is in talks to buy IP assets of bitcoin payments-processing company Bitnet Technologies Ltd., according to latest report from The Wall Street Journal. Both the companies have refused to give any official word on the development.
Bitnet has operations in Payments, Digital Asset Management, Blockchain Consulting, and Cross Border Remittance. Rakuten is said to be considering using Bitnet’s intellectual property assets to continue testing and developing blockchain. This is not the first time Rakuten would be using Bitnet’s services; some of Rakuten’s retail sites have been using Bitnet to accept payments in bitcoin.
Rakuten has a strong reputation of investing in start-up companies. Before the proposed buyout of Bitnet’s IP assets, Rakuten had invested in Lyft Inc., WePay Inc., and BlueVine Capital Inc.
San Francisco-based Bitnet had raised $14.6 million in Series A funding round in 2014, led by Highland Capital Partners.
Operating as a bitcoin payments company hasn’t exactly been a smooth ride. The merchants have been reluctant to accept bitcoin in payments, as the cryptocurrency has been mired in controversies. Till date, a major chunk of world population considers bitcoin as a speculative, high-risk instrument, mostly in the hands of some deep-pocketed players. With major global governments still cautious in their approach to digital currencies, the merchants are hesitant to take on unwanted risks associated with accepting bitcoin.
As numerous startups entered the bitcoin ecosystem in the initial euphoria, the profitability has shrunk. Some have even struggled to expand their business. BitPay Inc., a world-renowned payment processing company cut half of its workforce last year as growth slowed.
Bitnet has backing from prominent investment groups: Webb Investment Network, founded by Maynard Webb; Digital Currency Group, Stephens Investment Management; Commerce Ventures; Buchanan Capital Management; and several individuals, including Carl Pascarella, former CEO of Visa Inc.