Bitcoin has taken a bit of a beating of late. The cryptocurrency was used by the illegal drug online marketplace Silk Road, whose creator was recently convicted in a high-profile case. The valuation of the currency has also plummeted over concerns about its viability - one bitcoin is currently worth just $235, down from the dizzying height of $1,200 in late 2013.

But it seems Wall Street still believes in the troubled currency and Goldman Sachs is investing in the bitcoin wallet startup Circle. The investment bank is co-leading a $50 million funding round for Circle Internet Financial with Chinese venture capital firm IDG Capital.

Though a number of smaller Wall Street firms have backed bitcoin-based businesses, Goldman is the first major bank to back a business based on the Internet currency.

"We could not be happier with our new strategic investors," said Circle CEO and founder Jeremy Allaire in a company blog post. "They bring unique, powerful capabilities and capital that will help us continue building a new kind of global consumer finance company, one based on open platforms, open source software, and ubiquitous mobile devices."

The investment is coming from Goldman's principal strategic investments group, which generally puts money into projects that could have some relevance for the bank's own business. "We see significant opportunities in companies and solutions that have the promise to transform global markets through technical innovation," said Tom Jessop, managing director in Goldman Sachs' Principal Strategic Investments Group.

As part of the announcement, Circle has also released a new feature which allows customers to hold accounts in dollars as well as bitcoin. Circle users can hold their accounts exclusively in dollars if they wish but still have the capability of purchasing items in bitcoin with their electronic wallet.

When a purchase is made in dollars, Circle will automatically convert the U.S. currency to bitcoin and transfer the electronic currency to the merchant. Customers can also receive payments in bitcoin and the wallet will automatically convert it to dollars. This allows people to use bitcoin without being exposed to the volatility of holding any savings in the currency. Circle is rolling out the new feature slowly on an account by account basis before an unspecified general release.

This feature will put Circle in direct competition with peer-to-peer payment systems like Venmo. By making money transfers in bitcoin, it makes the process cheaper and quicker than having to deal with traditional payment companies and also avoids the tricky issue of transferring across national boundaries. It's likely this feature that has attracted the attention of Goldman and IDG.

Allaire says that IDG Captial will help Circle navigate the tricky regulatory landscape in China and mentioned that he hoped to grow the platform to be able to accept Chinese yuan in future.

Circle did not disclose the amounts invested by its partners beyond saying that Goldman Sachs and IDG Capital provided the majority of the $50 million investment. The other investors in the round are Breyer Capital, General Catalyst Partners, Accel Partners, Oak Investment Partners, Fenway Summer, Digital Currency Group, Pantera Capital and strategic individuals.

The investment from Goldman Sachs backs up a company report released in March which named bitcoin as one of the four "megatrends" that could transform the payments industry.

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