Doorn River Waterfall in the Northern Cape of South Africa. Damien du Toit It seems like not much has been going right in Bitcoin land these days.

Despite the hopes of evangelists that the fall of MtGox would mean the end of persistent headaches in the cryptocurrency's ecosystem, there has been a spate of new theft and fraud accusations. The most recent has emerged at Neo and Bee, a Cyprus-based organization thought to have opened the world's first Bitcoin bank branch. Cypriot authorities are now investigating claims that at least $48,000 have gone missing.

Meanwhile Wall Street analysts have expressed doubt about the potential for Bitcoin as a viable currency, though suggested its underlying technology could prove useful. Analysts at Goldman Sachs recently knocked down some of the key assumptions about why people should start using Bitcoin. Then UBS did mostly the same thing. And Warren Buffett has said the notion the digital currency has long-term potential is "a mirage."

As a result of all this, Bitcoin prices have fallen about 30% since the initial Gox price hit, and volatility has surged.

And yet.

In this same post-Gox period, we've continued to see a steady stream of new investments in and commitments to Bitcoin ventures. Late last month, crypto-payment group Circle announced it had closed a new $17 million funding around. SecondMarket CEO Barry Silbert, perhaps the most aggressive Bitcoin investor, not only announced plans for a U.S.-based digital currency exchange network, but also that he intends to beat the Winklevoss Twins to a Bitcoin ETF. The Chicago Sun-Times said it would start accepting Bitcoin payments for subscriptions, with Josh Metnick, the CTO of parent company Wrapports, saying they planned to extend that option to other products. And Marc Andreessen told the Wall Street Journal he planned to invest "hundreds of millions" more dollars in Bitcoin products.



What gives?

The answer: A willful belief in Bitcoin's future potential. Wedbush analyst Gil Luria, who's covered Bitcoin for the investment service, says it's a sign belief in Bitcoin has basically become independent from headline-driven volatility. "VCs are all looking past the price and the noise at the promise of the underlying technology," he told us in an email. "Considering many see bitcoin technology as the most disruptive technology since Social (others would say since the Internet started) there is a tremendous amount of entrepreneurial activity emerging and VCs want to be involved."

In an email, Circle CEO Jeremy Allaire used an analogy frequently deployed by Bitcoin enthusiasts, comparing both Bitcoin's potential and makeup to the World Wide Web to explain the continued capital flow.

Bitcoin is an open Internet technology not dissimilar to SMTP or HTTP, which provided the foundation for innovations like email and the Web, and transformed industry and society forever. Bitcoin holds similar disruptive potential, most immediately as a new payments platform, modernizing how we use money, but also for applications that have yet to be imagined.

And he echoed what many are VCs are saying about the long game investors are playing:

Most of the leading VC investors are taking a long view on Bitcoin and negative headlines here and there represent minor hiccups for a technology that is extremely young and hasn't even reach its 1.0 release. I anticipate continued, aggressive investment in the space and an acceleration in startup activity across the ecosystem.

Lightspeed Ventures CEO Jeremy Liew, one of the main backers of the BTC China exchange, says there's much more coming.

We’re at the very earliest stages of the Bitcoin investment cycle, and I would expect continued investment to flow into the sector over the next few years....This is going to be a long and bumpy road, but I think one that leads up and to the right. Most people who are interested in bitcoins potential are not focused on any short term changes or setbacks, but the longer term trend.

Even before this moment, venture capital groups had invested at least $134 million in Bitcoin-related firms and services, according to a report from the Aite Group. As of March 17, North American VC firms had banked a total of $98.6 million in Bitcoin-related projects.

Still, it remains unclear how much money these firms are actually making at this point. Julie Conroy, the author of the Aite study, noted that even at its peak weight in the Bitcoin market, MtGox was earning just $1.3 million per year in revenue.

And investors are under no illusion that price fluctuations may be scaring off potential users.

Instead, they seem to be dedicating themselves to the long game. As Barry Silbert told us last week upon announcing his plans to found the first public Bitcoin ETF:

I do think vehicles like this will help to reduce it, it will be bringing in larger sums of money, which will ultimately reduce supply of Bitcoin subject to volatility. [SecondMarket's] vehicle will not in itself help, but it will help as more vehicles do hit the market."

One unknown remains what impact the IRS' ruling on Bitcoin taxes will have on this funding flow. Bitcoin tax expert Tyson Cross told us the new rules create a heavy bookkeeping burden on Bitcoin users. And in a recent debate with Felix Salmon, Barry Silbert admitted that could have a chilling effect on Bitcoin use in the U.S. At the same time, he said, American tax law has no bearing on the rest of hte world.

It seems possible that Bitcoin could yet prove to be one of those technologies that ends up going viral simply because influential and wealthy keep telling us it should. To the existing Bitcoin community — the ones who'd have to bail for the project to really go south, that's all that matters.