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Silicon Valley based remittance service app built on the blockchain, Abra, raised $12m in Series A funding. Investors include Arbor Ventures, RRE Ventures and First Round Capital. Unlike Venmo, the company never actually touches funds. The service converts deposited currency to bitcoin and stores it locally on the users' device. This is an advantage for Abra, being able to reduce regulatory issues relating to transmitting money.
The important question is how does Abra combat bitcoin’s extreme volatility to allow the digital currency to always be pegged to fiat currency? Bill Barhydt, CEO of Abra, explained that Abra instantly creates self-settling contracts for users, which are built on the Blockchain and assigned to a counter-party that will share in the hedge. Basically, users are given a short contract to protect the price, while the assigned counter-party is going long on the hedge. Barhydt explained that the company has found willing counter-parties from across the bitcoin ecosystem, and they range anywhere from exchanges to mining companies.
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