A few other Bitcoin companies have recently announced small investments from European banks, and several bank executives have spoken of their interest recently. But Goldman is the first major bank to make such a prominent investment.
"Having a franchise like Goldman Sachs as an investor, who has done due diligence, is a vote of confidence," said Jeremy Allaire, the co-founder and chief executive of Circle.
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.
Goldman did not comment on the investment beyond a statement from the head of the principal strategic group, Thomas F. Jessop. The statement did not mention Bitcoin, but did say that the firm sees "significant opportunities in companies and solutions that have the promise to transform global markets through technical innovation."
Circle, which does not generate Bitcoin, had previously received investments from venture capital firms like General Catalyst Partners and Breyer Capital.
Unlike most big Bitcoin companies, which have focused on making it easier to buy and sell Bitcoins, Circle is hoping to use the virtual currency primarily as a way to cheaply and quickly move money both domestically and internationally.
Circle customers who want to buy and hold Bitcoin will be able to. But for those who do not want to deal with the volatile price of the virtual currency, Circle is preparing to make it possible for customers to keep balances in dollars in an insured bank account. For these customers, Bitcoin will be used only as a means of moving money, to avoid the fees charged by payment processors and money transmitters.
The network underlying Bitcoin is generally a cheaper alternative because it is powered by a decentralized network of computers rather than a single company, like Visa or PayPal, that can extract fees.
The founders of Circle are aiming to use Bitcoin to move into the burgeoning industry of peer-to-peer payments. The industry is currently led by companies like Venmo, a PayPal-owned application that allows friends to quickly send one another money rather than using a check or a bank transfer, which can take days to go through.
While Circle will, in the near future, offer much the same services as Venmo — including free, instant money transfers — the company hopes that Bitcoin will allow it to move money with same ease across international borders, something Venmo cannot do.