Security concerns about bitcoin storage have paid off for BitGo.

The bitcoin security startup announced yesterday that it raised $12 million in Series A funding.

BitGo offers a security platform to protect bitcoins from theft and loss. BitGo’s “patent-pending multi-signature e-wallet technology could be the solution for institutional investors’ bitcoin storage woes,” according to Forbes. The funding round comes from Redpoint Ventures, Bitcoin Opportunity Corporation, and investments from Barry Silbert and Ashton Kutcher’s A-Grade Investments.

Security has been a big concern for bitcoin opponents, who argue that, without a central bank or regulations, bitcoins are vulnerable to malware and fraud and can be easily hacked and stolen. Events like the collapse of Mt. Gox earlier this year led DealBook to note an influx of startups focusing on security for virtual currencies.

Jeff Brody of Redpoint said that bitcoin users need the same security that VeriSign offered to online banking, “Until VeriSign came along and offered the certificate authority and infrastructure, that was a pretty difficult and dangerous thing to do. We think that bitcoin needs the same thing,” Brody told DealBook.

This recent funding comes as news of a larger security threat to the virtual currency than simple fraud emerges.

A large bitcoin-mining company called Ghash.io is moving closer to managing over 50% of the bitcoin network’s hashing power. Why is this a big deal? If one single entity or organization owns 51% of the hashing power in the virtual currency, then the company could theoretically unhinge the bitcoin ecosystem. The block chain depends on independent verification of transactions. CoinDesk writes that “Such an attack could allow the attacker to reverse transactions they have sent, make double-spend transactions, prevent confirmations or even prevent other miners from mining valid blocks. It would corrupt the block chain and render the entire system unsafe.”

Ghash.io released the following statement:

“Our investment, participation and highly motivated staff confirm it is our intention to help protect and grow the broad acceptance of bitcoin and categorically in no way harm or damage it. We never have and never will participate in any 51% attack or double spend against bitcoin.”

However, the idea of an organization having more than 51% of the world’s bitcoin processing power threatens the safety of the entire cryptocurrency, and with no prevention or regulation available, it’s hard to see how this issue will be resolved. Maybe the guys at BitGo have an idea?