Fred Wilson's (Union Square Ventures) thoughts on bitcoin

[k]

http://www.avc.com/a_vc/2011/11/bitcoin.html

Fred Wilson is a very well known New York based venture capitalist. In this blog post he talks about bitcoin and the recent Wired article (The Rise and Fall of Bitcoin). It's very interesting to see this kind of interest.

Some quotes below. (bolding is mine)

So it seems to me and my colleagues at USV that an alternative currency with roots in peer to peer networks and based on an algorithm that is transparent to everyone is an idea whose time has come. The question remains if the Bitcoin algorithm or some other algorithm (possibly a derivative of the Bitcoin algorithm that deals with some of Bitcoin's weaknesses?) will ultimately win out. That's an important issue that has a lot to do with when this space becomes investable.

But Bitcoin or something else, I'm confident we'll see the emergence of currencies that are not controlled by nation states in my lifetime. Whether that is a good thing or not remains to be seen. I think it is, but there are significant ramifications that will result from the decoupling of currencies from governments. And one of them is an interesting investment opportunity that we hope to participate in.

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[k]

related discussion on Hacker News
https://news.ycombinator.com/item?id=3282793

[bbit]

Thank you for bringing this to our attention. I watch his blog often but hadn't for awhile heading over there to see what he said!

[cbeast]

I don't put much stock in venture capitalists 

[Yankee (BitInstant)]

Thanks for this share!

I had my investor give me an intro and setting up a meeting with Fred next week!!!

[Adam S (TradeHill)]

Thanks for this share!

I had my investor give me an intro and setting up a meeting with Fred next week!!!

+1

[k]

Some keeper quotes from the comments on Fred Wilson's blog

sethgodin:
Interesting that the media/government enjoys associating BitCoin with all the bad actors who have used it (drug deals, scam artists, etc.)

Every new communication/transaction technology is used by fringe actors early on, and the authorities love to highlight this, as if the technology causes the bad actions.

They rarely mention the current status quo as a similar threat to civil society--"American currency is the medium of choice for organized crime. In fact, drug deals use a lot of cash, we should ban it..."

 
fredwilson:
yup. i think that use by the "bad guys" is a good signal that something is useful

[stick_theman]

Wow Seth Godin the Marketer's taking interest and wrote a positive comment?  That's awesome.  Used to read a lot of Seth Godin's work.

[julz]

An update from Fred Wilson:

Aug 9 2012
Bitcoin Update
I wrote a post about Bitcoin last November wondering if it was over or if we were just in a down phase in the hype cycle (http://www.avc.com/a_vc/2011/11/bitcoin.html).

In the nine months since that post, Bitcoin has made a nice recovery. The price is up and volume of transactions is increasing.

Bitcoin is still very much a fringe thing and is tiny as these things go. Compared the the volume of transactions Square will do with Starbucks, Bitcoin looks like a joke.

But I like to pay attention to the jokes, the laughing stocks, because occasionally they get the last laugh.

I am curious what the AVC community thinks about Bitcoin these days.

http://www.avc.com/a_vc/2012/08/bitcoin-update.html

[Phinnaeus Gage]

Wow Seth Godin the Marketer's taking interest and wrote a positive comment?  That's awesome.  Used to read a lot of Seth Godin's work.

Damn! I missed this. I like Seth.

Going to read the follow-up now. Thanks, julz.

~Bruno~

[cbeast]

Vulture Capitalists will never understand Bitcoin. Who cares about them? Bitcoin is their Extinction Level Event.

[Boussac]

http://www.avc.com/a_vc/2011/11/bitcoin.html

Fred Wilson is a very well known New York based venture capitalist. In this blog post he talks about bitcoin and the recent Wired article (The Rise and Fall of Bitcoin). It's very interesting to see this kind of interest.

Some quotes below. (bolding is mine)

So it seems to me and my colleagues at USV that an alternative currency with roots in peer to peer networks and based on an algorithm that is transparent to everyone is an idea whose time has come. The question remains if the Bitcoin algorithm or some other algorithm (possibly a derivative of the Bitcoin algorithm that deals with some of Bitcoin's weaknesses?) will ultimately win out. That's an important issue that has a lot to do with when this space becomes investable.

But Bitcoin or something else, I'm confident we'll see the emergence of currencies that are not controlled by nation states in my lifetime. Whether that is a good thing or not remains to be seen. I think it is, but there are significant ramifications that will result from the decoupling of currencies from governments. And one of them is an interesting investment opportunity that we hope to participate in.

Thanks for pointing that out. As a matter of fact, Fred Wilson is known also on our side of the Atlantic since a Paris-based VC mentioned him to us unprompted.
Fred can shop for the best opportunity since there are already a handful of funded (seed money) ventures: Paymium (Paris-based, disclosure: I am a co-founder), Coinbase, Bitinstant..

mt gox is after him too.

[vokain]

seeing things like this makes me love bitcoins more and more and how I finally have the chance to be ahead of the curve this time around

[n8rwJeTt8TrrLKPa55eU]

seeing things like this makes me love bitcoins more and more and how I finally have the chance to be ahead of the curve this time around

Exactly!  For the average guy with a low net worth, it's impossible to get in on the ground floor of any interesting ventures, let alone anything as disruptive and society-changing as this.  It's a once-in-a-lifetime opportunity to stub your toe on a rock and discover a gold mine.  Those who complain about Satoshi and other earliest adopters getting loads of coins, are crazy.  We should be extremely grateful that they've given each one of us, big or small, an opportunity to wager some capital on this incredible bet.

[acoindr]

Vulture Capitalists will never understand Bitcoin. Who cares about them? Bitcoin is their Extinction Level Event.

Generally I'd share your sentiment, but FWIW Fred Wilson is not seen as your typical VC. He's probably as close to an ideal "nice" VC as you'll find if that's not a paradox

Regarding extinction I don't think so. Venture capital will always be needed in a capitalist society. The main problem we have now is the dollar system has so distorted the market there exists unmatched risk/reward ratios, unbalanced deals, moral hazards and all sorts of crappy finance related stuff.

Just imagine: there is more stock/IPO value in the *perceived hype* of a company than its track record of ever turning any profit at all. That wouldn't happen in a non-inflationary currency system.