Coinbase

One of the interesting things about Bitcoin is the contrast between how it is portrayed in the press and how it is understood by technologists. The press tends to portray Bitcoin as either a speculative bubble or a scheme for supporting criminal activity. In Silicon Valley, by contrast, Bitcoin is generally viewed as a profound technological breakthrough.

The Internet is based on a set of core protocols that specify how information such as text, photos, and code should be transmitted. The designers of the Web built placeholders for a system that moved money, but never successfully completed it. Bitcoin is the first plausible proposal for an economic protocol for the Internet.

This matters for two reasons:

1) It fixes serious problems with existing payment systems that depend on centralized services to verify the validity of transactions. These services are both expensive (roughly a 2.5% tax on all transactions) and prone to failure (Internet payment fraud is rampant).

2) More importantly, Bitcoin is a platform upon which new technologies can be developed. Developers have created some early applications, and speculated about future applications. Some potential applications include: a) micropayments as a replacement for banner ads or subscription fees, b) machine-to-machine payments to reduce spam and denial-of-service attacks, c) a way to offer low-cost financial services to people who, because of financial or political constraints, don’t have them today.

But to proliferate widely, Bitcoin needs a killer app the same way HTTP had web browsers and SMTP had email clients. That’s why today I’m excited to announce that Andreessen Horowitz is leading a $25M financing of Coinbase, a service that provides an accessible interface to the Bitcoin protocol. Consumers can use Coinbase to convert to and from other currencies and to pay for goods and services. Merchants can use Coinbase to accept payments and convert currencies. Developers can build new services using Coinbase’s API.

Coinbase has grown extremely fast and is now the most widely used Bitcoin service in the US. The founders of Coinbase, Brian Armstrong and Fred Ehrsam, have worked closely with banks and regulators to ensure that the service is safe and compliant. We think Coinbase can significantly accelerate Bitcoin’s proliferation, and as that happens the Internet will enter a new phase of invention and opportunity.

127 thoughts on “Coinbase

  1. sharpshoot says:

    Chris there are three areas that are interesting to me on top of this platform

    1) Digital connectors also mean we can start associating other data to money related triggers.

    Digital health data from sensors combined with triggered transactions = disruption of health insurance

    Sift Sciences + authentication on bitcoin transactions = new risk layer for payments

    2) Also i’m excited by global, digital trade

    The internet economy could be a new economic zone larger than the EU.

    Get paid to do work that can only be done through distributed human computation = a new jobs economy

    Get paid to do work that can be done from anywhere = new global economies for skilled digital craftsman (3D models, digital artists, data curators)

    Globally networked, flexible and accountable philanthropy = donate to causes everywhere, in what amount you want, and even increase your donation based upon.

    3) Reinvention of every traditional financial service

    lending, insurance, B2B commerce, remittance, wealth management, all with a networked, accountable and global flavor.

    These are all user experiences, and marketplace experiences on top of the Bitcoin protocol.

  2. Sebastien Latapie says:

    This is excellent. Bitcoin essentially takes the idea of Dwolla a step further, creating something that is truly web native. I’ m looking forward to the day when I can transfer money anytime, from anywhere to anyone without being constrained by the archaic banking system.

    I’ve also been very satisfied Coinbase user, glad to see Andreessen and USV investing in this.

  3. Sean R. Moran says:

    Great news and great post – these guys get it. Huge opportunity to bring this technology innovation to the broader public to make it a truly disruptive innovation. Coinbase has abstracted away the aspects of bitcoin that made it seem out of reach for anyone (consumers, merchants) other than first adopters and the tech savvy. Will Balaji be able to fund a Coinbase competitor (should one emerge)?

  4. re 2) I agree. I think micropayouts could be a big deal. Try paying someone in a developing world right now and you’ll see its extremely difficult. In general a more efficient/open financial system would also be a fairer financial system.

    re 3) agree also. It’s exciting to think what you could do here. For example, if person A wanted to buy money they could give the lender complete access to their transaction history on the block chain to analyze their creditworthiness instead of using innaccurate proxies like credit score.

  5. jonathanlibov says:

    What’s funny about Bitcoin is that it’s derided in all the ways and by all the people that any disruptive innovation *should be* derided if it really is disruptive and innovative. Like P2P file-sharing, iPhones, and even Google Docs, it’s derided by those *who have the most to lose* as an untenable, unsafe “toy” that could never serve the needs of people who want to do substantial, legitimate things. I can’t think of a more auspicious sign for Bitcoin.

  6. Thanks! Balaji is part of a16z now, and one of our main rules is to not back competitive companies. But if Bitcoin is as big as we think it will be there will be many more non-competitive services built on top that we could fund (and would be very interested in talking to).

  7. bwertz says:

    Congrats on the investment – when I started looking at the space a few months ago, it didn’t feel like a clear winner in the exchange / wallet area would emerge any time soon but looks like Coinbase is on a very good track to do this

  8. Bitcoin as http analogy is great.

    But what are the bets? Is it:

    1. Some notion of eventual price stability? Because if people are always going in and out of Bitcoin then they’re paying transaction tax through credit cards anyway?

    2. That human psychology is relatively plastic? We’ve seen that people can get to a place where 10,000 rubels buys you toilet paper, but can we see people get to a place where .000001 bitcoin eventually buys you a house? And that number constantly decreases?

  9. Congrats on a great investment. The more top tier VCs invest in bitcoin companies the better, this is where VCs will start disrupting traditional finance and potentially become the Goldmans and Morgans of the future.
    Thanks for mentioning and linking to coloredcoins article, we believe that is the next stage in the evolution of bitcoin allowing any financial instrument to be easily created and exchanged in the cloud, would be happy to get you involved in coloredcoins.org ;)

  10. herbert says:

    what about the insane amount of theft going on with btc and how its price instability make it unusable for any large retailers?

  11. First, congratulations on quintupling the investment in Coinbase. It deserves that level of audacity and risk taking.

    A big barrier of adoption may be a psychological one at the consumer level. If you put yourself in the shoes of the average consumer (which Coinbase needs to win), all they see is the inflationary track that the currency has been on, and it scares the heck out of most of them.

    I’d like to see some market education around Bitcoin to better explain it, so that it can get more adopted at the grass roots level, which you need for its success.

    I see the phase to be similar to 1994-95 with e-commerce when there was fear of the unknown about it, and CommerceNet stepped up as an organization whose role was to help lubricate the market, remove barriers (educational, technical, regulatory, etc..), educate, propagate, etc… I was there and part of CommerceNet, so I have seen that movie before.

    So, who is doing that now for BTC? Who is doing a great job, day in and day out on ensuring we all understand and believe in BTC? Not speculators, not profiteers, but real honest stakeholders that want this to succeed. I think a CommerceNet – like neutral, non-profit, strong organization is missing for BTC right now.

  12. Congrats to Coinbase and the micropayment survivors. Back in 2007, we introduced Znak as a virtual currency. It was nothing like Bitcoin, but b/c we pitched the idea as a micropayment solution for online commerce, we were mostly ridiculed. No VC would even look at anything micropayments then. People still don’t get it; most repeat after C. Shirky that “micropayment will never work” — but thanks to Bitcoins, at least some investors seem to start listening. Good!

  13. egalston says:

    Isn’t it possible that the price volatility of btc simply doesn’t matter for transaction protocol? As the market matures and hedging vehicles de-risk carrying currency, wouldn’t the best merchant processing protocol be one which converts dollars in a virtual wallet into bitcoin –> bitcoin into dollars for the merchants (consumer nor merchant ever really hold btc) while reducing transaction fees thereby disrupting the existing card networks? Or I am viewing this wrong?

    Congrats on the investment!

  14. Brian Roemmele says:

    Brilliant posting Chris!

    I full agree with your thesis. What do you make of Litecoin and the Scrypt algorithm?

    Do you see a world with a number of algorithmic currencies?

  15. The theft is just happening because people are storing their btc in insecure places. That will go down over time.

    Coinbase offers merchants the ability to instantly convert into local currency so price instability doesn’t affect them.

  16. We don’t invest in companies that compete with one another. But if we are right that Bitcoin will introduce a new technology stack there could be many interesting, non-competitive companies started.

  17. Coinbase lets merchants instantly convert into USD or other local currencies. I think your model might be correct. I think another way to think of it is people will keep some spending money in Bitcoin the same way you carry physical cash around in your wallet.

  18. egalston says:

    But cash isn’t as volatile as btc. So if we kept USD in a virtual wallet and Coinbase took the currency risk (but hedged), consumers would be spared the volatility and merchants would save on fees. Unless the costs of hedging are too expensive to make the model sustainable for Coinbase.

  19. Hany Rashwan says:

    You touch on how bitcoin is portrayed. I think it has an image problem that will create a constraint with people.

    I absolutely love Coinbase (and a happy user myself), but I think that in addition, we also need a killer app that abstracts away a lot of this and presents it in a clear way to the end consumer, especially in certain markets like remittances.

  20. Simone says:

    Hi Chris,
    You have mentioned the press and technologists.. my main concern, if this was my business, would be the potential customers, that is.. the rest of the world :)
    I have started to read about Bitcoin only recently and I imagine the topic is somewhere between intimidating, odd and SF for most people.
    What Coinbase or any simillar company is trying to achieve is no less ambitious than colonizing Mars. The complex emotional connection people have with (any form of) money is as important as the technical innovation aspect. I hope Coinbase is taking into account this connection as a main influencer of this journey success.
    Going back to the basics, think of other less revolutionary payment alternatives and how people are hard to be convinced to move away from say .. debit cards.
    I am a believer as long as the concept gets some sort of rebranding.. humanize it, demystify it, circulate some viral movies on youtube with use cases,,
    At this point Bitcoin feels like the currency that Julian Assange is using to buy coffee at the embassy cafeteria..

  21. Niv Dror says:

    I’ve said it once, and I’ll say it again. Coinbase is amazing. Easier to buy/sell Bitcoin on Coinbase than transferring money between checking and savings at Wells Fargo.

    Aaron Levie would appreciate this… Behold – the response of the incumbents:

  22. FreeJack says:

    It’s a two-pronged thing, the “killer app” of Bitcoin. It must be made extremely simple client-side (to the point where users are never confronted with addresses or private keys) and it must be easy, trouble-free on the vendor side for accepting payments. Coinbase and Bitpay are working hard to make this happen, but it needs to be standardized.

    There will be a mental hurdle to leap among the general public, as well…they have been conditioned over many, many years to feel that numbers to the right of a decimal point are next to worthless and go in a jar to be accumulated and cashed in for numbers to the left of the decimal point. It will be a challenge to get them to come to grips with the fact that numbers to the right of the decimal point can also have great value. I don’t know if that’s something that must be solved in software, or what.

    I also personally feel that Litecoin needs to be included with development, as it offers the very same functionality that Bitcoin does, while confirming transactions 4x faster. Because Scrypt is thus far ASIC-resistant, the network will be less centralized due to a hardware arms race and could end up being better suited for daily commerce. We need to be forward-thinking – Bitcoin already struggles with keeping up with transactions, due to the 10 minute block discovery time. It may be better suited to larger transactions among financial institutions, international funds transfers and things of that nature. I believe Litecoin is better suited to daily global commerce.

  23. FreeJack says:

    Right now, it’s the equivalent of people walking around NYC with a big wad of cash poking out of their back pocket. Coinbase offers two-factor authentication and other sites offer randomized passwords via hardware dongle or cell phone app. The tools are there to make online wallets secure, people just need to get used to it. It’ll happen.

    As for the price instability, that is due to the relatively few holders and traders of Bitcoin. If only 1,000 people are trading something and there’s a relatively small supply of it, one person with a significant portion of the total amount can cause massive swings in its price. But when 1,000,000 people have a thing, it’s much harder for one person to influence the market very much. When 1 billion people have it, the actions of one person will hardly put a dent in it.

  24. They are news sites, and that’s great, but I was thinking along the lines of the Bitcoin Foundation which should be doing more https://bitcoinfoundation.org/.

    Also, a line struck me as significantly interesting in the Coinbase blog, “We plan to use the funds to expand our team, continue to educate the market, and promote the mainstream adoption of Bitcoin.” I’m looking forward to seeing them educate the market and promoting mainstream adoption. Lots of opportunity there.

  25. Milly Bitcoin says:

    bitcointalk.org has some good info in between all the scam ads and fraudulent offers designed to defraud new users.

  26. Dre Peters says:

    Matters arising, let’s see how this turns out. Just like every new thing, many may express fears, especially when it’ll harm their source of income- the old way of doing things.

  27. Wow, awesome news. Bitcoin, drones. Swinging big in Year 1, I like it. Congrats. On the infrastructure side of BTC protocol, what opportunities do you see out there?

  28. Sure, Chris. They do work, in apps, in gaming, in music. Micropayments convert casual users into paying ones at rates several times greater than any credit card, paypal or subscription paywall would, and yet it feels, they are still an ugly duckling of e-commerce.

  29. pfreet says:

    To be accurate, Bitcoin’s rise is actually deflationary, right? It takes fewer and fewer Bitcoin to buy the same goods.

  30. erikvoorhees says:

    If you want to be super accurate, Bitcoin is actually inflationary, because the money supply is expanding. However, people perceive it as deflationary because the money supply doesn’t grow as fast as demand, and thus coins are bid up, and thus real goods and services fall in price relative to Bitcoin.

  31. pfreet says:

    But this is the rub. If Bitcoin is not stable, it can’t be used as a currency. Consumers will have to do math every time they want to buy something to translate it to a stable value they understand.

  32. the claim that bitcoin fixes problems is false. it is the most expensive way of transferring money, which is why it generally isn’t used for that purpose. the 2.9% fee is less than the exchange rate volatility. companies like coinbase or bitpay may seek to hedge exchange rate risk, though all that means is that they assume the risk themselves. they will need to be compensated for this risk, the compensation they take will be a function of the currency’s volatility.

    BTC is also prone to fraud and failure, as many transactions are rejected or take a long time to fulfill.

    technologists are fascinated with the protocol, which has all the attributes of a technology that will enable disruption. however, it seems the exchange rate issue has not thoroughly been considered, for it impacts all parts of the BTC ecosystem.

  33. apple had a market cap of over a half trillion a few months back. then it missed earnings. price fell by 7% in less than an hour.

    that is a company with a market cap of over a half trillion.

    the exchange rate is the fatal flaw. history shows a currency has never stabilized without explicit support from a government.

  34. This is just semantics, depending on whether you denote “deflationary” to mean that empirically, prices tend to decrease when denominated in that unit, or whether you denote it to mean that the number of units of account decreases.

    From what I’ve seen, the first usage seems to be more popular, and readily understood.

    However, to be super-duper accurate, eventually bitcoin may meet both definitions of deflationary, as lost bitcoins per unit time will ultimately be greater than newly created bitcoins per unit time.

  35. You can’t compare a volatility to a transaction fee; It’s an apples to oranges comparison. You could (and probably are) making the claim that saving a deterministic 2.9% will be insufficient for most merchants to bear the current levels of volatility in bitcoin exchange rates wrt gov fiats.

    It would be more meaningful to compare 2.9% to e.g. bitstamp’s 0.5% fee per trade, or bitpay’s .99% commission. Since bitpay completely hedges the bitcoin exposure risk, then bitcoin+bitpay does dominate the 2.9% fee that credit cards charge.

    I’ve never heard complaints about dropped / slow transactions when appropriate Tx fees are paid. Obviously to wait for confirmations is slow, but this is security overkill in most practical situations, and especially not necessary from the merchant side when trusted intermediaries like bitpay or coinbase are used.

  36. Guest says:

    All some techie has to do now is create an app that will do the currency calculation against other currencies along with actual value per minute.

    Something like that or more to alleviate the mom and pop syndrome of using the product and service.

    Of course I have my own use for it. Which makes Bitcoins nothing new really as I have always known something like this would have to be found for the net economy.

  37. All some techie has to do now is create an app to alleviate the mom and pop syndrome of using the product and service. Thus currency valuations etc.

    Of course I have my own use for it. Which makes Bitcoins nothing new really as I have always known something like this would have to be found for the net economy.

  38. value-wise, it’s not deflationary. your statement is correct if someone has already bought bitcoin and its value rises after that.

    for 99.9% of the consumers out there, that’s not the case.

  39. This investment by Chris and others can only help the sector look more legit. Its potential has been mentioned in several areas.

    However my interest in the sector, is to see it play major role as a means of investment / mixed investment in virtual shares / virtual stocks / virtual bonds with other forms of currency / payments (So it can benefit like a double value).

    I can see Coinbase products / services and others like it playing a major role in IPO2.0 and other net economy based products and services.

  40. Milly Bitcoin says:

    Yes, they seem to be trying but they are in a situation where many customers are waiting to leave. This is in a backdrop of many failed Bitcoin business where customers lost funds. maybe the new infusion of cash will help things but they seem rather unconcerned over these issues. Maybe things are different behind the scenes but I am very uncomfortable using them under the current circumstances.

  41. the problem with bitcoin hedging, and how it is not “cost-free” is examined in detail here: http://www.informedtrades.com/bitcoin/payment.html

    talk to people who tried to execute bitcoin transactions when the market was rallying sharply and speculators were frantically buying and selling. lots of people tried to get out bitcoins then but couldn’t because of the problems with the way the market is structured. coinbase themselves ran out of bitcoins.

  42. Nate Pacer says:

    Totally agree there’s a lot of noise out there. Our startup intelligence firm took a crack and trying to identify/organize all the startups involved in the bitcoin ecosystem, with an eye towards keeping it fact-based.

    The product is kind of in a beta, and being updated all the time, so I’d love some feedback: http://www.venturescanner.com/scans/bitcoin

  43. Yeah, hedging is never cost-free, and extreme volatility, trading interruptions, etc, only exacerbate the problems.

    I just see these as temporary growing pains that bitcoin should grow out of if adoption continues. However, their existence is a hindrance for adoption, and if it were to become too big of a hindrance, then it could threaten the eventuality of large-scale adoption.

    How do coinbase and bitpay actually do their hedging? Does coinbase just try to sell their incoming receipts in bitcoin to its users who want to buy? How about bitpay?

  44. Nate Pacer says:

    Nope! But that’s the data we’ve found so far. We touch base with the startups to double check, but I’d love any info out there that I’m missing.

    Also, a lot of these startups appear to be boot-strapped, which I think reflects the open-source nature of the platform and the enthusiasm of the community. Thoughts?

  45. i don’t know how they do their hedging, though the best strategies in my opinion will involve them trading it. in other words, it will involve them trading depositors money. this introduces many other types of risks (i.e. run on the bank, mass withdrawal, etc).

    this type of volatility can go on for a long time. and the more bitcoin grows, the more speculators will be attracted to it, who in turn may engender even greater volatility.

  46. Milly Bitcoin says:

    Today I heard that Snoog Dogg mentioned Bitcoin and Coinbase is trying to contact him to get him to sign up. While that would be great advertising they have employees contacting Snoop Dogg while all these tech support calls go unanswered. This is irresponsible and immature on the part of Coinbase. Can you imagine calling your bank and they tell you “sorry, we can’t help you, we are too busy trying to contact Snoop Dogg.”

  47. Tulips are plants. Bitcoin is a major breakthrough in computer science that creates an internet protocol for money. It’s hard for me to understand how someone could think they are analogous.

  48. Thomas Koors says:

    I guess you are not familiar with the various bubbles that have happened, one of them being the tulip mania.

    If you don’t understand what a mania is just read some or the previous comments from some people talking about purchasing a home with .00001 bitocoin etc.

    I don’t think bitcoin is a scam but their is definitely tulip mania going on in bitcoin right now.

  49. Mariano Giovanni Carozzi says:

    Totally agree I had the same experience in Italy working on the widely known payment gateway

  50. Mariano Giovanni Carozzi says:

    Talking about bubble: after the tulip mania we have innovative legal framework, after the industrial bubble we have the modern world, after the dotcom we have web 2,0 and smartphone. I think the something will happen after the bitcoin bubble

  51. Dill Weed says:

    Take heed.

    I didn’t think it would happen to me. I read the complaints on their site and their Facebook page that they were ripping people off by
    canceling their orders as ‘posssible fraud’ using an algorithm that they admitted caught up innocents.

    Coinbase cancels transactions after you have gone through their verification process and after they have withdrawn funds from your
    account to purchase Bitcoin. Ipurchased two Bitcoin for $696 each waited their seven days to receive them,then was notified that my
    purchase had been canceled. It cost me $400 profitand the opportunity to move into Quarks. I am doubtful about that my money will be returned. T

    The complaints are on their site and Facebook. Now, I have my own.

  52. kent quintero says:

    need to fix website. Support sucks. No way to contact anyone. I have a problem with my account. All info shows in the side bar, which I can’t access instead of on the main area of the page. I hope this isn’t a sign of there wonderful things to follow

  53. Michael Wolfe says:

    William, Coinbase enables many applications where the consumer might not even be aware that Bitcoin is being used behind the scenes.

  54. E.A says:

    Keith Rabois from khosla ventures that you probably know well is very bearish on BTC, being one of the most knowledgeable VC:s in the payment space he says that government almost certainly will ban all marketing on BTC. He refers to days of paypal/yahoo. What are your thoughts about his comments? Must be alarming coming from a name like him, link to the interview ; http://www.youtube.com/watch?v=Ia1bqXuOg04

  55. Andrew Kennedy says:

    this instant conversion feature is a very big deal as I am sure you agree. Am I correct in interpreting that Coinbase will take a temp BTC position in the event it can’t clear the order instantly? Feels a lot like a BTC broker-dealer to me.

  56. Sollars&Sense says:

    We see BitCoin, the network, as a software version of a Free Banking system

    With bitcoin (lower case) being a Smart version of Gold. (A commodity that can double as a super divisible currency)

    So its SmartGold (bitcoin) in a Free Banking system (BitCoin).

    The only question that remains now is who will win the digital currency race that has literally just begun…. Choose wisely, said the Tortoise… #Makes$ense

  57. Sollars&Sense says:

    William you hit it right on the nail! BitCoin has a fatal flaw that will certainly stop it from MASS ADOPTION. At least against another digital currency.

    Just because Investors, Uber Techies, and BitCoin enthusiasts are using it today does not mean, we repeat does not mean the MASSES will adopt it…

    We like to tell people to do a simple experiment. Walk up to any American or any person and tell them out of two brand new digital currencies which one would you rather use. An anonymous decentralized currency called BitCoin or a smarter version of what they already have in their wallets and bank accounts called Sollars and Sense? Go do it and see what they say.

    If you are honest with yourself you will see BitCoin was not made to be an end all be all currency for everyone. It has its benefits but there are many flaws that another digital currency can exploit and improve upon.

    Austrian School of Economics; Definition of money: The most MARKETABLE commodity… #Makes$ense #LetTheRaceBegin #ChooseYourSideWisely

  58. Sollars&Sense says:

    Interesting… jonathanlibov these are well spoken words! We just have a couple of questions for you… If you don’t mind pondering…

    Do you believe BitCoin deserves a worthy competitive digital currency in this space?

    If not do you believe one will show up?

    If you do not believe so do you think Consumers or the general population (who by the way do not want to learn a new currency) will want an alternatives to BitCoin?

    Do you believe BitCoin and its philosophy is the best iteration of a digital currency?

    Do you truly believe no one will come up with a much simpler way to do a digital currency that can reach a greater mass of people and merchants faster and more effectively than BitCoin?

    Do you believe BitCoin will someday replace the Petro Dollar as the means by which oil is priced?

    Finally on a scale of 1-10 with 1 being the beginning and 10 being the end, how far along do you think we are in the race for digital currencies to gain mass adoption? Who do you think is running in the race? Just BitCoin?

    … RIGHT … said the Tortoise

    2014… Time to #Make$ense for everyone else…

  59. Sollars&Sense says:

    FreeJack so true…

    As a competitor to both Ripple and BitCoin we have to say Ripple has a sort of Alice roaming in Wonderland aura.

    #DoesMake$ense

  60. Sollars&Sense says:

    Preach it pfreet. Investors are generally blinded by BitCoin’s first to market presence which hides its fatal flaw. Dorothy is about to pull back the curtains in 2014.

    BitCoin is awesome. It really is… But it is simply not the best way to do a borderless digital currency that Makes $ense for everyone. Not just an elite few who can mine and an elite few who have the time to do math every time they purchase something.

    What will gain mass adoption for “the rest of us” is a digital currency that works just like the American Dollar… just smarter. If this happens BitCoin doesnt stand a chance… #Makes$ense Stay tuned!

  61. Sollars&Sense says:

    Or some techie could make an Intelligent Borderless digital currency that works just like the American Dollar BUT independent of the financial and banking system. This way Consumers need no learning curve and can adopt much faster than a volatile system like BitCoin.

    It’s first to market. But its not the only way… #Makes$ense

  62. Sollars&Sense says:

    Steiner we welcome your thought, but you are DEAD wrong. As a competitor to BitCoin, we agree that it is not the best implementation of a digitized medium of exchange that Makes $ense for everyone.

    But it is certainly not a scam. Chris has got this one right. You’re comparing Apples (BitCoin) to Horse shit (tulips)

  63. Sollars&Sense says:

    Simone you are expressing a concern that many other digital currencies (including us) are working on to improve over BitCoin.

    BitCoin is great but there is a better way…

    We are glad as a borderless digital currency we can take advantage of the enormous psychological superiority that the American Dollar has built over the world this last century.

    We believe it will come in great handy for global mass adoption. Remember the American Dollar and Cent has been the reserve currency for almost a century now. It is just now making a transition out.

    What digital currency do you believe will have a better chance at replacing it? One based around it with Smart twist? Or BitCoin?

    Could you ever see BitCoin being used to price oil? #LetsBeSerious

    Sollars and Sense. Smart Money….

    2014 is the year we start Making $ense for everyone else. Fill free to follow us.

  64. Sollars&Sense says:

    Hany what you express is true but it will not happen with BitCoin. Look at what we said to another on this blog with almost the same concerns:

    BitCoin is great but there is a better way…

    We are glad as a borderless digital currency we can take advantage of the enormous psychological superiority that the American Dollar has built over the world this last century.

    We believe it will come in great handy for global mass adoption. Remember the American Dollar and Cent has been the reserve currency for the ENTIRE GLOBE for almost a century now. It is just now making a transition out which hasn’t technically begun.

    What digital currency do you believe will have a better chance at replacing it? One based around it, with a Smart twist? Or BitCoin?

    Could you ever see BitCoin being used to price oil? Replacing the Petro Dollar? #LetsBeSerious

    Sollars and Sense. Smart Money…. Simple to the point and universal for all…

    You see Hany the problem is Investors are painting a bad picture where they are portraying BitCoin as the only viable alternative being created. Its simply not true.

    2014 is the year we start Making $ense for everyone else. Fill free to follow us.

  65. Sollars&Sense says:

    Chris we have a question…

    Using the relationship of Fiat Currencies to Gold

    If BitCoin could be described as “SmartGold” in a Free Banking system

    Would Andreessen invest in a “SmartFiatCurrency” issued in a Reserve Banking system?

    Just wondering… #LetsMake$ense

  66. David Irvine says:

    I agree with most of what you say here, but I think I favour bitcoin, not due to technical completeness (it has a way to go), but in the fact it removes many humans from the money chain. For a token to be bartered for goods and services it should require no 3rd party. This allows fair pay of goods and services, when we introduce humans and their centralised systems then corruption inevitably happens.

    It is hard to corrupt maths and this is where bitcoin’s real strength lies.

    We have a fully distributed network in process and like bitcoin (a method of which is in our 2006 papers) it will also exlclude humans from the data and communicaiton networks. This is how nature works and third party servers are in contrevention of nature, so as in physics if we cannot find our system designs in nature then they are likley wrong. All of todays server based networks are a silly as cenralised finance operations that bitcoin will hopefully replace.

    We fully intend to implement bitcoin transaction logs, wallets and transaction validation services, this will allow bitcoin to scale incredibly easily and will hopefully remove the >50% attack vector.
    One day soon we will all realise decentalised systems are the way forward, but not the ‘distributed systems’ we have seen so far (even bitcoin), These systems will self heal and self manage without us humans to currupt them. It sounds easy but it’s harder than hell to get it all working, but the benefits will be incredible.

    I applaud bitcoin and all the folks who have the mental stamina and capability to look deep under the covers. Well done on the investment I hope there are many more to come.

  67. for bitcoin to be an actual medium of exchange, it needs a place to offset the risk of holding it, and a central clearing mechanism that will guarantee transactions. Once that happens, it becomes a store of wealth and participants can drive adoption.

    It may be a new protocol. But, until it gets massive adoption, no one will follow the protocol.

  68. Thanks. Some of the questions I’ve been struggling with: a) can we dissociate the protocol from the currency? b) does the BTC price need to continue rising to enable a widespread distribution of usage and value? c) if yes to b), then what is a theoretical price target, given there will only be 21 million units?

  69. herbert says:

    they’re going to need a butt load more cash for lobbying efforts to make the US govt more friendly to BTC. that is expensive. its just a matter of time before the USGovt starts crackin down

  70. TwoBitIdiot says:

    No love for the TBI thought leadership? Chris, I should have you on my email list. Coindesk is just the huffington post of Bitcoin…no original content. :-)

  71. TwoBitIdiot says:

    Agree on all of your points. The mental hurdle is big enough that I doubt the future of Bitcoin will actually be denominated in bitcoin the currency…at least from the owner’s perspective. I bet Circle or someone similar comes out with tools that use the Bitcoin tech, but completely denominate wallets and merchant tools in USD.

    The issue with any alt-coin is going to be how much investment goes to support the surrounding infrastructure. Litecoin is one of the few that can draw the appropriate resources.

  72. Sollars&Sense says:

    No problem.

    a) We do not believe it can or should be disassociated. Rather what should happen is BitCoin enthusiasts need to change up the language and PR sound bites. Its not appealing to the masses.

    They need to distance themselves from the “anonymous” and “decentralized” and talk more about how BitCoin the network (protocol) is a return to a Free Banking era. That is what it is! Its a digitized version of a Free Banking System. Where instead of needing to trust a few centralized player. Anyone has the chance now to be trusted as a banker (including themselves). It’s self sufficiency and democratization at its finest. #Makes$ense

    This is what Consumers and the masses would like to hear. Empowerment and how they can empower others. Not be anonymous.

    b) If BitCoin (protocol) is a digitized Free Banking system. Then bitcoin is what we like to call “SmartGold”. In this $ense we mean a commodity that can double as a currency… NOT a currency that doubles as a commodity (there is a BIG difference).

    So its SmartGold in a Free Banking system.

    Question B assumes BTC will be the only digital currency in town… So the answer is no but for a different reason.

    With that said we do not believe at any point in time BitCoin will be the means by which people value AND exchange goods, services, wealth and other commodities on a global scale.

    Can you imagine oil which is priced by the American Petro Dollar being taken over by BitCoin? It’s just not economically viable. Rather BitCoin as SmartGold needs an arch nemesis as SmartFiat or SmartMoney. And that my friend is where we come in… #Makes$ense

    What do you think?

  73. herbert says:

    there’s a multitude of other reasons why BTC is unfit as a currency.

    – block chain approvals take too long by nature of the crypto algorithms used. no high volume retailers can wait minutes for a tx approval. this is a fundamental flaw with the protocol. does coinbase instantly approve transactions? if so, sounds like there’s some risk exposure ?

    – couple this with the lack of central issuing authority and the anonymous nature makes for a recipe that fosters criminal behavior (money laundry, black markets, etc). the more this goes on the tighter the govts will crack down. china is starting already; the US legislature projected optimism but i think this will change very soon, especially once the IRS gets involved.

    – btc mining is inefficient use of energy and wasteful. only those with with access to cheap electricity (or stolen electricity) will win, hence more criminals getting in the game.

    IMO bitcoin is an interesting experiment and will be surpassed by a better implementation in the near future.

  74. herbert says:

    seems like ripple had a really promising start but lost legitimacy with the alt-currency community due to their distribution scheme. everyone seems to have unloaded their ripples and trading is pretty flat atm

  75. sachmo says:

    Bitcoin is a profound technological breakthrough… it is also highly speculative, and I think (20 yr horizon) will ultimately crash / be worthless – primarily due to limited monetary supply.

    I do think other virtual currencies may succeed where bitcoin will fail.

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