January 22, 2014
Since early 2013, Andreessen-Horowitz partners have expressed their interest and ethusiasm in Bitcoin. They have invested nearly $50 M in Bitcoin related startups till date. Marc Andreessen recently came out with his views on the vast potential of Bitcoin as a method of payment. He also gave enlightening facts about the virtual currency in a blog post.
Andreessen highlighted again how significant the Bitcoin was as a technological development comparing it to the adoption of personal computers in 1975 and Internet in 1993. Bitcoin at its most fundamental level is a breakthrough in computer science – one that builds on 20 years of research into cryptographic currency, and 40 years of research in cryptography, by thousands of researchers around the world, he says.
Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate, says Andreessen. He believes that digital property such as digital contracts, digital signatures, digital keys (to physical locks, or to online lockers), digital stocks and bonds digital ownership of physical assets such as cars and houses and digital money can be effectively transferred in this manner.
Andreessen says that Bitcoin is an ‘Internet wide distributed ledger’. The Bitcoin ledger is a new kind of payment system. Anyone in the world can pay anyone else in the world any amount of value of Bitcoin by simply transferring ownership of the corresponding slot in the ledger. Put value in, transfer it, the recipient gets value out, no authorization required, and in many cases, no fees.
He cites several reasons why Bitcoin could gain widespread adoption. Think about content monetization, for example. One reason media businesses such as newspapers struggle to charge for content is because they need to charge either all (pay the entire subscription fee for all the content) or nothing (which then results in all those terrible banner ads everywhere on the web). All of a sudden, with Bitcoin, there is an economically viable way to charge arbitrarily small amounts of money per article, or per section, or per hour, or per video play, or per archive access, or per news alert.
Moreover, Bitcoin generally can be a powerful force to bring a much larger number of people around the world into the modern economic system. Only about 20 countries around the world have what we would consider to be fully modern banking and payment systems; the other roughly 175 have a long way to go. As a result, many people in many countries are excluded from products and services that we in the West take for granted. Even Netflix, a completely virtual service, is only available in about 40 countries. Bitcoin, as a global payment system anyone can use from anywhere at any time, can be a powerful catalyst to extend the benefits of the modern economic system to virtually everyone on the planet, he adds.
According to me however, the most important aspect that was addressed by Marc Andreessen was Bitcoins vast potential in the international remittance market. Over $400 Billion is transferred by people back home to their families every year according to the world bank. Every day, banks and payment companies extract mind-boggling fees, up to 10 percent and sometimes even higher, to send this money, says Andreessen. Switching to Bitcoin, which charges no or very low fees, for these remittance payments will therefore raise the quality of life of migrant workers and their families significantly. In fact, it is hard to think of any one thing that would have a faster and more positive effect on so many people in the world’s poorest countries.
Bitcoin will be a force to reckon with in 2014. With big names such as Overstock.com, Zynga and even eBay giving their nod to the virtual currency, competitors will be hard pressed to follow suit. An astonishing number of smaller merchants and retailers are beginning to accept Bitcoin payments for products and services every day. Chris Dixon, partner at Andressen-Horowitz, believes that Bitcoin could reach $100,000 per BTC in value at some point in the future.
Recently, One of the biggest precious metals storage establishments in UK, GoldMoney announced the launch of a digital currency brokerage known as Netagio. Netagio's currently provides safe offline storage of Bitcoins only. However, the company eventually plans to offer a variety of Bitcoin-related services, including Bitcoin trading. The service is free.
Andreessen Horowitz, founded in July 2009, is a $2.5 Bn Venture capital firm. The general partners at the firm include Mark Andreessen, Ben Horowitz, Scott Weiss, John O’ Farrell, Peter Levine and Jeff Jordan. The firm invested in Belly during August 2013. On 12th December 2013, Andreessen Horowitz led a $25 Mn Series B investment in Coinbase, the San Francisco based platform/app that enables buying, selling and trading of Bitcoins.