Due to popular demand, we are working on a podcast about Bitcoin. Last night, I interviewed Marc Andreessen on the subject. His v.c. firm has invested roughly $50 million in Bitcoin-related companies, including CoinBase, and they are looking for more. It was a fascinating interview, in part because Andreessen has been personally involved in so many major digital events of the past 20 years.
In light of today’s news about the meltdown of Mt. Gox, the most prominent Bitcoin exchange to date, here is a preview of a section of last night’s interview with Andreessen. His view is vigorously contra the notion that the end of Mt. Gox would mean the end of Bitcoin; in fact, he would take that as a sign of progress:
DUBNER: The last few weeks happen to have been particularly volatile for Bitcoin. Real events and the news coverage of those events that again capture a lot of people’s attention — so there’s intense volatility, there are some exchanges that are glitchy or hacked, depending on what you read. There are continuing stories about how this can be fraudulently used and there’s continuing excitement about the speculative nature of the Bitcoin currency. When you see those stories, what do you do? Do you just say this is the noise that inevitably comes with a big new technology and some of these are real problems, some of these are not, and we’ll get through it? Or, do those point to elements of Bitcoin that indeed are weaker than other elements and should be addressed somehow?
ANDREESSEN: So there’s been very little actual substantive news in the last couple weeks. So like, for example, the actual price of Bitcoin has not moved that much. What’s happened is one particular exchange, which is the now the sort-of infamous Mt. Gox exchange, is in some kind of crisis. And specifically, it seems to be in a liquidity crisis that is similar in some ways to the MF Global event from a few years ago, if you remember that, on the commodities market. And so Mt. Gox is in this crisis. And we’ll see what happens with the crisis: they may go bankrupt, they may get sold, they may shut down, they may, by the way, be just fine. We don’t know yet. But they’re just one of many places where Bitcoin is traded. They were at one the point the largest place Bitcoin was traded. Over the last 9-12 months, they have been displaced by a series of others that seem to be much better-run, that people seem to be doing much better on. People point to the price of Bitcoin falling, [but] what they’re really pointing to is the price of Bitcoin in the Mt. Gox exchange falling. But that is basically an artifact of people betting on Mt. Gox itself failing, as compared to Bitcoin itself being lower. If you look at the price of Bitcoin on the other exchanges, it’s been quite stable. And so we think this is an example of exactly what I was talking about, which is, in the early days of a technology like this you’ve got various people doing various things. Some of them are serious and credible, some of them aren’t. In the early days of the Internet, you had various fly-by-night ISPs, some of them went out of business. You had various fly-by-night e-commerce operators, some of them went out of business. … One way to look at it is basically Mt. Gox has to fail in order for Bitcoin to go mainstream because Mt. Gox was never set up to be able to take Bitcoin mainstream, which is basically what’s happening now. The good news is we have many new companies that are much more serious and much better run.