If you’ve been following my posts you may have noticed quite a few references to Jason Calacanis and This Week in Startups. The show is an internet favorite of mine and is an important source for staying at the forefront of emerging technology trends and useful startups. The show follows a twice a week format alternating between interviewing a company founder and a ‘news roundtable’. For this week’s news roundtable, the show was devote to bitcoins and joining Calacanis was Howard Lindzon of StockTwits, Tom Longson of GogoCoin, and crypto currency blogger Charles Amadeus. For Lindzon, he’s been on the show several times, having both positive and negative opinions of bitcoins.
Some of the topics discussed:
Lindzon – volatility is a problem for attracting average users. But bullish on the technology and the direction it is driving costs down.
Longson – A viable market now even as it is a volatile since anyone can receive it and instantly convert to their fiat currency. Brought example that his wife’s bakery has no problems legally receiving them and converting them to dollars.
Amadeus – Only 10b in market cap, so volatility is based on lack of liquidity
Lindzon explains why he sold in the $500’s
Lindzon – “the market giveth, and the market taketh” so after making 3X sold. No different than gold and I wouldn’t want to own that either since there is no cash flows. Compared it also to any other stock that he would sell if it tripled or quadrupled. In terms of looking at market caps, Lindzon objected to Amadeus comment above by stating that you can’t look at its market cap since it doesn’t have cash flows. But, he added that “The price stuff takes us away from what we want to be talking about (like the payment products)”
This leads us to the next topic
Tech & Future
Longson – “talking about HTTP for money – way to send money like you send emails. Changing the way we send money, do contracts, it’s a big deal!”
Amadeus – “the internet of things” was the future that he invinsioned as the goal for digital currencies. He brought an example of a future time ‘when my leased car will have a bitcoin wallet, with the car only starting if the car payment was paid. He added that with contracts we can manage transactions of securities on the block chain.
Amadeus – Trinity of cryptography are, public keys, digital signatures, crypto-graphical hashing. The block chain is the technology for transacting irreversible payments.
Longson – Took a simplistic approach by explaining that bitcoin are like a credit card “after a purchase,people don’t care what happens afterwards”. The blockchain is this technology that allows for the payments to take place on the back end.
Is Satoshi a group of people?
Amadeus – Very high. Seems like it would take a long time to create it. Real innovation is decentralized network that ensures no double spending and who owns them. One of the items that Amadeus had repeated quite often is that the real innovation of the block chain isn’t the technology, since much of it is years old within the cryptograph sector, but the merging of different technologies together.
Longson – Probably
What is China’s stance?
Amadeus – sounds like they are trying to curb rampant speculation in a culture where that is common
Longson – Less a problem of government regulation than issue of banks. In China there is a worry of people moving money out.
Lindzon – Makes sense, they have enacted a cap on the yuan, so it makes sense that they are doing that for bitcoin
Talking about Coinbase
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Longson – Investment of $25 million from Andreessen Horowitz. This means next year will be the year of massive investments in bitcoin. He liked its momentum and what they were doing on the consumer side (Longson’s firm GogoCoin is a partner of Coinbase). In terms of comparing to BitPay, he stated that in addition to merchant processing, Coinbase was also in the consumer side which made them more appealing to him.
Amadeus – wanted to know that the $25 million was going towards innovation and “hopefully they don’t just become another bank”. As mentioned above, was looking to see more innovation such as bitcoin contracts.
What are chances digital currencies become a major part of our spending practices in 10 years?
Lindzon – Very high. He pointed out that Visa and Mastercard are major money makers and many companies are going after a piece of that pie.
Longson – very high – it’s the next gold or silver
Amadues – Back to the internet of things concept he stated that consumers may not realize that digital currencies are the infrastructure behind their payments. But they will very well exist in the background.
Chance bitcoins collapse in 1 year below $100
Lindzon – 40%. Subject to same risks as stock
Longson – 5% – digital currencies are here to stay. Might not be bitcoin or bitcoin protocol may change. In this regard he pointed out that bitcoins have a hard limit of 7 transactions per second, as compared to 20 from litecoin. But this could be changed with a different protocol.
Amadeus – Multiple 80% drops in prices, that would bring it down to $200. But if US liquidity dries up because of higher interest rates that could affect bitcoins as well.
Are credit card companies going to get behind this or are they like the music industry?
Longson – Speaking with bitcoin firms and their struggle to forge relationships with financial institutions, he concluded that banks dislike bitcoins and aren’t going to make it easy for bitcoin startups.
Amadeus – banks are creating their own digital currencies, but no one is going to care until somebody makes a ton of money. Pointed out that no bank wants to get behind a product that cuts their commissions done to zero. (DC Magnates thoughts on this here)