Marc Andreessen Takes on Bitcoin Critics with 26 Tweets Reaffirming High Hopes for 2015

Bitcoin critics have had much ammunition to start 2015. One of the world’s most prominent bitcoin exchanges has been compromised,

Bitcoin critics have had much ammunition to start 2015. One of the world’s most prominent bitcoin exchanges has been compromised, and prices have tumbled to lows not seen since 2013.

Bitcoin venture investor and enthusiast Marc Andreessen has taken to Twitter to argue otherwise. Best known as the co-founder of Mosaic (later Netscape, the first web browser), he has become one of the most prominent technology investors through his firm, Andreessen Horowitz.

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Twenty-six tweets, numbered in sequence, were all it took for Marc to demonstrate why observers should be optimistic in 2015. He first goes to work on those attacking Bitcoin because of price. Notable is tweet #5:

Pointing out that bitcoin’s two-year return is “spectacular,” he elaborates that resorting to “cherry picking” time windows to prove the value of an asset makes for poor arguments.

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He goes on to justify bitcoin’s volatility, in fact saying that its very design necessitates it being a vehicle for speculation. This was especially true early on, in order to “to overcome the normal chicken/egg bootstrapping problem for new networks.”

He takes it a step further. Bitcoin prices will in fact stabilize in the long run, he argues, due to “a combo of scale + use of derivatives (hedging).”

It is worth noting that the use case of derivatives for stabilizing prices has been raised in the past, but is far from certain. The prices of most assets have their own fundamental value drivers (e.g. earnings for a stock). The role of derivatives to influence prices upstream is counterintuitive, and may only be secondary at best (e.g. if trader demand shifts to a derivative instead of the underlying asset).

Of course, if the fundamental value of an asset can’t be derived (perhaps in the case of bitcoin), then the secondary effects of derivative activity can become highly influential.

He ends off by enumerating several things we have to look forward to in 2015, and in tweet #26:

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