The Bitcoin startup 21 Inc., backed by venture-capital firm Andreessen Horowitz, has garnered much press attention over the release of its first product. The product, a small Linux computer wherein the Bitcoin protocol is part of the operating systems, has concerned some Bitcoin experts, who suggest the product could allow 21 Inc. to accumulate mining power. The company is excited about the product.
“I’m very excited about it,” said Ben Horowitz, a co-founder of Andreessen Horowitz, told Wall Street Journal. “The thing that’s completely missing that I think would make the Internet better would be machine-to-machine payments. It’s just amazingly hard to do right now.” The company recently published a Medium article about the product.
“With this pocket-sized device, if you are an entrepreneur or developer, you can now instantly buy or sell digital goods and services at the command line using Bitcoin,” the company wrote. According to 21 Inc., you can use a 21 computer to do the following.
- instantly mine Bitcoin from the command line
- sell API calls for Bitcoin, like English-to-Chinese translation or file conversion
- set up your own personal iTunes-like digital goods store
- reward peers for posting your links on social media
- make any IoT hardware Bitcoin-rentable, from smart locks to 3D printers
21 Inc. states a primary goal of the company is to make Bitcoin an Internet protocol. Some are skeptical. Bitcoin entrepreneur Trace Mayer warned the Bitcoin community against possible ulterior motives by the company.
As Mayer states in an interview with Reinvent.Money:
We should be much more skeptical of what the intentions might be, because if they can acquire a huge amount of hashing power through consumer devices that they ship out that all come and mine on their pool, and then they are also able to buy or acquire through small amounts incremental hashing power from other pools, then they can take control of or acquire bitcoin for a fairly small amount of money relative to the entire market cap. At the end of the day, he who owns the gold makes the rules, and it wouldn’t surprise me if you can actually take control of a large majority of the hashing power with $100 million.
Tim Pastoor, Founder of 2Way.io, shares Mayer’s sentiment. “I believe that if they collect 75% of mining rewards they probably have to do that through a mining pool that will only increase centralization further.” For Mayer, it’s who controls the mining power.
“It’s not necessarily the decentralization of the mining power, it’s who controls what that mining power is directed towards,” Mayer said. “So, if they got millions of devices out there, but they’re all mining on their pool, then they can control how that hashing power is used. It could be a great play on acquiring co-opting Bitcoin.”
Last modified: March 4, 2021 4:45 PM