Bitcoin investor Marc Andreessen has said that he stands by Bitcoin. His statements comes in the wake of the poor start that Bitcoin has had in the opening hours and days of 2015. He shared his thoughts with the world via 26 Twitter messages in…
He began his string of tweets by tearing into Bitcoin critics who have used the volatility of the cryptocurrency to assert that Bitcoin is a stupid idea. His rejoinder to those critics was that they were also slamming Bitcoin when it was rising in 2013.
He also trains his guns on the paradigm that Bitcoin was the worst performing currency in 2014. His view was that those who think so, are taking a very narrow period to analyze the performance of Bitcoin. He thinks that they should instead adopt a 2-year window so as to more accurately gauge the performance of Bitcoin. Taking such a window would reveal strong performance over the long-term, especially when it is borne in mind that the price of Bitcoin in January 2013 was below US$14. He says in one of the tweets that “arguments that rely on cherry-picking specific date windows are not very good arguments.”
In his tweets, he also focuses on another group of critics whom he considers as being “smarter.” The smarter group aver that Bitcoin is too volatile, and hence cannot be used a store of value. On this Marc Andreessen concedes that they are right, but only up to a point. He feels that they miss the idea of Bitcoin as a distributed transaction and trust network. He adds that Bitcoin was specifically designed to use speculation early in its history. The reason for baking in speculation into its function was in order to overcome the typical chicken/egg bootstrapping problem that networks experience.
Bootstrapping refers to the means by which a peer can connect to the network. By giving rewards in bitcoins to those joining the bitcoin network, users were incentivized to start using Bitcoin and provide more and more computing power to the network, leading to greater adoption of Bitcoin.
Mr. Andreessen does believe that Bitcoin will stabilize in the long-run. He thinks this will be brought about by a combination of economics of scale and the use of derivatives. One element which will aid Bitcoin in its scalability is its ability to manage payments from virtually anywhere in the world. Many countries around the world have been locked out of global e-commerce. This is often due to poor payment and banking systems within those countries. In addition, the very real threat of credit and debit card fraud has contributed to a situation in which companies lose about 5-10% of sales due to security measures taken to reduce credit card fraud.
Marc Andreessen is also upbeat about the creative thinking and innovation which currently characterizes the Bitcoin company ecosystem. He believes that 2015 will see greater global adoption of Bitcoin as a result of consumer education and the brisk pace of technological innovation. Lastly, he concluded his chronicle of tweets by urging patience for the faithful since as he says, “Bitcoin is still a 6-year old toddler.” He does think it will grow up, eventually.
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Last modified: January 25, 2020 10:08 PM UTC