July 31st, 2013
Courtesy of The Genesis Block, some commentary on a recent investor conference focused on bitcoins:
The first panel discussion at today’s Inside Bitcoin conference featured an array of investors from both the digital currency space and more established financial institutions. In addition to offering insight into what they look for in potential investments, they were also given an opportunity to opine on why bitcoin has immense potential for positive social impact. The panelists included:
- Thompson Clark – Editor, Agora Financial
- Tuur Demeester – Author, MacroTrends
- Pamir Gelenbe – Venture Partner, Hummingbird VC
- Abelardo Mendez – Director, Knight Capital Group
- Brock Pierce – Executive Chairman, Playsino
- Drew Little – Founder, The Illuminated Ventures Project (moderator)
What do investors look for in a bitcoin company?
The panel opened with the information any aspiring entrepreneur would look for – what VCs look for in a bitcoin startup. The answers included many of the criteria that would apply to any industry: initial traction, a viable business model and a team that has proven they can execute.First to address the bitcoin market specifically was Pamir Gelenbe, who explained that his firm measures of investment in a bitcoin company is against simply investing in bitcoin itself (noting that their mandate is to invest in companies, not currencies), evaluating the risk and potential growth of each. He also elaborated that his firm tends to shy away from businesses that may encounter heavy regulatory risk or companies like mining operations that require heavy capital investment that may become obsolete quickly.
Tuur Demeester quickly balanced Gelenbe’s view by noting that his interest in mining companies remains high, including a recent angel investment he made. His interest stems from the unique opportunity over the next few years presented by bitcoin’s issuance schedule, which will increase supply by approximately 11% annually, roughly ten times the amount gold mining adds to global supply annually.
Is bitcoin simply hype-driven?
Addressing a question commonly asked but not as frequently answered, the panelists offered their view on the sustainability of bitcoin beyond temporal media-driven interest. Thompson Clark pointed out that in today’s world people have an increasing amount of currency options to choose from and that fiat is likely on the way out of popularity, with precious metals and cryptocurrencies on the way up for their unique immunity to central manipulation.Demeester added that bitcoin is not just a currency, but also a payment system on top of which numerous multi-billion dollar industries could be built, giving it extreme value potential. Gelenbe then added that bitcoin as a currency and protocol will exist, whether regulators want it to or not, making it an exciting investment opportunity.
Does bitcoin offer social benefits?
Clark and Demeester were eager to address the potential social benefits of bitcoin, in particular as a deflationary currency. Both concurred on the way a deflationary currency would lead to more thoughtful capital allocation. Thompson pointed to the growing piles of discarded goods around the globe created by a culture of producers who design products for quick obsolescence to sell more goods in the future. Adding that in a world where currency doesn’t quickly loose value, consumers would look for higher quality products and reduce overall waste.Succinctly summarizing the positive investment outlook shared by the panel was Brock Pierce when he stated, “Bitcoin could easily be a half trillion or trillion dollars of stored value eventually – the future of money is digital, whether its fiat or not fiat.”
This entry was posted on Wednesday, July 31st, 2013 at 3:47 pm and is filed under Blog. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
