Forget Mt. Gox: Bitcoins Will Still Be Your Future Currency

×
Marc Andreessen-6
jdlasica/flickrMarc Andreessen is bullish on Bitcoin.
It's been a tough couple of weeks for Bitcoin.

Hackers have had their way with three Bitcoin sites that hold customer funds, and one, for all intents and purposes, has gone out of business. Poloniex had $50,000 of Bitcoin stolen; Flexcoin reported $600,000 in theft; and Mt. Gox -- the first and at one time, the largest exchange -- reportedly had $400 million stolen, which caused it to cease business and declare bankruptcy. This turmoil has sent the former golden child of hipster investors plummeting from the nosebleed heights of $1,242 per coin to a low of $419.

The virtual currency gods then poured salt into the wound when the Japanese government announced that it intended to regulate Bitcoin -- a move that foreshadows similar actions by regulators in North America and the European Union. The dark cloud hanging over the currency got a bit darker -- reminding us that though the currency is virtual, the people behind it are real -- when it was announced that Autumn Radtke, CEO of bitcoin exchange First Meta, committed suicide at the age of 28.

So why hasn't Bitcoin failed once and for all? The answer doesn't have to do so much with what is happening now with the currency as it does with who is betting big on its success.

Follow the Leaders: Marc Andreessen and Fred Wilson

Allow me to introduce you to two people who think Bitcoin is just in its infancy, and whose opinions you should pay attention to: Marc Andreessen and Fred Wilson.

You might recognize Andreessen as the co-creator of the first web browser -- Mosaic -- and co-founder of Netscape Communications, which was purchased by AOL (AOL) (publisher of DailyFinance) in 1999 for $4.2 billion. After that, he went on to form Andreessen Horowitz, one of the premier Silicon Valley venture capital firms, which was an early investor in such obscure start-ups as Facebook (FB), Twitter (TWTR), Groupon (GRPN) and Zynga (ZNGA).

You might not recognize Fred Wilson, but his support of bitcoin may be even more prescient. Wilson is an outlier in the VC world, shunning the West Coast and headquartering in New York City. Even odder in the world of angel investors, where secrecy is the name of the game, Wilson writes a popular and widely read blog, AVC.

Wilson, too, has an uncanny knack of getting in on the ground floor of tech companies before they become household names. Through his company, Union Square Ventures, he and his partners have invested in Zynga, Tumblr, Kickstarter, Twitter, Foursquare, Etsy and a little company called Coinbase.

A Virtual Wallet Could Be the Killer App

Coinbase provides a virtual wallet for you to carry your Bitcoins and offers a platform where merchants and consumers can transact business in the new digital currency. And if that just made a little bell in your head go off, you might be thinking the same thing I am.

I don't claim to be an expert in Bitcoin. Nor do I know what trajectory will take Bitcoin out of its current troubles and into the hearts, minds and pocketbooks of every citizen of the world. But I do know that when very smart people put their money where their mouths are, we should all pay attention.

Andreessen, whose company has invested millions in Bitcoin-related businesses, equates the recent problems with similar transitory events in futures and commodities. "This is like MF Global, not some huge breakdown of the underlying technology or other exchanges," he told CNBC. "Bitcoin protocol is unchanged, and other exchanges and companies are doing fine."

Wilson went further, announcing on his blog that he personally bought more Bitcoins on the day Mt. Gox went out of business.

Technology moves so fast these days that those of us who don't live, breath and drink it on a daily basis often can't see the virtual forest for the trees. So before you dismiss Bitcoin as a fad or a case of technology run amok, take a minute to see who is championing it and what their track record is in successfully envisioning the future.

No man is an island, or even a peninsula, so I encourage your feedback in the comments below. And don't forget to pick up my book, "Trading: The Best of the Best -- Top Trading Tips for Our Time."


Why it's Easier to Rob Bitcoins Than Banks

Increase your money and finance knowledge from home

Finding Stock Ideas

Learn to do your research and find investments.

View Course »

Small Cap Investing

Learn now to invest in small companies the right way.

View Course »

Add a Comment

*0 / 3000 Character Maximum

32 Comments

Filter by:
Robert Brooks

WHY can't I look at all of my stocks?

March 11 2014 at 12:28 PM Report abuse rate up rate down Reply
gdgreenberg

Bitcoin is a very useful tool for trade to those who wish to employ it. The virtual currency world is an economic shot in the arm to the economy. From your local computer store and technician to the stores selling electronics to the computer programmer; from the lessor of office space to the professionals who advise consumers and business persons on the curent state of law and taxation. Virtual currency is here to stay and it is healthy and robust, creating jobs and income to a broad spectrum of folks across the country. With new opportunies comes hope and from hope springs invention and new businesses, more employment, more exchanging of ideas, goods and services. This is a good thing people. Of course there will be challenges and losses, as there are in any industry, new or established, but this will not stop the American spirit of hard work and creation. Bitcoin is a novel approach to buying, selling, trading and creating. George D. Greenberg, Esq., Las Vegas, Nevada. www.attorneybitcoin.com

March 10 2014 at 4:17 AM Report abuse -2 rate up rate down Reply
laurarvail1

I see the picture (it looks like a train token) but I still have no idea WHAT a Bitcoin is, why would I CARE what a Bitcoin is, and whose cockamamie idea was this? (actually they look like Chuck E. Cheese tokens)

March 10 2014 at 12:33 AM Report abuse +2 rate up rate down Reply
1 reply to laurarvail1's comment
rgemeni

To explain Bitcoin in basic term it's a world ledger of all transactions ever made since it's beginning within the program which is kept by every person that has the program around the world. Which means changing the ledger is impossible unless every single individual around the world which uses the program agrees to it which would never happen. In a bit of a more intermediate explanation every 10 minutes or so every person computer that does mining unlocks another new block in the transaction code using crypto encoding rewarding that person or pool the reward this will continue until 21 million then it will stop then the reward would only be transaction cost. Whenever a trade occurs a transfer the record is recorded in the ledger which is secured by all the people who uses the program unable to be altered. It's not physical it's kept by private and public keys and as long as you keep the private keys safe that will keep your Bitcoin safe In the address generated by you. To loosely compare it to something else in even the most basic form lets see a bank has your 20 dollars you transfer 20 dollars to another account money never really gets moved but the ledger of a bank shows that it did.

March 10 2014 at 2:53 AM Report abuse -2 rate up rate down Reply
k4jlp

Only if the "players" figure out how to profit from it, otherwise it does not stand a chance.

March 09 2014 at 11:25 PM Report abuse +2 rate up rate down Reply
supermolar

a few more big thefts and it will not matter who is behind Bitcoin- even the tech/zombies will figure out they have nothing when they have a Bitcoin if you ask me.

March 09 2014 at 9:20 PM Report abuse +2 rate up rate down Reply
ablecharli

Only readers who understand the fact that the stock market is nothing more than just a "big casino" will understand the comment to follow about bitcoins in the next paragraph. The price of stock on the market has nothing to do with the state of the economy. The company that issued the stock never loses any money received for the stock, when the value of the stock drops on the market.

When one buys a chip in a casino it is just like buying a bitcoin. The chip only has value to someone that will accept it in place of federal money. It is just like printing or minting ones own private money. Bitcoin money has no more universal value on the street than does old confederate or counterfeit money. Sooner than later the government must find a way to stop or control it so everyone does't start making their own monitary system in competition with the established monitary exchange system......good luck to the dreamers who are making their own uncontrolled monitary / banking system.

March 09 2014 at 8:13 PM Report abuse +3 rate up rate down Reply
John

You can play poker with matchsticks but you can't take them to the store and buy groceries. Bitcoin is bogus.

March 09 2014 at 5:41 PM Report abuse +6 rate up rate down Reply
ranewbould

I am so disappointed the person who kept calling everyone a mouth breathing knuckle dragging Neanderthal isn't here any more. Must have pulled down the tent and went home.

March 09 2014 at 5:09 PM Report abuse +5 rate up rate down Reply
theycallmeroy3

One can't hate what the NSA is doing, and not like bitcoin.

March 09 2014 at 1:47 PM Report abuse rate up rate down Reply
theycallmeroy3

If you hate banks---you'd like bitcoin.

March 09 2014 at 1:43 PM Report abuse -1 rate up rate down Reply