And Failure to Understand That Could Cost Investors Billions
It never ceases to amaze me how hard it can be for the media to separate hype from real-world potential in technology.
On one hand, you have amazing breakthrough technologies like the CRISPR immune system, which go virtually unnoticed by the mainstream press, even as they create miracles every day.
On the other, there's the sycophantism of reprinting the hyperbole common among investors with a specific bias to push in their own favor, which goes unchallenged and unchecked. Hedge fund managers, venture capitalists, and other commentators with a monetary interest in their ideas—paid not by readers but by their ability to sell an idea for more than they bought it—speak out with few questions posed as to why they say what they say.
Like with Bitcoin.
Last week famed technology pundit and venture capitalist Marc Andreessen penned an op-ed in the New York Times in which he espoused the world-changing potential of Bitcoin—from freeing us from enslavement by banks to enabling social change globally to saving cute puppies from slaughter (OK, I made that one up). But he tells the story of a technology virtually unbounded in its potential for social and economic change.
That article, while articulate (as Andreessen always is), came just ahead of a meeting held by NY securities regulators to discuss how to deal with Bitcoin. This meeting was scheduled on the heels of news that the FBI had arrested a few noted Bitcoin entrepreneurs in connection with a conspiracy to sell bitcoins to the now-shuttered Silk Road illegal drugs/guns marketplace, thereby enabling that criminal enterprise.
The timing of these items is, of course, not coincidental.
Andreessen painted a very rosy picture for the potential of Bitcoin: one in which transactions on the Internet are not gated by banks and credit card processors—where the customary 2-3% fees these institutions charge disappear—and currencies can be freely exchanged absent from regulations. For him, as an active investor in Bitcoin-related startups (he's ponied up some $50 million), he touts this perceived benefit as the main competitive differentiator. So he's hardly an objective observer; it's in his personal interest to paint exactly such a landscape.