It’s an open secret why Silicon Valley loves Bitcoin and it’s only a matter of time before the titans of tech start pushing around their influential weight—like Google, whose top engineers may have just let slip that they’re already in the game.
The explosion of innovation and capitalism out on the West Coast over the last two decades has been fueled by the proliferation of smaller and more powerful computers connected by an ever-expanding network, the internet of course.
Digital versions of mail and books shone a light on apparently archaic institutions like the postal service and the library while Jeff Bezos single-handedly made the shopping mall obsolete. Multiple tech bubbles and the businesses and services that emerged have forever transformed the way we eat, work, and play. But one industry remains indignantly undisrupted: finance.
Beyond PayPal—which was always more Western Union than Bank of America—the banking sector has been frustratingly impenetrable by techno-centric entrepreneurs in large part due to strict regulations, which represent inordinate barriers of entries for resourceful startups who would rather break things than play by the rules. Playing with money is the equivalent of playing with regulatory fire meaning that there’s never been an easy or obvious way to bootstrap your way into Wall Street.
At least until now: enter Bitcoin. Call it a currency or call it a commodity, it doesn’t really matter. In Silicon Valley, tech heavyweights see it as a backdoor into the world of finance.
Marc Andreessen, the man best known for making the web mainstream with the first widely used browser, Netscape, believes Bitcoin is the final missing puzzle piece, comparing the significance of the technology with the personal computer and the internet in an op-ed for the New York Times titled “Why Bitcoin Matters.”
“Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer,” Andreessen wrote. “The consequences of this breakthrough are hard to overstate.”
For practical purposes, Bitcoin allows Silicon Valley entry into a party dominated by centuries-old banks that they were never invited to or put on the guest list. Leaving out pesky newcomers of course allows the financial sector to keep profits for themselves.
And as much as Andreessen has done to support true innovation, he’s also in it for the money. His venture capital firm Andreessen Horowitz has invested in countless Bitcoin startups including Ripple Labs and Coinbase, which just received an additional $25 million in funding.
Think about why you even need a bank in the first place. Its main purpose is to act as a credible middle man. When you need to withdraw money from an ATM or wire someone funds, all a bank does is confirm whether or not you actually have access to that money. Banks make the entire process convenient and secure.
By solving the so-called Two General’s Problem, Bitcoin allows for cash like transactions on the internet—you don’t need a trustworthy middle man if you’re giving someone cash—by elegantly creating trust without the need for a central authority.
If you think about it, the way we treat and view money hasn’t changed since, well forever, and part of the reason is a lack of competition. There’s little reason for banks to innovate if they hold all the cards. Suddenly, Bitcoin opens Pandora’s box. Now anyone can access bank-like services without actual banks.
This is where analogies with technologies like the Mp3 are apt. When everyone still needed actual CDs to listen to music, the major labels still held all the cards. Once people could easily digest music in digital form, everything changed, not only how we purchased music but how we accessed it, shared it, and, from a profit perspective, how businesses could make money from it. The result is a steady stream of fresh industry entrants from Apple to Spotify. Part of what’s exciting with the whole process is that it’s difficult to imagine the future implications. What we do know is that when companies compete, the consumer usually wins.
It should be no surprise then that Google, whose futuristic vision involves cyber-contact lenses and an army of robots, is looking to get in on the action, going by a few enterprising email exchanges between the firm’s chief engineers.
Jarar Malik, a Bitcoin enthusiast and Pakistani rock star, reached out to a slew of Valley influencers including Jeff Bezos, Larry Page, and Tim Cook to see if they had any plans for the burgeoning cryptocurrency.
To his grand surprise, Google’s Senior Vice President Vic Gundotra “responded in like 5 minutes,” putting him in touch with senior engineers working on the company’s payment systems.
“We are working in the payments team to figure out how to incorporate bitcoin into our plans,” Sridhar Ramaswamy, Google’s Senior VP of Ads and Commerce, eventually revealed in an exchange that Malik forwarded to me labeled as “the moneyshot.”
If he was taken aback by Google’s straightforward candor in discussing their crypto-plans, Malik wasn’t surprised by their ongoing interest. “It’s clearly one of the most disruptive innovations of our time,” he told me over the phone. “It's only a natural marriage for Google and Bitcoin to go hand in hand at some point.”
As reward for his initiative, Ariel Bardin, Google’s VP of Payments, requested that Malik facilitate a Google Moderator seeking public feedback on what people “want Google to do with Bitcoin.”
Malik professes to be an early adopter who also happens to own a few coin. While he claims that money was never his main goal, like everyone involved, Bitcoin’s potential success will bring him personal gain.
It’s also this ongoing conflict of interest—believers, adopters, and entrepreneurs already have skin in the game—that lingering skepticism of Bitcoin’s true potential remains. Guys like Andreessen will obviously big up their trendy tech fixation given what's personally at stake.
But maybe that doesn’t matter, explained Alex Furmansky, a friend and New York-based entrepreneur on Facebook.
“New technologies are not adopted because they are great,” wrote Furmansky, who is the founder of Budsies and Sparkology. “But rather because a critical mass of influencers (who often stand to profit from the new tech) decide to make it so.”