Benner on Tech: Bitcoin's Blues and Facebook's Free-Speech Tight Rope

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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Bitcoin was supposed to be a substitute for gold, but now it’s behaving more like oil. Not the oil of 2013 and 2014 when the price spiked above $100, but the oil of today with prices below $50. Bitcoin prices have also fallen over the past year from about $1,000 to just above $200. In both cases, the price is so low that it no longer makes economic sense for the folks who extract fossil fuels and bitcoins to keep extracting those things. The costs to drill and mine are greater than the value of the thing that the drillers and miners dig up and sell.

There is however a key difference between oil and bitcoin. When producers stop drilling for oil, the supply squeeze generally results in greater demand and, eventually, in higher prices. It’s painful in the short run, but works out OK over time.  (Or at least that’s what we can tell ourselves to keep the nightmare of a world tilting back into recession at bay.)

As my colleague Matt Levine points out, Bitcoin works a little bit differently. Bitcoin miners aren’t really digging up coins. They’re a decentralized group of computers that verify transactions made in the system. For their effort, they’re rewarded with bitcoins. These computers make up the backbone of what’s referred to as the blockchain, the ledger system that makes Bitcoin a currency whose valued can be verified. If they won’t mine, then how do we figure out who owns what? You can see how the system itself breaks down.

Whenever bitcoin’s price gets volatile, everyone says that it’s OK because the blockchain is the real innovation and the thing that will change the way we distribute financial assets. Now we get to see whether the volatility will impact the blockchain too.

** The big deal news is that the craft marketplace Etsy is planning to go public, which many people say would give the New York City tech scene a much-needed boost.  (Whither Gilt Group?) And it’s more evidence that online retail is hot hot hot.

We won’t know Etsy’s revenue or growth rate until the company releases an IPO prospectus that has more financial details. As we await those numbers, let’s take a minute to dive into the worlds of Etsy, Regretsy and the other websites that pay homage to the weird stuff that made the marketplace more interesting than just another Fab.

Ventureland

Snapchat wants to charge brands $750,000 a day to advertise on the app, according to Adweek, which is quite a bit more than the $500,000 a day that YouTube reportedly charges. The app has more than 100 million monthly users.

Lynda.com raised $186 million in a round led by TPG Capital, making it one of the largest single investments in an education-technology company, Bloomberg reports.

MongoDB raised $80 million from investors including Goldman Sachs and T. Rowe Price, the Wall Street Journal reports. The data-analytics startup is now valued at $1.6 billion.

Slack has introduced a premium version of its corporate messaging tool called Slack Plus that costs $12.50 per month, per user, VentureBeat reports.

Wavelength, a service that lets people share movies with friends online for free, was just launched by Spencer Wang, a former Credit Suisse media and Internet analyst, Re/code reports.

Kuaidi Group, a Chinese ride-hailing app, has raised $500 million from SoftBank, Alibaba and Tiger Global, the Wall Street Journal reports.

Uber has been blocking accounts linked to transportation inspectors in Australia in order to avoid fines, according to ABC News.

Have Uber and Lyft inspired the cab companies to deregulate? Some cab companies in Broward County, Florida wrote a letter to the mayor demanding an end to county fees, limits on airport pickups and wheel-chair accessibility quotes in order to be more competitive with the car hailing app makers, according to VentureBeat.

People and Personnel Moves

Kevin Rose left Google Ventures and raised $5 million in funding for his mobile-app startup North Technologies, Bloomberg reports.

Wesley Chan has left his role as entrepreneur-in-residence at Google to join the venture capital firm Felicis Ventures as managing partner. Chan had also worked at Google Ventures.

Neetzan Zimmerman is out as editor-in-chief of Whisper, the anonymous sharing app, Capital New York reports. Zimmerman told Capital that other staffers have also been suspended as part of an internal investigation related to allegations that the company hasn't kept users anonymous.

Meet MediaLink's founders Michael Kassan and Wenda Harris, who orchestrate some of the most important events and meetings in tech and media. AOL CEO Tim Armstrong tells Re/code: “I would call them the human routers. ... They route more information around in our industry that any other single organization.”

Companies

BlackBerry…

Shares of Kim Kardashian's favorite mobile device spiked nearly 30 percent after Reuters broke the news that it was in talks to sell itself to Samsung. The company denied the report and the stock fell almost 13 percent, reports CNBC.

Facebook…

** CEO Mark Zuckerberg walked what the Wall Street Journal called "a free-speech tightrope" during a town hall-style meeting in Bogota, Colombia to promote Internet.org. When asked why he decried the terrorist attacks in Paris, but things like censorship in China, he said that people should not “live in fear” about what they say or write.

** The social network is launching an enterprise product “Facebook At Work,” in a limited rollout, TechCrunch reports. The product pits Facebook against work messaging apps like Yammer, Slack and Convo.

Google…

** The company will launch a pilot program that lets consumers build their own smartphones with mix-and-match hardware that snaps together like Legos, CNET reports.

** Automakers including General Motors, Ford, Volkswagen and Daimler have been in talks with Google to work on self-driving car technology and roll out a vehicle by 2020, Reuters reports.

** Lawyers for Google want to block a lawsuit filed by ex-Formula 1 chief Max Mosley over images of Mosley taken at a sex party, the BBC reports.

IBM…

The company introduced a new mainframe that can encrypt and analyze data in real time to appeal to clients who want speed and security, Bloomberg reports. The new mainframe's success is important to IBM's turnaround because so many of the company's higher-margin services and software contracts are sold in conjunction with hardware.

Twitter…

Cybercrime Blotter

The Department of Homeland Security is a cybersecurity mess. A federal report says that the department fails at basic computer security and is "unlikely" to be able to protect the country from cyberattacks, ZDNet reports.

Media Files

David Cross, of Arrested Development, talks to Digiday about why he's distributing his first feature film over BitTorrent and raising money for a theater run on Kickstarter.

We got offers from distributors, but they were all the same plan: Open in New York and Los Angeles, maybe a handful of other places, play it for a week, then put it on video on demand. That’s boring. I’d make a little money, but I’d rather roll the dice and take the chance. And I’d rather have more people watch it.

News and Notes

Companies accused of making secret deals not to steal employees and to cap salaries, including Google, Apple, Intel and Adobe, are nearing a settlement deal with the Justice Department, the New York Times reports.

Mexicans are closing the digital divide by building their own cellular networks, Wired reports.

We’ve all heard plenty of uplifting stories of the democratizing potential of cell phones, how they’ve brought everything from voice calls to mobile banking to people who have never had access to landlines and laptops... But on its own, “your cell phone doesn’t really know how to do anything,” he explains. All of the utility is in the network. And by and large, that network is provided—and, therefore, controlled—by a company that wants to make a profit.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.