Benner on Tech: The Future of Bitcoin

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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People are Talking About…

Two very different companies are trying to create mass markets for Bitcoin: the startup 21 Inc., which just raised more money than any other digital-currency startup, and the new exchange Digital Asset Holdings, which just hired credit derivatives pioneer Blythe Masters to be its chief executive.

Both companies have abandoned the idea that Bitcoin can be a store of value or an alternative currency. Instead, they’re trying to replace old systems of record-keeping with the one that powers Bitcoin.

So if you were unlucky enough to buy a bitcoin at $1,000 (a bitcoin is now worth about $300), then you might also be unlucky enough to be holding it just as some of the smartest minds in tech and finance are moving beyond a world where we buy our laptops in Bitcoinpay our employees in Bitcoin or day trade Bitcoin

21 Inc. is still being coy about exactly what it does, hinting to the Wall Street Journal that it wants to drive mass adoption of the underlying technology that makes it possible to exchange goods on Bitcoin between two parties in a trustworthy way. The Journal writes that “new uses could range from lawyer-free smart contracts to tamper-proof online voting systems.”

Until we see what that looks like, the most notable thing about 21 Inc. is its roster of high-profile investors. It raised $116 million from Andreessen Horowitz, RRE Ventures, Yuan Capital and Qualcomm’s venture-capital fund. Individual investors include PayPal founders Peter Thiel and Max Levchin, eBay co-founder Jeff Skoll, Dropbox CEO Drew Houston, Expedia CEO Dara Khosrowshahi and Zynga co-founder Mark Pincus.

Digital Asset Holdings is being a little clearer about what it wants to do, or as clear as one can be when one does not yet have a working product. Masters tells the Journal that her company wants to replace Wall Street’s antiquated, slow system of intermediaries and settlement delays with the much faster tools that power Bitcoin transactions. But Digital Asset Holdings would also use “the audit trails, credit limits and other checks and balances that help secure that traditional system.”

I’ll go out on a limb and say that Digital Asset has a shot at moving Wall Street onto a faster, cheaper trading system. That’s probably because I’m closer to the fifth stage of Bitcoin understanding

** Future Data Scientist Alert: This 12-year old girl got mad at Silicon Valley’s lack of girls in games. She used data to show that mobile game makers are biased. Then she took to the Washington Post to air her grievance.

I started to pay attention to other apps my friends and I were playing. I saw that a lot of them featured boy characters, and if girl characters did exist, you were actually required to pay for them.

Ventureland

Simplivity, a data storage company, joined the unicorn club. Re/code says that the company raised $175 million at a valuation of more than $1 billion.

There are pretty much no black venture capitalists, and Venrock Vice President Richard Kerby looks at why this is the case.

The huge surge in seed funding is creating a Series A crunch, argues First Round Review.

People and Personnel Moves

Patrick Pichette, Google’s chief financial officer of nearly seven years, abruptly retired. He may be the only executive to truthfully say he’s leaving to spend more time with his family. The company is still working out Pichette’s end date and seeking a replacement.

Dan Pfeiffer, the outgoing White House communications guru, talks to Backchannel about how he made POTUS a viral sensation.

Peter Thiel joined Y Combinator as a part-time partner.

Companies

Apple…

Central Intelligence Agency researchers worked for years to hack into Apple devices, the Intercept reports. Elmar Mock, the co-inventor of the Swatch, tells Bloomberg that the Apple Watch could decimate the Swiss watch industry. Apple draws in so much traffic that the Wall Street Journal says it gets great real-estate deals from mall operators.

CEO Tim Cook had to break it to an investor that he doesn’t want to buy Tesla, Bloomberg reports. The company’s annual shareholder meeting included a serious diversity shout-out when the Rev. Jesse Jackson took the floor and said that management ranks in tech are way too white. USA Today says that Jackson also praised Apple for donating more than $50 million to initiatives that will encourage more women and minorities to work in the industry.

Facebook…

The company is working with DataSift to give brands access to consumer behavior information, TechCrunch reports. Paul Ceglia, who used fake documents to claim ownership of half of Facebook has removed his electronic monitoring device and is nowhere to be found, Bloomberg reports.

Twitter…

The company is launching a Hong Kong office to strengthen ties with Chinese firms, despite the fact that its service is banned in China, reports the South China Morning Post.

Security Watch

Blue Coat, a network security company, was bought by Bain Capital from Thoma Bravo for $2.4 billion, reports Bloomberg.

News and Notes

Disney created its own wearable, a magic band that makes the Magic Kingdom a frictionless wonderland, reports Wired.

Hillary Clinton defended her e-mail setup and that fact that she deleted the stuff about weddings and yoga, Bloomberg reports. The cost of sifting through the 55,000 e-mails the State Department does have? Millions of dollars, according to Bloomberg View’s Eli Lake and Josh Rogin. It’s technically true that government officials get to choose what correspondence constitutes a record that must be kept under the law, and my Bloomberg View colleague Megan McArdle says that this rule needs to be changed.

The White House wants more people to train for tech jobs, so it announced a new TechHire Initiative.

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