Fred Wilson of Union Square Ventures answered questions in front of a large audience of student developers, organizers and founders, as well as Bitcoin entrepreneurs and investors, about how this new currency can change the world. The presentation took place in NYU’s Eisner & Lubin auditorium in Washington Square. Students were given free tickets, and all proceeds were donated to the NYC Public School Computer Science Department.
After his presentation, the students lined up to ask him questions. Here are some insights into why he loves Bitcoin and thinks it’s the place to be:
Basically the program teaches coding to schools that don’t have the program in their school. I was with the first year and unfortunately I graduated high school this year so I can’t take the program anymore. But, because of the program, I was able to get an internship. And they donate Bitcoins through Coinbase and you can automatically transfer it into money and give it to the charities. What happens to the Bitcoin? Does it go back into the market to be minable?
Fred Wilson: No, not to be minable; once a Bitcoin is mined, it exists. Think about Bitcoin a little bit like gold, right? Once you pull the gold out of the ground, you’ve minded the gold, now you have the gold, right? So what happens is, there are these things called exchanges – great question – so, what Crowdrise does with the Bitcoin is they send it over to Coinbase that either puts it in your account, or if you want dollars, they go to an exchange like the New York Stock Exchange — although it’s not the New York Stock Exchange, but a Bitcoin exchange where they sell that Bitcoin and get dollars. They put the dollars in your account and that Bitcoin that you gave, ends up belonging to somebody else. That’s how it works.
Who is going to pay for all these core developers to continue to write and develop the open source software?
Wilson: What I think is going to happen is companies like Coinbase, BitPay, Circle, Zappo and Blockchain – there’s a bunch of companies now – if you look at the number of Bitcoin companies that have raised venture capital it’s probably in the 20, 30, 40 companies now. But, I think all these companies are going to realize that they need to basically have two or three developers on their payroll who are spending all of their time on core development work. They’re going to effectively subsidize some of that. And then, I think, you’re going to see companies like Google and Amazon, PayPal and eBay start to realize that they have a vested interest in this too, and they’re going to start doing it. I think that’s ultimately what’s going to happen here.
Student: How do you see the very long term future of Bitcoin? Let’s say you have 21 million dollars’ worth at $10,000 — each is a big number. What do you see happening next? There are more transactions? The expectancy for accumulation? Once you know it’s a commodity that grows you want to accumulate it. It ends up in the hands of a few people.
Wilson: Well, that’s a great question. I think there’s a big debate going on right now about that. There are people who think that the thing to do is treat it like a commodity or property and hold it and just watch it go up. I think that that doesn’t end well. I think unless we see it have a real economic value in the sense that it gets transacted and it becomes effectively a currency, I don’t think it will sustain its value in the long term – I don’t really care whether the stable price for a Bitcoin is $100 or $500 or $1,000 or $10,000. That’s irrelevant to me. What I want to see happen is the velocity of it go through the roof and then have the price stabilized, and for it to feel more like a dollar or feel more like a Euro. So, that’s what I hope the long-term potential is.
Student: But it’s so typical because the more transactions there are, the more used, the more practical it is – the more attractive it is.
Wilson: Yeah, but if that causes the price to stabilize and all of a sudden you can’t make a lot of money by holding it, people will start transacting with it and treat it more like a dollar. Holding onto a dollar doesn’t do anything for you, you know. You put it in the bank, it still doesn’t do much for you. You turn around and invest it, then it will do something for you. You turn the dollar into a share of Google and all of a sudden you’ve got something that’s appreciated. So, that’s my hope for that Bitcoin.
Attendee: I see a lot of companies accepting Bitcoin like Overstocks.com and Expedia.com. Regarding your own portfolio, do ever talk to companies like Kickstarter and ask them…?
Wilson: Yeah, I would like to see Kickstarter accept Bitcoin, I’d like to see Etsy accept Bitcoin. I’d like to see Shapeways accept Bitcoin. They all have it somewhere on their roadmap. It’s not as high of a priority for them as maybe I would want it to be. But, they run the company, I don’t and it’s not my job to tell them what to do. I can suggest, cajole, advise, plead, beg – eventually it will happen.