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Comment by hendzen | Hacker News Reader

I'll be honest, I am a Bitcoin fan. But I realize there is a relatively large chance that it might just fail entirely (or only be used by criminals and just be regulated to death).

Venture Capital investment in Bitcoin has been fairly massive - and from many top tier VCs e.g. a16z, USV & Accel (but notably not Sequoia nor Greylock). Some key investments: 75m for Coinbase, 20m for Xapo, 9m for Circle (still haven't launched) and many smaller investments.

VCs have also been putting massive amounts of money in to BTC itself.

If Bitcoin fails, SV will collectively look pretty silly. Its going to be interesting to see what happens when either the US economy takes a dump, or interest rates rise and VC funding dries up...

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Sequoia Capital invested in Color. Sequoia also invested in WhatsApp.

The failure of Bitcoin won't make SV look silly. It will be business as usual.

> Some key investments: 75m for Coinbase, 20m for Xapo, 9m for Circle (still haven't launched) and many smaller investments.

That barely breaks a billion. It doesn't seem massive to me in relation to the rest of Silicon Valley. For comparison: Instagram.

I'm not sure of your point. According to Crunchbase, Instagram took $7.5m funding at seed/A and then another $50m not long before it was acquired.

If you're taking about Instragram's exit valuation, I don't see the relevance.

~104m doesn't break a billion.

Bitcoin is respectable technology compared to the excesses of the first dotcom boom. Any VCs who are worried about embarrassment have probably left the building long ago. http://www.cdixon.org/2010/01/03/the-next-big-thing-will-sta...

That said, Chris Dixon, Balaji Srinivasan & Marc Andreessen (all a16z partners) have been pumping BTC harder than a sump pump. Not sure that blog post is the best example.

> Its going to be interesting to see what happens when either the US economy takes a dump, or interest rates rise and VC funding dries up...

We just had a financial crisis 6 years ago in which the U.S economy "took a dump" and caused a global panic/recession/depression (pick your favorite euphemism). Investors poured their money into Treasury bills, and in such numbers that in 2008, monthly T-bill rates were actually negative. Don't count on people rushing to Bitcoin during the next financial crisis.

My point was that during the next financial crisis, everyone might just sell all their Bitcoin, not that everyone would run to it.

And everyone might stop using Facebook. Or WhatsApp. Then Mark Zuckerberg would look silly. Like AOL did after buying MySpace.

Is there a deeper point here which I'm not gleaning?

Didn't AOL buy MySpace after everyone stopped using it?

I don't think AOL ever owned myspace, maybe you guys are thinking about News Corp (Fox)?

But in any case, myspace was still really popular when it was sold and was still growing for a couple of years after; it didn't start getting creamed by Facebook until 2007/2008.

> I don't think AOL ever owned myspace, maybe you guys are thinking about News Corp (Fox)?

I suspect the first poster may have been referring to the sale to Fox, I actually saw the reference to AOL purchasing MySpace and made a false connection to the sale by Fox misidentifying AOL as the purchaser.

No, but AOL did buy the social networking site Bebo for $850mm in March of 2008, which promptly died and became worthless.

You're right, my mistake. I'm old enough that I should remember, did it look silly when Time Warner was bought by AOL for $164B shortly before AOL's growth and profits stalled (leading to a $99B write-off and tanking the stock from a market cap of $224B down to $20B)? Yeah, maybe a little.

I hope you can understand the difference between a currency and a social network.

Or the difference between a currency or a payment system, possibly cheaper method of keeping books, or political movement? Any one of these (including currency) can collapse faster than you can say Friendster.

Oops. Sorry about that.

I don't think it can fail entirely, because it's not even clear what failure for Bitcoin would look like. Even if the value of a BTC plummets overnight, it's still useful as an intermediary, which is what all the big Bitcoin startups are using it for.

The only failure scenario for Bitcoin that I can see is a technological one: if someone finds a way to break transaction integrity, that would be very bad. But the basic premise is sound, so even if Bitcoin falls in this manner, some other cryptographic value transfer system will continue to exist.

Name a major currency in fiat money ($,£,¥..) that isnt used by criminals? More people use US Dollars for crime than Bitcoin and it will always be that way especially if you consider military funding, Bitcoin doesn't need fancy investment firms, to invest in it, I'll consider as a "bootstrapped" startup. The total crypto-currency market is over 12 Billion Dollars. Bitcoin doesnt live and die with some rich people who live in California, its global

> Name a major currency in fiat money ($,£,¥..) that isnt used by criminals?

Name one that is only used by criminals.

I did not know I was a criminal for using bitcoin.

You may not be, but have you really missed the reports on how popular it is with criminals? The OP fears that if bitcoin goes down, the criminals might end up being the only remaining bitcoin users.

All this straw man stuff about how every currency has its criminals and not every bitcoin user is a criminal right now is totally irrelevant to that. But I guess some people suffer from jerking knees that interfere with their reading.

My friend bought groceries at Whole Foods with BTC.

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