Fred Wilson Speaks about Bitcoin and Philanthropy
Before a crowd of hundreds of local Bitcoin fans, college students, and even high school students who have an interest in crypto-currencies, Fred Wilson of Union Square Ventures (USV) gave a 75 minute talk called “A Fred Talk for Good” about Bitcoin and Philanthropy. Mr. Wilson has been a long-time successful venture capitalist, backing companies such as Coinbase, Twitter, Tumblr, Etsy, and Kickstarter in their early stages through USV. Most recently, he has invested heavily into CrowdRise, a crowd-funding charity platform that allows individuals to contribute via Bitcoin right out of the gate. The tickets for this event were made available for this event through supporting one of the projects he currently supports, the New York City Foundation for Computer Science Education (CSNYC) at $25 for regular seats and $100 for VIP seating. The VIP section took up the two front rows of the nearly full Eisner and Lubin Auditorium at NYU. [Editorial note: In light of recent allegations about journalism in the Bitcoin space, it should be noted that the author of this story paid for his ticket out of personal funds in support of this good organization.]
Mr. Wilson was the sole speaker at the talk and worked without a presentation or other materials, only occasionally consulting his phone for specific details such as the formal title of the original Satoshi Nakamoto paper, “Bitcoin: A Peer-to-Peer Electronic Cash System.” His talk format was equally simple, with the first big topic point being “What is Bitcoin?” Here he opened with the very good and very accurate statement, “Bitcoin is a peer-to-peer network.”, a fact that is often overlooked as the real power of the crypto-currency. He then went on to speak about the fundamentals of the crypto-currency in general, transitioning to explaining the basics of the Bitcoin transaction process and emphasizing the power of the open-source nature of the software, describing it as being fundamentally “Cash over the air.”
He later brought the conversation around to how Bitcoin could help charities, drawing a parallel case that a good idea like Kickstarter could not work for artists, makers, and others without the existence of the Internet. Kickstarter’s popularity should rapidly carry over to charitable organizations as they see the power of what direct, middleman-free transactions sent cheaply to them can do for their fundraising efforts and expenses. He cited three main obstacles that could cause problems for such organizations – or any organization seeking to work in the Bitcoin space on a large scale – and that was that bitcoins are not held by enough people today, that most expenses charities face cannot be paid directly in bitcoin, and in the settling of any taxes or other expenses where the government requires payment but refuses to accept bitcoins. Still, here and throughout his talk, he seemed to be very excited about Bitcoin’s potential, saying among his concluding remarks, “Learning about Bitcoin today is like learning how to code for iOS 7 years ago.”
Then came the Q&A period and as the lines behind the central microphones got longer and longer, it was clear that so many in the crowd were eager to ask him questions. The questions were directly about Bitcoin details, although a some students (groups from Girls Who Code, All-Star Coders, and The Network for Teaching Entrepreneurship were in the crowd) sought some career advice in the Bitcoin space. His general advice could be summed up as: “Get into the APIs and build something – anything, even just prototypes.” Below are highlight points from some of the interesting ones – including one answer that the crowd found to be VERY interesting at the end:
Q: On Bitcoin replacing Western Union in international money transfers:
Here was where he enthusiastically expressed that he felt that international remittances was the first “killer app” for Bitcoin, answering the questioner by saying “There is nothing that is less efficient than Western Union.”
Q: On what it might take for the IRS to recognize Bitcoin as a legitimate currency:
Mr. Wilson here and earlier spoke about what he sees as one of the flaws in the current Bitcoin space – that of volatility and hoarding (sometimes called “Smauging“) and that he felt that these factors were impairing Bitcoin’s velocity in the marketplace. This further contributed to price volatility which made Bitcoin into something that just did not look like a currency. To a later related question, he did express with certainty that the real power of Bitcoin was in its currency form and that it needed to be used as money and not classified as property.
Q: On the security of Bitcoin:
Here he cut right to the heart of the matter, avoiding unnecessary discussions about the robustness of the protocol and zeroing right in on the security woes of the end-user, saying that it was not that secure at all. Considering how easy it appears to be to hack into PCs or trick people into revealing their wallets, theft and fraud cases are big issues and much heavier investment is needed in this space. He mentioned companies like Coinbase as being potential bulwarks for consumers who wish to own bitcoins but did not want to assume the risks and responsibilities involved in securing them. To a related question, he put out the idea of an insurance consortium insuring a provider’s “hot wallet” instead of their entire reserve. He will come back to this general idea when asked if this would make those holding intermediaries “the new middlemen”, assuming the role that the banks have today and possibly bringing in many of the negatives that Bitcoin was designed to avoid. Mr. Wilson responded by saying that this would prove to be unlikely because the fundamental protocol will remain open source. This means that anyone could still emerge as a player saying in closing, “The way you keep things open is with competition.”
Q: On Bitcoin Core Development:
This issue spanned several questions, with the first asking about the current state of affairs of Bitcoin core development. Mr. Wilson responded by saying that he felt the current team was far too small for the task before it, and calling for a much more robust development effort to be brought to bear as soon as possible. When asked who would pay for this, he said that he said that in general, major Bitcoin companies – Bitpay, Circle, and Xapo, were his examples – should have Bitcoin developers on their staff with Google, Amazon and Paypal building out even larger teams down the road, but it wasn’t clear if he meant as core-level contributors or simply serving their own companies with occasional contributions. However, later he was asked if he had concerns about those companies managing to take over Bitcoin and he said that while Google is good many things they try to do, they do not have a perfect record of success so, “If anyone *could* do it, [Google] could try but I just do not see it [happening].”
Q: On making significant changes to the Bitcoin protocol:
Following up on an inflation/deflation-based question asked earlier where he said that there would need to be some changes made to the core protocol that would allow Bitcoin to grow further, Mr. Wilson was asked what kind of changes he would like to see and he said that one of the first things on his list to change was the idea that the total number of Bitcoins should be solidily held at approximately 21 million. He said that it would be better to modify Bitcoin such that it grew by a small amount per year – 100,000 more per year, was his initial suggestion – as a check against impairing velocity. Many members in the audience actually gasped and grumbled at this idea as a fixed number of Bitcoins has been a very important feature for some. While there have been discussions about making bitcoins even more divisible should the market require it, an overall increase in the number would change the nature of the currency significantly. Should this idea start to gain ground, it will be very interesting to hear the community’s response.
Following the Q&A period, Mr. Wilson announced the conclusion of the event and offered to stay yet another half hour to meet with the inevitable swarm of people who wished to speak with him and/or try out their elevator pitches. Overall, the event seemed quite worthwhile and that the ticket prices went to supporting CSNYC – in Bitcoin, no less – made it even more rewarding.