VCs putting their bitcoin where their mouth is

In this month’s cover story, “Honing your bitcoin strategy,” VCJ reporter Mark Boslet digs deep into the growth of the virtual currency, No doubt, investor appetite appears on the rise, as firms currently active in the bitcoin space ardently remain so. And those that have spent months carefully studying the complexities of the digital currency are getting ready to write checks.

Andreessen Horowitz has already written $50 million in checks in the space. One of the firm’s investments is in Coinbase, which in December raised $25 million from Andreessen Horowitz, Union Square Ventures and Ribbit Capital, making it one of the well-funded bitcoin startups.

And the firm is looking for more. Marc Andreessen himself wrote a treatise in late January on “Why Bitcoin Matters” in the New York Times. He makes many valid points on the subject. And one of the most compelling is that bitcoin provides a solution to pain points, such as high transaction fees and credit card fraud. Remember the notable Target security breach late last year? 

Andreessen wrote: “With Bitcoin, the huge hack that recently stole 70 million consumers’ credit card information from the Target department store chain would not have been possible.”

Other top VCs also talked to Mark and offered their perspectives on bitcoin’s future and how they are approaching it. Contributing to the conversation in this month’s cover piece are Naval Ravikant, co-founder of AngelList; Joshua Goldman, a partner at Norwest Venture Partners; Jeremy Liew, a partner at Lightspeed Venture Partners; and Chris Dixon, a general partner at Andreessen Horowitz.

Liew, who’s known for his social media and commerce deals, told Mark: “There is a decent chance that bitcoin ends up being a widely-used, alternative payment mechanism, in the same way the Discover card or PayPal are widely-used payment mechanisms.”

In other words, expect bitcoin deal-making to climb this year.

I’m often asked what I think of bitcoin. Unfortunately, I’m no financial expert. I studied journalism in school, and so I am mostly skeptical when I see new things that appear risky and full of regulatory nightmares. So my standard response is that the fluctuating price is worrisome. I’ve called bitcoin and the fervor surrounding it goofy.

But I’m hearing from more VCs who are interested. They are looking at their bitcoin portfolio companies and seeing they have big potential payoff. And many of them have likened it to when they first backed Internet companies a couple of decades ago.

I get it. I’m beginning to see the light.

So who wants to take my bet? Put your bitcoin where your mouth is.