Bitcoin is trading about 55% below its record high and Its biggest exchange is now bankrupt following a multimillion-dollar loss. Does the popular virtual currency have a future?
Marc Andreessen, the founder of Netscape, thinks so. The co-founder and partner of venture capital firm Andreessen Horowitz has invested about $50 million in bitcoin-related companies and plans to invest hundreds of millions of dollars more according to The Wall Street Journal.
Andreessen has invested $25 million in Coinbase, which creates digital wallets, and smaller sums in Ripple, a payment system as well as other bitcoin-related companies, according to The Journal.
"There appears to be some need for a digital currency that crosses borders that anybody in any country at anytime can exchange...with low transaction costs [and] can then be picked up anywhere else in the world," says The Daily Ticker's Henry Blodget, about the potential demand for virtual currencies.
But will that change?
Andreessen is betting on it. He expects more Internet users will use virtual currencies in the future, to transfer digital contracts, signatures and money because the costs will be less than doing the same transactions through banks and credit card companies.
"Andreessen is betting on the idea that there will be a big infrastructure built around currencies like this," explains Blodget in the video above. "He's investing in the service providers around them." Andreessen is betting that bitcoin "is the Internet in 1993, 1994," adds Blodget.
Blodget says if bitcoin does gets adopted by more people "it probably will become more valuable." But in the meantime, says Blodget, its price "could go to a penny or a million. It has no intrinsic value whatsoever."
Even Andreessen acknowledges the price risk. He told the Journal that bitcoin is "weird and scary and nerdy, and full of scams and frauds, just like the Internet was."
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- Marc Andreessen
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