It’s been a wild 2013 for Bitcoin, both in terms of price action and public debate.
The virtual currency surged from under $20 to over $1200 at its recent peak before tumbling to around $500 this week after Chinese authorities stopped the nation’s biggest exchange from accepting deposits.
Amid the wild swings, Bitcoin became one of the most wildly discussed and debated topics in financial circles. As 2013 comes to a close, angel investor Alexander Payne offered a devastating critique of the virtual currency and its Valley adherents in a blog post entitled: Bitcoin, Magical Thinking, and Political Ideology.
“The only thing ‘profound’ about Bitcoin is its community’s near-total obliviousness to reality,” writes Payne, a former platform leader at Twitter and former CTO of Simple.
Payne was responding to a blog post by Chris Dixon of Andreessen Horowitz, which recently led a $25 million financing round for Coinbase, a digital wallet and platform for Bitcoin transactions.
According to Dixon, while the press “tends to portray Bitcoin as either a speculative bubble or a scheme for supporting criminal activity” it's “generally viewed as a profound technological breakthrough” in Silicon Valley.
Payne took umbrage with Dixon’s characterizations, both of Bitcoin and the Valley’s perception thereof.(Update: Andreessen Horowitz did not respond to declined a request for additional comment.)
'The New Wall Street'
Beyond the inside baseball and potential for virtual Valley-on-Valley violence, Payne touched upon a theme with much broader implications, arguing that Bitcoin is "synonymous with everything wrong with Silicon Valley: a marriage of dubious technology and questionable economics wrapped up in a crypto-libertarian political agenda that smacks of nerds-do-it-better paternalism."
Citing recent comments from the Pope and President Obama (among others), Payne says “economic inequality is perhaps the defining issue of our age. Bitcoin represents more of the same short-sighted hypercapitalism that got us into this mess, minus the accountability.”
Payne expands on these ideas in the accompanying video, describing Silicon Valley as "the new Wall Street."
Related: Is Apple Plotting Against Your Old iPhone to Make You Buy a New One?
The Valley likes to think of itself "as a haven for big thinkers and people who want to change the world," he says. "There's certainly that element...but money is what's steering the ship in the Valley for sure. The dominant socio-political ideology of Silicon Valley has failed to deliver sustainable profits to the broader investor class while technological innovation has slowed and jobs have dried up."
While the Valley has created incredible wealth and tons of jobs (full disclosure: my employer is based there), there does seem to be a rising backlash against the 'money-is-everything' ethos of the Valley, and the excesses of some of its leaders. It's topic that is sure to heat up in the coming year; stay tuned for more coverage.