Freedom and Innovation

I testified yesterday in a public hearing on Bitcoin as part of two days of hearings put on by the New York State Department of Financial Services. The hearings are being livestreamed here and you can click on the archives and watch yesterday’s two panels.

I got pretty animated during the discussion, which is probably not a great thing to do when testifying in a government hearing. But this kind of thing is really important to me. We were talking about the freedom to innovate in an emerging market that is going to get regulated. I don’t have a problem with regulation per se, but how and when it happens matters a lot.

As our panel was winding down, Superintendant Lawsky asked what countries were doing it right. I didn’t answer that question but instead decided to talk about one that isn’t doing it right and brought up China and noted that a fantastic investment strategy would be to have invested in every Internet servcies that China has blocked. My point being that the services China likes to block are the really important ones that have been built on the Internet.

I then noted that this discussion is really about freedom. Chris McAlary recorded my assertion in this tweet:

Some will say that I was being overly dramatic or romantic with that line. But I really believe it. If you look at the countries around the world where the most innovation happens, you will see a very high, I would argue a direct, correlation between innovation and freedom. They are two sides of the same coin.

#VC & Technology

Comments (Archived):

  1. jason wright

    i can therefore expect the NSA to be disinnovated – a service must come that renders the agency’s ability to spy on the citizens of the free world did you come to be there, by invitation? edit – ok, by necktie – love it. no notes – even more so as it comes across as more sincere and authoritative than a .doc

    1. pointsnfigures

      If you have passion, and command from of the facts, you don’t need notes.

      1. jason wright

        the panel has a passion deficit

    2. JLM

      .The problem with NSA — whole intelligence community really — is really quite structural.The recent head of the NSA/CIA — Air Force Gen Michael Hayden — spanned almost three administrations in those positions.It is hard to hold someone accountable who can out last the administration.Congress NEVER understands what is going on from an intelligence perspective for good reason — most of them are not reasonable security risks. Recent sworn testimony by NSA officials was filled with lies in particular James Clapper’s testimony both in open session and in secret session as to the real methodology of the NSA’s intrusion into phone surveillance. The three “hops” v one “hop”.NOTHING HAPPENED as a result of his perjury. And nothing will happen. Ever.Presidents never have an intelligence agenda until something goes wrong and then they are reactive.The country does not know 10% of what is going on at the NSA, CIA, DIA and the Pentagon.As l’affaire Snowden has proven, the internal security is abysmal. Who knows what we do not know?JLM.

  2. CalebSimpson

    I’m reluctant to jump in a Bitcoin discussion since I don’t really understand it, but I think that is part of the problem. To me, it’s a bunch of geeky engineers with large super computers that are controlling the wealth. I think I understand correctly that the flow of coins is regulated, but It seems to me the original intent of Bitcoin was lost when people started using super computers to game the system and mine up all the wealth, leaving the little guys with MacBook Airs nothing.

    1. fredwilson

      That’s all wrong. I am happy to explain it if you are interested

      1. CalebSimpson

        I would actually be interested in getting a good explanation. Everything I read online just seems so illogical and like it will pass quickly. Should I send you an email? Or can you just explain here?

    2. William Mougayar

      Caleb, it takes some time to understand Bitcoin. I highly recommend starting by devouring pretty much anything Andreas Antonopoulos has written or said:

  3. Dave W Baldwin

    Good discussion and good use of analogy.

  4. andyswan

    Welcome to the Libertarian movement. Mr. Ron Wyden and Mr. Rand Paul will see you now.

    1. fredwilson

      i would like to be invited into that club but not have to be a dues paying member of it

      1. andyswan

        I feel the same way!

      2. JamesHRH

        That has to be the Libertarian party motto.

  5. jason wright

    as i watch yesterday’s hearing i do oh so wonder about the timing of the arrest of Shrem. the coincidence is blatant. the powers that be are playing the system like the hardened professionals that they are.

  6. Julien

    There’s not even 2 sides of the same coin, they’re same side of the same coin. Innovation is freedom to make the world better. Every authorization, approval, permission that you have to ask is a dent into innovation.

  7. Roger Ellman

    Not at all overly dramatic…you made the point well and it’s a point worth making.Freedom is the nectar of progress.

  8. sigmaalgebra

    Yes, in something like ‘virtual currencies’, it’s too easy to get all tied up in fine but nearly irrelevant details downon the ground. Your view, the central points of freedomand innovation, from, say, 10,000 feet up looks like it captured a more appropriate picture.

  9. mikenolan99

    It is tough to think of a single time any government has correctly regulated an emerging technology without the price being that of innovation.I’m OK with some regulation like when, in the early part of the 20th century, the government regulated Radio to prevent overlaping signals and monolopies from forming. Of course, they couldn’t stop there – creating well meaning but over reaching obscenities and public interest, needs and necessary rules.

  10. Richard

    If freedom was a 4 lane highway, three of those lanes are under construction for entrepreneurs.

    1. awaldstein

      Really…Stuff ain’t perfect but its far from 3/4 closed down.It’s never been better and getting more so all the time.

      1. Richard

        No doubt that these are amazing times for tech entrepreneurship, probabably the best of times, save for the industrial revolution, but its hard to make a case for this being the he best of times for personal freedom? Call it the cab driver test. When cab drivers start talking about it, it’s too late to do anything about it. Take raw juices..this industry is just one health related outbreak (remember odwalla?) from regulations that will shut it down or make it super difficult to operate.

        1. awaldstein

          Hey…Are people freer to be themselves, more so than every before? In every possible way?W/o a doubt and certainly within my lifetime.To your example about juice–it’s a pain. It would be a disaster to have no one looking out for public health.Is it perfect–nothing is.I spend zero time mulling over the stuff that are roadblocks. I spend lots of time doing what drives me.What am I missing?

  11. LIAD

    at the fringe London Bitcoin meetup last night the libertarians and cypherpunks talked in terms of permissionless innovation and the freedom to act without fear of reprisal and retribution.they truly see the decentralised ledger as a pandora’s box to wrestle finance, judiciary, and democracy from the clutches of the elite.they worry vested interests already have their claws into the protocol and things can be co-opted with increasing ease. (core bitcoin developers consulting for ‘regulated’ US bitcoin companies etc).they talk of the underclass and unbanked, of the marginalised and silent majority.they see things through the lens of the people having the advantage and the state playing catch-up. comprising on core ideals so the state rubber-stamps bitcoin is the antithesis of what they think should happen.their language and outlook is a whole new world to me, much of it contrary to my world model. BUT, you cannot doubt the sincerity of their words, the skills at their disposal or the effort they are willing to put into making it a reality.

    1. Andrew Kennedy

      Great comment. Thanks for sharing.

    2. Vesuvius

      As one of these nutty libertarians, let me add the following.The typical person believes regulation is an unalloyed good that protects consumers and “reins in” predatory capitalists, that though regulation can turn out to be misguided, this is the exception, not the rule.I believe regulation is INVARIABLY, not sporadically, a way for politically connected parties to gain rents at the expense of everyone else, especially the least politically connected.

  12. Brandon Burns

    One can never have too much passion. Rev ’em up!

    1. Kirsten Lambertsen

      Nor is there such thing as being overly romantic 😉

    2. LE

      A bit like thinking that you can’t drink to much milk. To much passion can also turn of some audiences. It’s a when in rome type of thing.And the world also needs people who lack passion. You know to do all the shitty jobs that don’t require passion just someone who will then derive pleasure from another aspect of life.

      1. Brandon Burns

        Why you gotta go rain on the parade?! Lol.True, though.

        1. LE

          Why you gotta go rain on the parade?I actually don’t like parades. Parades to me are boring. But some people do like parades and I can understand that. I’d probably (like a politician) enjoy parades if I derived some financial or other benefit from them. My cousin owned supermarkets. When it was bad weather he would get excited because people would go wild and buy everything and anything. (A flip of the reward system.) When I was growing up and we had our lawn sodded my dad stood on the porch and was happy because we needed the rain for the new grass. So it was a positive. Anything can be a positive generally in the right context.

    3. Richard


  13. sigmaalgebra

    Your point about a novel ‘China investmentstrategy’, i.e., invest in everything China blocked,was cute and good.Fortunately the US regulators didn’t see thepower of the commercial Internet. Else theymay have screamed, “Just why do people needmore than 300 bits per second (bps) download speeds? After all, at 300 bps can print at 30 characters per seconds, and few people caneven read that fast. People who want more than300 bps are just bandwidth hogs, and bandwidth isfinite. The whole US long distance voice networkhas only about 30 billion bits per second (Gbps)of bandwidth, and you are talking about 1 Gbps foreach Internet user? Absurd! It will totally swampthe whole US long distance voice network! We desperately need some severe regulations to stop this catastrophe! Besides, what will peopleDO with so much bandwidth? Shouldn’t we firstunderstand just why people would need so muchbandwidth? What might be the consequences?What criminality? What economic dislocations?What about the electro-magnetic radiation? Andwhere will we get enough copper for all the wiresand cables for that much bandwidth? And for thismassive build out of the network, where will we getenough telephone operators? All of this reeks ofcatastrophe! We’ve got to slow down and take a long, careful look at this Internet thing. This uncontrolled,unplanned, risky growth can’t be allowed! The speedsbeing discussed might even wear out the electrons!”

    1. Richard

      The problem is not regulations, it is the regulators.

  14. vruz

    Lack of freedom is, put simply, maximum friction.

  15. Alex Murphy

    “would you fight for one chance to buy with bitcoin” Fred (aka William Wallace) Wilson. Well done!

  16. Andrew Kennedy

    I watched the hearing last night. Onramp to regulation is just such a clean concept that makes total sense for everyone and I thought you did a nice job of articulating the benefits for both sides. There were a few comments here at avc yesterday about the similarity between nuclear power and btc. certainly a lot that is not similar there, but the analogy is apt re: getting railroaded and so i completely agree that this is really important, for everyone.

  17. Tom Labus

    Could you tell what made an impression on Lawsky? Where are they heading?

    1. jason wright

      and who has his ear?

    2. fredwilson

      i think a lot of the things that were said made an impression on him

  18. DanielHorowitz

    My impression is that the superintendent recognizes what is at stake here and that’s a good thing. I think you and everybody else did great. Can’t wait for ticketmaster on bitcoin

  19. vruz

    This also reminded me of the very important topic of Net Neutrality.If a given ISP can selectively throttle connections of the Bitcoin network protocol, that effectively increases the cost of some or all transactions, at their own discretion.That’s too much power in their hands.This is true for all Internet services, but it’s especially troubling for crypto-currencies.IMHO “Net Neutrality” has a branding problem, it should have been called “Internet Freedom” for this very reason.Also related, on “Bitcoin Neutrality”:

  20. William Mougayar

    A minute later, Tyler Winklevoss echoed that: “Back to what Fred said: Bitcoin is freedom. It’s very American.”Re: the China comment… then China went on and built every flavor of Internet company for their own, inside their borders, from search to messaging to payments, etc. like WeChat, MoMo, Didi, Qihoo, and others.Re: Regulation. We shouldn’t even be talking about regulating Bitcoin. Those overzealous bureaucrats like Lawsky want to make a name for themselves and care less about freedom and innovation. Lawsky said it yesterday, that he believes New York would be the first to implement such regulation. Yippee, what a lousy achievement that would be!We don’t need regulation to catch thieves and dishonest people. Just apply the same laws we already have, but first they need to attempt to understand what Bitcoin is. This isn’t different from the discussions on the Internet in ’94 when governments wondered if they needed special regulations for it or not. The same discussions are happening again. It’s unfortunate that in 2014, the topic of terrorism is on everyone’s mind, and this is clouding the issues, and getting in the way of our freedoms.Bitcoin is like a baby. Let the poor thing live to adulthood before you start to figure it IF and how it needs to be regulated. It’s like banning a baby from burbing because it’s not acceptable. Well, the baby will burb, until it grows-up. And Bitcoin will burp, so it can grow-up.

    1. Kirsten Lambertsen

      Well said! The idea of identifying which laws and regulations can already apply to something new is not something that our gov’ts do well. They definitely don’t follow the DRY rule 🙂 It would be great to teach them about it.

      1. William Mougayar

        Yup, Bitcoin is a new project for them.

    2. JLM

      .If you support lawlessness, you are going to attract not only regulation but also law enforcement.Bitcoin’s nascent history as a means of conducting anonymous drug deals is not going to disappear easily. Those facts are what they are and it will take a long time for them to be diluted.There is absolutely no possibility that any currency which will be the means of creating profit or sales tax obligations is going to be overlooked by tax collectors initially, the SEC or law enforcement.Why should it be?JLM.

      1. William Mougayar

        Drug dealers and bad guys can do all they want with or without Bitcoin. Bitcoin doesn’t facilitate their dirty work necessarily. That is a misconception. If you filter and control the flow of transactions, then you’re in favor of NSA type snooping?We can catch the bad guys and deal with them without regulation.Look at Wall Street. It’s regulated to the hill, yet it’s full of crooks, and no one is in jail for it.

        1. awaldstein

          Well said.

        2. JLM

          .Whatever attraction drew bad guys to bitcoin is a fact. The anonymity would appear to be the obvious attraction but it really makes no difference what it was — it was.There is no parallel that I can see with the NSA. I am in favor of the NSA operating with reckless abandon outside the US under the guise of basic espionage. In fact, I have asked them to take a very close look at you, William, as you are a Canadian and therefore a clean target.Inside the US, they damn well better adhere to the Constitution, in particular, the 4th Amendment which prohibits unreasonable search and seizure. Absent “probable cause” they have absolutely no right to invade any communication wherein there is even the most remote “expectation of privacy”.Probable cause is a very well litigated standard and requires an affirmative statement BEFORE any search. Therein lies the problem for the NSA domestically.The technology has leap frogged over the legal constraints and the NSA and others like that but it will not comport with the Constitution and case law.The default condition is NO SEARCHING or intervention. The government has a duty — not a right to passively ignore the transgressions — to preserve privacy.Regulation is always held hostage to the quality of system to deploy and enforce the regulations. Look at the Wolf of Wall Street movie — that scumbag got 3 years in part because he ratted out everyone else.While I agree that there are a lot of Wall Street folks who should have gone to jail, it is simply not true that the SEC and FINRA have not been trying very hard to eliminate crooks.JLM.

    3. Cam MacRae

      China’s position seems remarkably prescient to me — I’d rather be a hostage to my own crooked government than Uncle Sam.Then of course there is manufacturing for which the pace of Chinese, and more broadly Asian innovation means not only is it not cost effective to make stuff here, but we haven’t a bloody clue as to how.

      1. William Mougayar

        Well, they blocked these services under their own pretexts. They wanted to control them and make them comply with their lack of freedom and control practices. I wouldn’t be surprised is an alternative crypto-currency will later emerge in China, with a Chinese stamp of their own.

        1. Cam MacRae

          You’re right, of course. The did it openly. As opposed to indiscriminately hoovering up every packet to ensure compliance with their lack of freedom and control practices.When I play a game I prefer to know the rules.

    4. pointsnfigures

      Yes, because regulation did such a good job on Jon Corzine and Madoff.

      1. William Mougayar

        you’re being facetious?

        1. pointsnfigures

          I hope so. Markets are tremendous at punishing the chaff if given the chance to.

  21. Richard

    Fred, talk to small business owners in NYC. You’ll hear about fines due to regulations that you didn’t even know existed. There are secondary and tertiary consumer right regulations that make bitcoin very challenging for small retailers in NY. Things likes bitcoin pricing on shelves, receipts, exchange policies, collection of sales taxes and as they say “but wait there’s more….”

  22. Aaron Klein

    It is right to be passionate about a topic when one is thoroughly correct.

    1. LE

      It is right to be passionate about a topicI think you have to be aware of the party you are selling to when you are selling and what their hot buttons are and what approach works with them. Different audiences react differently. Bottom line is always “did you get the sale”.

    2. SubstrateUndertow

      The harder one has worked to construct a meaningful/informed understanding of a process the greater is their earned right/responsibility to speak up passionately in defence of that hard earned perspective !Fred need not make any apology !

  23. jason wright

    in my wallet is cash, individual notes of varying values, each with a unique serial number, and yet no one can link those notes to me or transactions that i might wish to conduct using them (only finger prints can show that i possessed them at some point in time, but that does not define the nature of my transaction, the what, when, where, with whom et.c.). cash is clearly sub optimal. the blockchain is a jewel for regulators in this respect. encode the regs in the blockchain, and not only as a statute. Mr. Lewsky needs to learn code at code academy.There is the dark web (the tor web). the danger is that heavy regulation will create the blackcoin, the invisible virtual currency of choice for the bad people of this world.

    1. Kirsten Lambertsen

      All governments need a nerd-in-residence, maybe.

  24. pointsnfigures

    Alexis de Tocqueville put it best a long long time ago. He recognized the differences between America and Europe. Freedom, and the American spirit around freedom was one glaring difference. I am glad you made that point about freedom.If no one has read the book, “Free To Choose” is one that should be permanent on your bookshelf. Coase Theorem also is about freedom. America 3.0 is a very concrete path on how we can change America to work for us today-yet still preserving our historical rights and historical values. (not talking abortion et al, but the core values on how we were founded as a nation)Governments exists to pick winners and losers. They always restrain freedom. The less government-the better. The USDA, the SEC, the CFTC, the EPA, , the FDA and other bureaucracies mobilize against the freedoms of people in the US.Meanwhile, I am stuck in Atlanta hoping to get out today……

    1. Kirsten Lambertsen

      My brother-in-law left work in Atlanta at 2pm yesterday… he just got home at 9:30AM this morning. Sorry you got caught in that 🙁

    2. ShanaC

      it might take a bit, they were caught unprepared…

      1. Jeff

        Just rolling into Indy. Posting off my phone. Politicians made excuses. We snuck out on back roads at 930am. You cannot believe the stranded cars trucks and people. 3 more hours to get back in the Windy

  25. Twain Twain

    Innovation does happen in China; it just gets obfuscated by the “lost in translation”.Chinese social networks and gaming platforms were ahead of their Western counterparts like FB:*

  26. JLM

    .Fred, your comments were brilliantly delivered.You have an authoritative understated confidence that comes across in a very convincing and persuasive manner.POW interrogation tip — lean back. Leaning back is the “tell” for the truth. Of course, you were not being waterboarded.JLM.

    1. LE

      POW interrogation tip — lean back.Amazing. On my first date with my wife I was really careful to lean back in my chair fearing appearing overly aggressive. I was also trying to appear calm and in control but I was a bit bothered by the strong overhead lighting making me appear older (which I was). I actually tried to get a different table but nothing was available. Effort paid off in the end. (Marriage I mean not …)The bottom line is that you have to give thought in advance as if you are an actor playing a scene. [1] That is what I have always done in terms of negotiation and being prepared up front and not winging it (which you already end up doing anyway because of any curves). Isn’t that also done in sports? You don’t wing it right? You simulate and practice.[1] And when I have told other people what to do I try to talk in terms of not what to say but as a generality so they can then deviate and act appropriate given the changing circumstances. That way their behavior is more consistent with what they are trying to achieve.

      1. JLM

        .Back in the day, I used to have the pleasure of undergoing a fairly routine monthly lie detector test administered by one gov’t agency on behalf of another. They were testing off a written narrative I had supplied a day prior to the exam so I had no time to rehearse my answers.After the “normal” test, I would try to fool the test by using techniques one of these agencies had taught me.Over the months, I began to learn how and why certain things worked. One of the most productive things was simply shifting your body weight so that it was bearing external to your body thereby dampening any vibration or tremor.Do not cross your legs or arms, lean back with your weight on the chair and breath slowly. Lie you ass off.It worked.JLM.

        1. LE

          One of the most productive things was simply shifting your body weight so that it was bearing external to your body thereby dampening any vibration or tremor.God I love this stuff.I once got my ex wife to return a phone to an At&t store by not telling her the truth (that it wasn’t eligible for return it was way past the date.) I just told her I bought it in the last week and that I had no receipt (this was a landline not a cell phone). She just went in perfectly with no guilt at all and gave them the appropriate hard time and got the money refunded. Had I told her truth this would have no doubt had a different outcome.I began to learn how and why certain things worked.This is really so key to many things. Understanding why something works allows you to adapt to many situations.Have you ever seen the Viagra commercial where the mid 50’s guy is in the middle of the desert and his old Camarao car is overheating?He pulls into the fillup shop with some old crusty dude watching, gets a bottle of water, and pours it (after drinking a bit) into the radiator. “You know how to get things done and how to solve problem. This is the age of knowing”.(Pharmaceutical commercials are works of maniupulation art. I love watching them.)Anyway point is you can’t learn everything for every situation. You have to take what you learn and be able to apply it in different cases when the landscape changes.

          1. JLM

            .Not to get too Old School weird on you but one of the reasons that waterboarding is effective is because it projects you into behaviors you would not normally experience — like drowning.In the glow of that abnormal behavior, you will consider doing other things that are also abnormal — like spilling your guts.I volunteered to be waterboarded as part of SEER training. I fancied myself a damn hard case and I was perfectly comfortable in the water. Bit of water up my nose — no big deal.When that Sergeant smacked me and my mouth opened in outrage and I swallowed the whole damn bath tub, I was ready to sing in about 30 seconds. Nah, more like 20 seconds.I was sure I had survived for 5 minutes but the tape showed otherwise.There is a lot of science to this stuff.JLM.

          2. LE

            In the glow of that abnormal behavior, you will consider doing other things that are also abnormal — like spilling your guts.Interesting so then the theory is that it breaks down your normal front of resistance? And besides in an emotional state you are certainly less likely to resist (which is why traditional advice is to cool off and not make rash decisions during trying times.)

          3. JLM

            .’When your emotions are engaged or your body is stressed, you begin to focus on the notion that this could get very dicey.Like when an interrogator cocks a pistol.. You automatically assume you are going to be shot. Now.If you think about it, nobody is going to shoot you when you still possess useful and important information. That is a rational thought.When you are emotional or stressed, you stop thinking rationally and begin to catalog the “terribles”.The harder an interrogator is trying, the better your chances of surviving.The second the interrogator has what he wants — you are really NOW expendable.Skillful interrogators are not stupid. They employ a bit of theater to get your mind to see things.They fill the tub. They lay out the dental instruments. They bring in the power drills.Nobody really wants to see whether that drill bit hurts.BTW, nobody really resists. This is not Jack Bauer on 24. Everybody breaks. Everybody.JLM.

    2. fredwilson

      but Sheryl Sandberg tells us to lean forward!

      1. Guest

        .”Equipment check” — lean back and chill.When paratroopers are getting ready to jump, you get several commands. This is Old School and some 92 jumps ago so they may have changed a thing or two.The Jumpmaster would say:”Ten minutes””Get ready” — five minutes out”Stand up” — sometimes given to inboard and outboard jumpers seperately”Hook up””Equipment check””Sound off for equipment check” — pass along the status to the front to the Jumpmaster”Stand in the door” — as an officer and first jumper in the stick, I would usually be the guy in the door for every pass over the drop zone. I wanted to make damn sure we were in the right place coming out of the plane.”Jump”When they first used to have female paratroopers, the guys used to use the command “Equipment Check” to check the equipment of the female paratrooper to their front. They were checking a bit different equipment. Every guy laughed until the first woman gave the trooper behind her a knee in the groin.Lean back, my friend. Different equipment.JLM.

      2. ShanaC

        That book still annoys me

      3. JamesHRH

        We are not part of Sheryl’s ‘us’ Freddy.

  27. JLM

    .Freedom is the secret sauce that makes America America.The American entrepreneur is marinated in freedom from the cradle and it infiltrates her DNA. Folks drawn to America are quickly basted and injected.This freedom manifests itself in both traditional ways and in other more subtle ways.The ultimate dividend of freedom is the realization that there are really no barriers or limitations to what is possible.Unfortunately, sometimes we take it for granted.JLM.

    1. Richard

      Your point on DNA is not just tongue and cheek, Epigenetics is the science of what you are talking about.

    2. fredwilson


  28. Ariel Ness

    Indeed, innovation is directly linked to freedom. @zachklein in a movie called ““The Startup Kids” (on @Amazon Prime) explains he spends half of his time in the woods, where he and his friends completely disconnect and “do whatever they want to do”. They experience freedom, it’s where “they are most inspired” and it’s the best time for them to innovate and be creative. Which country is known as the “Innovation Nation”?

  29. Jim Canto

    Drama and romance fuel passion. Passion can’t be taught. And…when that dramatic, romantic passion is rooted in the truth, it becomes nearly unstoppable.This particular “truth” .. the reality of alternate currencies… represents a fundamental shift in power. I believe that is why lawmakers are being “pragmatic” and proactive. Coincidentally; The need to protect the public from the nefarious activities of others is GREAT cover…because that’s also a truth that one can be dramatically and romantically passionate about. Therein lies the rub.”The truth shall set you free.” < Has a familiar ring to it, eh? :-)Here’s to the future!

  30. Richard

    Who else but Fred could give an opening statement without reading pre-written opening remarks. #professional

    1. fredwilson

      i did think about what i wanted to say before i started talking

  31. LE

    Randomly seeking for the “animated” [1] part I did just hit this about about 87 minutes:”the early adopters of the internet didn’t get rewarded unless they bought domains that’s probably the best example”.[1] Anyone have the marker for the animated part?

    1. Richard

      64th & 70th minute

      1. LE

        Thanks I just watched that. So here are my thoughts:a) Points Fred is making are all valid. (God knows I pay so much tax in NJ and there is so much friction because of all the regulation and stupid controls we have here).b) Animation (and vehemence) is a turn off since to many people when you are that forceful they feel something is being shoved down their throat and they immediately turn off. It evokes danger in the other party. It is usually better (imo) to be slow and deliberate. It’s like bedside manner with a doctor and patient. Nobody is scared of the kindly old person making a point and they are more likely to listen. (In general as always..)c) Use of Fred in the example “I had to fill out 5 forms” would not resonate well with the public to gain appropriate sympathy. Like hearing that Madonna has to wait to check her luggage. General public will say “sucks to be you, sorry to hear that ms rich entertainer”. Even if they also think checking luggage sucks (which they do).d) Re: “c” better to make up a fictitious example “fight for the little guy” and spin a story about a hypothetical person who has the “5 forms problem”. Even if you have to say “so I spoke to a woman on the subway who told me”. Acceptable poetic license. Basic storytelling and if done right can be done without lying also.e) Using “facebook” in the argument probably is not good because most older people see facebook as “play” and not serious. I’d have to give some thought (more than a comment) on how to incorporate the idea. Perhaps mention facebook but preface by “I’m not saying to use Facebook but maybe something like xyz” so people have the “this for that” that allows them to understand what you are saying. The “I’m not saying” gives you cover for the concept.Just off the top. Thanks again for finding it was interesting.

        1. fredwilson

          all great feedback. thanks!!!!!

  32. Pete Griffiths

    Which raises deep questions about the nature of freedom.If the NSA trawling of any data they can get their hands on prior to any cause is acceptable then why stop there? How about collecting the DNA of everybody in the US? How about automatically collecting the DNA of every newborn? Such data would undoubtedly lead to solving more crimes. Is that sufficient justification? Our society is facing some very tricky questions about the very nature of privacy and freedom.

  33. Salt Shaker

    I get the freedom and innovation aspect, where I’m having trouble is identifying a true market need. I can see bitcoin having niche demand w/ early adopters, but I have a hard time understanding how/if this thing scales, particularly given its limited supply. Let’s face it, fraud has become pretty common place w/ digital transactions and bitcoin already has strong precedents w/ money laundering. Regulation is not only coming, it is necessary. Will bitcoin be a game changer for the masses? I’m no sure. The commodity markets are big industry, but the lay person or avg investor today does not indulge.

    1. fredwilson

      the awesome thing about an open platform/protocol for innovation is developers and entrepreneurs will find the market need for it

  34. Richard

    Great example by Fred: “The idea that you would get all of them [music startups] to get licensed by the music industry to know if they even built something that matters, makes no sense. Yet that’s how the music industry is operated. When a startup walks into to see a music executive and says you know I’ve been operating for six months and my service is working. We are really successful and now we need to get rights. The first thing that the are handed is a lawsuit.”

    1. fredwilson

      i am glad that worked for you. it’s something i have witnessed up close and personally

  35. ZekeV

    This was a good hearing in terms of having some credible folks speak intelligently about bitcoin. I liked the comments about distinguishing between different types of bitcoin companies. For example, it makes sense to regulate an exchange that holds consumer deposits, but please don’t regulate the actual use of bitcoin, or the mining or processing of the transactions.Unfortunately the bitcoin community has not come up with a good political strategy to head off bad regulation at state and fed level. I would like to see federal money transmitter regs that preempt, rather than supplement, state regulation. Otherwise, if you want to set up a fully compliant exchange, you have to do what every other money transmitter does and apply for msb licenses in all states where required. By the way, if you ever want to sell an msb in an exit event, you may also then have to obtain regulatory consents / approvals from 30 or so state regulators, as things stand today. This is only realistic for huge companies like PayPal. And those companies will lobby in favor of keeping this high barrier to entry in place. People should be organizing across industries, not just crypto but also in payments, to come up with a logical and preemptive federal regime to address AML and consumer protection issues in payments, in a generic way.

  36. Gulay

    Here is the same analysis for Turkey and China: ” The connection between free expression and economics”

  37. philipdangler

    Just finished watching the archived webcast: Fred, your animated and passionate testimony was great. I believe strongly in regulation for some things (environmental protection is good!), and we’ve all seen what can happen without it. You managed the hone in on and explain well some of the more subtle points that were completely misunderstood by bankers who have little technical knowledge and even less passion.It amazes me that these guys have no problem at all with complex derivatives and toxic asset swaps that are completely incomprehensible to the average consumer, but are the first to cry “Money laundering! Volatility! No oversight!” when it comes to crytocurrency.Watching these hearings reminded me of a TIME cover story about the internet in 1995:…Take a look–that’s a good glimpse of the public/regulator perception of the Bitcoin protocol and bitcoin as a currency today. What do you think it will look like in 19 years?Probably a lot like the internet. Thanks for helping us get there.

  38. Will Sommers

    When you talk about China and innovation you have to think about micro level freedom and macro level freedom.If you do not interfere with State Owned Enterprises/State Picked Winners, you are allowed to innovate. What are SOEs? Public utilities, steel companies, resource companies, defense companies. Bitcoin obviously is macro level innovation.When you talk to small-mid sized business owners in China you will find true innovation. It is processes, mostly, but it is still innovation.

  39. iggyfanlo

    Two sides of the same “BitCoin”? 😉

  40. William Mougayar

    Andreas Antonopoulos summed up the hearings today pretty well!

  41. Ela Madej

    I’ve been reading “Physics and Beyond” (stories or early days in particle physics by Heisenberg) and listened to some Feynman interviews about the Manhattan Project and I’ve been thinking a lot about where we are now. I’m an optimist at heart, but good crisis management calls for understanding “how bad things can get”.We live in times where an amazing transformation is just about to happen and some really dark scenarios are clearly not just dreamed-up by sci-fi authors – think massive social unrest resulting from robots taking all jobs before we have socio-economic policies protect people, bitcoin’s protocol strengthening the transfer of illicit funds to an unknown level, strong AI going all wrong, proper eugenics, nanobots deployed to our bodies without us knowing, recent NSA Big Brother situation getting fully out of control). Just as the industrial revolution triggered further rapid growth of the military industry and pinpointing nuclear fission led to the invention of an atomic bomb, we might now be in such very moment where everyone is excited about the great ways science and technology transform our lives… but there will be an “ooops” moment cause that hyper-optimism makes us forget we need to take a step back and make sure the humanity is ready for what science/technology so eagerly caters. People will misuse things, that’s a rule. But with today’s technologies a single person can cause unprecedented damage–financial, environmental, human. I come from a region that remembers “the banality of evil” very well. It starts with a great revolutionary idea, blind belief, subjectively defined “good intentions” and enough “will-power to change the status quo”.The lack of humanism and broader perspective really bothered me when I lived in Silicon Valley. It’s important to have those hubs full of young energetic people cause that’s how we make leaps forward but it’s good to remember that the history repeats itself and “revolutions”, let it be technological this time, were often quite literally bloody. We’re waking up to a world that’s increasingly hard to predict. It’s exciting but I think it’s only reasonable to assume – or at least have a scenario for things getting terribly wrong before they get better.It’s important that you’re writing about it and you took part in that hearing. Legislation and perspective of people like yourself who did not just graduate (or should I say – drop out of) high-school will help us make sure that software (actually, technology at large) won’t eat people as it’s eating the world.

  42. Peter Seed

    Fred stated at the 88-minute point in the tape that there will be a point where Bitcoin will experience price stability — defined as a phase where there will be less dramatic swings in price (less price volatility). When he was asked about what he felt will decrease Bitcoin’s volatility, Fred said one word: “liquidity”. He went on to say that liquidity and volatility are inversely proportional. Whereas, I agree that an inverse correlation is a reasonable explanation when price discovery is limited, I think that it is an oversimplification to say that liquidity and volatility always have an inverse relationship. There are some very liquid markets with high volatility. Look at the price of FaceBook options and you will see what I mean. In my opinion, volatility is the largest impediment to the general acceptance of Bitcoin. I believe that ANY virtual currency that controls money supply via a logarithmic program — eventually capping the money supply — will inherently be more volatile. You can have all the liquidity in the world and Bitcoin will always be more volatile than the dollar.

  43. gregorylent

    no one has discussed the relationship between censorship and self-esteem, or surveillance and self-esteem ..bitcoin or nsa or or or .. we are suiciding ourselves

  44. Vesuvius

    Great remarks, great argument. But why are you an Obama voter??? Talk about anti-freedom. (As is the Republican Party, no doubt). Vote Libertarian, or be like me—don’t vote at all.

  45. marshallyang

    I just did a simulation, and found that the strategy of investing in blocked services only makes OK money – you certainly can’t raise a fund just to do this. here is the full process with a spreadsheet:

  46. fredwilson

    i think the regulators are listening and thinking. which is a good thing