Bitcoin Adoption Metrics

I said in yesterday’s post that price and volume charts were not what I look at when I think about Bitcoin. I mentioned Github repos, hackathons, and teams in accelerators working on bitcoin projects. This morning I came across an excellent slideshare on the state of the Bitcoin ecosystem. It had this slide in it.

These are the kind of metrics we need to be looking at to decide how Bitcoin is doing. And on these measures, I’d say 2014 has been a great year for Bitcoin.

bitcoin adoption metrics

I bumped into a friend of mine last night who said “all you write about is Bitcoin.” That may well be true. But I write about what I think about. So take that for what it is. I’m not going to apologize for my obsession with Bitcoin.

#hacking finance

Comments (Archived):

  1. Twain Twain

    The weakest Q/Q metric is Mainstream media mentions. Someone needs to track whether those media mentions were positive or negative and whether BTC was referred to as a “replacement for gold”, a crypto-currency or a global transactions network.That will help identify receptivity to it as a concept — before we even consider the adoption strategy.Most of the problem for BTC is one of perceptions. The language is just too technical for mainstream media to communicate and encapsulate at the moment.It’s like using the term “fungible” to Joe-Jane Public when “flexible” is more everyday.

    1. Pete Griffiths

      ‘flexible’ is still a little high brow – try ‘six pack’

  2. John Revay

    β€œall you write about is Bitcoin.”I thought a similar thought this AM, last two days – back to back posts re: Fred’s pimping Bitcoins…..But in general – I don’t agree that you have written that much on the topic, I reconciled it as Fred’s thinking is a ahead of the game…and this is he continues to see investment promise.

    1. Bruce Warila

      He’s willing it forward. Someone credible has to do it πŸ™‚

  3. LIAD

    when sophisticated people hear the word bitcoin, they hear:- revolutionising the worldwide financial industry- disrupting corrupt, expensive, and needlessly complex banking infrastructure- creating programmable money which opens up a world of opportunity and efficiencieswhen main street hear the word bitcoin, they hear- internet disney dollarsas with other tech advances, acceptance and adoption is predicated on the narrative and not the technology

    1. Richard

      The most important feature of money (today) is credit. When Cryptos build this into the model people will begin to take notice.

  4. Seenator

    This is the all important metric for me. BitCoin transaction volume. It beat Western Union last year!

    1. Brian Crain

      That’s a very misleading stat. Bitcoin transaction volume is not comparable to the transaction volume of other payment networks. For example, someone sending bitcoins from his mobile wallet to his desktop wallet is not really an economic transaction, but still counts. Moreover, it probably includes change that is returned to the sender.

      1. Guest

        Good point but when you consider that Western Union is a 160+ years old organization vs the 5 years bitcoin has been around… that speaks volumes..

        1. Brian Crain

          Totally. I’ve focused my entire career on Bitcoin so I believe in its future more than anyone. And I’m sure Bitcoin will do more actual economic transaction volume than Western Union in no time.

          1. sigmaalgebra

            I’m curious, “want to know”: Who are the users of bitcoin? What are they doing with it?Okay, just yesterday saw a news story that people in Venezuela were using bitcoin for international money transfers and avoiding some laws about some such things.

    2. Richard

      Looks like bitcoin is a rounding error of VISA.

      1. ZekeV

        VISA is an incredible and fascinating organization, with one of the most eccentric founders I’ve ever read about. Check out *One from Many* by Dee Hock. It will blow your mind in both good and bad ways.

  5. Bala


  6. JimHirshfield

    Metric: yesterday when I awoke I owned 0 Bitcoin.Today I own me some Bitcoin… thanks to you and all your talking about it, and me asking about it.Keep talking.

  7. pointsnfigures

    When apps are rolled out and start to make Bitcoin easier to use in business, bar the door. Until then it’s too easy to discount and make fun of. In conversations about startups, if I want people to roll their eyes I say “Bitcoin”. I have a friend that says no one will use driverless cars. Getting him to even think about Bitcoin is useless.

  8. JimHirshfield

    Bitcoin ATMs? Huh? Please explain.

    1. jason wright

      where you can exchange bitcoin on your mobile wallet app for actual $$ in your hand…for a fee of course.

      1. JimHirshfield


      2. p7r

        And vice versa – you can buy bit coin at the one I’ve seen

        1. jason wright

          quite so. one fee is never enough πŸ™‚

  9. jason wright

    what will the tipping point be?

    1. JimHirshfield

      Usually 15% to 20% at New York restaurants.

      1. aminTorres

        a bitt less if the service is spotty, a bit more if you are charlie sheen.

      2. jason wright

        on good form today :-)is that obligatory?

      3. LE

        Maybe this doesn’t happen in the “center of the universe” (where you live) but in these parts I’m always amazed at the critical error that wait staff makes when they drop off the check.They spend all this time being nice and doing a great job. Then when they drop off the check they woosh in, say only a really quick thank you (with little eye contact) and thereby give you less reason (at the most critical time) to tip a larger percentage. It’s almost like “ok I’m done and I don’t care anymore bye”. I think that’s the most important time to blow the smoke you know? At the point when a decision is going to be made.

  10. Guest

    I enjoyed your video a while ago where you spent a day with your friend around the city as he interviewed you. I recall your comments on the blockchain technology as a delivery system. Your excitement for the future evolution of commerce transactions for companies was evident even beyond Bitcoin perhaps. ( Coinbase stake noted of course). I use the following article for the intro class I adjunct Tuesday evenings based on and with that post.…The USV portfolio is a track record of ideas you believed in. That you are obsessing with this at this stage and at this level is probably a pretty good leading indicator. Futurists walk that fine line between prophecy and insanity they say. Since Bitcoin is in the here and now obviously the insanity part is behind us already.

  11. awaldstein

    Less than five years ago major corporations were discussing the efficacy of social media.Less than 10 years ago corporate blogs were having endless debates about whether to allow unapproved comments.Digital currency is already the future. Whether it is Bitcoin or another is what is playing out.

    1. Richard

      yep, in 20 years it will be hip to pay with paper.

  12. William Mougayar

    This is almost exactly what happened with the Internet in 1994 as usage and attention started to increase. I recall when there was 10Million Internet users, then 50M, then 100M, etc. And we kept writing about the Internet, and we still are.Bitcoin is a bit more complex than the Internet, and it has similar headwinds from incubants, but at the end they all joined, even banks who didn’t want to touch Internet payments when they came out because they thought they weren’t secure.All aboard please. The seats are better for those arriving earlier.

    1. Kevin Stecko

      Are “regular” people ever going to get it, though? I am doubtful.

      1. Sebastien Latapie

        But do they need to get it for this to become a success?Think of all the people who didn’t understand the internet when it initially rolled out. Yet, some of them did, and they started building amazing services on top of that network. People understood the value of those tools and that’s when it received wide adoption. I can see a similar development pattern for Bitcoin

        1. pointsnfigures

          you don’t need to understand how routers work to use the internet. once there are apps built on the blockchain that make it usable, no one will care. they will send bitcoin back and forth like email.

          1. Kevin Stecko

            It’s not about do they understand how bitcoin, or routers, or the internet work. It’s about do they understand “why should I use it?”. For the internet in 1994 it was “I can chat with babes online all day” or “now I can watch porn without the judgement of the mail delivery person and my wife won’t even know”, etc. etc.I run a small ecommerce store and we’ve enabled BitPay and almost no one uses it.

          2. pointsnfigures

            Good for you on installing it. I think more startups should be thinking hard about how their business integrates with Bitcoin in more than just payments. Payments are the end game.

          3. awaldstein

            Shopify has a plugin and no one uses it to my knowledge.I’ve thought about rolling it into a food biz I co own. Not time yet.

          4. sigmaalgebra

            Looking at these comments and looking at Fred’s image of the metrics, there’s some lack of fit: That is, from the metrics there are 6 million or some such ‘wallets’ or whatever, but from the comments no one has found a big need yet.So, nearly all the usage is international funds transfers, criminal activity, or some such? Who are the users? What’s going on?

          5. Robert Metcalf

            Agreed. That’s definitely the critical point of creating the native apps that allow something to exist that didn’t exist before. If it’s a “Bitcoin is how you pay for stuff that is awesome and that wouldn’t exist without Bitcoin” pitch, then you’re on to something. If it’s really just a different way to pay for stuff, Bitcoin might still be important, but it will be a much longer slog to make the transition from early adopters to mainstream. Classic innovator’s dilemma curve.

          6. Pete Griffiths

            Let’s not assume that those apps are altcoins/cryptocurrencies.

        2. awaldstein

          Understanding is not a prerequisite.Few understand the Internet, everyone including my 94 year old mother uses it.If understanding is a prerequisite for market success its going to be a slog.

          1. LE

            If understanding is a prerequisite for market successAgree.You don’t have to understand but you have to have a reason to try something so you have to perceive a benefit in order for it to supplant the existing behavior that fills the same need.You have a reason to get your feet wet.I don’t think it’s a stretch now to feel that most “normals” (and even many tech people) aren’t feeling they have to pay any attention to this. This is not e cigarettes. This is not fax machines or the internet or cell phones or even Visa and Mastercard. This is not overnight delivery services.Look, many people like to play golf. I was pretty sure I wouldn’t like golf but I tried it (was forced to actually). I was right I didn’t like golf. Most people don’t like golf. If they did there would be more golf courses and people would be playing golf all the time and they are not. Some things are just never going to fill a need that makes them something that regular people want to do.On the other hand people like to eat. In the past the only thing holding people back from eating out more was the cost, the number of choices (we had only diners and “fancy” restaurants growing up, right?) and a different culture where mom made dinner. Once those things changed all the sudden demand changed and we have a slew of restaurants and dining is a big obsession now as an addiction and entertainment. But the demand was always there just handled in a different way.

          2. awaldstein

            I wonder though whether there is a change afoot about the mass market.People care about the sources and the processing of their food and this changes how they think about taste.People care about how the materials for their clothes are made and even the labor conditions under which they are made.Not everyone but enough people that represent trillions of dollars in whole foods, eco fashion brands and more.People don’t care about crypto whatever but a huge amount could very well embrace the fact that there is no longer a need for an intermediary.I’m changing my stance on this as the market and the behaviors of consumers is changing.I know this is true for wine and food.

          3. LE

            Probably a good canary in the coalmines for this is whether young kids in college and high school care about the payment system. Or if they can be brainwashed to care. [1]With food and clothing it’s clear that they do care. But more importantly it makes sense that they do. (I hear this from my own daughter who uses and was just at a customer advisory meeting with them and totally enjoyed getting involved and giving feedback – talked to her about it for an hour on the phone last night.).My guess is that her cohort doesn’t have any issues with the traditional payment industry. Or give it any thought. (Otoh she uses uber because it’s a clearly better way to do something she was going to do anyway..)The reason? Mommy and daddy have been the backstop for that and money is not really an issue in their mind nor are fees etc.That’s just my guess looking at the basics. Curious on your take.[1] It would be trivial for me to (if I wanted) to drop into her brain a reason to care about wine because there is what I call “secondary meaning” and a halo around wine. Not so with cryptocurrencies.

          4. awaldstein

            As a consumer payment systems are your friend.As a business you notice them as will your daughter most likely after awhile.Two things to chew on:-on systems like shopify, you notice and have anxiety over the rigidity and cost of the system.-and consumers will adopt alternative systems is they can if they work if they are suited to their cost and lifestyle. Rejecting cable is an example.Good chat.

          5. Kevin Stecko

            But your 94 year old mom understands that she can see pictures of her grandkids, and that’s the understanding that matters.

          6. awaldstein

            Understanding what it means to you is not the same as understanding the how.The vernacular of bitcoin today is all about the how. When there is a Why it simply won’t be necessary.

          7. Kevin Stecko

            I agree that understanding the how is different from the why, but the why is what matters.

          8. awaldstein

            My point exactly.For some classes of investors, the Why is here right now.Intellectually and mathematically it is like catnip.For the rest, not yet…yet!

      2. ZekeV

        Nope. Regular people don’t even begin to understand the money they use on a daily basis. Where does money come from? Most people could not give you an accurate explanation.

        1. Kevin Stecko

          I agree on that, “real” money is no less abstract than bitcoin, but regular people already use it and it’s working fine for them.

          1. ZekeV

            That is true. I’m not sure that bitcoin will actually improve the lives of the average consumer. I think it’s more likely that it will make the financial life more difficult for a lot of people, if it gains adoption. Now you don’t only have to worry about the stuff you do with regular bank deposits, most of which issues have been resolved satisfactorily by government regs and FDIC insurance. Now you also have to worry about losing a secret password connected to all your money. Or, a new kind of money coming out that instantly makes your bitcoin worthless. Like a lot of financial tech, bitcoin is going to create winners and losers, and the outcome will not be fair. Still, it is the inevitable march of progress, and I think in the long run it will be better for society to put the power of money into the hands of individuals, even if they then have to bear all the risks.

          2. ManfredSteyn

            You make some great points. If you are worried about passwords/security/storing your bitcoin, I’ve really enjoyed using the free service at

          3. ZekeV

            If there’s one thing I’ve learned the hard way, it is never to trust a third party to control the private keys to my bitcoin longer than absolutely necessary. Eventually you will come to grief. The other lesson is, make multiple backups. I’ve lost data due to hard drive failure, and would’ve been a very sad person if I hadn’t backed up religiously.

          4. LE

            Now you also have to worry about losing a secret password connected to all your money. Or, a new kind of money coming out that instantly makes your bitcoin worthless.Wow. Skunk in the barnyard. That’s a big problem.

          5. ZekeV

            It certainly is. And out of the dozen or so third-party wallets I’ve interacted with, fully half of them have at some point lost or stolen funds that belonged to me. But I’m willing to accept this for myself as a cost of doing business, as much as I would like to find the responsible parties (in the cases where this involved theft) and punch them in the face. Dealing in an environment where caveat emptor is the rule takes a very different mindset from the normal world, where we generally trust that “someone else” is looking out for our interests at the end of the day.

    2. Mark

      What an inane comment.

    3. CJ

      What’s the benefit to Bitcoin of Dollars?

    4. JLM

      .I will take the under on your argument. The Internet did not replace something that was doing the exact same thing — it was an advance of capabilities. Huge difference.Today EVERY thing that is suggested can be done by bitcoin, I am currently doing with WFB, USAA and Schwab. Everything.I have no problem with intermediaries. I like them. I like their role in documentation, reliability, dispute resolution, fraud protection.What I adore about the Internet is its actual use — the applications. The applications are the driver.As you have suggested, the bitcoin applications are still in the oven — buns in the oven so to speak, no?Call me when the applications trump WFB, USAA and Schwab. I am also adding Visa these days.JLM.

      1. LE

        I think the key to this is being able to hypothesize that bitcoin will be able to do something that isn’t able to be comprehended with what it is today. That is a big theme that Fred seems to talk about.Generally, Mr. Rumsfeld might call this “the unknown unknowns” in the case of your thoughts but for me this is “the known unknowns”.unknown unknowns – “You don’t know what you don’t know”known unknows – “You know there are things that you don’t know”(Above is my take feel free to correct me I’m trying to illustrate a concept not answer a test question..)Fred’s bet is really on #2 above. In fact many VC’s bets are based on this. That’s why it’s hard for me (or I speculate you) to wrap a head around this.It’s not concrete like real estate or traditional business or opening a restaurant. It’s totally speculative based on the fact that something could happen (that you don’t know about) and it’s worth a bet that it will. It’s really “click your heels and wish” which seems to be a valid operating principle.I’m more “evaluate the downside risk and all the risks vs. the upside” I have a really hard time with things like this for sure.That said if I was using other people’s money I’d get comfortable with it.

        1. Pete Griffiths

          I think you are absolutely correct but imho it won’t be bitcoin that realizes this potential. Understanding bitcoin is getting one’s training wheels off in this new world of distributed trust.

          1. jason wright

            ‘distributed trust’ – exactly so.

      2. ZekeV

        Bitcoin is not the Internet. It is html 1.0.

      3. pointsnfigures

        First uses of the internet did replace usual things. Intuit was merely paper book keeping online. Email was not any different than sending a letter. Microsoft Office took paper processes and put them online. Etc etc. Bitcoin will do the same in the blockchain. The problem today is the block chain is hard-so we need an app to make the block chain usable by everyday people. Netscape made it easier to use the internet. What’s the blockchain’s Netscape going to be?

        1. JLM

          .In a left handed way you are validating my comment. What you are talking about are “applications” not the underlying infrastructure. The underlying infrastructure did not replace anything that already existed.The applications for bitcoin are arguably not yet birthed. That is what the discussion the other day suggested, no?JLM.

          1. pointsnfigures

            I think the block chain does replace things that didn’t exist. As Andreessen cites, it solves the Byzantine General problem and close a loop hole in the protocols on the internet. Blockchain/Bitcoin is the solve for it. The payment systems you cite are useful but not adaptable. Nor are they transparent. Can I use AMEX to post a patent? No, I can only use it to pay the patent office and show someone my receipt. And-no one can see the payment stream. With the block chain I could post the patent, pay for it with bitcoin and everyone in the world could access it.

          2. JLM

            .The two generals problem was solved by semaphores a couple of centuries ago. We used to study that at VMI.There are no real “new” applications of bitcoin. It is the apps which will ultimately be the proof.As to things like patents, the regulatory infrastructure will choke the blockchain into submission.JLM.

          3. Pete Griffiths

            The Byzantine Generals problem was not solved by semaphores and bitcoin does represent a material advance in distributed trust just as public key represented a significant step forward in cryptography.

          4. JLM

            .Actually, no, it was solved by semaphores. The “two generals” problem is a real world military problem which was shoplifted by computer science to describe a similar situation.Read carefully and see I did not refer to the “Byzantine Generals’ Problem” but rather the “two generals problem.”As anyone who ever wandered through a military academy or spent time at Ft Benning knows, the generals were able to communicate via semaphore and verify the receipt of the message by the same system.I have no doubt that bitcoin has the potential to create a reliable mechanism for documenting transactions absent a middle man — as a skeptic of its utility only I say: Toward what end?JLM.

          5. Guest

            Interesting. I can’t find anything googling the ‘two generals’ problem. Could you let me have a link?What exactly was the ‘two generals’ problem? And how did semaphores solve it?

          6. Pete Griffiths

            How did they solve it with semaphores?

          7. Pete Griffiths

            Thanks – I get semaphores i just don’t understand how they used them to solve the problem.

          8. Pete Griffiths

            Thanks for pointing out the difference. The Byzantine Generals problem is indeed a generalization of the earlier Two Generals problem.My admittedly cursory research indicates that not only is the Two Generals problem not ‘solved’ but that it can’t be solved in anything other than a pragmatic sense i.e. it is possible to design a protocol that offers a high degree of confidence with an acceptable cost of resources. Is that your understanding?In any event, the problem that bitcoin addresses is the more general case and it is more general in an important way that does indeed open up the possibility of a new class of applications.

          9. LE

            Can I use AMEX to post a patent? No, I can only use it to pay the patent office and show someone my receipt. And-no one can see the payment stream. With the block chain I could post the patent, pay for it with bitcoin and everyone in the world could access it.I realize that’s only an example for illustration purposes but I’m curious why you see so much value in that in particular. I’ve filed for multiple trademarks (not patents) and I’ve gone through the USPTO process which is somewhat of a pain in the ass but for the amount of time I have to do it it’s not a deal breaker. I would also doubt that enough people need to do that particular activity or more importantly there are enough activities like that that it should matter.For example I can pay my real estate taxes by sending a check from online banking.Currently I do this for the following items:federal est taxstate est taxvarious real estate property taxesAll of the above are super important to get paid on time and to document. My process used to be to send by certified mail return receipt. I did this for years waiting in line at the post office and hated it. A few years ago I decided that I would no longer wait in line and that I wouldn’t send it by certified mail either.Currently the fed/state are sent by postal mail regular first class. The real estate tax is sent by online bill pay (4 times per year for each property).I haven’t had any problem with any entity not getting a payment. However I do printout and note that the check is received and cashed which takes time.So a method to do this and keep track of it would be helpful. But most people aren’t me and don’t do the above things (real estate taxes are paid by mortgage company for example and their company deducts payroll taxes etc).So my point is I’m wondering what is the mass adoption item that everyone needs to do? It’s not paying bills that already exists with online bill pay. And there aren’t any other things that I can think of that are the equivalent on a consumer level of the example you gave above with patents. (known unknows possibly).

          10. pointsnfigures

            I think Bitcoin/blockchain will create markets and products we can’t envision right now. Hard to give specific concrete examples. But Andreessen has said it’s more secure than credit cards-and payment is more timely-and cheaper. First big use of blockchain might be in supply chains: B2B.

          11. LE

            Well knowing what I know about human nature, computers etc. I have a really hard time believing and agreeing with what Andressen says assuming we both mean the same thing by “more secure”.If you look at this page (as only one point of reference) you can see that there are multiple points of failure, human failure:…The idea that a typical person (or even a company) is able to have good practices in terms of keeping everything safe I simply can’t agree with. So what does the rest of it matter if that is not the case? Something has to be good technically and also practical and fail safe. Not everyone is an electrician that can wire a light fixture without turning off the power.Now if the idea is to have someone else ensure the “fort knox” (at a cost of course) then that’s another story.Bottom line: The first sentence you wrote above is true!

          12. Twain Twain

            The B2B piece is something IBM seems to be working on and, with coincidental wit given the references above to the ability to file patents via Amex, IBM filed a patent for their e-Currency Validation system:*…The other pieces of the puzzle are that IBM Watson just opened their NY office to service the finance sector with their machine intelligence, IBM’s working on neurosynpatic chips (which pack and process bits in a different way) and there’s a connection between Bitcoins and server management which is (at the moment) just beyond my feelers (but I’m trying to tie it all together).In any case, may we live in interesting times!

          13. pointsnfigures

            Good point on that Watson thing. That looks disruptive to a lot of things. Makes sense that it will integrate with Bitcoin and a blockchain-since machines don’t have emotion about financial transactions.

          14. Twain Twain

            “Machines don’t have emotion about financial transactions.”Here are a few interesting associated paradoxes:(1.) Every transaction we humans engage in is emotional — yet emotions haven’t been modeled for in financial or economic systems with any degree of accuracy or coherency.Perhaps we can ask whether and how they should be?(2.) Emotions and Natural Language understanding are two of the hardest problems to solve in Machine Intelligence.The IBM Watson, Google, Facebook, Baidu, Stanford, Twitter-MIT teams are all working in these areas. They need to solve it because all their AI are trying to replicate our natural intelligence (and emotions and language are an intrinsic part of our intelligence).I know the emotion piece of the puzzle is one that IBM Watson wants to solve because, when I raised the question about IBM Watson’s founder, Dr David Ferrucci, calling his own creation “akin to an autistic human savant”, IBM Watson’s current CTO said they’re working to solve this.IBM Watson held an event in SV to encourage developers to use its APIs and develop apps with its core technologies.I think if the Apple-IBM strategic partnership works out and IBM Watson can improve its developer tools with Apple’s knowhow, it will be a game changer.

          15. Pete Griffiths

            Right! It’s all about the blockchain.Bitcoin is an instance of an application of the blockchain.And bitcoin/blockchain is broken in some important ways.It is hard to fix some of them.But the blockchain will live on no matter what happens to bitcoin and it is perfectly possible indeed inevitable that we will have blockchain 2.0 3.0 and cryptocurrencies 2.0…3.0…

        2. awaldstein

          Email is nothing like a letter honestly.Real time. Embedded link. Share and forward.It may start with ‘hello’ but the paradigm was a complete flattening of the communications spectrum.

          1. LE

            Real time. Embedded link. Share and forward.Would add to that also a way to keep track of, memorialize and document business interactions.Just had a conversation with the accountant. Asked him to send me an email so I could show my wife and document what he said. Seconds later it was in my inbox.Might be hard for people who didn’t operate businesses prior to the fax and email to fully understand what it was like to do business without those two efficiencies. Or cell phones untying you from the desk.

          2. awaldstein

            yup game changer from the very first email for my team of then 180 people.

          3. LE

            Funny story. On the multi user system we had the Unix command “write”. Basically the ability to send a message to someone else’s terminal in real time. It beeped when the message came in and the person could write back [1]Anyway one day a girl walks into the lobby (had security cameras) and see looks pretty good to me. So I text my manager (who was a friend as well) and said “take a look”. Well he shoots down right away and asks her out on a date. [2] A year or so later, gets married. They have kids. Pretty sure they are still married. All because of networked terminals, cctv and the ability to send an instant message.You could also broadcast a message to everyone’s terminal at the same time I guess this could be an early version of twitter in a very simple form.[1] This exists on macintosh for example (or any Unix system obv.) you can open up “terminal” and type “write <username>” and you will see.[2] Not exactly like that but close.

        3. LE

          Intuit was merely paper book keeping onlineFwiw Quicken on a desktop computer was available way before it was a product available to be accessed online in “the cloud”. For that matter in the mid 80’s I had a multiuser system Unix system (AT&T 3b2/400) with dumb Wyse terminals and dial up modem access. It ran an accounting package (Conetic Cbooks). I could dial up using a dumb terminal from anywhere in the world and do accounting tasks “online”.You are using the word “online” so by that did you mean “cloud” or did you mean “on a computer”. It seems to be ambiguous.Netscape made it easier to use the internet.I think you probably mean Mosaic actually:

          1. pointsnfigures

            Yes. Two of my friends were part of the startup of Intuit. And yes Mosaic which became Netscape which was bought by Microsft and became IE.Point being while Quicken was very difficult to program and sell, it didn’t take a massive mental leap to see how useful it was.Same with the browser. Was almost impossible to surf before it.

          2. LE

            Netscape which was bought by Microsft and became IE.Huh? Netscape was bought by AOL.…You’re probably talking about Microsoft IE being based on spyglass which was based on Mosaic (as Netscape was).

          3. pointsnfigures

            Yup. My error

      4. Pete Griffiths

        There is a good point here but imho the significance of bitcoin is not so much its role as a new form of exchange so much as its underlying mechanism for distributed trust. This results in a very widespread misunderstanding of the significance and potential of bitcoin-like products. If you take a look at something like Elysium it is very different in kind from bitcoin, which was only ever an experiment. Elysium or other products like it enable a completely new class of applications and there is no reason to suppose that all of them will either be altcurrencies or indeed anything that is a different way of doing something that already exists.

      5. Caladan

        Ughhh. You must be kidding. You obviously have not thought this through very well. First, this is exactly what almost everyone (of limited creativity) thought of the internet at inception. “Just a faster fax machine” & “We already have mail and phones, what’s the big deal – I’m fine with what I have now” sound familiar?Secondly, most of the planet does not have access to any of the services you are describing. This is by itself monumental. Think deeper.

        1. James King

          This is the same trash response that every Bitcoin fan makes when confronted with the counter argument:”You don’t get it!””You don’t understand!”… and so on.To the contrary, some people “get” Bitcoin and still see it for the bad idea it is. Please notice that Mr. Wilson has not included anything re: transaction volume. That’s mostly because it is flat and would probably be even worse without exchange transactions. And the marginal costs in energy and equipment to make new bitcoin is HUGE. This is an idea being propped up by venture capitalists and others with dollar signs in their eyes.I’m far from a fan of the fiat currency system but Bitcoin is simply a ridiculously terrible idea that has the potential to make people like Wilson and a few others very, very rich. Great, yay Capitalism. But, no, it’s not going to change the world or, in the end, be very different from what we have right now.

          1. BTC Guy

            As ironic as this may sound, and while you will not believe me, I think you fall into the same category as JLM. You are failing to see the applications and uses that Bitcoin is going to open up and take advantage of that no current system does, or does much more poorly.

          2. James King

            What would those be? I keep reading this but these magical problems are never fully described and definitely not solved.Bitcoin fans seem to have a terrible grasp of monetary dynamics and economics. Money isn’t a technology problem but an ideological one. Bitcoin fixes no actual issue related to the currenct financial and economic system. The currency aspect amounts to a pyramid scheme.I think blockchain technology itself is pretty major. But it’s tied to a flawed currency scheme that would prove to be pretty disastrous if Bitcoin were to actually proliferate.


            “What would those be?” – provably fair elections, provably fair gambling (already happening), contracts, markets, exchanges, all done in a decentralized distributed way. Meaning cheaper than the status quo. Also just because they don’t solve a problem for you right now, doesn’t mean it will not solve a problem for half the world. The potential is huge, and the “flawed currency scheme” is what makes it work by incentivizing the participants to secure it and process the transactions, without the “tokens of value” the blockchain doesn’t work.

          4. James King

            “… provably fair elections, provably fair gambling (already happening), contracts, markets, exchanges, all done in a decentralized distributed way. Meaning cheaper than the status quo.” – NakedBits.comNo, not cheaper than the status quo. To the contrary, Proof of Work creates tremendous costs in energy and capex. The marginal costs to create new bitcoin, as I stated previously, is huge right now. This is being circumvented with off-blockchain transactions which defeats the purpose of a transparent general ledger.Some of those things you pointed out can also be accomplished without blockchain tech.”… the “flawed currency scheme” is what makes it work by incentivizing the participants to secure it and process the transactions, without the “tokens of value” the blockchain doesn’t work.” – NakedBits.comThe “tokens of value” are the problem. It’s unlikely that Bitcoin can be both a medium of exchange and an appreciating asset. As long as the value of bitcoin rises, there is no incentive to exchange them. If their value doesn’t rise, there’s no incentive to invest in them.The ideal state of a currency is equilibrium between supply and demand. The way fiat currency addresses this state is through expansion and contraction of money supply. Bitcoin won’t have that option. As the demand for the currency increases, it will have to be divided into smaller units, each of which will be less in absolute value and MAY represent less in relative value. This is an inflationary state.

      6. Vasya Pupkin

        The bizarre aspect of bitcoin is its currency status. Why does anyone want to take on currency risk for regular transaction if we are all getting paid in dollars?

      7. Peter Renshaw

        “… The Internet did not replace something that was doing the exact same thing — it was an advance of capabilities. …”Not really.A smaller scale Internet lived on networked *NIX machines before the Internet exploded.You can sort of get an idea what it was like by reading: Paul Ford, “I had a couple drinks and woke up with 1,000 nerds” ~…The Web, which sits on top of the Internet, that’s something completely different and it totally fits your description.The World Wide Web changed everything.

    5. awaldstein

      We had email in 1994. Changed the work lives of every single person who used it immediately.I see the similarities generally and anything that reaches the mass market has certain stages but the dynamics are just different to me.

      1. sigmaalgebra

        In 1983 or so, when I was a B-school prof, I was also Chair of the business school computing committee. I’d led an effort to get us a time sharing computer (instead of punched cards from the university center), and the little team we had running it (I’d run one while in grad school) was bright. The main guy was pushing e-mail, and, sadly, I failed to see the potential. And, really, then and there, there wasn’t much potential. Later, sure BOOM, it exploded.So, in 1985 I was at IBM’s Watson research lab, and presto, bingo, the whole company was being run via interactive computing, much like the Internet now — 3600 mainframes around the world, where people could log in, and connected via bisync lines where the mainframes also acted as packet routers.So, we had fora, or if you will, blogs, and were just awash in e-mail, on-line phone books and org charts, etc. We’d use the computers for word whacking, etc. The whole thing was called VNET and was based on VM/CMS and not on MVS.So, one day the lab had a talk from an executive from elsewhere in the company, and some of the questions were about IBM selling something like VNET to ordinary customers so they could do what we were doing inside IBM. The executive got torqued, claimed no “business case”. Gads.Soon, of course, IBM was running the Internet, took it over from NSFNet who took it over from ARPANet or some such. So, IBM was running the whole thing. They could have been right out front with Web browsers, search engines, fora (Yahoo Groups), social, etc. Nope, they didn’t do that.But in Research they did have a group working on ‘wearable’ computers. Ah, that’d never happen, right?They were way ahead, had it all in their lap, but just didn’t connect.Here is some of why: As I recall, the last of the water heater mainframes had a processor clock of about 150 MHz. Gads, should be able to beat that by writing an emulator in C for the 370 instruction set and running in on a smartphone! The idea that a computer that IBM sold for $1+ million would be replaced by a chip for $200- or, if push it, maybe about $20 with hard disks of 1 TB for ~$70, quantitiy 1, retail, also Ethernet at 1 Gbps in millions of living rooms — tough to get people to believe such things!But, it wasn’t just Moore’s law; there were also the optical fibers, heavily from long, hard, brilliant work at Bell Labs, things like GaAlAs junction solid state lasers!

          1. sigmaalgebra

            Yes, Godin was ‘too early’ for videos of people playing computer games. I know what he was saying! At one time people were doing romantic match making with, say, an office with a library of video tapes, one tape per ‘member’. I pursued a project to have such content, and more, all digital.We were too early for the technology: Then all digital for video, etc. was wildly expensive if doable at all. And we were before the explosion of the commercial Internet which meant that people would do such romantic searching in their PJs at home and never go to an office. So, our project was obsolete before we could get the first work done.One or a few guys back there in IBM Research took a mainframe, which actually had a lot of I/O bandwidth for the time, wrote some good ‘channel programs’, that is, the low level part of I/O programming, and got a video server, could serve 100+ or so streams of video.Why would anyone want a video server? Hmm …! YouTube, Hulu, NetFlix, …! At least someone saw that there should be a need for video servers. Nice.But what really made video servers reasonable was not tricky I/O programming or a big, specialized project but just the huge, astounding progress in computing for desktops, e.g., 4 core, 8 thread processors at 4.0 GHz with 8/16/32 GB of main memory, SATA I/O at 6 Gbps, 1 TB hard disks, 10 GbE network interface cards (NICs), on motherboards for $200-. Astounding stuff!There’s a lesson here: Roughly, a charging herd of elephants can overwhelm nearly anything done by some mice. This is too obscure, but there is: Once I had a chat with a guy about a Lisp computer. So, could build a special purpose Lisp processor and get the world’s fastest Lisp. Right away he explained: Such things won’t work. Instead, by the time come to market and grow a little, general purpose processors, say, for people to look at e-mail, pictures of family, do word whacking, browse the Internet, will improve so fast that a general purpose processor with some software will run faster, cheaper, cooler, etc. than your special purpose Lisp chip. So, you will have to design another Lisp chip, and doing that often enough to keep up will be too expensive. Or, to heck with a Cray supercomputer — now a smart phone is faster!Ah, need to collect some initial data for my project. So, last night saw that while I easily wrote TCP/IP code to automate getting HTTP data, writing code to automate getting HTTPS data would be much more work. So, …, right, discovered cURL, got it installed, and used it. Nice! Amazing chunk of work, and really nice piece of software. The Internet is just astounding, fast, cheap, powerful. Looks like I’ll be able to get some nice data!Net, the progress in speed, costs, capabilities of digital processing, storage, communications, and infrastructure software from PCs to the present is beyond belief.Godin, in his post you linked to, discussed ideas. That’s a hot button topic for me: Never again do I want my work or business project made obsolete by some chip sized electronic wonder worth $200-. Instead, I want a project that will serve a lasting need and some crucial, core technology too difficult for essentially everyone else to duplicate or equal.

          2. Chimpwithcans

            Your last paragraph resonates with me. I think you are right on the money to focus on ideas and making something essential, rather than just faster and more efficient. By my understanding – if Godin’s ideas are to be followed – that means you must focus on building a community around your idea, which takes time and consistency. Love your dating video library story. The web broke a lot of ideas wide open!

    6. Salt Shaker

      BTC at its core is an alternative monetary platform, while the Internet isn’t an alternative to anything! The Internet is arguably one of the 5 greatest technological advancements in the history of man. Not to suggest there aren’t inherent benefits to BTC, potentially there certainly are, but a comparison to the Internet, certainly at such a nascent stage, is hyperbolic (and somewhat of a disservice in securing acceptance). Education and realistic management of BTC’s perception/expectations is critical to indoctrination (and to date has been managed somewhat poorly). Over-hype has been the “kiss of death” for many a product/service.

      1. Pete Griffiths

        If the point of what bitcoin represents was the fact that it is a financial exchange app you would be right. But the real point is the blockchain and distributed trust and what that represents is a huge (I do not use the word hyperbolically) advance that is still poorly understood.

      2. William Mougayar

        Exactly. Hype and hyperbolic promises is what crashed the Internet in 2000 as well.

        1. Jim Peterson

          The Internet never crashed- just stock prices of internet firms

          1. William Mougayar

            i meant the internet economy, internet companies πŸ™‚

    7. jason wright

      “The seats are better for those arriving earlier”Yahoo/ GoogleNetscape/ ExplorerMyspace/ FacebookMany/ YouTube…those arriving earlier keep seats warm for those arriving later. the bumpy ride unseats…

      1. William Mougayar

        Well, if the first seats are cheap, the learning is cheap. I was referring to users that need to gain experience early. But I get your point about companies being pioneers and getting the first arrows.

  13. Kasi Viswanathan Agilandam

    “these pretzels are making me thirsty”

    1. JimHirshfield

      George Costanza?

      1. Kasi Viswanathan Agilandam

        remember that episode?I like the way Kramer says it….

  14. p7r

    I’m still bearish on crypto currency because it is conceptually so hard for so many people to grasp still. It’ll be interesting to see how it pans out.

    1. Kevin Stecko

      I agree that this is the main problem with Bitcoin. I remember when RSS was supposed to be the next big thing, but the “average” person could never wrap their heads around it and now it’s mostly dead, to steal a phrase from The Princess Bride. Just because something is potentially useful doesn’t mean it will be adopted by the masses, and if it’s not adopted by the masses it won’t be all that useful.

  15. Gideon Sylvan

    Do you ever see Bitcoin as a mainstream currency, and if so, how do we avoid the inflexibility of a fixed supply for macroeconomic stability? If not, how do you see the digital currency being used in the long run (at least 20 years away)?

    1. CJ

      I see Bitcoin as liquid gold. An asset that people can use to park their money, have it appreciate (hopefully), and trade without conversion. The biggest problem is that almost everyone recognizes that gold has value and that’s what gives it its value…and its shiny. Shiny helps.Bitcoin isn’t shiny and has to be explained and is hard to understand. In an age where a ton of people have an issue understanding email, Bitcoin faces a huge uphill battle when trying to convert people who don’t speak in URLs. And it’s not shiny.

      1. iggyfanlo

        Your thinking is exactly where the IRS ended up… it’s a store of value (see my comment yesterday). And whether it’s shiny or not… the only things needed are scarcity, transportability, verifiability, and then acceptance… some societies have used stones….Great book on Gold

      2. Gideon Sylvan

        To some extent I both agree and disagree with you. Bitcoin is similar to gold in that it is influenced by the public, but it is different in three major ways (not including how established it is):1. Gold’s shininess is of real value to aesthetically-related markets such as the jewelry market.2. Gold has industrial value in industries such as electronic manufacturing and previously dentistry. 3. Gold’s quantity is not fixed because it can be manufactured at an atomic level, not to mention discovered on levels we are unsure of (ex. Planetary Resources is planning to mine asteroids).

  16. andyswan

    Very strong.

    1. JimHirshfield

      The metrics? Fred’s post? Or your sour mash?

      1. andyswan

        Yes No Yes

  17. Mario Cantin

    The lower it goes, the more of it I can afford to buy. It’s all very good news for me.

  18. vruz

    In 1994 there were people who said I paid too much attention to the internet.In 2014 they still complain that the world doesn’t seem to stop spinning.

  19. iggyfanlo

    I have to say, when you talk about BTC, you sound like an entrepeneur… optimsitically pointing to the positives that are driving your thinking… welcome to the light side

  20. Richard

    Peter Thiel’s recent book talks about first mover advantage vs last mover advantage. It sure looks like the current bitcoin ecosystem has qualities of the former vs the latter.

  21. meredithcollinz

    I don’t think all you write about is bitcoin. I read avc daily, and I’ve learned an awful lot because of the diversity and depth of your posts (and the comments). A year ago, I knew nothing of this world and fumbled blindly through my first conversation with investors at a conference. Today, I certainly don’t have all the answers, but I definitely understand the questions and know how to find the needed info thanks to you and the avc community. I also have a 12 week old social songwriting MVP that took on a life of its own and that people are actually paying $$ to participate in! So, thank you! Maybe we’ll add a bitcoin payment option soon!

  22. Emily Merkle

    I only write about what I think about.

  23. RichardF

    I’ve read every comment for the past three days and nobody has yet to come close to answering why I should go to the effort of buying bitcoin, what am I going to do with it? What am I going to use it for right now? If I could buy chocolate 50% cheaper by paying for it in bitcoin I’d be all over it.I love the idea of bitcoin but there is just no incentive for me to use it. It’s a shame that transaction fees are imposed for small payments because micropayments would be a great place to start. People could get comfortable using bitcoin for minimal risk.Hopefully someone will come up with something incorporating bitcoin and the only method of payment will be using bitcoin and it is so appealing that people will feel compelled to use it.

    1. JLM

      .Bitcoin strikes me like men’s ties — we willingly wear them from time to time but nobody can explain why.If we were inventing ties today would we be able to make an argument as to their utility? And yet we wear them like lemmings.Bitcoin is cool but I can’t find any real utility for me and every — EVERY — argument advanced does not provide a service I cannot currently do with WFB, USAA or Schwab.So I ask myself — why?Crickets.I am a skeptic not an opponent.JLM.

      1. LE

        but nobody can explain why.A better question is if you are Bill Gates and have been the richest man in the world and you have the whole world wanting to do business with you and blowing smoke up your ass (24×7) and you actually, in the past, spent a great deal of your time not even showering (while building your company) why do you wear suits and ties now? I mean I thought Zuckerberg was foolish to show up in a hoodie on Wall Street but by the time you get to be Bill Gates it might be time to get comfortable and let your hair down.You know when foreigners show up in our country they wear their native garb that they are comfortable with. It’s not like he needs to get all dressed up to get respect or anything.And yet we wear them like lemmings.I don’t. I hate wearing a tie or a suit or even a sport coat. I will avoid that at all costs. I’ve actually found it to be helpful. People tend to underestimate someone who “isn’t dressed the part” and let their guard down.

        1. sigmaalgebra

          Yup, Gates, Zuck, Larry, Sergey are all rich enough to wear whatever they want!

      2. LE

        If we were inventing ties today would we be able to make an argument as to their utility? And yet we wear them like lemmings.A non starter of course not.The utility dates back from a separation of the working class from the wealthy people (my take). White collar vs. blue collar. Sunday best and all of that. Emulation of upper classes (you know tans used to be frowned upon).I learned a bit about the behavior of working class people dressing well when I was a kid and observed the behavior of people that worked for my parents.Case number one was a black man who worked in the warehouse. He would always wear nice clothes in transit but then change to work clothes at the warehouse. He could have easily just worn the work clothes to work or something that wasn’t as nice for sure. Another example was the cleaning lady that worked for my mom. She would do the same thing. Not to mention that when my mom dropped her off at home she would not want to be dropped off at her house but down the street so her neighbors wouldn’t see or think she was “a cleaning lady”. (I think she arrived by public transit..)I’ve noticed that (at least back in the day I don’t know how true this is now) african americans tend to put more emphasis on looking good because they are judged differently than whites dressed the same way. For example I can dress one way (dungarees and tshirt) but a black man dressing like that wouldn’t get treated the same way that I do. Just like I can drive a nice car in dungarees and a tshirt and I’ve never ever been stopped by the cops (despite not even having a front license plate on my car in a state where they are required). I am quite certain that you aren’t stopped for “driving while JLM”. Just so you know it’s not the pocket square that is doing the magic.Ties are a convention that dates back to a different time and place. The “dapper” era.It’s not a matter of whether they are needed or not but what is going on in your brain.You know the party. I know to you (iirc your various comments specifically the “pocket square”) dressing well is very important. So for you it works that’s the way you are. You would definitely feel uncomfortable dressing the way I do. I got my first “big” contract in a down vest going up against Xerox salesmen dress in suits.Also noting that in real estate and what you did in particular it would be quite inappropriate to not dress that way. Just like I didn’t show up for my wedding not dressed appropriately and wore a tux.That said I think that people are way less judgmental of dress today than in years past.

      3. ZekeV

        The tie stems from the cravat worn by Croatian mercenaries in the 17th Century, when it arguably played a functional role in the uniform of men who engaged in ferocious hand-to-hand combat. We continue to wear its sartorial descendants today for reasons that are hard to explain. Though clearly, if you fail to wear a tie in select company, the omission could disadvantage you. In that sense, I would say the tie has much more in common with sovereign currency and legacy payments networks, than it does with bitcoin.

        1. JLM

          .Haha, great explanation. I knew someone would rise to the bait.Actually ties were first worn by Roman legions to identify their units but also to provide material for a tourniquet or a bandage. Today American soldiers carry field dressings as part of their basic TOE.Even today in the Army, different branches (infantry, artillery, armor, combat engineers) wear colorful scarves with their uniforms on pay dayI used to spring my combat engineers out of the stockade when they had beat the crap out of the MPs and medical service corp soldiers (hardly accurate to call MPs soldiers mind you) because they had matching color scarves. My combat engineers used to whip them and steal their matching scarves.Surely you agree that the arcane explanation of ties correlates more closely with the arcane explanation of bitcoin?Bit of advice on hand to hand combat from someone who was a paratrooper and a Ranger and schooled in its delicate intricacies?Always carry a pistol.JLM.

          1. ZekeV

            It is hard to disagree with you when you invoke your service history and hard-earned knowledge of the world.

          2. JLM

            .Good sport. Your comments on bitcoin are very insightful. Keep it up.Well played.JLM.

      4. tuneyards

        Good for you, being an American with access to a broad range of financial services. There are many people in the world who don’t own a tie, and don’t have access to those services either.If we were all using Bitcoin already and you invented internet money/payments that required banks, that didn’t transfer outside of office hours, that required permission from someone to use, that could be frozen and that got its value eroded year on year by inflation would it catch on?

        1. JLM

          .So we’re not talking about reality but some alternative parallel universe? Bitcoin is going to require access to the Internet most generally, is it not?Once you have access to the Internet aren’t you going to have access to Charlie Schwab and his merry band?Anyone who is short of ties let me know and I’ll send them one.JLM.

          1. tuneyards

            I was talking about the same alternate universe where the tie was not invented :)But anyway, your assumption is not correct. You should check the numbers on how many people in the world have a bank account versus how many have a cellphone. You might be surprised.

          2. tuneyards

            Another interesting stat I found from CNN: “About 8.2% of U.S. households, or nearly 10 million, lack a bank account, according to survey results released Wednesday by the Federal Deposit Insurance Corporation. That’s up from 7.7%, or about 9 million households, in 2009.”

          3. Chimpwithcans

            I’ll take a JLM tie, and I’m expecting pictures of tanks or WW2 fighter planes on it πŸ™‚

    2. pointsnfigures

      agree-no reason to buy it yet. but keep watching and don’t get frustrated.

  24. Matt Hardy

    Is there any rhyme or reason that you usually wait until later in the day to tweet out your posts?

  25. James Ferguson @kWIQly

    > I write about what I think about. So take that for what it is.Trouble is that can have you writing about EverythingI just guess you are in a depth-first phase

  26. Salt Shaker

    Speculative investment or a legitimate transactional tool?The latter requires wide BTC acceptance by merchants, which is still very spotty and at a nascent stage. In the 80’s, Visa started running a very successful ad campaign to drive both merchant and user acceptance (“It’s Everywhere You Want To Be”). It addressed Visa’s perceptual shortcomings by focusing on all the cool places where the card can be used. BTC at this stage lacks widespread merchant acceptance. Its success is conditional on educating merchants, as much as, if not more so, than consumers. (One of the charts in Fred’s slideshare indicated merchant acceptance is lagging industry forecasts.) Solve the merchant distribution/acceptance prob, and you have a legit transactional/growth platform. Likely a long (and expensive) educational process.

    1. JLM

      .People fail to recognize what a great performance VISA had v Amex when they emphasized the “credit” aspect of VISA.This is the big difference between them.Amex has come to the credit party — late and awkwardly dressed.JLM.

      1. LE

        Amex has come to the credit partyI’m always amazed at the exclusivity that Amex has been able to brainwash into people that surrounds their “charge” card.I mean imagine being able to convince someone that it really mattered what the store clerk or restaurant waiter might think if you were using an Amex card vs. Visa. or MC. That somehow you were not only special but the person getting the card would think you were special because of that. And something good would happen enough to pay for the yearly fee.I’m not saying that there aren’t markers for success that somehow pump you up (in your brain) and make you feel better about yourself (whether deserved or not). Meaning there is a benefit even if there isn’t an actual benefit. I just would have never guessed that you could build a “charge card” brand (what the original Amex was) around it.That said Amex was built in a different place and time. I don’t think they could have done what they did if they started in the 80’s or 90’s etc.

        1. JLM

          .Good point as it relates to the segmentation of the type of Amex card. I can’t figure out which is the ubercard metal type anymore.JLM.

        2. PhilipSugar

          Try and get a charge reversed. It is clear: Amex = on wealth consumer side, Visa = on merchant side. No different than the fees.I still use VISA much more now that they have cash back, but it is simple who has my side and who does not.

          1. LE

            As a Visa/MC/Amex/Discover merchant (since the 80’s in two different businesses) I haven’t found that to be the case. Perhaps it is for major merchants (I don’t know). All I know is that if a customer sneezes it’s on the merchant (who is guilty) to show otherwise. And gets hit with not only the chargeback but a chargeback fee.All that “not responsible for unauthorized charges” falls on the merchant.Now if you are talking about Amex and some kind of system they have to insure satisfaction in legitimate transactions I’d be curious about that benefit but only curious. I don’t really have a need for that type of protection personally.

      2. Richard

        Yep, Credit (revolving) was the killer feature of credit card industry. Without this feature, Bitcoin remains a cult.

  27. LE

    Of the above the most interesting number and indicator to me is “Merchants annual Revenue”.

  28. RichardF

    Maybe bitcoin should run a worldwide mega lottery with 99% of ticket revenue going into the prize fund

  29. LE

    I bumped into a friend of mine last night who said β€œall you write about is Bitcoin.”To me that clearly shows that he doesn’t check the blog everyday.So it’s what I call “a lever”. [1] The days he has checked it coincided highly with posts about bitcoin or perhaps even other days he thought about you (not in a carnal way of course) when he read a story about bitcoin.[1] A lever (my term) is when you have little exposure to something so anything becomes way more important because it happens out of context to the larger picture and before you have a full grasp on what is “typical”. For example if you move into a new house and on the first day the dog is barking and also on the 2nd day as well you will assume “we will have a problem here”. Something that you wouldn’t assume if you lived there for a month and then heard barking two days in a row.

  30. Thorsten Claus

    Thanks for sharing the numbers! There’s a puzzle I’m trying to solve in the past couple of weeks and I know I’m missing something, maybe you can help:I looked at three figures:(1) The estimated number of noncash payments, excluding wire transfers, in the U.S. was #122.8 billion in 2012, with a value of $79.0 trillion. The number of noncash payments in the United States increased at a compound annual rate (annual rate) of 4.4 percent from 2009 — which is about $3.5bn in — or $98.0 trillion in 2017 if that CAGR holds (2013 Federal Reserve Payments Study).(2) Mobile money transfer will have a volume of $495bn in 2017 (Deutsche Bank).(3) Mobile purchase payment volume will be at $318bn in 2017 (Deutsche Bank). Let’s keep aside the use of bitcoin for the unbankable or uncardable for a moment (something Visa or Mastercard will be happy to use Bitcoin for). I think that Bitcoin for purchases or as a financial vehicle for money transfer is not supporting very high bitcoin prices, and I must be missing something (for example: native Bitcoin/Blockchain applications using Bitcoin/Blockchain as an actual currency and not as a proxy for USD): Let’s assume for the fun of it that 1% of all of above transaction will be made in Bitcoin. That would mean $980 billion noncash payments in the U.S. in 2017, or $5bn mobile money transfered, or $3bn mobile purchase payments. At a target bitcoin price of lets say $1,000 USD that would mean that the volume of noncash payments in bitcoins is #980 million bitcoins, or #5 million bitcoins volume for mobile money transfers and #3 million bitcoins volume for mobile payment purchases (and higher target price for bitcoin = less bitcoins traded). but of course bitcoins are indefinitely devisable (while the U.S. Dollar has a cent as the smallest cash-value denomination, let’s leave aside some banking and stock oddities). For noncash payments, if the assumed 1% of $$ value is equal to 1% of ## volume (unlikely, but let’s roll with it) then we have #1.2 billion transactions, so about #0.798 bitcoins per transaction average (another cringe: average for transactions… I wish I could get a median). In that case the average noncash payment transaction in bitcoin would be worth $798, per our assumption of $1,000 per bitcoin. really? Maybe with a lot of good will and some car purchases… but not in my case, and I would consider myself on the high end of noncash payments.Somehow I’m stuck and cannot quite wrap my head around it… I think I’m looking at it from the wrong angle…

    1. tuneyards

      One thing you’re missing is that Bitcoin is also used speculatively and as a store of value. If Bitcoin even captures 1% of the wealth storage function of gold, that’s $10k per BTC alone. Bitcon is many things all at once.

  31. jason wright

    bitcoin = ‘money’block chain = protocolboth are really interesting, but quite different.Tim Berners-Lee speaks;…the block chain could help with his idea about the ownership of the personal data we generate every day on the interwebs.

    1. Pete Griffiths

      Absolutely correct. The block chain is a deep advance that is the foundation for a whole new class of applications.

  32. disqus_igxgvwFK9C

    I think this would be much more meaningful as a metric if it said ‘merchants’ annual revenue – (IN BTC)’ . Why is merchants’ bitcoin revenue excluded? If all merchants accept it but individuals don’t get enough benefit from switching to acquire and spend bitcoin, the other metrics don’t matter. There’s no guarantee that ease-of-use or other tech improvements will spur usage, if the financial advantage is small..

  33. Pete Griffiths

    Fred – I am concerned that constant references to ‘bitcoin’ are making what is really going on. People seem to think that the significance of bitcoin is some kind of better medium of exchange. The key advance however, as you well know, is distributed trust. And with distributed trust whole new families of applications become possible – not just a torrent of altcoins/cryptocurrencies.People are looking at the finger instead of where it’s pointing.

    1. fredwilson

      i love it when there are so many naysayers and the more vocal the better this is a great sign.

      1. Pete Griffiths

        From an investor’s point of view it’s great if people are missing the point at some stages of the adoption cycle. But it would be nice to be on the real page at some point. πŸ™‚

  34. mechtronic2001

    Is anyone looking to make investments with their bitcoin?

  35. nycbtc

    Questions:-Does the wallets number cover all wallets or only those that have bitcoin deposited? An empty wallet that someone created by giving blockchain their email address is not really an active bitcoin wallet.-Merchants: does the merchants number exclude those who have never received a single payment in bitcoin?-Merchants’ annual revenue: irrelevant-Unique bitcoin addresses: unclearVC investment: yep there has been a lotMedia mentions: yep lots(the last two things don’t mean something will become successful!)Technology: Github repositories: not growing very fast if you consider the small base.

  36. Mark

    These numbers are great, but there is a very big problem that isn’t being discussed enough. People that want to create bitcoin services in the US cannot find banks to work with them. You can build web apps with reckless abandon, but if you want to build a bitcoin app, you have to find a bank that will not only deal with MSBs, but has a stomach for bitcoin as well. On top of that, you must be licensed as a money transmitter in every state or (maybe) face prosecution. These obstacles are probably throttling those numbers significantly, and are going to lead to less reasons to adopt.I am very bullish on the technology, but the bull is in a swamp.

  37. CryptoOptimist

    Bitcoin will win in the end.It may take 10 years but the world needs a global currency and Bitcoin will become the “one world currency”. Naysayers should simply accept this. The Bitcoin community is diverse and growing far beyond it’s arch tech geek roots.…The low transaction volume will be solved with the “Linear Leak” issue is fixed. The Circle will close when Bitcoin starts becoming a local retail currency. This is starting to happen as more and more people realize that Bitcoin is… REAL MONEY.Please read the “History of Money” by Jack Weatherford and you will see just how perfect Bitcoin is as a currency and as money, two different things.This is a good article on the economic terraforming that we are just now beginning to see as the technocratic age begins to truly gear up.

  38. We Are Innovation

    This is a great insight and lively conversation below. Thanks for sharing. It’s important to understand the real value of such innovations and impact on economy to estimate what are the key risks and threats. Interesting to find such a vivid divide between supporters and non-supporters. Anything new and starting has it crowd of reluctance to change, and to some extent it is fair as it allows a mindful roll-out. The Economist recently analyzed that currencies as we know them today will disappear, question is what will actually replace them, and Bitcoin already has a step into it. I suppose the greatest threats are around overestimating opportunities, volatility risks and security.

  39. jason wright

    one of the clearer cases of market manipulation i’ve seen recently.