Bitcoin's backers know they need to win you over

New applications are needed for wider acceptance, investors recently said

Bitcoin's popularity is growing, but even its biggest backers say it has a mountain of problems to overcome in gathering wider appeal.

"It's on the fringe," said Marc Andreessen, the Silicon Valley venture capitalist and Netscape co-founder, whose firm, Andreessen Horowitz, is one of the largest investors in ventures involving the Internet-based monetary system.

Bitcoin's current standing in the technology world is analogous to the early days of the Web, he said, when it was feared for its connections to child pornography and illegal drug sales.

The digital currency has found its way into a range of online services over the past year, boosting its popularity, but mainstream acceptance remains elusive.

There are numerous issues at play. People still aren't sure what to make of it, established digital payment systems generally work fine, and there aren't tons of exciting applications yet. Those challenges, and others, were laid out by Bitcoin investors Tuesday at CoinSummit, a San Francisco conference focused on Bitcoin and other digital currencies, which drew hundreds of entrepreneurs and others working in its expanding ecosystem.

One of the biggest challenges is that some people, particularly banks, may not trust Bitcoin yet, some investors said. "The lack of banks willing to take merchant accounts for new Bitcoin companies is a real inhibitor to the growth of the ecosystem," said Jeremy Liew, a partner at Lightspeed Venture Partners, during a panel discussion.

The Web, of course, was eventually embraced by the masses as it became useful for shopping, email, and many other tasks. Investors hope that Bitcoin will someday go mainstream as well, as its platform expands and new applications are developed.

But building trust in Bitcoin takes time, Liew said. "Trust is going to be a very important factor for companies in the Bitcoin space to grow," he said.

Still, investors have high hopes for Bitcoin, despite recent blowups including the fall of Mt. Gox, once the largest Bitcoin exchange, and mounting scrutiny by financial regulators and authorities across the world.

"We think of Bitcoin as being on the scale of the next Internet," said Balaji Srinivasan, a general partner at Andreessen Horowitz, during a panel discussion at the show.

One barrier to use is that people don't trust Bitcoin as they do paper money. When average people think about trusting money, Andreessen said, they think about whether they can trust the bank, or the U.S. Treasury, or the U.S. Mint. Using bitcoins requires trusting the underlying technology, which is a foreign concept to laypeople.

"We have to work hard to explain [the system], articulate it, simplify it, and make it understandable," Andreessen said.

Another issue is the fact that Bitcoin still doesn't have a killer app yet, said Micky Malka, the founder of Ribbit Capital.

Also, if companies working in Bitcoin want to see wider use of the currency, more protections should be put in place to verify the security of the technology, according to some speakers at the conference.

Andreessen Horowitz's Srinivasan said the firm would be interested in funding an "underwriters lab" for Bitcoin, which conceivably could provide electronic audits and safety testing for Bitcoin exchanges and other companies that might otherwise become the victims of hacks, as some reports called Mt. Gox. The idea has some support.

"These fundamental infrastructure components need to exist before [Bitcoin] apps can truly thrive," said Hemant Taneja, of General Catalyst Partners.

Some Bitcoin companies are trying to tackle these concerns. Coinbase, a Bitcoin exchange, wallet and payment processor that is backed by several high-profile investors, has pledged to provide quarterly security audits by outside firms. A recent review of Coinbase's system said it was operating according to security best practices.

Above all, Andreessen said his firm viewed Bitcoin as an ecosystem capable of providing a range of applications that might not even use actual bitcoins, such as peer-to-peer money-lending networks. One of the firm's goals is to build a portfolio of investments in all areas of the ecosystem.

Meanwhile, average people need to become more comfortable with Bitcoin and aware of its potential, he said. People were skeptical of the Web in the early '90s, he said. But by 1995 or 1996, he said, "they said, 'oh, this is pretty cool.'"

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is

Join the PC World newsletter!

Error: Please check your email address.

Tags Ribbit CapitalLightspeed Venture PartnersInternet-based applications and servicesMt. Goxe-commerceAndreessen HorowitzBitcoin FoundationmobileinternetanalyticsCoinbasemobile applications

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Zach Miners

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles


PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?