BitAngels interview with David Johnston — The next bitcoin startups

William McCanless
Jun 4, 2013 at 21:47 UTC
Updated Dec 17, 2013 at 12:49 UTC


I recently had the pleasure of sitting down with David Johnston, the executive director of BitAngels, which is a network of investors that was sporadically formed a couple of weeks ago during a San Jose technology conference to create the first ever angel investment network for Bitcoin startups.

David hopped on Skype with me after having just flown into Mountain View, California for the week, where he was staying at an AirBnB location he dubbed the “Zen Pad”.

“AirBnB is part of the share economy,” he stated enthusiastically. “You rent out your place to travelers and they pay you like a hotel. Normally cheaper in my experience and nicer accommodations in good locations. There was a bar of chocolate and bottles of water waiting for me, I’ll put it that way. Amazing what the Internet and a free market can come up with – no more barriers we can just talk directly with one another person to person, much like Bitcoin.”

BitAngels began as a small idea – sort of a side bar during the technology conference – that somehow turned into the Project X of startup investment organizations.

“Mike Turpin came up with the name BitAngels and we invited like five people out to lunch, and like 25 people showed up.”

The numbers did keep growing. At the time of this writing BitAngels has over 100 Bitcoin alumni in their group made up of business owners, lawyers, programmers, and more waiting to fund up to six or seven startups in just the next few months. Early Bitcoin startups are set to receive anywhere from $25,000 to a quarter million dollars in funding at the higher levels.

BitAngels has grown so rapidly in just two weeks that they have received over 60 applications at the time of this writing, and most of them are being heavily considered. Not only that, but the group itself has spread to over 20 cities across the world, with many members offering office space in places like San Francisco, New York, and Austin.

David talked in length about some of the interesting startup applications BitAngels has already received and may be announcing funding for shortly.

  • Bitcoin Transfers Through Social Media – One BTC-based application wants to make it possible for people to send Bitcoin through Facebook, Twitter, and other social media avenues. David says this will likely be one of the first companies they announce funding for, and the idea is incredibly exciting. The easier Bitcoin is to use and transfer, the more legitimate it will become, and the marketplace as a whole will become more stable and steadily profitable. Imagine being able to send BTC to someone as easily as you would a tweet or FB message, that would trump even PayPal transfers.
  • Better Wallets – One thing about wallets is, if you haven’t put in the research, they’re kind of confusing. You have web wallets, mobile wallets, software wallets, and paper wallets. Of course, the safest wallet is paper or “cold storage,” which can be a hassle. Software wallets can be hacked, even if they’re encrypted – not only that, if your computer crashes, it’s the equivalent of your safe disappearing into the proverbial ether (money go bye-bye). Web wallets and mobile wallets are definitely more convenient, but are at a much higher risk of theft and hacking. Any startups that can achieve funding for the development of easier, more secure wallets with a greater mass appeal will definitely help change the landscape and make Bitcoin more accessible to – let’s say – your grandmother, or your friend who still doesn’t understand what Twitter is. David says he’s gotten a lot of applications in this area.
  • Colored CoinsDavid talked a lot about colored coins in our interview and for good reason. Many of you reading this right now may not know what colored coins are, so I’ll do a little ‘splainin’ because it’s super cool. Originally, bitcoins are fungible and operate as a neutral medium of exchange. However, imagine if you could track the origin of any given BTC and essentially “color” it in order to distinguish it from the rest – kind of like if you had a stack of Benjamins and decided to mark a few of them with a highlighter in order to set them apart (or color a mustache on ol’ Franklin). By coloring the coins, they can be provided with special properties by either an issueing agent or a Schelling point, which will give them value independent of the face value of the underlying bitcoins. What does this mean? Well, it means that specifically colored bitcoins can be used for alternative currencies, commodity certificates, smart property, and other financial instruments such as stocks and bonds. Basically, these colored bitcoins can be stored or transferred without the need for a third party and be exchanged for one another in an atomic transaction, which may open the way for decentralized exchanges of things that are not possible by traditional methods. Neat!
  • Compliant US Exchanges – This is a biggie. David says, “There aren’t that many exchanges in the US that have navigated the regulatory problems and regulatory issues around being a money transmitter.” And, right now, we’re all currently under the mighty whim of Mt.Gox or one of the other exchanges that, let’s face it, are just a nightmare to fund and trade on. With the upcoming new US exchange launching soon, we can not only have a more convenient US alternative to Mt.Gox, but make sure we are completely compliant with the US government, which is a really good thing – it provides more legitimacy to the currency. We want to be friendly with the feds – you know, take them out to dinner, show them a good time, but definitely don’t enter into a monogamous financial relationship.

Because BitAngels is made up of a large and growing group of alumni, it is able to provide social capital. As David says, it’s costing less money to start businesses now, which makes social capital more and more important. With all of these experienced alumni working together to fund Bitcoin startups, it allows for an amazing amount of room for growth in the overall digital currency economy.

If you think you have the next big idea for a Bitcoin startup head on over to BitAngels.co and submit an application, chances are they’ll be happy to hear from you.

Oh, and for those of you wondering whether or not BitAngels is concentrating solely on BTC and completely ignoring alt-currencies – they’re not. When asked whether or not they will consider alt-currency startups, David issued an emphatic, “Absolutely” followed by a resounding, “Monopoly is not a healthy thing.”

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.