Chamath Palihapitiya: Bitcoin is Moving Past ‘Amateur Hour’

Carrie Kirby
Mar 26, 2014 at 21:52 UTC
Updated Apr 15, 2014 at 13:44 UTC

In a wide-ranging, pointedly honest and often funny on-stage interview with Bloomberg BusinessWeek writer Brad Stone at CoinSummit San Francisco on Wednesday, 26th March, venture capitalist and former Facebook and AOL executive Chamath Palihapitiya reflected on the future of bitcoin and on the changes the bitcoin ecosystem is undergoing right now.


Though he had just flown in from Toronto for day two of CoinSummit San Francisco, Chamath Palihapitiya immediately opened his fireside chat on 26th March with a quote that arguably summed up the feeling of the conference, saying “I feel like I’ve traveled to Mecca” in a quip that garnered laughs from the packed crowd.

BusinessWeek’s Brad Stone followed by asking Palihapitiya to bring the audience up to speed on his recent investments, and he quickly illustrated that he remains bullish on bitcoin, stating his belief that “everyone in the world should have 1% of their assets in bitcoin”.

Palihapitiya took big topics head on out of the gate, dismissing all other digital currencies by emphasizing that his previous statement referred only to bitcoin, not other alternative currencies, and stating that the Internal Revenue Service (IRS) guidance issued on 25th March was in fact a boon not just for the industry, but for the general investing public.

“For anyone who thinks this is a bad thing, it’s actually a really good thing. There has been tax policy that has been exploited by rich people for years that have allowed us to wash taxes on anything we own.”

Has-beens and also-rans

The troubles of Mt.Gox and several other recently failed bitcoin companies are “awesome for bitcoin,” Palihapitiya said.

“We’ve got to flush out all the has-beens and also-rans. There’s a bunch of amateur hour bullshit in the bitcoin ecosystem.”

“They will get replaced by a more systematic approach to problem-solving, the right checks and balances, the right regulatory participation,” he said. “The fact that the price stabilized after is even more important, because it shows the growing maturity of the bitcoin market,” Palihapitiya added.

CoinSummit, has a more business-focused mood than some past bitcoin events, with a notable absence of panels on libertarianism or floating extra-national communities.

This shift is exactly what bitcoin needs, Palihapitiya asserted.

“All of the folks that want to have a libertarian bent or some other political agenda and strap it in on top of bitcoin – it’s really bad for us. You need to replace them with people who have a technological motive or a financial motive.”

Bitcoin’s apolitical agenda

Palihapitiya made it clear that this is an important point to him, returning to it when asked about his biggest worries as a bitcoin investor:

“We need to divorce ourselves from all the political rhetoric. I don’t think this is meant to be a mechanism to evade taxes, a mechanism to push back on government structure.

If we can drop the ego-driven part of wanting to thumb our nose at the establishment, then what we’re left with is actually a Trojan horse that replaces the establishment. And that’s good enough.”

What he is not concerned about is the use of bitcoin for illicit transactions, like on the now-defunct Silk Road marketplace.

In the future, Palihapitiya said, bitcoin will be more crime- and terrorism-resistant than cash, because it will likely get to a place where bitcoin addresses are associated with real names – or even Facebook accounts. But even right now, US dollars are used for more illicit purposes than bitcoins, he stated.

“The CIA drops bushels full of money at the feet of Afghan warlords. What do you think they’re doing with that, buying bread and fucking cheese? That’s not what they’re doing with it. They’re harvesting heroin and killing people.”

Golden State Warrior

Palihapitya swore freely during his interview, usually drawing chuckles from a clearly admiring crowd. Stone jokingly asked when Palihapitiya, a partial owner of the NBA franchise the Golden State Warriors, would start accepting bitcoin for ticket sales.

“We’re working on a stadium, and are about to plow three-quarters of a billion dollars into the San Francisco economy. … As soon as we figure that out, we’ll talk to BitPay,” he said.

Becoming more serious, Palihapitiya said that big retailers such as Walmart will eventually want to accept bitcoin because it will cut their credit card processing costs and provide customers with fraud protection.

Here are some of the other topics Palihapitiya touched on in his lively conversation with Stone.

On Mark Zuckerberg’s opinion of bitcoin:
“I think he thinks it’s cool. I don’t think they’re going to do anything in the near term. I’m speculating. Here’s a  great thing that would be awesome, is if Facebook figured out how to partner or launch a secure wallet, and then how to apply their identity on top of it to create a whitespace within the blockchain so that transactions, buying between people who were willing to be named, have some mechanism to have an easier way of doing things, acknowledged by governments and tax authorities, etc. That would be a game changer for bitcoin overnight.”

On the true identity of Satoshi Nakamoto:
“Who cares? The only reason to care is because that person or group of people should be celebrated. … We’re all going to mythologize this now to kingdom come. It’s almost better if this person or group of people never became public, because then it’s really all of ours – and that’s what we want.”

On why he advocates for everyone owning at least a little bitcoin:
“When we look back after 30 years and these things are at $1m (dollars) a coin, I think it would be better if many people had shared in that appreciation instead of a few. That’s why I’m so evangelical about it. You can own one bitcoin, you can own five, you can own a few satoshi. Everyone should just have a little taste of it.”

Images via CoinDesk