What will it take for Bitcoin to gain broad adoption and become the foundation of a new global financial system?
Worth Wray sat down with Barry Silbert, founder of the Bitcoin Investment Trust, to discuss. As one the most active venture capitalists in the industry (with investments in over 30 Bitcoin-related portfolio companies through the Bitcoin Opportunity Corp.), Barry has gone all-in on Bitcoin and Bitcoin-related businesses.
He believes the rise of Bitcoin from 2009 to 2014 is just the beginning… and the virtual payment system may be approaching a big inflection point as Wall Street takes the baton from Silicon Valley.
Silbert thinks about Bitcoin adoption in five general phases.
(1) Experimentation Phase. (2009–2010)
- No real value associated with Bitcoin. Hackers and developers playing around with the source code. Experimenting with Bitcoin as a medium of exchange.
(2) Early Adopters Phase. (2011–2013)
- Interest from investors and entrepreneurs started to grow with substantial press coverage in the wake of the Silk Road bust. First generation of Bitcoin-related companies (exchanges, merchant processors, wallet providers, etc.) started. Potential began to shine through poor management.
(3) Venture Capital Phase. (2013–Present)
- World-class VCs started investing in Bitcoin companies and rapid ramp-up is already outpacing the early days of the Internet. VCs poured more than $90 million into Bitcoin-related businesses in 2013 and more than $300 million in 2014 (compared to $250 million invested in Internet-related businesses in 1995).
(4) Wall Street Phase. (2015?)
- Institutional investors, banks, and broker-dealers begin moving money into Bitcoin. Rising price and volume (in addition to development of derivatives) become the catalyst for mass adoption as retail investment follows.
(5) Global Consumer Adoption Phase. (?)
- Only happens if (i) companies continue to innovate and make it easier for consumers to buy, hold, and spend Bitcoin, (ii) volume expands dramatically so that large merchants can start accepting payment in Bitcoin, and (iii) Bitcoin awareness continues to rise with these developments.
If Barry is right, the rise of Bitcoin could be as transformative for finance as the Internet has been for commerce and communications… and it could happen FAST.
To learn more about Bitcoin and hear more from Barry and other world-class thinkers, check out Mauldin Economics’ latest documentary, Why Bitcoin Matters.