Former paypal COO, David Sacks, discussed bitcoin and cryptocurrency during a recent interview with CNBC. During the interview, Sacks articulated that bitcoin is fulfilling the vision for a digital payment network originally held by Paypal, and expressed his belief that cryptocurrencies pose a significant threat to the venture capital sector.
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Bitcoin and Cryptocurrency Are “Maximizing the Efficiency of Every Asset, Means of Ownership, Fluidity of Markets, and Mechanism of Payments” – David Sacks
Silicon Valley veteran, David Sacks, discussed bitcoin and cryptocurrency at length during a recent CNBC interview. David Sacks is the former Paypal COO, founder of Yammer, and early investor into Facebook, Uber, and Airbnb.
Sacks describes “bitcoin [as] fulfilling PayPal’s original vision to create ‘the new world currency’.” For sacks, Paypal’s belief was to get “enough people to participate” so that “money would never need to leave the system. PayPal could become the database of money.” As with bitcoin today, Paypal “added features like interest and debit cards so you’d never have to withdraw funds to the legacy banking system.” Sacks states that “cryptocurrencies like bitcoin are now fulfilling that original vision. They are doing it in a decentralized way… whereas PayPal tried to do it in a centralized way.”
Sacks recently described bitcoin and cryptocurrency as potentially comprising ‘Web 3.0’ via Twitter. Addressing the comment, Sack told CNBC that “it feels like we are witnessing the birth of a new kind of web… Ultimately this is a technology for maximizing the efficiency of every asset, means of ownership, fluidity of markets, and mechanism of payments. The goal is the optimization and maximization of the world economy. That may make it the biggest revolution of all.”
For Sacks, many within the United States underestimate the value of bitcoin’s utility due to relative stability and success of American financial institutions when compared with states possessing underdeveloped economic structures. “People in the U.S. — and especially longtime participants in the U.S. financial system — have tended to underestimate bitcoin because we have long enjoyed relatively stable political and financial systems. People in parts of the world with less trusted systems have gotten it sooner because almost anything would be preferable to having their life’s work trapped in a fiat currency that could collapse or be confiscated at any moment.”
“The Terms of Crypto Capital Are More Favorable to Entrepreneurs Than Venture Capital” – David Sacks
Sacks also addressed the growing Initial Coin Offering (ICO) industry, and the likely ramifications that increased ICO regulations may have upon cryptocurrency. Regarding ICOs, Sacks believes that “the trigger for a big correction is more likely to be regulatory than technical,” adding “hopefully it will be a soft landing rather than a nuclear winter.”
For Sacks, the future success or failure of the ICO industry may depend upon if the “SEC is able to distinguish between “‘protocol coins’ (which have an actual use in a software ecosystem and should not be viewed as securities) and ‘asset coins’ (which are securities).” If the SEC makes an appropriate determination, Sacks believes that increased regulation “could be a positive thing if all the scammers and pumpers get washed out of the space…. Many of these ICOs are still just slideware.”
Sacks views ICOs as a direct threat to the current venture capital (VC) business model, stating that “a lot of start-ups that would have sought venture capital can now raise money through an ICO… The terms of crypto capital are more favorable to entrepreneurs than venture capital… All of this being said, the SEC’s rulings in this area will have a huge impact on how this plays out. If those rulings support innovation, that will lead to a more competitive world for VCs.”
Do you think that ICOs pose a threat to the current business model employed by venture capitalist firms? Share your thoughts in the comments section below!
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