- Last week, at the bitcoin conference Consensus, 21 CEO Balaji Srinivasan, a partner at Andreessen Horowitz, moved the company’s purview forward again.
- Srinivasan frames bitcoin as the next major “system resource” in computing, something that will be a key component in every computer, just like a hard drive, RAM, and bandwidth.
- Bitcoin, he says, can be the resource that computers trade with other computers (without you having to worry about it), creating a “machine economy.”
- Once a computer can send a small amount of money as part of its operating system, “it can effectively rent or sell resources to other computers,” Srinivasan says.
- “One way of thinking about it is, the 21 software makes bitcoin a part of your operating system,” Srinivasan says.
An ambitious plan to remove the friction from all Internet commerce.
@readDanwrite: The “decentralized Internet” Richard on @SiliconHBO wants to create, using phones, is basically what @21 is doing:
Before 21 Inc. had even put out a product, it had raised $121 million in venture funding —the most of any bitcoin company. It was unclear, for months, what 21 would actually do or make. But some of the biggest names in fintech funding, including Andreessen Horowitz, Khosla Ventures, and the Winklevoss brothers, were interested enough to invest.
Then things started to move very quickly. In February, 21 released its first product—and it was hardware, a rarity among bitcoin companies. It was the 21 bitcoin computer, which allows for mining the cryptocurrency as well as building applications on top of the bitcoin blockchain, the open-source, decentralized ledger that underlies bitcoin .
The computer, which runs on Raspberry Pi (a small, single-board programming computer launched in 2012), sells for $400 and is about the length of an iPhone. It attracted a lot of buzz and attention in the bitcoin world.
Last week, at the bitcoin conference Consensus , 21 CEO Balaji Srinivasan, a partner at Andreessen Horowitz, moved the company’s purview forward again. He announced that the 21 software can now be installed on any Mac or Linux-compatible system (Windows is coming soon), and eventually will come to mobile phones. “Every computer is now a bitcoin computer,” he said.
And this is why 21 is arguably the single most exciting bitcoin company right now.
Most people on Wall Street, as well as regular, everyday investors (and Yahoo Finance readers like you) still don’t quite understand what bitcoin is, or why it matters. Many think it’s a scam or some kind of illegal tool for hackers. (The negative publicity around stories like the Silk Road trial didn’t help.) Srinivasan’s argument is: You don’t need to know what it is or how it works for it to be important to your digital life. He explains it this way to a layperson: “I ask people, ‘Do you use Linux?’ They’ll probably say no. But if you’re using Google.com, or Facebook.com, or Yahoo.com, you actually are using Linux, even if you don’t know it. So Linux is there, everywhere, it’s just behind the scenes, and it just sounds very technical because it solves problems for developers. And I think it’s going to be the same thing with bitcoin.”
Srinivasan frames bitcoin as the next major “system resource” in computing, something that will be a key component in every computer, just like a hard drive, RAM, and bandwidth. Bitcoin, he says, can be the resource that computers trade with other computers (without you having to worry about it), creating a “machine economy.” Once a computer can send a small amount of money as part of its operating system, “it can effectively rent or sell resources to other computers,” Srinivasan says. That was the idea behind the bitcoin computer: “If you had 500 of these things, what could they do together?”
So, what can they do together?
For starters, you could earn a small amount of money (yes, in bitcoin, but a wide range of platforms now exist for quickly converting bitcoin to U.S. dollars , if that’s what you’d prefer) every time you visit a certain URL. On stage at Consensus, Srinivasan described it thusly: “Every time you load a webpage is a HTTP request. That’s a lot of HTTP requests. If you are earning bitcoin on every HTTP request, that could be a lot of earned bitcoins.”
This could get exciting for media companies, in particular, with paywalls. For years, print newspapers and magazines have struggled with how to charge readers for access to their content online. Paywalls have only been successful for a select few publications, mostly because of the friction created by the moment when you, a reader in a hurry, have to enter your credit card information.
In the future that 21 envisions, your computer could cough up a small fee on its own every time you visit a publication’s web site, or even every time you want to read a single article. If this process could become truly seamless, it would have major implications for digital journalism as an alternate revenue stream from selling digital ads, which has severe flaws.
But this doesn’t just apply to journalism. It’s much, much bigger than that. On the machine web, where computers can accept and send small amounts of money instantly, there would no longer be a need to ever enter your credit card information online. The concept would improve the experience of shopping at Amazon or any other e-tailer, or sending a donation to a Kickstarter campaign, or any instance when you need to send money online.
This, after all, has been the value proposition of bitcoin’s rails since its inception—cutting down on the usual transfer fees, delays, and general friction you face when sending money through banks. And 21’s vision should be exciting to everyone, not just developers who understand bitcoin, or speculators who have bought bitcoin as an investment. It should be exciting to anyone who has ever sat at their computer, aggravated and impatient, filling out a credit card form online.
“One way of thinking about it is, the 21 software makes bitcoin a part of your operating system,” Srinivasan says. “Over time, what we think that will do is increase demand for bitcoin as a resource.”
Of course, the rah-rah-bitcoin train has slowed recently, on the whole, as banks and big financial institutions have gone gaga over blockchain without bitcoin. But along with a handful of other companies that are doubling down on the cryptocurrency, like Coinbase , Srinivasan and 21 are betting that it’s still the digital coin that will prove to be the major innovation—not closed, permissioned blockchains.
Big business will eventually come around to bitcoin, Srinivasan insists. He compares it to online dating, which once had something of a stigma around it that, today, has all but disappeared. “It was like, it’s for nerds, it’s for nerds, it’s for nerds,” he says, “and then suddenly, oh, here’s Tinder, and now it’s totally flipped and normal and you’d be crazy not to date that way.”
For now, to most of the mainstream economy, it’s still the bitcoin believers who look like the crazy ones. Srinivasan is just fine with that.
Check back with Yahoo Finance later this summer, when we will test out what the 21 bitcoin computer can do in a follow-up story and video.
Daniel Roberts is a writer at Yahoo Finance, covering technology and sports business. Follow him on Twitter at @readDanwrite.