Way back when I started out as a venture capitalist, I invested in a number of companies. We had a computer revolution and a lot of good companies came out of that, and then we had the internet revolution, and a lot of great companies came out of that.

Now I think we have got the bitcoin revolution. The internet revolution was incredibly wonderful, some great things happened, and big industries got transformed and I was able to succeed by backing companies that transformed communication and information and entertainment and gaming and lots of other industries.

What I look for as a venture capitalist is industries that are run by monopolies or an oligopoly, those industries are, usually, providing bad services at a high cost, and I am always looking for that new technology that can come in to those industries and be the beginning of transforming it. And allow entrepreneurs to kind of wedge into those industries and grow from there.

How it all began

There was this Korean guy who visited me and told me that about 40% of Korea is playing one game. I think it was called Lineage. Lineage was taking so much of people’s excitement, that he decided that he (he was very successfully in business) has to also be successful in Lineage and, so, when he was away and he had to go to work from the game, he hired a guy to be his avatar, to play Lineage while he was at work, and so his avatar will get stronger and powerful. So, he will have would have the strength and power in the physical world, but he also had it in this virtual world, and when I started to think about that, I thought wow there is going to be a virtual then there is gonna be a physical world and we are gonna live in both of these. Virtual good, virtual money, virtual life, ultimately, there will be a virtual government.

When bitcoin came long, I went wow this is it! I had been exploring a lot of different currencies before this, and I saw bitcoin and I said wow, this is the currency that is decenetralised, that keeps the perfect ledger through the blockchain. It is an extraordinary new technology and a new currency that can be decentralised, it can be global, it can be frictionless, it is awesome.

First trade

I got all excited, I backed a guy who ran Coin Lab and he said, “Hey, I can get you some bitcoin if you want. I gave $250,000 and he said I am going to take this [money] and some other money and we are going to buy an ASIC that will mine faster than anything that’s out there, so we can actually get you bitcoin for like $4 a bitcoin, not $6 dollar where the market was. I said, “Great, let’s do it.”

They finally started to mine some bitcoin, which was stored in a place called Mt Gox and, of course, Mt Gox imploded. I thought, too bad, this virtual currency had too much promise and this is going to put an end to it. But bitcoin only dropped about 15% on that news, and so I thought, wow, we are on to something with this. Somebody really needs this — when the market came crashing down there were buyers that kept it up. I thought where are people are using this? I did some research and discovered that the unbanked are using this. The people whom banks push away for because it costs $200 dollars per account to regulate people, they don’t want to take small account. So, suddenly the unbanked had a new way to do business, to participate in the world economy, that as a breakthrough and then people were using it send money to their families overseas, apparently people used to use Western Union and it cost something 8-16% to send the money overseas. This was a frictionless way to do it and was almost free. Then people were using it to store value, people felt like hey I can take this down in United States or I can travel somewhere else and and take it down there. This is a currency that is open and available to everyone in the world and anywhere in the world. And I thought that is a really a major breakthrough too, and then people were using it because it was keeping a perfect ledger, so they were keeping perfect records of all their accounts through the blockchain. So, I got very excited about it, even though it had dropped and we had lost the bitcoin. I had continued to buy, and when the big Silk Road auction came up when the US Marshalls Office confiscated money from the Silk Road, they put it up to auction. I bid above the market, and I was a little surprised because I got a lot more bitcoin than I had bargained for, I got all the nine lots because I bid above the market and I guess nobody else had. So, I got all this bitcoin, and I was kind of glad that I did, and the more I thought about it, that I would rather have bitcoin than any of these fiat currencies.

Move over fiat

My son, Adam, started Boost VC. Boost is an accelerator and it started as an accelerator specifically for bitcoin, and one of these tribesman who came to Boost came from Argentina, and he said I love bitcoin, and Adam said why, and he said “well, because my family has watched its fortune disappear three times in my life and I am only 30 years old.” So, in effect, every decade, the politicians or governments of Argentina have, basically, taken fortunes away from people, by messing with the currency or having too much debt out there, from many other things. So, I thought I’d rather own this than the dollars in Wells Fargo, then I started to hear about all these hacks are happening in the banks and banks are getting hacked all the time. And the Bitcoin blockchain has been secure, it has never been hacked, knock on the wood, it is completely secure, it keeps complete record of all the transactions.

But some other things have happened here, bitcoin brought along this great technology called Blockchain, so you can start owning your own data on the Blockchain. So, once your data is Blockchain, you can start say this data I am going to allow this person to use, or this company to use and, may be, you will start getting paid for this data, so this is a big breakthrough. Another big breakthrough is the smart contract, and Ethereum has been very big on smart contracts and it has focused on these smart contracts so that I can set up a contract with you in software, and whatever happens, set the switch off that sends the money to the right people. So, imagine a movie, you watch Star Wars, there is 15 minutes of credit, and they can put that into one big smart contract, and when Star Wars does $300 million in sale for a quarter, boom, it shoots out to everybody who gets it, and who deserves it. They need to have all the lawyers involved, they don’t need to have all the accounts involved. It just happens.

Radical transformation

If you combine blockchain with smart contracts and deep learning you have a big opportunity in healthcare. We are going have our data up there, I am going be able to put all my healthcare record, my blood test results, my genetic history, all that stuff up in the cloud. And then I can add things like my Fitbit results, what I had for breakfast, or where I flew to, or where I live, or whatever.

So, different things will affect different people, and there is no doctor in those 12 years who can memorise all that information about all those people. So, I think healthcare is going to change in an enormous way. It is probably one of the biggest industries in this world. But there is one industry that provides the worst service at the highest cost — the government. The government provides the worst service at the highest costs, but the great news here is that government now is starting to bifurcate, part of it is at the virtual level, and part of it is at the base level. And at the virtual level, governments can now compete for you. They can, one might provide better social security, one might provide better medical insurance and all of these services that governments provide, that can be done virtually, can now be done with bitcoin on the blockchain with smart contracts and big data. This is one of the biggest sea changes in the history of the world and, hence, governments are responding one of the two ways. Some governments are responding with, “No, we like it the way it is, we want our currency, we want to control our currency, we want to use our currency to control our people.” Japan is doing just the opposite, Japan said bitcoin is a national currency and here is how you do an initial coin offering (ICO), so what happened then was all those bright entrepreneurs, all that creativity, and all that technology that was going to happen in China is now going to happen in Japan. These governments are trying to attract you, they need you because they want to make sure that you work with them, because all the best entrepreneurs in the world, all the most dynamic people are mobile. All those mobile people will go to the place that provides the best, the most open, the most free, the most honest environment for them to operate their business.

So, we are going to start to see this amazing sea change, the world has just opened up. In the virtual world, geographic borders have become invisible, and that is ripe for one of the greatest renaissance, transformation, in the history of the world. I am excited and glad to see this whole transformation of the society.