
Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play - yuvadam
http://blogs.wsj.com/digits/2015/03/10/secretive-bitcoin-startup-21-reveals-record-funds-hints-at-mass-consumer-play/
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softdev12
This is interesting because it's the first time I've heard about 21 and they
have raised $116 million pre-launch. Given that companies who've raised an
order of magnitude less are all over the news, it's surprising they have been
so stealth.

I'm also still not clear what 21 does. According to the article they are
building out the blockchain into the internet of things (IoT). That sounds
really vague. Plus, the article mentions a contractual twist - like smart
lawyer contracts. These two things don't seem to obviously go together.

~~~
zmanian
It sounds like some variant of the hardware Bitcoin bank idea that has been
floating around the valley.

The rough sketch of the idea is

-Hardware device runs a full security bitcoin node in your house -Provides a multisig for your mobile wallet. -Automatically moves savings into cold storage -Provides a basic environment for implementing crypto banking features

~~~
alvarosm
yeah, another bitcoin pipe dream... what's needed is probably something like
integrating a wallet+bitreserve+exchange+payment processor in a single
business. And then forking/enhancing btc itself. Some of the top btc companies
have got ridiculous investment rounds that could be used towards that goal,
easily.

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downandout
With this kind of investment capital on the line, I sure hope that they are
focusing their efforts outside of the consumer payments area. I think the fact
that consumers must purchase Bitcoin in advance, with no clear advantages that
average consumers would appreciate (consumers generally don't care about
privacy), makes mass-adoption of Bitcoin for payments incredibly unlikely to
ever happen.

The biggest question in my mind is whether or not they have developed a
realistic revenue model. The whole point of the Bitcoin protocol is to
relinquish control of the blockchain to the network's participants, which
makes it hard to monetize. They could license whatever software/hardware they
manage to build for various applications of the technology (voting, research,
etc), but $116 million seems like a big bet on a company building solutions on
top of open source software.

Edit: It appears that they are building both software and hardware, and more
interstingly, intend to operate their own datacenters. One of the job
descriptions from [https://21.co/#jobs](https://21.co/#jobs) :

 _" 21 is seeking a Datacenter Operations Engineer to travel to our
datacenters and keep them up and running smoothly. You should like big iron,
cutting edge equipment, and firmware._ The job description says you will be
responsible for _" day-to-day operations of 10,000+ server installations"_. I
guess we know where $116M is going.

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presty
21 Inc was previously 21E6
[https://bitcointalk.org/index.php?topic=334759.0](https://bitcointalk.org/index.php?topic=334759.0)
who was in the news back in 2013

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jboggan
What percentage of that funding is just buying and holding Bitcoins? Many of
these large rounds have that business model baked into the amount they raise.
There's much more profit to be had from buying at current prices and selling
at a consumer inflection point than there is in actually building a Bitcoin
service.

~~~
IkmoIkmo
It's idiotic to assume an investor will invest in a company to buy coins,
rather than coins directly.

Maybe if it was expensive art, exotic animals or something difficult and
tricky to buy and store without having specialized knowledge, yes then you'd
invest in a company to buy and manage these assets.

But storing bitcoin is storing private keys... a password. Anyone can buy it
and store it. Hell you can even buy it on registered exchanges, or as a
security from SecondMarket's bitcoin fund.

No. These guys raised money to hire software and hardware engineers, they're
looking to build a product.

Does that mean the investors aren't buying bitcoin? No, they do so, but
outside the company. It's well known that there are a number of VCs (e.g.
Chamath) who have bought a few million worth of bitcoins besides their
investments in bitcoin companies.

I don't any evidence that many of the 'large rounds' have this business model.
There are some companies that bought bitcoin, but that's for liquidity, not
investments. Circle, Coinbase or exchanges all need bitcoin to sell as they're
brokers/exchanges. But they didn't buy it as an investment, they could just
buy bitcoin as individuals, as could investors.

~~~
jboggan
I spent 2014 trying to get a Bitcoin derivatives exchange off the ground and
had a lot of intimate conversations about business models with large players,
I am not speculating here.

Consider that Bitcoin has return characteristics that are highly desirable to
a VC's risk profile, yet the restrictions of their limited partnership
agreements precludes VCs from directly buying Bitcoin.

~~~
IkmoIkmo
So you're saying Coinbase, Bitpay etc or likewise have bought bitcoin purely
for speculation (not as necessary liquidity as part of the product they're
offering) with VC money and directed by VC orders to act as an investment
vehicle for bitcoin, while using the tens of engineers etc and products as a
front? While simultaneously lying to the VC funds' investors who have set
restrictions that they're actively circumventing?

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kordless
It may be coincidental, but Qualcomm just announced a massive stock buyback.

My best guess is this is an IoT play targeting embedding cheap cell chips into
devices which will carry their own wallets. The cell chips connections to the
network can be funded with cryptocurrencies the devices carry, but the
ultimate goal is likely enabling software delivery into the devices. Devices
pay for the software downloads. Users fund devices using credit cards, etc.
Think of it as a fancy licensing engine for the trillions of devices that will
be hooked up.

My second guess would be a decentralized cell network, powered by
cryptocurrencies.

Either of those is a massive market.

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loceng
How much Bitcoin do the founders, employees, or investors own? Curious to see
what real gains they could realize if they succeed in making people see
Bitcoin as a legitimate means of payment.

~~~
vessenes
LOTS. 21e6 has been mining for some time, and A16z has been funding and
involved in Bitcoin for a number of years now, with a very 'winner take all'
approach.

~~~
loceng
Thanks. What's Coinlab? The website is down.

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brighton36
hopefully, they take me up on the advice I gave Bitpay:
[http://cointelegraph.com/news/113255/keeping-score-at-
the-20...](http://cointelegraph.com/news/113255/keeping-score-at-
the-2014-bitcoin-bowl) (see "The solution")

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swamp40
Since they're looking for ASIC engineers, I guess they're a mining hardware
company.

I've been hoping someone will design a bitcoin cash voucher reader/printer,
like you see in the casinos.

(For use in small retail business and vending machines.)

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comrade1
Are there ways to reduce the size of the block chain? Or will we get to the
point where only large service providers can hold the block chain?

I ask because I was maintaining my own wallet for awhile but stopped because
the block chain database was getting unwieldy - it would take up to a week to
resync if I ever turned my wallet software off for a significant amount of
time.

You know though... I actually don't care. Bitcoin was an interesting curiosity
and useful in some situations (transferring money to people in rural areas of
3rd world countries, for example), but it's slow (up to 15 minutes for the
transaction to be approved?), has high fees in its transactions and even
higher to convert from/to cash, it's unwieldy...

To use it from consumer devices would require someone else managing the
wallet, and at that point I'll instead just use cash or a credit card.

~~~
puranjay
I'm in India and I can't even buy it easily. Paypal hates it, as does India's
Reserve Bank.

Too much effort for too little reward. Right now, the only thing I'd actually
want to buy with BTC is illegal stuff off the darknet. There is virtually
nothing else I need that bad that normal cash can't do.

~~~
jafaku
> Paypal hates it, as does India's Reserve Bank.

I can't believe this doesn't immediately make you think that maybe, just maybe
there is something good about Bitcoin. Are you 0K with the central bank
stealing wealth from you and your family through the debasing of your
currency? Are you 0K with working your ass off so that bankers and other
powerful people can live a life of wealth and pleasure? How can you take
advise from such people?

"Bitcoin is bad, don't use it! It's a drug currency... very shady... also,
terrorism!"

That is basically what every central bank said to the people in their country.

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Animats
If they raised over $100M, why do they need Bitcoin? I'd assume they intend to
have their own coin. Fewer headaches.

~~~
markkat
It would be very difficult to get another coin to the level of adoption that
bitcoin has. Many have tried, and none have come close.

~~~
shashu10
They possibly could if they create a more secure cryptocurrency

~~~
jafaku
That's not really a possibility, it's just your desire to see Bitcoin go down.
I don't know why there are so many people so salty about Bitcoin.

~~~
deeviant
Yeah really, the only other time I saw a group of people so salty about
something is Google glass. There is just something about bitcoin and glass
that makes people go NaCL.

