Bitcoin and other major cryptocurrencies have lost more than half their value in recent months, a critically important digital token that was supposed to serve as a safe haven and stable store of value has almost completely crashed, and a growing chorus of critics has been labeling digital currency projects as effectively Ponzi schemes.
But Marc Andreessen is unfazed. He's still a bitcoin believer.
In a recent interview with EconTalk, a podcast hosted by Russ Roberts, a libertarian economist and fellow at Stanford University's conservative Hoover Institution, Andreessen explained why he's still excited about cryptocurrencies and blockchain technology. While cryptocurrencies haven't yet been universally adopted, the amount of activity involving them is already huge, he said. And despite the volatility, cryptocurrencies have worked well as a store of value, particularly for people who live in countries without stable financial systems, argued Andreessen, a founder and general partner at venture firm Andreessen Horowitz.
"Bitcoin, cryptocurrency, I think it's hit critical mass," Andreessen said in the interview, which was recorded in late April but published Monday. "People are using this, and you see more examples of people using this in countries all over the world," he continued, "especially when their local currencies get into trouble."
Andreessen sees digital currencies and blockchain technology as the next evolution of the Internet, adding to the network something that ideally would have been built into it from the start, he told Roberts. The Internet has been missing a currency and way of doing finance and executing contracts that are native to it, he said. While such features have bolted on to the network since it launched, cryptocurrencies offer something that's more in the spirit of the network itself, because they're "permissionless," he said.
The Internet thrived because no one needed permission from some central authority to set up a new website or service, he said. That structure allowed developers to be creative and experiment and figure out what would work on the network, he said. Cryptocurrency projects operate in a similar environment and offer similar promise, he said.
"Anybody on planet Earth can participate in this," Andreessen said. "That's why we get excited about this."
People differ on cryptocurrency's potential in games
Blockchain technology is starting to gain traction in three key areas — distributed finance, or DeFi; non-fungible tokens, or NFTs; and gaming, he said. Gaming is particular exciting, because video games tend to be the "vanguard" for new technologies, paving the way for broader adoption, he said.
Cryptocurrencies have the potential to revamp the economies within games, Andreessen said on the podcast. Today, whatever time or money people invest in video games is lost when they finish the game. In the future, thanks to blockchain technologies, players' work and investments could be transferable to other games, he said.
"This is a wave of innovation that is going to transform how the gaming industry works, but it's also going to transform the experience of the gamer, and basically bring a lot more real-world economics into play," Andreessen told Roberts.
To be sure, many gamers aren't excited about the idea of incorporating NFTs and blockchain technology into games, seeing them as exploitative, environmentally harmful and having the potential to warp the design of such games from promoting entertainment to boosting profits. In the face of such resistance, some such efforts have already been abandoned.
And many investors have seen their faith shaken in cryptocurrencies in general in recent weeks and months, particularly after TerraUSD, a so-called stablecoin whose value is supposed to be pegged to the dollar, and Luna, a related cryptocurrency, both crashed in value amid the equivalent of a bank run. It's hard to argue that cryptocurrencies have been a stable store of value when bitcoin and ether, the two most popular cryptocurrencies, have each fallen by more than 55% since hitting their peeks last fall, and many other digital currencies have dropped even more.
But Andreessen has reason to talk up bitcoin and cryptocurrencies and their use in gaming in particular. Andreessen Horowitz has invested heavily in the space in recent years and plans to invest much more in the future. Earlier this year, a16z, as the firm is sometimes known, was reportedly trying to raise up to $4.5 billion to invest in cryptocurrency and blockchain startups.
On Wednesday, a16z announced the launch of its its first fund targeted at the video game industry. The firm plans to use the $600 million vehicle, dubbed Games Fund One, to invest in game studios, consumer apps that serve gamers and other tools and services that support the industry.
