According to Marc Andreessen, co-founder of venture capital powerhouse Andreessen Horowitz (a16z) and founder of Netscape Communications Corporation, there has been a „architectural shift“ in technology and the world as a result of cryptoassets, which many crypto supporters have failed to recognize.
Andreessen Horowitz announced today the creation of a new USD 2.2 billion fund to continue investing in cryptocurrency networks.
Meanwhile, in a recent interview with economic blogger Noah Smith, Andreessen compared the topic of cryptocurrency to the parable of the blind men and the elephant, stating that it allows people to interpret many different parts in many different ways, or to use it to make their point, depending on their perspective.
Using cryptocurrency as an example, he described people seizing on „the money part,“ then either glorifying crypto as a new type of monetary system that allows for greater independence from the nation-state or „crucifying[ing] it as a threat to economic stability and the ability of governments to tax.“
Andreessen, on the other hand, believes that while these are compelling arguments, they are not sufficient.
„I feel all of them miss a extra elementary level, which is that crypto represents an architectural shift in how know-how works and due to this fact how the world works. That architectural shift known as distributed consensus — the flexibility for a lot of untrusted members in a community to ascertain consistency and belief.“
As far as he is concerned, the Internet has never had this capability before, and it will take thirty years to go through all of the possibilities that will arise as a result.
Other things that can now be built in theory, according to the investor, include Internet native contracts, loans, insurance, title to tangible real-world assets, unique digital goods known as non-fungible tokens (NFTs), and online corporate structures such as digital autonomous organizations (DAOs).
This also has a significant impact on and shift in incentives – both of which have an impact on the ability to reach these applications.
According to Andreessen, collaborative human effort online has so far taken the form of a literal adoption of real-world corporate norms, such as a company with a website, or an open-source project like Linux that does not have any money directly attached to it.
„With crypto, now you can create 1000’s of latest sorts of incentive techniques for collaborative work on-line, since members in a crypto venture can receives a commission immediately with no real-world firm even needing to exist,” he said.
While open-source software development has been fantastic, people are generally more willing to work for money than they are for free, „and all of a sudden all of those things become possible and even easy to do,“ says the author.
It will take several decades to see the results of this, but according to Andreessen, „it is not out of the realm of possibility“ that „this could be a civilizational shift in the way people work and are compensated.“
Furthermore, he discussed the idea that artificial intelligence is somewhat of a left-wing idea, with centralized machines making top-down decisions, whereas cryptocurrency is a right-wing idea, with many distributed agents, humans and bots, making bottom-up decisions, citing another prominent venture capitalist, Peter Thiel, co-founder of PayPal.
Andreessen pointed out that the tech industry has historically been dominated by left-wing politics, and that today’s big tech companies are intertwined with the Democratic Party of the United States, as Andreessen put it.
„Crypto potentially represents the creation of a whole new category of technology, quite literally right-wing tech that is far more aggressively decentralized and far more comfortable with entrepreneurialism and free voluntary exchange. If you believe, as I do, that the world needs far more technology, this is a very powerful idea, a step function increase in what the technology world can do.“
As for Andreessen Horowitz becoming known for innovation within venture capital, Andreessen stated that venture capital is both old and new – and this something new includes cryptocurrency.
„So we sit at the vortex of this combination of the very old and the very new. It’s certainly possible that venture capital itself gets pulled into this vortex and comes out the other side radically transformed, and in fact, this is what some of the smartest crypto experts are predicting,“ Andreessen concluded.
