Today Bitcoin exchange/wallet/service provider Coinbase announced that it closed a $75 million round. Among all the major funding announcement of other tech companies $75M may not seem like a lot of money, but it’s actually quite significant. Not only is this a record funding for a Bitcoin company (one that puts total funding for Coinbase at $106 million), but even more important are the investors that put their money into Coinbase. They are not just venture capital funds, but for the first time also top financial institutions.

Among the investors in this round are the New York Stock Exchange, Spanish banking giant BBVA, US military insurance company USAA and Japanese telecom operator DoCoMo. Also the former CEOs of Citi and Thomson Reuters both invested privately in this round. I think this is a game changer for Bitcoin that shows that the crypto currency is no longer dismissed in the board rooms of the largest financial institutions in the world. Now that the first banks are on board the rest will have to take Bitcoin more serious as well.

Why would the NYSE invest in a Bitcoin exchange? I believe they want to better understand how the blockchain works and how they could potentially integrate it into their own systems. Investing in Coinbase will give them access to doing this with the market leader. NASDAQ was for a long time seen as more innovative by tech start-ups that wanted to list (that changed a bit after the Facebook IPO), but with this investment NYSE shows that they are not as traditional as many people used to think.

Having a mega bank like BBVA invest is also significant, because this is the first time that such a bank invests in a Bitcoin company. Banks actually have a lot to lose if they invest in Bitcoin technology: they make their money mainly through fractional reserve banking (basically creating new money) which is not possible on the blockchain, because you can see exactly where each Bitcoin is. The blockchain is the ledger that banks provide for their customers and many of the bank functions are not needed anymore if Bitcoin would start to take over the financial industry. I am aware that you can of course circumvent this by creating money through off-blockchain transactions, and that might happen eventually, but I don’t think that’s why they would invest.

Probably BBVA’s thinking is that it’s better to be the first to embrace Bitcoin banking than to be a follower. Now they are able to buy a share in the leading Bitcoin company in the world for what may turn out to be a low valuation. Normally a $75M round implies an approximate $400M valuation of the company, but if Coinbase would really become the first Bitcoin bank that’s peanuts (BBVA itself already has a $50+ billion valuation, 125 times that of Coinbase).

Many might not know this, but BBVA is a very innovative bank. Last year they bought Simple, a debit card ‘bank’ that was on its way to disrupt the banking industry. I loved Simple and was a bit disappointed that they sold out, but at least BBVA seems to be a good parent company (Simple is still around, but I have no idea how they are doing).

Having former Wall Street CEOs on board as investors may not seem to be a big thing. However, even though these guys don’t have the power anymore that they used to have, but they are still extremely well connected and will spread the word about Bitcoin in the right circles. The fact that they see Coinbase as an investment opportunity means they understand that the financial world is going to change.

I don’t think this is the last big Bitcoin funding announcement that we’ll see, it may actually open the floodgates for even bigger investments in companies like Circle, Bitpay or Blockchain. Or we may see more M&A activity in this field, with $75 million in the bank you can do some interesting acquisitions. Good times in Bitcoinland!

The falling Bitcoin price gives many people the impression that Bitcoin is dying, but actually the opposite is true. Yes, the price has been on a downward spiral for a long time and right now there is massive panic selling going, but for me that does not mean that the currency or the blockchain have failed. After record VC investments last year I expect a lot of companies to release Bitcoin related products over the next couple of months, and I think that once the price reaches a bottom a lot more people will start using it, either directly or indirectly. I am now sitting on an airplane, so I finally have some quiet time to put my thoughts in a post.

Let’s start with the elephant in the room, what is happening with the price? I am regularly asked by people what is going on, some are just curious, others are annoyed that their investment is not doing well and some are panicking because they put too many savings into Bitcoin. To be honest, nobody really knows for sure what determines Bitcoin prices on a daily basis, but I have some thoughts on this. I am a member of several private Bitcoin message roups on WeChat and on Telegram and the price is a regular topic of debate there (but certainly not the only topic).

Everybody has different opinions, but the consensus seems to be that the huge volatility and price drop we are seeing right now was not expected among the people who spend most of their time in the Bitcoin world, but that it’s also not unusual for such a young and hyped currency, and that Bitcoin has seen this kind of drops before.

Most people were not part of Bitcoin yet in 2011, but in early June that year the price reached $32 only to fall to $10 a few days later. The bottom of the following bear market was at $2 in November 2011! So if history repeats itself the price could fall a lot more than it has done so far, and maybe that would be a good thing.

I still spend a lot of time on Bitcoin and am surprised that Bitcoin would fall so much. The main reason that the price has been on a downward trajectory is actually partly because of its success: more companies accept Bitcoin (among others Microsoft, Paypal and Dell now take the crypto currency) so more people are using Bitcoin that they already own to pay for goods. The problem is that merchants change these bitcoin for fiat currency right away, leading to an increased supply of coins. Only when they would hold on to them (e.g. when they could use BTC to pay their suppliers or pay their staff, or if they would believe that the value would go up) the markets will stabilize, and that is just not happening yet. And in a downward market there is less incentive to buy new Bitcoin for people who spend it, because people expect the price to be lower in the near future.

To make matters worse, the Bitcoin miners that used to hold on to most of their Bitcoin are now spending them to pay for electricity. The lower the Bitcoin price the more coins they need to sell to pay for their costs. At current prices it’s almost impossible to make money with mining and some companies even stopped their mining operations (see for example http://www.coindesk.com/cex-io-halts-cloud-mining-service-due-low-bitcoin-price/)

What we are seeing now is that people who bought coins in the uptrend are panicking. Many of these must have bought coins when prices were far higher than today and they may now worry that the value of Bitcoin may eventually go to zero, and so they cut their losses and sell. Smart? If you need the money it may be a wise decision, but if you bought the coins with money that you were prepared to lose I would hold on to it.

This is typical behavior of small investors and it normally indicates that the bottom is near. Soon bulls will come back into the market and start buying coins on the cheap. The question is of course when this will happen, and that is something nobody knows. I personally have not sold a Bitcoin over the past months and I am not planning to do so now either (many people are like me it seems, 70% of all Bitcoin have not moved in the past 6 months). But I am also not buying yet, mainly because I feel I have enough exposure to Bitcoin in my portfolio. If I would not have Bitcoin yet, however, I would probably put some orders in soon. Don’t take this as investment advice of course, and keep in mind that most people are a lot more risk averse than I am.

Actually, Bitcoin usage was at an all-time high a few days ago, with several days of over 100,000 Bitcoin transactions per day. Still tiny compared to other financial transactions, but there is a clear uptrend despite prices going down. And take into account that so far there are hardly any good use cases for Bitcoin for the average consumer.

I am probably one of the bigger Bitcoin users in the world right now (in terms of number of transactions), because I have a Bitcoin debit card. This card was issued by Blade Financial, a company that CrossPacific Capital invested in and where I am on the advisory board. I use the Bitcoin debit card on an almost daily basis. All over Vancouver I pay in Bitcoin, but none of the merchants know that of course, and they don’t have to know it either (they only see dollars, not BTC). It works great and I believe that once this card launches officially (this is just a test card) a lot more people may be exposed for the first time to Bitcoin.

VC investments in Bitcoin companies are still on the rise and I hear about new Bitcoin companies on an almost daily basis. Bitcoin is far from over and maybe the shake-out that will be caused by the low price is a good thing. Of course the low price will lead a lot of people to be even more skeptical about Bitcoin, but that can change quickly if the price stabilizes and will start increasing again.

Like I said earlier, nobody really knows what determines Bitcoin prices. I am just pointing to some trends that I observe in the market and that play a role in Bitcoin prices. One thing I did not mention yet in this post, but that I talked about in the past, is that institutional money can still not invest in Bitcoin because there are no ETFs on the market. I had expected that the first ETF would have been launched much earlier already, but the SEC is taking its time to approve these funds. The first one will likely be the Winklevoss fund and that could well lead to an unexpected rally when suddenly demand goes up much higher than supply.

I find the Bitcoin world fascinating and I am still very happy to be part of it. The low price leads to completely new dynamics in the market and because of that I keep on learning new things (sometimes the hard way!). Changes go much more slowly than I had expected, but I see that changes are taking place, both with blockchain applications and with Bitcoin as a currency. I look forward to the next year in Bitcoinland and being part of it as a participants, an investor and as an evangelist. The best is yet to come!

Grace and I just got back from a 3-day trip to Las Vegas. It’s an easy destination to get to from Vancouver, both Air Canada and Westjet have direct flights that bring you to Sin City in less than 3 hours.

Leaving dark & rainy Vancouver

The past weeks had been extremely busy so about 10 days ago we booked a flight and a hotel for the days before Christmas. Unfortunately work and private issues messed up our schedules a bit, so in the end we almost decided not to go. Because of that we both had to do phone calls and many emails while on vacation. Not the best way to relax, but we couldn’t change it and the only alternative would have been to stay home.

Because I’m not a big fan of casino’s (I hate gambling and have trouble understanding how people can sit at slot machines or casino tables for hours) we booked one of the few hotels that does not have its own casino or slot machines, the Mandarin Oriental. I love the chain, it’s one of the hotels that I prefer to stay at in Asia as well. Their Las Vegas hotel was excellent with very friendly staff, a great room and good services. Almost comparable to 5-star hotels in Asia, which is something special in North America.

We had decided to go to Las Vegas because we wanted to be away from the dark and rainy Vancouver winter days, and Vegas normally has dry and sunny weather (it’s in the middle of the desert). We were lucky because we had temperatures up to 23 Celcius while there (which is much warmer than usual), so I could walk around in a t-shirt during the day.

View from the Mandarin Oriental Las Vegas

Grace’ main activity was to go shopping, while I was sitting in the hotel room behind my laptop, although I joined her a few times as well. A bit of a sacrifice, because I’m not a fan of physical shopping, I prefer to buy my things online.

What I like about Las Vegas is of course the nightlife, although we did not go out a lot. I was so tired from work that I slept 9-10 hours per night during the trip, just to recover. We did have some excellent dinners though. The first night we went to Picasso in the Bellagio, a French restaurant with a classical feel to it. I was glad I wore a jacket, otherwise I would have felt underdressed. We decided to go for the Menu Degustation, a multicourse tasting meal that featured the best creations of the chef. A great choice, but quite a large meal if you also take the wine pairings.

Filet Mignon at Jean Georges Steakhouse in Las Vegas

We found out that Jean Georges also has an establishment in Las Vegas, in the Aria Resort. We had dinner there quite late on the second night, after we first had a foot massage in a Chinese spa on the outskirts of the city. Jean Georges did not disappoint, but it was not as high end as the one in Shanghai. Many of the other top restaurants that were on my shortlist (e.g. Hakkassan and Twist by Pierre Gagnaire) turned out to be closed during the week before Christmas, so that’s something to check out in advance before a future trip.

On the last night we had dinner with friends from Vancouver that were coincidentally also in Las Vegas (the husband is actually a successful entrepreneur who lives mainly in Beijing, his wife and kids live full-time in Canada). Good for me to practice my Chinese a bit. We went to the Cirque du Soleil show Michael Jackson ONE with them in the Mandalay. There are always so many shows in Vegas that it’s hard to decide which one to go to, but after some research this seemed the best one. It was indeed a good choice, it was a combination of acrobatics, performance and dancing on the music of all famous Michael Jackson hits. Micheal himself also played a role with his 3D hologram dancing on stage, pretty cool!

View from Mix Lounge at Delano over Las Vegas’ skyline

We’re now back in Vancouver where I’ll work one more day on Wednesday before trying to take a few days off. It was a fun trip to end the year but next time I’ll try to plan it during a time when we are less busy.

Do you like to read detective books or watch detective movies? Do you enjoy a reality show? Then how about a combination of the 2 in the form of an audio podcast?

About 2 weeks ago I wrote a post about the Startup podcast that I liked a lot, and after that I decided to give the Serial podcast a try. I had heard about it a few weeks before already but did not think it would be interesting to listen to. Well, I was completely wrong. When more and more friends wrote about it on Facebook and Twitter, when even the mainstream press started to write about the podcast, and especially when the podcast hit #1 in iTunes I knew I was missing out on something.

It took me less than one episode of this weekly program to become addicted to the podcast. I ‘binge listened’ the first 7 shows in just 2 days (episodes are 30-50 min each). I lost sleep over it, listening to “just one more” episode at 2 AM and I drove home slowly from work so I could listen to a few minutes extra of the podcast. The experience reminded me of some of the top TV series that I binge watched, such as the early seasons of Lost and more recently Downton Abbey, where I could not wait to finish my work late at night so I could watch an episode.

Serial is the story about the 1999 murder of Hae Min Lee, a Baltimore high school senior. Her ex-boyfriend Adnan Syed was arrested a few weeks after the murder and was later convicted. He is still in prison. The thing is, he says he is innocent. Of course many criminals say they are innocent, but the longer you listen to Serial the more you realize that some strange things have happened in the investigation.

Did Adnan do it? I don’t know yet. One moment I am totally convinced that he is not innocent, but 10 minutes later I feel certain that he was framed and someone else was the murderer. I change my mind continously while listening to the podcast and when thinking about the facts afterward.

One reason why the show is so successful is because it slowly releases new evidence. The storytelling is amazing, with an important role for Adnan who is interviewed by phone in almost every episode. You hear him speak to you about the crime and what happened on the day of the murder (was she really murdered that day?) on your headphones or over he speakers of your car. That is so powerful, especially because his story is mixed with insightful comments by host Sarah Koenig.

Interestingly, nobody knows how the podcast will end. There will likely be another 3 episodes, but even Sarah says she does not know what her final verdict will be. The Internet is full of theories about Adnan and what might have happened on January 13, 1999. There are tens of thousands of comments on Reddit, people write blogs about it and there are even podcasts about this podcast. Many (or likely most) of the major newspapers have written about Serial and keep writing about it. I have never seen this before for a podcast. Serial is taking the medium to a completely different level.

One takeaway from Serial is how sloppy murder cases are investigated in the US. The police wants to find and convict someone and seems to just put aside evidence in favor of the accused. Adnan’s lawyer may not have had the best for her client in mind (unfortunately she died a few years ago, so she could not be interviewed) and it’s clear she made some major mistakes during the trial. Racial profiling is a big issue, my impression is that had Adnan been a white guy he may not have been convicted. And the scariest thing is that a former police detective who was paid by the program to look at the evidence, said that this case was actually investigated better than average…

If you want to give Serial a try you can listen here to the podcast on iTunes and here on Soundcloud (embedded below). Or just go the website of the Serial podcast where you can read about and stream all episodes. And if you like it as much as I do, make sure to send a donation to the production team so they can keep on doing the world’s best storytelling. I can’t wait until Thursday when the next episode comes out at 6 AM EST!

One of the companies that will be threatened most if Bitcoin becomes a success is Western Union. So when a parody on one of their ads appeared on Reddit and Facebook, they were not amused. The company sent a DMCA notice to Facebook forcing them to take the picture down.

Not a smart move for anybody who understands social media. Not only is a parody generally considered fair use of an image, so there is no legal basis for the notice, but normaly a take down notice leads to a lot of additional reporting, so many people who would not have seen the ad now see it.

The original ad makes me feel sad for people that don’t have normal bank accounts and need to use Western Union to transfer money. Sending up to $50 for ‘only’ $5 is crazy expensive, this is a fee of 10%. And this is only within the US, not even to overseas locations.

I wonder if there are other hidden fees, because in the add it only states ‘transfer fee’. I tried to figure this out on their website, where I noticed the small print messages “Card issuer cash advance fee and associated interest charges may apply” and “Western Union also makes money from currency exchange”.  Of course there will be no currency exchange when sending dollars inside the US, but that could add up for international transfers. Also “fees for agent locations may differ from online fees”… Plus there is a maximum amount of $999 that you can send per 30 days.

Generally I don’t think the US will be an easy market for Bitcoin to take off, because it’s too well developed to solve a real need. But this kind of transfer fees remind me that even in North America there are some serious business opportunities. I hope the ad will lead a lot more people to consider using Bitcoin. The technology is still too difficult to understand for most people (especially that part of the population that uses Western Union in the first place), but easy-to-use services such as Circle.com are now available to anyone and could save people a lot of money.

This weekend Scott and Elaine had their first public piano performance during a recital for the Canada Music Week. Scott, who is 6 years old, started playing piano just over a year ago, in October 2013. Elaine (5 years old) tried piano for a few weeks last year but she was too young and started again this summer, so she now has about 4-5 months of piano experience.

They have lessons once a week (next to all their other extracurricular classes and their daily homework), but practice at least 30 minutes at home every day, with Grace as their substitute teacher.

The kids liked to dress up for the event and were not nervous at all. The only one who seemed to be nervous was Grace!

After their performance they got some flowers from us and they were really proud of that. On Saturday Scott and Elaine will have their next piano recital, so they are studying hard on another piece this week.

Links to their performance on YouTube: Elaine’s piano recital and Scott’s piano recital

Embedded videos of their performance:

My Silvercar at the Opus One winery in Napa Valley

About a year ago I wrote about my very positive experience with car rental company Silvercar. Last week I used them again in San Francisco and I still love their cars and their disruptive business model. I am just surprised that not more people know about them and use them, therefore another blog post to spread the word. And no, I am not getting paid for this of course!

Silvercar is a US based rental car company that only has Audi A4 Quattro cars in its fleet (although that will change soon, I heard they will add Audi Q5s as well). All cars are exactly the same and are silver colored, hence the name. Pricing is competitive, at $89 per day during weekdays and $69 per day during weekends (in SFO, other airports may have different prices). But what really sets them apart from the competition is the experience and the extras that are all for free.

At San Francisco airport lines are generally quite long at the traditional car rental companies. For Silvercar there are no lines, after you made a reservation you just open the Silvercar mobile app when you arrive at the airport and click on the button to indicate that you have arrived. A Silvercar representative then picks you up from the rental car terminal and drives you to the Silvercar location (a 5 minute drive). There you can choose a car, you open the door by scanning the car’s QR code with your phone and off you go. No waiting in line, no filling out of forms and no upselling of insurance or other unnecessary add-ons.

But that’s not all, because the Silvercars are all extremely well equipped. Every car has a great navigation system built in (honestly, it’s much better than the system in my Porsche or Mercedes-Benz), which is free. So no $25 per day for an old-fashioned GPS that some car companies are trying to sell you. Each car has a toll tracking device, meaning that you can take the Fastrack lane at toll gates (very handy around San Francisco), and they will bill you automatically for this. All cars are also equipped with Sirius XM satellite radio, so you are not forced to listen to FM radio stations full of advertising and dumb presenters. Of course you can also play your phone’s music or podcasts through bluetooth. And the cars have built-in wifi, so you don’t have to use expensive data plans if you use a non-US phone or want to check your mails on your laptop. No other car rental company offers this and certainly not for free.

When you get back after your trip you just park the Audi at Silvercar and they automatically detect how full the tank is (with a sensor), so no need to fill it up when you are in a hurry to get to the airport. They will charge you regular gas prices, no huge mark-up like many car rental companies do (Silvercar just adds a $5 fee to fill it up). Unfortunately they do not bring you back to the airport in your own car anymore, you now need to take a shuttle bus (that left straight away after I got on, so no waiting for other passengers). At SFO they charge you an additional $20 for that, but it’s a mandatory airport transportation fee so it seems they can’t get around that.

My experience with Silvercar is excellent and I would advise everybody to use them when they are in San Francisco or at one of the other airports out of which they operate (currently Los Angeles, Dallas, Austin, Miami, Denver and Phoenix, with more locations being added over the next months). Silvercar just closed its $14 million Series B round (in total they raised $31.5 million), so I think you’ll hear a lot more from them in the future!

Even though there is hardly any snow yet on the North shore mountains, today both Cypress and Grouse Mountain opened their new ski seasons. Because I have a season ticket for Cypress Mountain I decided to drive the 20 minutes from our home to the ski area to check it out.

The weather has been fantastic over the past days. Since I came back from San Francisco on Tuesday I have only seen blue skies, but it has been quite cold. On Friday morning it was -5 Celsius in Vancouver, with maximum temperatures around +5 Celsius during the day. That means that it was freezing the whole day in the ski areas (Cypress base station is at 3000 ft, about 900 meters), which is perfect for artificial snow making.

When I arrived at Cypress I saw that only 2 chair lifts were open, and a total of just 3 downhill ski runs. Not a lot, but good enough for an hour of skiing.

One advantage of skiing at Cypress Mountain is that it’s normally very quiet and there are hardly any lines at the lifts. Even today it was not very busy, the longest I had to wait was less than 5 minutes. Most Vancouver locals wait until there is a lot more snow before they start waxing their skis, and today the majority of the people on the slopes actually seemed to be Chinese (I heard a lot of Mandarin around me while in line for the lift).

It seems that there will be some rain by the end of this week, which likely means snow on the mountains, and I look forward to that. I am planning to ski at least 1-2 times a week over the next 5 months, so the more snow the better!