Union Square Ventures Almost Invested in Bitcoin

btc gartner hype cycle bitcoin Union Square Ventures Almost Invested in BitcoinFred Wilson, internet-famous VC and principal of the well-regarded Union Square Ventures, is long Bitcoin. The investor read the article in December’s issue of Wired (basically, Is Bitcoin Over?) and concluded that Bitcoin hasn’t peaked, despite a streak of bad news and a depressed value–it’s merely moving along the Gartner hype cycle, moving from the “trough of disillusionment” into the “slope of enlightenment.” In other words: a spike of overinflated interest is followed by a drop in traction which is followed by steady, healthy growth. “The hype cycle model rings so true to me because it maps out what has happened with the commercial Internet over the past fifteen years,” Mr. Wilson blogged. “In 2002/2003, so many people thought the Internet was “over” as an investment opportunity. And they were wrong.”

Betabeat was not aware of Mr. Wilson or USV’s interest in Bitcoin–Mr. Wilson says he’s mentioned the ecurrency “a number of times” on the blog, though a search turned up none. But apparently the Flatiron VCs have been interested in Bitcoin for a while, and even considered a “Bitcoin specific investment” earlier this year. (We’d guess that would be a Bitcoin startup, of which there are many, rather than a speculative currency buy.)

“So it seems to me and my colleagues at USV that an alternative currency with roots in peer to peer networks and based on an algorithm that is transparent to everyone is an idea whose time has come,” Mr. Wilson wrote. “The question remains if the Bitcoin algorithm or some other algorithm (possibly a derivative of the Bitcoin algorithm that deals with some of Bitcoin’s weaknesses?) will ultimately win out. That’s an important issue that has a lot to do with when this space becomes investable.”

Investor interest beyond the Goldman IT techs trading on their off time would be a serious indication of Bitcoin’s sustainability. Bitcoin readers: do you know of any tech investors putting money into Bitcoin?