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For decades the leading network companies have been tightly coupling their software to complex, custom-built chips. Besides leaving IT buyers with a staggering array of appliances, the reliance on custom silicon has chilled industry startup activity. But with software defined networking (SDN), that is beginning to change.

Check out my article in Network World for a look at the evolution of the SDN market, where we are today and what it means for entrepreneurs http://bit.ly/13eAUMc

 

Follow me on Twitter @arifj

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FinCEN, the department of the Treasury responsible for fighting financial crimes has already issued guidance on how it views Bitcoin. Now it looks like the Commodities Future Trading Commission may also seek to regulate Bitcoin. More regulation is coming for Bitcoin.

I think that this is a good thing.

I do not believe that the US Government is out to stop Bitcoin. Some in the Bitcoin community may call me naive. But I believe that the arms of the US Government are primarily interested in their stated functions, not in some grand conspiracy to stop Bitcoin from becoming an alternative currency and payments system. And I think that those stated functions are typically good for society, and good for Bitcoin.

For example, FinCEN is set up to fight money laundering, and to a lesser extent, terrorist financing. I think most people would agree that these are worthwhile aims.

The CFTC’s mission it to “protect the public from fraud, manipulation, abusive practices and systematic risk in commodity future and options markets”. That sounds like a worthwhile aim as well. And the Bitcoin ecosystem has seen plenty of fraud, manipulation, abusive practices and systematic risk in the past. If some degree of regulation can help make Bitcoin a cleaner, safer and better lit place to do business, that can not but help to make Bitcoin a more acceptable alternative for a broader cross section of the public.

The biggest long term driver of value in the Bitcoin ecosystem is its use in transactions. And the biggest driver of widespread use of Bitcoin in transactions will be Zero(ish) transaction costs. But before the public is willing to accept Bitcoin, they need to trust it. And that trust in Bitcoin is largely absent in the broader public right now.

There are many elements that can drive trust. But whether you like it or not, governmental oversight is one of them.

Two of the early drivers of Bitcoin adoption were its decentralized nature, and its anonymity. Governmental oversight will mean sacrificing both of these characteristics. Many of the early adopters of Bitcoin won’t like this. But I think it is necessary if Bitcoin is to achieve widespread use.

Regulation of course carries many dangers. Bitcoin has a PR problem right now. It is thought of either as a wild speculative commodity, or an enabler for illegal or unsavory activities. If the Bitcoin ecosystem does not improve its reputation by rapidly enabling and showcasing a number of positive usecases (perhaps saving the newspaper industry, or ending hyperinflation in a developing world country), then the risk of over-reaching regulation, is high. I worry even more about over-reaching legislation or prosecution driven by ambitious politicians or state AGs, looking for an easy target to beat up on. But that is on us as an industry. We need to enable and celebrate positive usecases, and quickly, for Bitcoin to survive and thrive.

So what do you think? Am I naive, am I a tool of the government overlords, or is more regulation an inevitable part of the path towards widespread Bitcoin adoption?

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Right now, more than 80% of Bitcoin volume is in the USD market. And many of the pundits commenting on Bitcoin, both positively and negatively, are in the US. So it is natural to assume that Bitcoin adoption will start first in the US. I think that that is a reasonable assumption, but it is one worth questioning.

The US is a relatively stable and strong economy, with good rule of law, good financial technology, low inflation and financial institutions that most people have faith in (although many Bitcoin enthusiasts would beg to differ). But these happy circumstances do not hold in every country in the world. And when these circumstances do not hold, the appeal for Bitcoin is stronger.

Some attributed one of the recent rises in Bitcoin price to worries in Cyprus and Spain about the fragility of their banking systems. There is a good documentary about Bitcoin in Argentina that highlights similar concerns, in that case driven by the economy and inflation.

Inflation, and hyperinflation, is one possible driver of Bitcoin adoption in a country. When holding the local fiat currency entails losing value by the day, citizens will seek alternatives. In Zimbabwe, hyperinflation drove the US Dollar became the de facto local currency even while foreign currency trading was illegal. So there is existence proof that high inflation can drive a whole country to adopt another currency, one that is completely disassociated from the central government. Despite Bitcoin’s volatility, it may serve as a better store of value than a rapidly inflating local currency.

High transaction costs are another possible driver of Bitcoin adoption. This can be especially severe when most transactions are small. Africa presents another example of adoption of a digital currency, or at least a digital form of payments. M-PESA, a payments system enabled on mobile phones, now constitutes 31% of Kenya’s GDP.

As the developing world leapfrogs to mobile, I think that it is likely that we will find some developing countries with the right combination of high inflation, high mobile phone penetration, high transaction costs and weak financial institutions to foster fast Bitcoin adoption. What do you think?

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The LA Times and Chicago Tribune are for sale. BarryDiller recently announced that buying Newsweek was a mistake. They are not alone in their distress. Newspapers and print magazine across the country are under increasing pressure as they …

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What does “big data” mean to you? When most of us hear the term, we immediately think about mainstream use cases that leverage smarter data sets to assist companies in making better decisions that optimize business operations, improve enterprise application …

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For there to be a deep and liquid exchange marketplace in Bitcoin, the primary Bitcoin exchange needs to be robust and performant, with millisecond trade execution timeframes under heavy volume. Right now, Mt. Gox, the primary place where people can …

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Supercell raised $130M at a $770M valuation and got a lot of press for it recently. It is well on its way to being a billion dollar game company. Also on that track are companies like Kixeye (a Lightspeed portfolio …

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This week, the price of Bitcoin hit an all-time high of $266 and then a “flash crash” brought the price tumbling down to $105.  What happened?  The largest exchange Mt. Gox reported that it had seen dramatic increases in new …

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I’ve been fascinated by the potential disruption that Bitcoin represents. Disruptions like this could create both massive value destruction for incumbents and massive value creation for startups, which is exactly where entrepreneurs and VCs should be playing.

I recently did …

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Over the past several years, MuleSoft has quietly emerged as one of the leaders in providing platforms for powering the New Enterprise. Lightspeed was an early investor in MuleSoft, and we’re excited to be partnered with a company that has …

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