I'm fascinated by the blockchain. It's a mathematical/technological solution that's got huge implications. It can be used for commodity/currency trading as with Bitcoin, driving new, more secure Internet (DNS), or even a new messaging system (to replace SMS or email).
Mastercard's CEO recently said that cash costs the economy about 1% of GDP. He mentions this by way of saying that his credit card company sees cash has its primary competition.
Huh? Credit cards charge between 3-5% of a transaction. Cash is about 3x cheaper. This is why virtual currencies are exciting. They offer a method to digital send cash that doesn't cost as much as credit cards.
Between Benchmark Capital and Andreesen Horwitz there have been two top-tier VCs who are betting on the medium-term success of Bitcoin. Benchmark's investments to date don't hint at a long bet on virtual currency. VCs are getting into to disrupt credit card companies' cut from the bottom up.
Investing in a new type of financial company has not been successful. Square is mostly a POS system and Simple ultimately gave up trying to build a new bank. Virtual currency is a way to side-step the whole problem. By refusing to play the in the same game as the banks and credit card companies, undercutting is possible.
A cash replacement doesn't have to be much different from virtual currencies in games or gift cards. Both are widely accepted by customers. Bitcoin isn't the point. The point is finding an alternative to credit cards for online payments.
I'm not sure that Bitcoin, the brand will win, but virtual currency and the blockchain are fundamental technologies that will shape the world!