Disclaimer: Opinions expressed in this article do not constitute investment advice from Bitcoin Reserve.
Stephen Cole is an investor and organizer of the Orange Country bitcoin meetup.
What was it like for you to learn about bitcoin for the first time?
I shrugged Bitcoin off the first few times I heard of it, assuming it was yet another way to send money, like Visa or PayPal. Later in 2013, after noticing how excited some of my coworkers in the San Francisco startup world still were about it, I started looking more seriously.
Learning about Bitcoin's scarcity—with its limited supply of 21 million—was a turning point for me. The idea of something digital having a limited supply was hard to wrap my head around, but the more skeptical questions I came up with, the more answers I found, the more my confidence grew. After sifting through Twitter, Reddit, and podcasts, I eventually discovered the writings of the Nakamoto Institute. Seeing their analysis of Bitcoin through an economics lens helped me appreciate its potential as sound money and better understand what its adoption and impact might look like. I started to realize Bitcoin wasn't just competing with money transmitters—it was competing with the money itself.
How did your experience at eBay and other tech companies help you understand bitcoin better?
Working in Silicon Valley turned out to be a double-edged sword for understanding Bitcoin. It was helpful in that I'd seen software "eating the world", so I kept a pulse on emerging tech and an open mind about crazy-sounding ideas. On the other hand, the culture tends to fixate on rapid innovation and a constant hunt for the "next thing". That's great for companies and products but can make it harder to see big foundational shifts, especially in systems with strong network effects like communication protocols or money. I almost missed Bitcoin by being too quick to look for its successor, and I worry much of the VC and enterprise tech space is making the same mistake. Over time I've come to view looking for the "next Bitcoin" like looking for the "next internet".
You run the Orange County bitcoin network. Any success stories that came out as a result of these meetups?
The OC Bitcoin Network has been super rewarding. I started the meetup after moving to Orange County and finding lots of blockchain and crypto groups but nothing on Bitcoin. Brian Harrington joined soon after and really helped take it to the next level. In just a year we've grown from five people chatting Bitcoin over pizza to over 300 members with a solid core group. Twitter is great, but nothing beats the energy of being in a room of people who share your passion.
My advice to anyone considering starting or contributing to a meetup is just to go for it. Don't overthink it. Start small. There's no downside if it doesn't take off, and it just might turn into something wonderful.
What are your personal criteria for choosing startups to invest in?
I like to invest early, typically seed stage. At that point it's less about spreadsheets and numbers and more about founders and the vision.
I love seeing companies take a Bitcoin-only approach and hope to see that proven out and normalized as a strategy. I categorically avoid cryptocurrencies other than Bitcoin. That may sound religious, but I like to think it's rooted in practicality: there are thousands of cryptocurrencies, and the signal-to-noise ratio has been atrocious. The opportunity cost of considering too many is high and can almost become a denial-of-service attack on your brain cycles.
How do you see the investment landscape in the bitcoin industry develop over time? Do you see any particular areas of interest from the investor's point of view?
Unfortunately a lot of venture capital is enamored with blockchain technology. I hope in the next few years we see companies focusing on Bitcoin gain ground on competitors spinning their wheels supporting a plethora of cryptocurrencies. An example would be retail on-ramps, where you have startups like Swan taking on incumbents like Coinbase. The more that Bitcoin-only strategies are proven out, the more capital will follow.
A nascent area I'm excited for is the machine-payable web, integrating low-latency micropayments into web protocols like HTTP. Earn/21 pioneered that concept years ago, but the timing turned out to be rough due to on-chain limitations and fees. Now with technologies like the Lightning Network and LSAT from Lightning Labs, use cases like this seem promising.
Something further out but interesting is Bitcoin's potential to upend much of how companies and financing operate. What changes when startups can ship products and get paid without needing a bank account, a legal entity, or even to reveal the identities of the team? Will we see more pseudonymous founders? B2B circular economies fuelled by Bitcoin? A follow-on effect of unstoppable money is unstoppable companies, and the implications are fascinating.
Samourai, a privacy-focused wallet, is among your first investments in the space. Why do you think privacy is an important aspect when it comes to transacting in bitcoin?
Yeah, Samourai was my first investment in the Bitcoin space in late 2016. At the time, the spotlight was very much on scaling and the block size debate. Resolving that was crucial, but I worried privacy and fungibility weren't getting the attention they deserved. Samourai's privacy focus, bold vision, and cypherpunk ethos resonated with me.
Bitcoin has the potential to reshape our society, but part of that entails taking power from governments and giving it back to the people. As much as I hope for a "smooth upgrade" with regulators allowing citizens to peacefully opt in, I think it's important to arm people with the tools they need to protect themselves, even from nation states. Having companies like Samourai pushing the envelope on privacy makes me more optimistic about Bitcoin and about the future more broadly.
There exist multiple custody models for bitcoin, from insured third-party custody to full self-storage. In light of your investment in Casa, a secure custody service, which model do you think will become the most prevalent in the coming decades?
There will always be cypherpunks doing it themselves and others fully trusting custodians, but in between is an enormous opportunity. I'm most excited about robust self-sovereign storage finally becoming mainstream, something Casa has been paving the way on. They've struck a really cool balance of security and usability—a slick interface that still keeps users in control of their funds. The more proven and prevalent those types of solutions become, the fewer sad stories we might have to read about BTC being lost in accidents or stolen from centralized third parties.
By all standards, bitcoin can be already considered a success. What is your long-term vision of bitcoin? What does a future bitcoin world look like?
I believe Bitcoin will change the world profoundly, in ways that are hard to even appreciate yet. Whole books could be written on that, but at a high level I think it means smaller countries, fewer wars, longer-term thinking, and increased prosperity.
Any advice for entrepreneurs who want to start a bitcoin venture and seek funding
Find an investor who believes in the mission and why it matters. Startups are hard, and lots can change along the way. Having someone who believes in the 'why' makes all the details about the 'how' much easier.