The Bitcoin protocol creates a rare opportunity for entrepreneurs and investors to partner on a technology platform that's likely to be a root level service of both online and offline business for years to come. As it relates to the Internet, Bitcoin is a trust network, a decentralized exchange that can be used for a variety of transaction types. Specifically, however, the embedded distributed ledger creates a number of advantages that entrepreneurs will be able to exploit for years to come. Many of them are explained extremely well by Marc Andreesen here.
" ... Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate." - Marc Andreesen
These are important advantages, and they become even more powerful when you overlay the transaction capabilities within the Bitcoin protocol. Bitcoin can support simple peer to peer exchanges, but it can also support more interesting transaction types such as time-locked transactions (send X to Y on the following schedule) or, the most mind-blowing (but perhaps not the most commercially valuable), data driven, conditional transactions. Imagine a world where weather bots, and a Google search are combined to monitor real-world events that catalyze funds disbursement?
If this isn't reason enough to be excited about the potential for venture returns in the Bitcoin ecosystem, we also look forward to advancements in Bitcoin mining technologies. "Miners" provide an invaluable service in the Bitcoin ecosystem. They add and verify transaction integrity in the block chain and are rewarded with a steady stream of incoming Bitcoins. This ensures that Bitcoins are distribtued in a decentralized manner.
This ecosystem is new, and I suspect by 2016 it will be one of the larger segments of venture investing. In Austin, BitAngels, an incubator focused on startups with Bitcoin-related revenue models has set up an office. I'm ecstatic they're here. I've long been a proponent of specialized accelerators and I could't be happier that there's a BitCoin focused incubator playing in Austin. I can't wait to talk to dozens of Austin companies focused on Bitcoin innovation.