Is there anything that Washington has built a wall against in terms of progress?

Well, the big thing right now for the tech industry is the Snowden revelations, and the consequences of that for the American tech industry. Specifically, in two areas: One is that the level of trust that customers have [in] American tech companies has been seriously damaged. And that is especially — but not exclusively — true outside the United States. Every time another revelation comes out, like the one this weekend about hijacking the routers on their way out of the country, or the one about hacking into the Internet companies' backbone networks — every time one of these shoes drops, and apparently there is just an unlimited number of shoes — every time one of these things happens, it's a serious blow to the credibility of these companies, especially outside the U.S. And so there's a really big, I mean very, very, very high level of concern in the Valley that the American tech industry is in trouble outside the U.S.

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And then, two is this balkanization of the Internet that's happening now. As more revelations happen, more and more countries are saying: "Okay, if we can't trust the Internet, if the NSA is going to watch everybody on the Internet all the time, we're going to have to break off and have our own Internet. Have our own firewalls, do what the Chinese do, have our own private Internet or whatever the hell it's going to be." This issue is being used as political cover for what these countries want to do anyway.

That brings us to, "Okay, how is the American government getting in front of this?" And the answer is, "Not even a little bit." The view in the Valley is that the White House has hung the NSA out to dry. Just like, "You're on your own." And there's basically no effective communication right now that I'm aware of between the American government, especially the administration and American tech companies, on like, "Okay, what happens now?"

There isn't?

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No.

Those meetings that occurred, that's just for show?

Yeah, people come back, and they're like, "Nothing happened." The Obama administration does not seem to have any real — they don't seem to have a plan. They seem to be in the mode of they kinda hope that it goes away. And they hope that if they get face time with the execs they can just mollify everybody and over time, the issue will just dissipate. But I'm not aware of any substance that's come out of those meetings. I'm not aware of anybody who's come back from those meetings saying: "Okay, now there's a plan. Now we know what's going to happen." It's been the opposite. It's been people saying, "I don't even know why I went."

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Is there anything tech companies can do, whether on the Snowden stuff, or culturally?

These technologies escalate the power of government, but they also escalate the power of business, and they also escalate the power of individuals. So everyone's been upgraded. And it's a recalibration of who can do what, and everybody can do new things, so everybody's uneasy about it. Governments are very worried about what citizens are going to be able to do with these new technologies. Citizens are very worried about what governments are going to do, and everybody's worried about what businesses are going to do. It's this three-way dynamic that's playing out. And so for any of these individual issues, it's not just "What is one leg of this triangle going to be doing?" It's, "What are all three of them going to be doing, and how will the tension resolve itself?"

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Any thoughts on all these mergers that are being announced?

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Not specifically on the mergers.

Or net neutrality?

So, I think the net neutrality issue is very difficult. I think it's a lose-lose. It's a good idea in theory because it basically appeals to this very powerful idea of permissionless innovation. But at the same time, I think that a pure net neutrality view is difficult to sustain if you also want to have continued investment in broadband networks. If you're a large telco right now, you spend on the order of $20 billion a year on capex. You need to know how you're going to get a return on that investment. If you have these pure net neutrality rules where you can never charge a company like Netflix anything, you're not ever going to get a return on continued network investment -- which means you'll stop investing in the network. And I would not want to be sitting here 10 or 20 years from now with the same broadband speeds we're getting today. So the challenge, I think, is to accommodate both of those goals, which is a very difficult thing to do. And I don't envy the FCC and the complexity of what they're trying to do.

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The ultimate answer would be if you had three or four or five broadband providers to every house. And I think you actually have the potential for that depending on how things play out from here. You've got the cable companies; you've got the telcos. Google Fiber is expanding very fast, and I think it's going to be a very serious nationwide and maybe ultimately worldwide effort. I think that's going to be a much bigger scale in five years.

So, you can imagine a world in which there are five competitors to every home for broadband: telcos, cable, Google Fiber, mobile carriers and unlicensed spectrum. In that world, net neutrality is a much less central issue, because if you've got competition, if one of your providers started to screw with you, you'd just switch to another one of your providers.

There's more and more integration between Bitcoin and the financial services sector. But a lot of people who support Bitcoin supported it because it was sort of disconnected from the infrastructure represented by government and everything else.

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So we sort of have a theory on this, on where really disruptive technologies come from. So the really new disruptive technologies come from the fringe. This was true of PCs. Steve Jobs was, like, a hippie. Internet came from the fringe. No big technology company thought the Internet was going to be important, right up until basically 1995 or 1996.

Bitcoin is the classic instance of that. Bitcoin didn't come from Citibank; it didn't come from the Federal Reserve; it didn't come from Visa. It came from the fringe. And now Bitcoin is in the early stages of mainstreaming today. And the signs that it's in the early stages of mainstreaming are mainstream venture capital firms funding mainstream startups, employing mainstream engineers to build services that'll be used by mainstream people. You've got big companies that are not yet doing a lot with it, but are looking very seriously at it. So every big bank has people that are trying to figure out what to do with Bitcoin; every big e-commerce company has people that are trying to figure out Bitcoin. You have mainstream regulators figuring it out; you've got people at the Federal Reserve, and the Treasury Department and IRS that are figuring it out. At the state level, people are engaged on it. And so, it's in the early stages of mainstreaming.

It's already happening.

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Anybody who thinks Bitcoin makes it easier to do transactions that aren't tracked by the government is 100 percent wrong. The transactions all happen in public view. Anybody can look at the entire ledger and verify who owns what. So if you're a law enforcement agency or an intelligence agency, this is a much easier way to track the flow of money than cash. So I think actually law enforcement and intelligence agencies are going to wind up being pro-Bitcoin, and libertarians are going to wind up being anti-Bitcoin.

For [journalists], the big challenge has been explaining what Bitcoin is to people. And I think we've always explained it as a currency, but does that — now that people know about it in terms of a currency, does that prevent them from [grasping Bitcoin's full potential]?

I have a lot of friends who are programmers. The programmers have always gone like, "Those [Bitcoin] guys are crazy."

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And then, almost 100 percent of the time, they sit down, read the paper, read the code — it takes them a couple weeks -- and they come out the other side. And they're like: "Oh my god, this is it. This is the big breakthrough. This is the thing we've been waiting for. He solved all the problems. Whoever he is should get the Nobel prize -- he's a genius. This is the thing! This is the distributed trust network that the Internet always needed and never had."

So, one of the challenges is you take people who aren't professional programmers or mathematicians and then you expect them to understand it from a standing start. And it's daunting. And so then it gets a word attached to it, like "currency" or whatever you want to call it, and then people think that it is something it isn't. And you have a sense of this, but it's a much deeper concept than currency. It's the idea of distributed trust.

So the business opportunity posed by this "distributed trust network" — as an investor, what do you see that you could potentially —

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Hundreds or thousands of applications and companies that could get built on top.

Is this, like, a billions-of-dollars kind of industry?

Yeah.

Trillions…?

Yeah! (Laughs, steeples his fingers Mr. Burns-style). Yeeeah… (Laughs) I have the haircut, I can do it.

Digital stocks. Digital equities. Digital fundraising for companies. Digital bonds. Digital contracts, digital keys, digital title, who owns what — digital title to your house, to your car. Like for example, you get a digital title on a car, attached to a digital key, where you own your car on the Bitcoin blockchain and on your smartphone. The key for opening your car and starting your car is tied to that title. And if I sell you my car, automatically you get title, and you get the key that lets you operate the car, and it's all digital, and it's all unique, and it can't be cracked. You've got digital voting, digital contracts, digital signatures. You've got unique pieces of digital content. If you guys wanted to know exactly who had every piece of content you ever made, you can track that. It's this long list. And then every aspect of financial services: insurance contracts, insurance derivatives, currency exchange, remittance — on and on and on. It gives you a chance to basically go after this very broad category of online business in a new way. And, by the way, if we had had this technology 20 years ago, we would've built it into the browser.

E-commerce would've gotten built on top of this, instead of getting built on top of the credit card network. We knew we were missing this; we just didn't know what it was. There is no reason on earth for anybody to be on the Internet today to be typing in a credit card number to buy something. It's insane, because — which is why you have all these security problems, the Target hack and all this crazy.... And these high fees, this high fraud rate. It doesn't make sense online to have a payment mechanism that requires you to hand over your credentials to make a payment. That's just an invitation to fraud and identity theft. It's just stupid.