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Bitcoin bubble could 'decentralize internet' and threaten power of tech giants, VC says

  • Bitcoin's rise could help lead to the creation of a so-called "decentralized internet," according to a venture capitalist
  • Decentralized internet is the idea that the web is run across a number of machines that are owned by regular users rather than owned in a central place like a server
  • This could ultimately reduced the power of tech giants, the VC said
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Damien Meyer | AFP | Getty Images

Bitcoin's rise could help lead to the creation of a so-called "decentralized internet" that could take power away from large technology firms, two venture capitalists told CNBC on Thursday.

The internet works thanks to large centralized services such as server owners, cloud providers, search engines and social media. As a result, many internet giants are dominant in their respective area of the internet.

A decentralized internet promises to spread the running of these services across users. So, a number of independent machines would power services across the web.

The money pouring into cryptocurrencies like bitcoin is helping to bring resources to developing a decentralized internet, according to Hemant Taneja, managing director at U.S. venture capital firm General Catalyst.

"The underlying reason for cyrptocurrencies is about building a decentralized internet. And I think that's a profound reason," Taneja told CNBC in an interview at the Slush technology conference in Helsinki, Finland.

"So, when you think about all these large platform companies that have become so powerful… wouldn't it be nice if we could get the benefit of what these companies provide but without these centralized authorities that have so much control."

Taneja said that the industry is "nowhere near" having the technology ready for such a project, but the cryptocurrency bubble is helping to bring capital and talent to the development of a decentralized internet.

"The more smart money that starts believing there are benefits around decentralized internet the better it is for us," Taneja said.

Albert Wenger, another venture capitalist at Union Square Ventures, echoed the sentiment, but admitted that reducing the power of internet giants is a long way off.

"In the long run, I think that's the goal we are shooting for. I don't think they (tech giants) have to tremble in their boots any time soon," Wenger told CNBC in an interview on Thursday.