Is aiming for an ipo. That is according to people with knowledge of the matter. Lending club turned a profit of 7. 3 million last year. Arene luxury retailers fancy, seeking a new lu asian of 1. 2 billion. Of 1. 2aluation billion. Bids are due for the bitcoin auction and the results will tell us how much demand there is for the virtual currency. 30,000 are on the block. Seized when the government shut down the silk road. Potential bidders need to be screened to make sure they have no connections to the silk road or its founder. They are required to deposit 200,000 in cash grid the winners will be announced on monday. Matt, this is a fascinating story. I love it. Think about all the things they seized from silk road. Probably heroin, they could have seized fake passports, any contraband you couldve bought there. They certainly wouldnt be auctioning it off. But they will be auctioning this off, which says a lot about the legitimacy of this currency. The Marshalls Office must be technologically advanced to even know how to store bitcoin and pass it on. Apparently they are not good using emails, or the making mistakes that we all make when using email. They will be very cool to see this. It will be interesting to see how the price of bitcoin is affected. It is a sizable chunk of bitcoin. About 30,000 bitcoins will be auctioned. This is just the beginning. They have 144,000 total. There are only 13 million bitcoin in existence today. Or that have been mined altogether. A million have been lost or locked away because the original bitcoins have never been moved. A lot are lost all the time. It is a big chunk of change in the bitcoin world. They are not selling them all, though. Is this the ipo style did a nice pops you can sell more at a higher price . That may be it. The u. S. Marshals office sells billions of dollars of stuff every year. They are not new to auctioning things off. They know how things work. They know how markets work. They will sell off this initial 30,000 bitcoin chunk in blocks of 3000. The idea is they dont want any one group or any one person to be able to drastically affect the price in the open market. That is one of the ways they have figured out to trying curtail that possibility. Bidders have to put a deposit down. They are good for decent bid by the end of today. 6 00 p. M. Is the deadline. They bid an amount, and for how how many blocks they want to buy. On street smart, we will show somebody putting a liability in. A live bid in. Matt, sit tight. Joining us now from wedbush securities, gil does this lend a different type of credibility to bitcoin . What does this mean for bitcoin . I agree with that. I think the government various agencies of the government have learned to accept bitcoin and are in the process of learning how to deal with it. We have already had treasuries and the fed comment on bitcoin, where they think it belongs. The u. S. Marshals could have treated it as an illicit asset, and not surrendered it. And not try to sell it. But they did. You realize it is a unique financial asset, they need to sell it in a unique way that makes sense for that together asset. That is what they are doing. Those bitcoins are actually more valuable in that they are coming from the government. There is even going to be a certificate from the u. S. [no audio] the u. S. Marshals office, saying they come from the government. It makes them more attractive to potential bidders. What is the path the price reaction to this upcoming auction . The price rose a little. It was trading at 5 83. 5. 83. The bloomberg terminal now has a function where you can check the bitcoin u. S. Dollar price, which i think says something about his legitimacy as well. That basically values each 3000 bitcoin block at 1. 75 million. A couple of days ago was worth substantially less. In november, it was worth a heck of a lot more. If you look at the price over the last year, it has not been a bad ride for people who got in on this currency early. You see this bike there right around november the spike their november december, you are up 500 where you would have been if you bought a 12 months ago. I have totally come around this notion of bitcoin, and what the possibilities are technologically. The way it works technologically gil, let me ask you. Is bitcoin still the dominant alternative currency out there . Our competitors to get more love . The coin has by far the biggest infrastructure. Thousands if not tens of thousands of Software Developers that are working on bitcoin. There are some efforts to try and take the functionality into a different coin, into a different type of technology that has some advantages. By and large, bitcoin is really where all of the activity is as we speak. I think you will see a lot of the alt coin ripple may be a different story. Alternatives to bitcoin that are similar, when you find a positive and that, it is brought into the bitcoin source code. When bitcoin source code exhibits a negative, that these other alt coins dont have, that can be worked out as well. It is an evolving currency, constantly changing, and it is a very democratic currency. That is a huge advantage that speaks to the longterm survival of bitcoin over any smaller competitors. Matt miller in new york, gil, with wedbush, thank you. The Manhattan District Attorney isnt making friends as they order social networks to turn over user data. Thats next on bloomberg west. Im cory johnson. This is bloomberg west. Facebook is in a legal dispute with the district man that Manhattan District Attorney. Judges ruled that the social Network Facebook must turn over user data. Information from these accounts will be used for Fraud Investigation that workers have filed for federal disability. The government thinks they are faking it. The facebook pictures show them healthy. Facebook says the warrants are unconstitutional. This is an interesting story. Who owns this information . When the government requested this information, they werent just requesting it for the the individuals themselves, they went straight to facebook. They wanted it on hundreds of people. Facebook couldnt tell the people, so they couldnt let the people sign up for themselves, or give them a warning. And they had to turn it over. The couldnt deny the government that information because the Fourth Amendment rights are their own. If the people if the pictures are in my file cabinet, i own them, they would have to subpoena me. But because facebook has them, are they facebook, or are they the users . The courts have said is an online it is an Online Repository of data. Facebook happens to have the data. Attorneyttan district can ask for it. Facebook is appealing that, saying this is the equivalence of going into someones home and taking out all their stuff. What is different when it is digital . So they already turned over the information . But they are trying to get it back. The da is trying to figure out away to keep it . Do we know what people these are, what injuries they thought they were faking . Government employees, retired Police Officers that said they had injuries and trauma related to work. The photos show them doing water sports are proving that they were not disabled. For some of them, not all of them. Is obviously raises issues for facebook will be on the small case in new york. Absolutely. This happened to twitter too. They protested the government asking for information occupy wall street protesters. They refused to turn over. This is an example of how our data is at the disposal of the government. On top of all of these nsa regulations. Revelations. This will come to a head. Thank you very much. Is the next best thing in gaming watching other people play videogames . We will talk about why the social Gaming Platform has taken off. You can also watch a streaming on your tablet, phone, or bloomberg. Com, or apple tv. Welcome back to bloomberg west, im cory johnson. Hardcore gamers want to play other people wants to watch other people play. This allows people to record their own gameplay and watch others. They found this thing and put money in it early. It seemed ridiculous. I saw this report about internet traffic. Twitch is getting up there. Its one of the biggest things on the internet. Its funny. There is peak traffic. And what youre doing live video, or transmitted in realtime, that is what creates peak traffic. There is so much data that goes across. It started as a Company Called justin tv, who wore a camera on his head and broadcast his life 24 hours a day. He got people very upset when he went on a date, and took the camera off to go to the bedroom with the state. Date. And that was an investment point . Sometimes you want to be a little crazy. Rational doesnt always make good investments. The audience thinks this could be turned into what . Its not a rational process. There are four kids. We are doing really edging stuff with video. That was pretty much it. This is ridiculous. It is. I feel like you have had such a long term in this business of investing. Have you always had that approach . Especially when he made the jump from being a journalist to an investor . Being a journalist requires some reason. You have rules to abide by and trying to report on what is actually going on. That was a bit of an adjustment. When you want to be ahead of everybody else, you cant be rational. Specifically around which twitch people who arent exposed to it, arent exposed to it. You and i are old. We grew up in the time word is different than it is now. The vast majority of millennials actually experienced playing games as a core part of their upbringing. Mainstream as movies and television and anything media going forward. The new xbox was a last announced last year. When they announced you could use twitch directly on the xbox, there was this big thing and on for him of people went crazy. I wasnt aware before that. Let me give you a broader perspective on twitch. Its not that you just want to watch other people playing video games, is that now there is a professional sport where people make a fulltime living playing video games competitively. They have formed teams. Teams have formed into leagues, and the leeks compete. The leagues compete. It is all of the instructor of a professional sport, whether it be european football or american football, or whatever names you want to apply to it. When you make an investment this early, how do you start to imagine the way the business will look considering the notion of what could be . We are just investors. It is the team that figures out. The guy that is the ceo of twitch right now worked with justin, and thats now blown grown to be this huge business. It ships infinite numbers of minutes of video. Typically, do follow investors from one business to another . Absolutely. If someone makes you money, you want to bet on that guy. The four founders of justin tv, what is now the ceo of twitch, one follow the company that was sold. The fourth has launched a Company Called cruise. They are the only start up crazy enough to take on google in the area of self driving cars. That the start up . Yes. You start seeing google talking about android and on the dashboard, and self driving cars might be a business long before we get to a time of self driving cars. That is what happens when you get to be a big company. People are saying that googles future is more like microsofts present. These guys are saying screw that. If you happen to have a black audi, we will sell you for 10,000 all of the equipment that you need to turn your car into a self driving car. If you were a rich guy with the black audi, a kind of goes back to henry ford. Then we will put this equipment on. They install the thing that turns the steering will for you. They install the sensors to make sure you will brake. It is self driving. It is only in a limited use case, which is when you are on a long commute. When you are on a highway. You are not going through radical turns come off the road. It just makes it easier to commute. You dont have as much road rage. We have bill gurley on the show. We were talking about the difficulty of some businesses getting into regulated Industries Like health care or broadcasting, finance, this is for good reason. This is aftermarket equivalent. So it is regulated differently than the car manufacturer. Audi has to take care of the fundamental regulations and building the car in the first place. You choose to install it. It is a total buyin an opt in. This is where google is very helpful. Without even being an official partner, because they take all the slings and arrows. They take all of bieber agencys response ash all of the agencies responsible for regular thing cars. Whoever set the rules for that, they worry much more about google than they do about this tiny little company. Interest in stuff. Interesting stuff. Thank you very much. Is it time to change patent lawsuits . A little help from Silicon Valley to clean up the junk in patent regulation. Lets get you traded caught up on where stocks traded. Finishing the day higher. Technology and utilities salvaging the session for much of the day. Stocks were mixed. You are watching bloomberg west. Im cory johnson. The legislation to kill patent trolls died on the senate floor. Patent trolls live on for now. But the Supreme Court is not letting patent reform remain at a standstill. Head of the Patent Office made a major policy announcement, offering a new approach to combat use trolls. Lets take a quick moment to define the straight to find that phrase. They are called patent trolls companies who have acquired the rights to patents but dont actually sell or produce anything. They build patent arsenals often collected from the abandoned stockpiles of universities, failed startups, and defunct big the companies. Once they build their war chest, those trolls go out for blood, targeting Companies Whose technologies are similar to those outlined in the patent. They threaten costly lawsuits unless licensing fees are paid. Most troll attacks are settled out of court for nondisclosure agreements. Of the 4700 patent lawsuits filed in 2012, 3000 were from these socalled patent trolls. How we regulate against the abuse of little use litigation and patent trolls . Michelle lee joins me right now. You were at stanford talking about patent trolls. What do you fundamentally see is the problem with these trolls . That is accompanied in question. That is a complicated question. I think the bigger question is for us to ask is what can we all do to better improve the patent system . To make it the best we can be . There are initiatives being undertaken by the court and by the congress, and also by the administration. Happy to go into those in as much detail as you would like. Youve worked in Silicon Valley, you worked in the Apple Microsoft case which was so important. How do you explain how Different Things are now than they were even 10 or 15 years ago . I think companies are just as innovative as they have always been. I do think there has been an uptick in patent litigation, and also, abusive litigation. The goal of the administration is to help curtail abusive patent litigation, and create a system that promotes and encourages innovation. What kind of litigation is considered abusive . Asserting a patent where you have no ownership rights. Asserting a patent and stretching the meaning of what it covers. Using a tactic where you said and demand letters to a lot of folks saying, dont look too much into the details, you can settle this litigation for 3000. Less than it would cost you hire a lawyer. How do you stop that . More precisely, what has to change to stop that . The Patent Office is undertaking a huge priority to increase the quality of the patents it issues. The clearer and less ambiguous the patents, the less the ability or likelihood of that patent being used in abusive litigation. And the more likely that the companies are able to focus on innovation. How do you make the patents better . Can they do better patent examination . They are already doing a tremendous amount. They do an excellent job searching, however, we are actually using Silicon Valley techniques, such as crowd sourcing. We are going out and asking experts to say, look, you are experts in your field. What do you think our examiners could be using to determine whether a patent should be issued . We are also bringing in people from academia and that sit outside the world of the pto . Come in and give presentations on their areas of expertise. Give the training to our examiners. We will televise it and broadcast it to all of our members. Smart examiners this will make , them up to speed on fastmoving technology. What you think you didnt get through the senate . It is obligated. It is complicated. There are many factors. We want to curtail the use of abusive patent litigation. We also want to preserve the right of legitimate patent owners. To balance that, to have a valid set of reforms that promote innovation there are a lot of issues at stake there. We are not waiting to move forward. We have a number of initiatives underway, we are tapping into experts in the field. We are also using the data. So many of our companies use. We have a lot of data. For the first time, were able to go over that data, review the data, and feed that back into how our examiners review the patents at every stage of examination. President obama there was a time when patents werent the scene of a meter challenge. I think it sort of highlighted the importance. Lets pass a patent reform bill that allows businesses to stay focused on innovation, not costly and needless litigation. Just amazing. It shows us how relevant this issue is. But i wonder if, the twentyyear timeframe of patents needs to change now. Innovation happen so quickly. That is true. Innovation is coming quickly. But we have to keep in mind there are Many Industries for which a 20 year term is justified and needed. For example, biotech and pharmaceutical Companies Put hundreds of millions of dollars into developing and getting fda approvals for new drug. In order to recoup their investments, they need longerterm protection. Longer than 20 . 20 is long enough. They seem to be operating just fine with that time. E period. You do need a certain. Period of time of exclusivity. Do you think it should be morsels of more exclusive . If we start having different rules for different technologies, think about it. How quickly technology ev