Posts from blockchain

Tokens

Our friends Balaji and Naval penned a really nice primer on crypto-tokens. 

AVC readers have been hearing me talk about this new form of business model and fund raising mechanism for a while now and so it won’t be new to all of you. But even so, I think the way they lay it all out is really well done and I’ve sent it around to a bunch of people I know who are still trying to make sense of tokens.

If you want to give it a read, click here and check it out. 

Video Of The Week: What Is Kin?

Our portfolio Kik announced last week that they plan to decentralize their messenger app and monetize via a cryptocurrency called Kin. Here’s a video they put together explaining how it will work and why it is important:

Kin

Our portfolio company Kik announced some big news today.

They are going to decentralize Kik and use a new cryptocurrency called Kin to build a business model around a decentralized Kik and, hopefully, attract other developers to build decentralized communities using Kin as well.

All of this is outlined in the Kin Whitepaper that was published this morning.

Here are the main parts of this plan:

Kin is a cryptocurrency designed to bring people together in a new shared economy.
Envisioned as a general purpose cryptocurrency for use in everyday digital services, Kin will be used for all transactions within the Kin Ecosystem. Implemented on the public Ethereum blockchain as an ERC20 token, Kin will serve as the basis of interoperability with other digital services in the Kin Ecosystem.

Kik will be the first digital service to join the Kin Ecosystem.
Kin will power a digital economy inside of the Kik app. With millions of users, Kik will drive mainstream consumer adoption of Kin, establishing fundamental value for the cryptocurrency. By natively integrating the Kin wallet into the app, it will instantly become one of the most adopted and used cryptocurrency wallets in the world.

The Kin Rewards Engine is an innovative cryptoeconomic structure intended to promote the use of Kin as a common currency.
Through the Kin Rewards Engine, Kin will be introduced into circulation as a daily reward, to be distributed among stakeholders by an algorithm that reflects each community’s contribution to the overall ecosystem. This economic structure will create a natural incentive for owners of other digital services to adopt Kin and become partners in the Kin Ecosystem.

The Kin Foundation will act as the non-profit governance body for the Kin Ecosystem. to build, enhance and monetize those services.
Over time, the Kin Foundation will ensure the delicate transition of the Kin Ecosystem into a fully decentralized and autonomous network.

As I said in the release that went out this morning, we believe cryptocurrency is the next important business model innovation in tech and Kik will be the first mainstream application to integrate a cryptocurrency. This could be a watershed moment for the blockchain sector.

I Paid $22.38 For This

This is a virtual good, called a Rare Pepe. I blogged about it a few weeks ago.

Hawkeye tweeted this at me a couple days ago:

And I liked it so I went into the Rare Pepe directory, found the card, and offered 1000 Pepe Cash for it.

1000 Pepe Cash goes for $22.38 right now in the cryptomarkets.

So I paid $22.38 for a virtual card that has no utility other than I can collect it (on my computer or phone), I can send it to someone else, I can sell it, and I can blog about it.

But the one thing I do know is that these are “rare”. There are only 391 issued right now. And that is verified on the blockchain.

Something to think about as it relates to digital media/digital art/digital music/etc which has been suffering from no scarcity value since the invention of the Internet.

Blockstack – A New Internet

The founders of our portfolio company Blockstack are ambitious.

What they have built and are announcing today is effectively a new Internet, powered by the blockchain.

This is what the Blockstack team is after:

A new internet needs to have security and safety as a core of its DNA. Applications and services cannot be owned and controlled by remote third-parties. We can build a digital world of truly peer-to-peer internet utilities not maintained by corporations, but collectively, by the people. We can build a digital world that encodes property rights, where we can own our data, and where the people are powerful.

Here is their blog post announcing the Blockstack Browser.

And here is my partner Albert’s blog post on the USV blog explaining why this is important.

Video Of The Week: My Talk With David Kirkpatrick at Techonomy

Last wednesday morning, I went to Techonomy NYC and talked with my friend David Kirkpatrick for about 30mins.

That conversation is below.

There is one gross misrepresentation in the talk. David and I were talking about my efforts to ignore Trump and I said that the Gotham Gal spends “two to three hours a day on that stuff” which is not anywhere close to accurate. She reads the NY Times religiously in paper form every day and does pay a lot more attention to Trump than I do, but it’s not anywhere near two to three hours. I apologize to her for suggesting such nonsense.

Funding Friday: Coinlist

Some interesting developments that we have been working on came public yesterday.

  1. Protocol Labs, a company that builds blockchain-based protocols laid out its ambitious roadmap and finally got around to announcing the seed investment USV and others made in it last year. My partner Brad Burnham wrote a blog post on USV.com explaining why we are so excited about Protocol Labs.
  2. Protocol Labs will be launching a token offering soon for Filecoin which powers a blockchain based storage network on top of its IPFS protocol.
  3. The Filecoin offering will be managed on a new platform called Coinlist which was built by Protocol Labs and AngelList.
  4. Coinlist will utilize a new kind of security called a SAFT (Simple Agreement for Future Tokens) that has been constructed to comply with existing securities regulations.

While all of these are interesting developments, particularly the architecture and roadmap that Protocol Labs laid out, I thought I would talk a bit about Coinlist given that it is “Funding Friday.”

Token Offerings have been going on for quite a while now. There are over 800 tokens listed on Coin Market Cap.

But US domiciled companies have not had a good way to raise money in token pre-sales and comply with existing securities laws. This forced a number of promising blockchain projects to domicile outside of the US, often in Switzerland, and organize as Foundations for tax reasons. A US domiciled company can wait until the token is live and functioning and sell it then, because at that point it is not a security, it is a token. But if you want to raise funds in a pre-sale for a US domiciled company, there has not been a good way to do that.

Enter Juan Benet, founder of Protocol Labs, and Naval Ravikant, founder of AngelList. They collaborated on CoinList and, with the help of a number of venture law firms and their investors, including USV, came up with the SAFT structure.

Naval put it like this in a Forbes piece yesterday on all of this:

ICOs are obviously a new and interesting form of funding for blockchain-based protocols. But it’s not clear that all of them comply with U.S. securities laws or that all of them are companies that have good native use cases for new coins. So, we wanted to use a high-quality coin and team to trailblaze a legal and compliant ICO.

If you are an accredited investor and want to participate in token pre-sales, check out Coinlist.

Rare Pepe

Over the last few weeks, I’ve been playing around with a digital asset collecting game called Rare Pepe. My partner Andy tipped me off to it a while back and it took me a while to wade into it.

Rare Pepe is based on an internet meme called Pepe The Frog that has been around since 2005 and became popular on 4chan.

Rarepepes are digital trading cards that are traded as counterparty (XCP) assets on the Bitcoin blockchain.

Andy and I were talking about this yesterday on Twitter and my friend Jason asked what we were “nerding out” over.

I responded that rarepepes are “about the coolest thing ever” which may be a bit of an overstatement but isn’t that what Twitter is for?

The truth is rarepepes are a bit complicated to buy and collect. First you need a Rare Pepe wallet which you can get here.  Then you need to transfer in some Bitcoin from somewhere like Coinbase. Then you need to buy some Pepe Cash (yet another crypto asset) which you can buy here, but only after transferring in some more Bitcoin. Then you transfer the Pepe Cash to your Rare Pepe wallet and then you can buy the digital trading cards. But you need to spend BTC to send these cards around because that is what powers the Counterparty system. You can also publish your Rare Pepe wallet address on Twitter and maybe someone will send you some. I did that yesterday and it worked.

Here are some of my cards:

So why do I think this is interesting?

Well for one, it shows the utility of a blockchain in action. You can buy, sell, hold, and transfer digital assets and they have value and are traded for other digital assets (like BTC) in an online global marketplace. Anyone can make one of these cards and if they are determined to be “rare” they become digital assets with value attached to them.

It also shows how a game can be built on a blockchain with virtual goods and characters and more.

And it shows how clunky this stuff is for the average person to use. Just playing around with this over the last few days showcases to me all of the technical challenges that blockchain technology still has to overcome before it can become mainstream. I would like to think that if this sort of game were built on Ethereum instead of Counterparty/Bitcoin, and if it ran inside something like the Token messenger that I blogged about a few weeks ago, it might be a lot simpler and easier for the average user to access. So there is real progress happening on this front right now.

Rare Pepe itself has a fair bit of baggage. It’s a meme popularized by the alt-right and attached to a lot of ideas that I personally find difficult to take.

But putting all of that aside, I find it encouraging that people are building things that are comprehensible to the average person on public blockchains. Rare Pepe may not be the killer app that public blockchains are waiting for, but something like it may well be.

And, of course, you can speculate on/invest in this, as my partner Andy showed me yesterday:

Rebalancing

Two of my favorite techniques in investing are dollar cost averaging (when buying and selling) and rebalancing.

The early stage venture capital business has dollar cost averaging built into its buying model. You build up a position over multiple rounds and years. That is a great thing. I also try to exit investments, particularly public stocks, via this technique. But when a company is sold in an M&A transaction, you generally have to sell everything at once.

In public stocks and other marketable assets, these techniques are particularly important. I believe you can spot a long term trend and ride it. But I do not believe you can spot a market bottom or top until it is in the rear view mirror. So that is why I like to average into and out of a position over time.

Rebalancing is even more important. If you have a position that has worked incredibly well and it starts to become a very large portion of your overall portfolio, it is wise to take some of that position off the table and reinvest it in other attractive assets. This gives you more diversification, which I believe is generally a good thing, and also de-risks your portfolio from a big selloff in the largest position.

The reason I mention this is that I have been rebalancing my crypto portfolio. I got into BTC early and have held a highly concentrated position in BTC for the past five years. As other crypto assets have developed enough liquidity and maturity that they become attractive holdings, I have been taking profits on my BTC portfolio and reinvesting, mostly in ETH for now. But I am also looking around at other crypto assets to start buying.

The macro thesis around crypto has been building for the last six years that I have been investing and following it. I think it is certainly time to have a diversified portfolio and start using best practices for investing in marketable assets in this sector.

Token Summit NYC May 25th

AVC regulars William Mougayar and Nick Tomaino are putting on an exciting event in NYC on May 25th called Token Summit.

I blogged about it a while back but I thought an update was in order because:

1) I am going to do the wrap-up session with William at 5pm. That should be fun.

2) The agenda has been published and it looks great.

3) AVC wine geek Arnold Waldstein and William are doing a talk on natural wines at an event for attendees the night before.

This is the closest thing to an AVC meetup that I know of since the 10th anniversary party back in 2013.

It should be a fun couple of days in NYC.