Posts from blockchain

SegWit2x Update

I posted last week about the debate between the SegWit2x Bitcoin update and the threat of a soft fork.

Since then a number of important things have happened.

BIP91 locked in on Thursday and and yesterday BIP91 enforcement was activated.

That means that SegWit is now active on the Bitcoin network.

This is a big deal because the most contentious protocol change in the history of Bitcoin, the introduction of SegWit, has finally happened.

The SegWit2x road map is not complete yet, as the next step will be to introduce a block size increase.

Jeff Garzik, who has been leading the SegWit2x implementation, has a good interview up on Coindesk explaining all of this and more.

Bitcoin has a lot of great things about it. As Jeff says in the interview, it is by far the most secure blockchain. But it’s developer community has had a hard time finding consensus and moving forward together.

SegWit2x is an opportunity for that to change. And I am encouraged by that.

Funding Friday: Token Filings

Public market investors who like to buy into IPOs have Edgar, a database of SEC filings that they can browse through to learn important information on upcoming IPOs.

Investors in token offerings have not had the same thing. Until yesterday.

AVC regular William Mougayar has launched TokenFilings.com which is essentially Edgar for Tokens.

Yesterday we got Coindexter. Today we get TokenFilings.

The crypto community is building stuff that makes this sector more interesting every day.

Reminds me of what the Internet used to be before the big guys took over.

Coindexter

Our former USV colleague Jonathan Libov finally took the covers off a side project he’s been working on since he was at USV.

It is called Coindexter and it’s “a collaborative library for long-term investors in decentralized, blockchain networks.”

You can contribute to Coindexter, like a wiki, or dive into research areasthat interest you. Feel free to ask a question if there’s something you’re looking to learn.

Check it out if you are into token/crypto investing.

SegWit2x vs UASF

Bloomberg has a good piece on the struggle between the Bitcoin core developers and the leading miners on how to best scale Bitcoin.

I am for the SegWit2x proposal and hope that we see it broadly adopted later this month.

There is a chance that doesn’t happen and a user activated soft fork (UASF) could be used to force SegWit into the market.

I personally hope that a user activated soft fork doesn’t happen as it would create a lot of turbulence. The Ethereum fork last year (almost exactly a year ago) that created Ethereum Classic is a good case study to look at if you want to see how that might play out.

Ultimately I do believe the best ideas will win out and that Bitcoin can survive any of these scenarios. But it would be good to see the Bitcoin community agree on something and implement it. That would build confidence that the governance model, which has been a bit shaky, is maturing.

Easy Come, Easy Go

I saw a friend last night who has been trading fiat currencies for thirty years. He looked at the Bitcoin chart and said “I would be worried about Bitcoin if I were you.”

He knows that we own a fair bit of Bitcoin (and Ethereum).

My take on the selloff that continues in the leading cryptocurrencies is “easy come, easy go.”

Anything that goes up 38x in six months can easily go down by just as much.

I am not saying that ETH is going back to $10 or that BTC is going back to $1000. That of course could happen. I am just not predicting it.

It has been too easy to make money in crypto this year. It has been too easy to raise money in token offerings this year.

Tapping people who have made 50x their money on ETH to invest in your whitepaper is a great way to raise money until those people start to lose money on their ETH and fear starts overtaking greed as the dominant emotion in crypto land.

But crypto has not been an easy business to be in over the last eight years. It has just been an easy business to be in over the last seven months.

I remember the two bubbles we experienced in BTC back in 2013:

In April 2013, BTC peaked at just over $200 and then quickly retreated back to below $100.

In November 2013, BTC traded briefly above $1000 and then faded, and did not see that level again until January of this year.

I remember back in the late 90s, a reporter asked my partner at the time Jerry Colonna what he looked for in entrepreneurs.

Jerry said “I want to back people who are doing a startup because of the mission rather than the money, because someday the market will crash and the money will be gone and I want to be with an entrepreneur who will still be around then.”

Bubbles always attract people who are chasing the easy money. And those people come and go.

But crypto is about a lot more than making money.

And the people who are into crypto because of the mission, a global decentralized platform for innovation, are going to be around after this bubble bursts, and the next one bursts, and the next one bursts. They have been around since before the April 2013 bubble and the November 2013 bubble, building this important technology. And so have I and I’m not going anywhere either.

A Visit To Crypto Valley

I blogged about Crypto Valley yesterday (aka Zug Switzerland).

Well it turns out that a couple of AVC community members (Ken Berger and Jeremy Epstein) have put together a three day trip to Zug on August 14-16. Details are here.

Ken Berger wrote this in his post yesterday:

Our target attendee participants are enthusiasts already well-versed in decentralizing internet technologies, including blockchain, crypto-currencies and beyond. We’ve already confirmed some VC’s and hackers, but other deep thinkers and some simply curious will likely make the list too; will be a great group. The event is free of charge. And hey, it’s gorgeous Switzerland in summer.

Unfortunately, we are very limited in spaces. To indicate interest as a participant (or speaker, or host), feel free to message me or use the instructions on the event’s post.

I will not be making this pilgrimage but I suspect some of you may be interested in doing so.

Jurisdictional Competition

The economist Paul Romer introduced me to the idea of jurisdictional competition about ten years ago and I’ve been fascinated with it since. His TED Talk about charter cities from 2009 is a good primer on the concept.

The basic idea of jurisdictional competition is countries, cities, and regions can compete economically with each other by adopting more favorable laws and social norms.

We are actually seeing this play out right now in the crypto sector with the Swiss Canton of Zug becoming the preferred location to domicile a crypto-currency business.

Zug has even taken to calling itself Crypto Valley.

We have watched the blockchain companies in our portfolio struggle to adapt their business models, financing approaches, and more to US laws. We have been working with them to come up with creative ways that they can continue to operate in the US while executing the crypto playbook. It has been quite challenging. Many have advocated just moving the businesses to Zug, like so many others have done. And that may happen. We are for whatever is best for the founder and the business they create and have no preference for US domiciled companies. We have invested in Canadian companies, Estonian companies, French companies, Dutch companies, German companies, and likely a lot more. Investing in a Swiss domiciled company or foundation would not be a big deal for us.

The crypto playbook is a disruptive one. It is not a new way to raise money. It is a new way to architect a business. The profit motive is flipped upside down. You extract profits with your currency, not your business model. They are so many institutions, laws, even governments that look at that playbook and freak out. There has been pressure for years to rein the crypto sector in. And many rules and laws have been passed. And yet the crypto sector continues to flourish. Some of that is because it is, like the Internet, a global technology that knows no borders. Some of that is because lawmakers and regulators have been wise to tread carefully. And some of that is because nobody wants to drive this sector out of their city or country.

And yet that might happen anyway. It is already happening. And the US, and Silicon Valley in particular, have the most to lose if it does.

My Very Own Rare Pepe

I’ve written about Rare Pepe a bit here at AVC. I am fascinated by the combination of trading cards, internet memes, and crypto assets that Rare Pepe represents.

This morning I woke up to this news on Twitter:

Of course I went to my Rare Pepe Wallet and offered 400 Rare Pepes for it. I hope that trade clears and I become the owner of one of the 100 that will exist.

It is Series 21, Card 14 in case others want to collect this gem.