Posts from crypto


AVC readers may have noticed that I didn’t blog here yesterday.

That’s because I blogged on instead, about our most recent investment.

You can read that post here.

Your Data Is My Data

This piece in Recode explains that Cambridge Analytica built an app that 270,000 people used to amass profiles on 50 million people.

That’s not very surprising because we are talking about networks here.

This is a network graph that my colleague Jacqueline made of my twitter network a few years ago:

In our online life, we are connected to a huge number of people.

If I get access to your email inbox, I am going to see emails with thousands of people.

Which is what makes this privacy/data sovereignty stuff so important.

When your data is taken without your knowledge/permission, it is not just your data that is taken.

It is the data of thousands of other people, often the people closest to you.

That sucks.

This is one of the many reasons I am hopeful about an Internet 3.0, a decentralized system with data security and integrity at its core.

Slideshow Of The Week: Why Tokens Are Fundamental

This weekend I am going with a slideshow instead of a video or audio embed.

Some of my colleagues at USV have been spending a lot of time with regulators, elected officials, and lawyers helping all of these people understand cryptonetworks and why they are super important and need to be regulated with extra care.

One of the issues that many folks get wrong is the role of tokens in these cryptonetworks. For many reasons, not the least of which being the speculative frenzy surrounding cryptotokens, regulators and others simply see tokens as financial instruments and want to regulate them as such.

So my colleague Nick put together this deck to explain the “centrality” of cryptotokens to the operation of cryptonetworks. He published it on his blog earlier this week. I am republishing it here.

I would encourage everyone to hit the [ ] icon and read this in full screen mode.

The Coinbase Tax Center

Our portfolio company Coinbase launched some much needed tax tools this week.

I used them today to calculate our gains in 2017 and send the reports to our accountants.

The Coinbase tax center is here.

The tools look like this:

I generated all of those reports just now and sent them to my accountant so we can report the 2017 gains on our returns.

Sadly in 2015 and 2016, we had no gains. Some small losses which might offset a few of the 2017 gains, but not much.

2017, on the other hand, was a material year for us. The BCH fork generated real value and we sold some of that. We will be paying taxes on that shortly.

I tell you all of this because gains and losses on crypto trading is taxable income and you should declare it and pay the taxes.

That’s the law and it is important to comply.

Coinbase Index And Coinbase Index Fund

First a disclosure for all the disclosure enthusiasts who hound me here and on Twitter to disclose things that are well known to most readers in hopes of turning this blog into a legal document: USV is a large investor in Coinbase and I am on the Board of Coinbase.

Ok, now that we have done that part, here’s the news that came out yesterday and I want to talk about today.

Coinbase launched an index and an index fund yesterday:

The Coinbase Index is a measure of the financial performance of all assets listed on Coinbase’s GDAX exchange, weighted by their market capitalization.

And the Coinbase Index Fund is a way to buy that index without having to buy the individual assets that make up the index.

This blog post has more details on both.

To start, the Coinbase Index Fund will only be available to US-resident, accredited investors. Coinbase is actively working on launching more funds which will be available to all investors and cover a broader range of digital assets.

To me, this is all about broadening the appeal of crypto tokens to a wider range of investors than are currently in the market. Making it simple for the average investor to get exposure to this emerging sector is a good thing and I am pleased that Coinbase is broadening its offerings to reach people it is currently not serving.

Safe Harbors

I am not opposed to regulation. I think that industry needs to play by a set of rules that ensures things like public safety, fair dealing, etc.

But I do think that regulating an industry or a company too early in its life can be very damaging to innovation and the development of new technologies and new industries.

So I am a big fan of Safe Harbors.

A safe harbor is a stipulation in a given rule that certain entities or certain situations will not be deemed in violation of it.

In general, I like the idea that small companies or nascent industries are given safe harbors until they are at a size where compliance becomes affordable and/or possible.

My partner Albert wrote a post last week proposing some safe harbors for the crypto token sector.

Crypto tokens seem like an ideal technology/sector for safe harbors. Clearly this sector needs some rules and regulations. But subjecting projects and technologies to these rules too early in their life or subjecting projects and technologies to inappropriate rules and regulations would be devastating.

Why Decentralization Matters

As you can see, I am not writing this presidents day weekend. I explained why on friday.

Instead I’ve been posting things that I found worth sharing with all of you.

Today, I want to share a blog post written by my friend Chris Dixon about decentralization.

This is a portion of the post that I like very much.

Decentralization is a commonly misunderstood concept. For example, it is sometimes said that the reason cryptonetwork advocates favor decentralization is to resist government censorship, or because of libertarian political views. These are not the main reasons decentralization is important.

Let’s look at the problems with centralized platforms. Centralized platforms follow a predictable life cycle. When they start out, they do everything they can to recruit users and 3rd-party complements like developers, businesses, and media organizations. They do this to make their services more valuable, as platforms (by definition) are systems with multi-sided network effects. As platforms move up the adoption S-curve, their power over users and 3rd parties steadily grows.


When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. The easiest way to continue growing lies in extracting data from users and competing with complements over audiences and profits. Historical examples of this are Microsoft vs Netscape, Google vs Yelp, Facebook vs Zynga, and Twitter vs its 3rd-party clients. Operating systems like iOS and Android have behaved better, although still take a healthy 30% tax, reject apps for seemingly arbitrary reasons, and subsume the functionality of 3rd-party apps at will.

For 3rd parties, this transition from cooperation to competition feels like a bait-and-switch. Over time, the best entrepreneurs, developers, and investors have become wary of building on top of centralized platforms. We now have decades of evidence that doing so will end in disappointment. In addition, users give up privacy, control of their data, and become vulnerable to security breaches. These problems with centralized platforms will likely become even more pronounced in the future.

Click here to read the entire thing.

Audio Of The Week: A Decentralized AI Platform

My friend Gordon texted me this podcast and said “AI, blockchain, and homomorphic data. Trifecta!”

I gave it a listen and indeed some very interesting concepts are discussed in this one.

Video Of The Week: Is Crypto the Future of Early Stage Funding?

A lot of people in the crypto sector have suggested that ICOs and tokens are the future of early stage investing and highly disruptive to my business (venture capital).

In this video (yet another from the Upfront Conference), VCs and other investors discuss why that may not be the case.