a16z crypto

I guess this is the week I am going to compliment our competitors in the VC business.

That meme started yesterday in my post on Benchmark and will continue today.

Yesterday afternoon my friend Chris Dixon announced a new VC fund called “a16z crypto” which he will lead with a team of great investors, many of which are also friends, including his new partner Katie Haun who I serve on the Coinbase board with. She is a very special person as Ben Horowitz described in this post.

Go read the blog post which Chris wrote to announce the fund. It is among the best articulations of the crypto opportunity that I have read.

Here are some of the concepts he explains which had me nodding my head:

Trust is a new software primitive from which other components can be constructed.


The new primitive of trust also means that 3rd-party developers, entrepreneurs, and creators can build on top of crypto-powered platforms without worrying about whether the rules of the game will change later on. In an era in which the internet is increasingly controlled by a handful of large tech incumbents, it’s more important than ever to create the right economic conditions for developers, creators, and entrepreneurs. Trust also enables new kinds of governance where communities collectively make important decisions about how networks evolve, what behaviors are permitted, and how economic benefits are distributed.


We believe that just as the last three megatrends — mobile, social, and cloud — intersected and reinforced each other, so will the next three megatrends — next-gen computing devices, AI, and crypto.


crypto is purely a software movement and doesn’t depend on a hardware buildout, in contrast to, say, the internet, which required laying cables and building cell towers. Second, the space is developing extremely rapidly, partly because the code, data, and knowledge is largely open source, and partly because of the increasing inflow of talent.


Cryptogoods can unlock new experiences and business models for games and other forms of media.

I really like the term “cryptogoods” and plan to start using it as my default word for NFTs and related efforts.

Many of our crypto investments have been with Chris and his partners and I hope that will continue. They are fantastic to work with.

#crypto#VC & Technology

Comments (Archived):

  1. aminTorres

    re: cryptogoods. before “someone else” beats me to it. You are a sucker for coin-ing new terms.

    1. JimHirshfield

      My 2 cents? Quit while you’re a heads…or tails.

      1. kenberger

        don’t go changing.

    2. Mac

      That’s coiny.

  2. jason wright

    out of all of this i do so hope to see general ‘cryptogood’ as the atomic outcome for more of the people more of the time. the present system is net negative.trust is one thing, truth an another. the truth is that it’s still going to be a hyper competitive world, and people will still compete fiercely for ‘scarce’ resources. we know what they are. i hope people are not expecting a utopian ‘flip’ in distribution based on the perfection of distributed governance. they may have to fork off to find their preferred outcome. i’m wondering if it will end with a multitude of governed silos.

    1. Michael Elling

      It will.

    2. kidmercury

      Eventually most governed silos will reach federated agreements, like a United Nations or petrodollar type of agreement.

      1. jason wright

        a datadollar? it feels like there’s going to be a process of rationalisation over time where one protocol wins out over most others in a process driven by rational game theory behaviour, and where we end up with a ‘god token’ ruling the rails of that protocol controlled by a clique, which sounds familiar and is unappealing.- cryptogods?

  3. TeddyBeingTeddy

    I wish Chris would post to his blog everyday. Because he, like Fred, is brilliant and helpful.

    1. fredwilson

      Me too. He is wayyyyyyyy smarter than me. My superpower is frequency and regularity

      1. TeddyBeingTeddy

        Consistency (and transparency) has served you quite well!

      2. kenberger

        …and humility, evidently 😉

      3. Vendita Auto

        the power of bran

      4. jason wright


  4. William Mougayar

    It’s great to see more credible crypto funds like the A16Z one enter the space with a long term view on activity and returns.

  5. kenberger

    “cryptogoods”– glad that someone answered my Freemium-inspired call for an alternative to “NFT”.I had suggested “Uniquoins (unique coins)”, cryptogoods refers to the assets rather than the tokens. https://avc.com/2018/05/vid

    1. fredwilson

      Cryptogoods is so good

      1. kenberger

        sure. But it doesn’t cover a new name for the token/coin itself that represents such assets.

        1. kenberger

          …unless the NFT is a collectible itself, maybe. Where NFTs are used as representations of real world assets, it’s slightly different.Interesting to think of such rules as we blaze this new path. Dieter’s ERC721 spec is a start.

          1. Mac

            You replied to yourself. Was that just a COINcidence?

          2. jason wright

            did they turn down the action on kitties deliberately (a 98% reduction in transactions as i read) to preserve the credibility of Ethereum’s name?

      2. Pete Griffiths

        Names matter.For low quality cryptids I hereby propose “cryptocrap.”

    2. Kirsten Lambertsen

      I thought of your call immediately. I personally prefer a term that doesn’t include ‘coin’ because I feel like that’s limiting.

  6. DJL

    So we have a crypto story around governance in cyber security. But the ICO market seems like it has come unglued as a way of alternate fundraising. Would you see these new funds as open to allowing existing businesses to layer crypto into their existing business models?It seems like the flow of money into crypto funds is just beginning.

  7. kenberger

    Charles Hudson (now of Precursor Ventures) started the excellent event series “Virtual Goods Summit” back in 2007 (sold it later). That feels almost like the granddaddy of this, now.https://www.vgsummit.com/

  8. Pointsandfigures

    My biggest hope is crypto markets allocate assets better and more efficiently than we do currently. That will allow more people to have access to capital and will raise standards of living world wide. For those that don’t understand Coase Theorem, they should get familiar with it

    1. Pete Griffiths

      Why would you imagine it might?And what likely impact on externalities do you see emerging from the rise of crypto?

      1. Pointsandfigures

        Because they should break down a lot of old layers of distribution. That puts the producer closer to the consumer. Cool stuff happens then. With property rights clearly assigned by a blockchain, bargaining with lower transaction costs can happen. More efficient outcomes should happen. I haven’t thought about potential negative externalities from crypto too much although StreetwiseProfessor.com has. One could be the rise of very monopolistic blockchains which strangle markets when they were designed to make markets flourish

  9. JamesHRH

    Chris is super smart and incredibly personable, but like anyone in VC, he’s been wrong a lot.Trust is not a standalone proposition. Never in the history of ever has Trust just existed, like some sort of ecosystem bubble you can walk in and out of. Its kind of non-sensical, nirvana-ish. The rules of the game will always change for people.HW & SW are always interdependent build-outs, especially when establishing an industry standard is in play – BT anyone?Blockchain is going to be a set of massive HW players connecting their systems at the device level, its like combining BT & the cloud. Its not going to be something that a lot of people notice in an overwhelming wave of societal change. It will be incremental.The token side of it will never be much of a thing at all.Crypto goods? Puh-leez.

    1. Michael Elling

      We have a generation of coders who grew up hashing data and script in a trustless, permissionless and settlement free internet. No wonder we have arrived at this moment.

      1. JamesHRH

        Are you supporting my argument, commenting or arguing against it?;-)Coders are a closed sect.

        1. Michael Elling


      2. jason wright

        AKA cracking?

    2. Girish Mehta

      Re: “Crypto goods ? Puh-leez.”Like I have said here before, crypto is whatever you want it to be.Up next – Crypto widget ?2013. Cryptocurrencies.2016. Cryptocurrencies. Cryptoassets.2018. Cryptocurrencies. Cryptoassets. Cryptogoods.2022. “Its a fictional product. It doesn’t matter”.https://www.youtube.com/wat

      1. Adam Sher

        “It doesn’t matter, tell that to the bank.”

        1. Girish Mehta

          The punch line.

          1. Adam Sher

            The CFO at a former company dogged on me for years for not having seen Back to School. I finally watched it and I’m sorry I waited so long.

    3. fredwilson

      Nobody bats 1000 .If you bat 333 you go to the hall of fame. In my experience Chris bats over 500 in one of the toughest environmens. He is having a hall of fame career

      1. jason wright

        who’s pitching?

      2. JamesHRH

        I agree.But he’s at his best when he’s judging others not creating his own ideas. His ideas have had some nice exits but the premises have never really materialized.It’s kind of hilarious to raise a fund to bet on a single decentralized platform being the winner, isn’t it?The internal logic of that doesn’t hold.Financial transactions are settled on a standard. The web is on a standard. Credit cards are on a standard.No one owns any of them. There are some big brands out there, but brands are not an aspect of IoT and if there is a brand to be built, you are already in it (Coinbase).He’s going to miss here, and big. But what do I know.

      3. Twain Twain

        True story time. 9-10 Oct 2010, at NYU Hackathon, my team-mate and I tried to do a social media mashup and pull data from Hunch, Chartbeat, FB profiles and a Yahoo BOSS movie database API to do a recommendations engine. This was my product idea.Hunch’s CTO had to sit with us because their API had code bugs.I coded front-end of RECCE like this and we had to use dummy data instead of API data because of Hunch’s code bugs.https://uploads.disquscdn.c…Clearly, after sitting with us, Hunch’s tech team went back and fixed all the issues because 5 months later, this happened …11 March 2011, Chris Dixon released his little hack, Forage — which used Twitter and YouTube music videos.* https://gigaom.com/2011/03/https://uploads.disquscdn.c…I get Chris’s arguments for “cryptogoods” but there’s still a unifying protocol needed for the RDF to facilitate language processing and that unifying protocol would be better than the game theoretics currently being used for block chain/ethereum.Still, it will be interesting to see what A16Z does with its fund.

      4. Twain Twain

        Google’s Tensorflow AI platform is a blockchain AND Twitter’s recently been migrating their AI components to that.So the idea that Cryptointernet won’t also be controlled by existing incumbents is over-optimistic.Other than that, of course A16Z’s announcement is great since the industry’s felt stale for about 30 months.

      5. Stephan Froede

        Yeah something will come back but who knows what? (Aka portfolio management)Crypto goods … ok that’s basically the hope or bet find something which applies the power law (long tail) Model on crypto.But … what should that be? Are there any big transactional markets which aren’t digitalized? Is there any good where transactional costs are too high?Housing or Cars is mentioned often (makes sense, bc these are huge markets), but … would AirBnB on the Blockchain be much better than without?Or carsharing / -rental on the Blockchain, that’s probably more interesting … but would carsharing on the Blockchain be much better or cheaper?Are there any ownership models which would be better?So far there are only three successful crypto business models: speculation, reducing transactional costs for international payments, and funding (ICOs)….It’s difficult to see how the digitalization of ownership via tokens will be hugely successful … maybe within corporations (Allianz is doing something here).

    4. Joe Cardillo

      Re: trust, have to agree with you thereI think crypto is largely defined as a set of economic incentives (which is evident in Chris’ post / other posts) and glossing over the tension between that and other valuations (trust is motivated by many non-economic elements) makes it seem a lot easier than it is.Having said that, I do see the potential in chain and crypto technologies, but I’m not convinced, looking at the last 20 years of venture capital, that startups or investors are anywhere close to it yet.

    5. JamesHRH

      What is the best part of this story:a) Ether co-founder putting in a safety net in UHNW Toronto Real Estate?b) latest purchase was made BY WIRE TRANSFER after he cashed out some tokens?

    6. Bruce Warila

      James, enjoy reading all your comments on AVC.. “Trust is not a standalone proposition.” Don’t really agree: death, taxes, and eternal scarcity…all powerful and certain proportions. Chris’s words: “Trust is a new software primitive from which other components can be constructed.” seems so right to me. Now with crypto, do models/ideas have to be evaluated against tokenized alternatives where the entire proposition can be built to orbit around a perpetual scarcity? I think people are just barely learning how to model ideas around crypto/trust; five years from now, it will be in every B-school graduates systemic thinking toolkit. I am kind of slow, so it has taken me many months to shake off old paradigms so that I can barely contemplate organizing an idea around indelible trust…and not for the sake of doing so, but because I don’t want to be crushed in the marketplace for ideas by those capable of crafting ventures around / on top off…trust. Writing this comment reminded me of this video. https://youtu.be/MFzDaBzBlL0

      1. JamesHRH

        Chris is wrong,Trust is ephemeral, dynamic & human.SW is quantifiable, programmable & inanimate.My Pops spent 50 years as one of the world’s Foremost Peactitioners in one of the western world’s crucibles of Trust – a criminal courtroom. He was a master of creating flows of trust.I have a Masters in Human Communicstion w a focus on cognition & electronic media. I’ve spent 20 years in startups. I’ve seen lots of product people underestimate humans.IE – I’m not winging it here.You have already seen the human side of Blockchain – the insane speculation.The technical side will be important, but not what Chris describes. It will be large scale but incremental integration, not a new paradigm.Thanks for the kind words.

  10. Michael Elling

    Networks reduce risk. Trust is built through frequency of use and quality of input/action. Both are governed by layers and boundaries defined by protocols that efficiently clear marginal supply and demand. Across each layer or boundary there need to be incentives and disincentives via settlements that serve as price signals. These settlements need to also equilibrate the natural disparity between the geometric wealth/power capture at the core and top of networks with the linear costs borne at the bottom and edge of networks. What holds for one network is even more important for inter-networked ecosystems. How much of all this is being addressed by the crypto crowd?

  11. Frank W. Miller

    Echo, echo, echo….

  12. kidmercury

    The rules of the game will definitely change imho. You already see this with Tron and EOS, their governance systems are much richer and more akin to a constitutional format in which there is a built in structure for enabling change. Some chain operators will surely act authoritarian at times, or at least from some perspectives. Nonetheless, some formalized governance is much better than the current system which is akin to dictatorship by default. That can work, but it’s a higher risk proposition over time and as the jurisdiction in question scales.

  13. Kyle

    Chris Dixon’s articulations on why the Crypto opportunity is as good as good how A16Z will invest in crypto; their “all-weather fund” is durable throughout cycles, and empahsizes patience and being long-term investment strategy—no rush for immediate liquidity, instead let the network and token mature!

  14. Kyle

    I also really like how they use “cryptogoods” instead of cryptocollectibles.This is equally spectacular:“There are two axes of progress; there is genuine innovation and the prices,” Mr. Dixon said in an interview on Monday. “The prices got ahead of the genuine innovation. The metric I look at is: Are there great entrepreneurs coming in and building great projects? On that metric I think the space is in a really strong place.”

  15. sigmaalgebra

    “Trust”? We’ve got important ways to do that now, IIRC authentication remains central in computing, back to Kerberos with RSA for the communications, and now we have certificate authorities for the Internet.So, the difference in crypto is that there are the distributed crypto servers instead of some one corporation authentication or certificate authority? That’s important?For self-driving cars helping crypto? IMHO, driving a car on existing public roads with existing traffic occasionally requires actual human intelligence, and since no one has even a clue about how to program that I see no real hope for self driving cars on existing public roads with existing traffic and, thus, no way self driving cars can help crypto.For AI, I see a few niche applications but nothing very general and useful. IMHO the few, useful AI applications will be made soon, and then we will be in another AI winter for a long time. So I see no way for AI to help crypto.

    1. Pete Griffiths

      “So, the difference in crypto is that there are the distributed crypto servers instead of some one corporation authentication or certificate authority? That’s important?”That is indeed the key question.

  16. Xuelin Li

    I’m a little confused about the role of VC in ICOs. Traditionally VCs are equity holders and have certain control rights on compensation, turnover and investments. But in crypto world, are they just blockholders of tokens? It seems to me then they are just customers of pre-sold products.I guess this is a general question for ICO investors. Are there any equivalent tools that token customers could use as shareholders to restrict moral hazard problems?

    1. Pete Griffiths

      Good question.

  17. Donna Brewington White

    This level of commitment by a16z is a huge win for the crypto space. Excited to see this.

  18. Terry J Leach

    I’ve been stalking the intersection of crypto, social and cyber risk management for at least three years, it’s great to see a A16Z getting ahead of the curve. The hype cycle over the last few years has drown out what truly possible using Block chains, so I’ve been rightly focused on determining which use cases can create value, What I would like to see is more talk, blog post about learning from current cyptogoods and less about the price of whatever coin. I really hope A16Z and USV can shift the focus of Cryptogoods discussion.

  19. "a man hears what he wants..."

    Just as “software in eating the world”, Andreessen Horowitz is disintermediating boutique VC shops like Union Square Ventures. Andreessen Horowitz is like Home Depot or Costco whereas Union Square Ventures is like a small hardware store or variety store on Main St USA in the 1970’s. Chris Dixon clearly figured that out. Therefore, he joined Andreessen Horowitz.Fred your ignornace in this area is astounding. Like Paul Simon sang, “still a man hears what he wants to hear and disregards the rest,” https://youtu.be/l3LFML_pxl

  20. LE

    Marketing and business wise this makes sense simply because it allows them to isolate and insulate the downside from wins of their other portfolios. If it ends up downside.So for example say you are a traditional business let’s say Whole Foods. You have a new idea which is a risky bet. If you do it under Whole Foods brand (same company) if the idea fails you run the risk of damaging that brand as well as the financial impact of the failure. If you start a new company not linked you get the upside with less of a downside. And easier to close the position out (in a traditional business not a fund).I made a comment the other day that I thought 25% of USV’s investment into crypto was ‘to much’ (based on nothing btw..). However this more or less takes care of that issue creatively. I like it for that clever reason alone even though it is not why it is being done.Other marketing advantage is that it isolates investors and well as provides a reason for someone to take money from someone who is specializing and not a generalist VC.

  21. Pete Griffiths

    I was always clear that crypto was primarily about Trust not tokens, more specifically distributed trust. I salute that and it’s potential but I have a couple of questions/doubts about the material posted above.”…crypto is purely a software movement and doesn’t depend on a hardware buildout,”Really? The hardware buildout to support Bitcoin has been massive hasn’t it?Furthermore, in Bitcoin it is the cost of this buildout that has concentrated the real character of the network that validates the coins. Mining is far more concentrated than many realize. Your average Jo doesn’t have 25,000 purpose built devices located in a farm near cheap power. And if course, such concentration compromises trust by increasing the risk of Miner cabals.You get nothing for nothing. There is an inescapable cost to maintaining distributed trust whatever model you choose to do it. And that cost is going to require buildout. Algorithms don’t cost anything. Running the software that implements them does. That takes real hardware.

    1. Michael Elling

      Few understand the important linkages north-south (app to infrastructure or software to hardware) and east-west (edge to core or actor/app/network to actor/app/network) in the informational stacks. The reason we have monopolies, siloes and lack of universal service (the digital divide is indeed growing) both in the 30 year old internet and 140 year old PSTN is because of an inability for most to understand and model these linkages and flows within and across digital networked ecosystems.

  22. jason wright

    i wish a16z would sort out its newsletter distribution issues. it’s so sporadic.