Some Thoughts On Crypto

The crypto sector is in an interesting phase right now.

The market has rallied from its lows this past winter and is up a lot in 2019:

But Bitcoin now makes up almost 70% of that aggregate market cap.

In some ways, Bitcoin is the one protocol that has found lasting product-market fit. In terms of a censorship proof digital store of wealth, there is nothing that comes close to Bitcoin. There are some protocols, like the privacy-focused ones, that offer similar and in some cases better use cases. But for the most part, Bitcoin is our digital gold.

Ethereum, as many of you know, confounds me. It has shown the way to so many important things; smart contracts, programmable trust-free computing, potentially proof of stake, and a lot more. But it remains hard to build on, scaling issues abound, and many developers are looking elsewhere.

Stablecoins, including Facebook’s plans for Libra, are a bright spot. There has been much innovation in this sector and more is coming. There is no doubt that technology can provide a stable programmable crypto asset. We are still early days in the use cases but it is not hard to imagine why one would want to own and use stable programmable digital money.

We are also seeing signs that users like using crypto-assets in mobile and web apps. Kin, built by our portfolio company Kik, has become one of the most used cryptocurrencies in the world and is built into more than fifty mobile apps. Our portfolio company Blockstack has a Dapp platform that many developers are using to create consumer Dapps. And our portfolio company YouNow’s Props token is seeing a lot of consumers transacting with it.

But there is also plenty of disappointment to be had in crypto right now.

Regulators and banks in many parts of the world are downright hostile to crypto and have pushed much of the liquidity to Asia and the innovation has followed it there. Many of the most interesting things in crypto right now have emanated from Asia.

And many of the most promising and best-funded projects are massively delayed in getting to market. Some of this is that building scalable secure and decentralized protocols is not easy. But it is also true that the decentralized development approach that many of these projects are taking is not well suited to deadlines and ship dates.

And maybe most of all, crypto has not gone mainstream. Very few people earn in crypto. Very few spend in crypto. Very few use Dapps. Very few do anything with crypto other than buy, sell, and mostly hold.

I am an optimist. I am convinced that many of these disappointments will be overcome in the next few years. But it is easy to be bearish on crypto right now. The reality is well below the hype and challenges abound

I am long crypto and USV is long crypto. And we are putting more capital into the sector and will continue to do so. But it is not without risks and setbacks. Actually it is full of them.


Comments (Archived):

  1. awaldstein

    This is useful, thanks, though i take it in with a big sigh honestly.In that tiny corner of the world where NFTs are being used as wrappers of all sorts of cool things, everything feels profound yet incomplete, exciting but embryonic.I am excited to see people wrap contracts in an NFT to try and build solar markets with hybrid grids.Enthused that game giants like UniSoft now have a blockchain game incubator.,And most excited about where conservation and collectibles come together.But yes, patience is a prerequisite.

  2. Ben Longstaff

    stable coins are going to do weird things to privacy once people start building meta data layers that sit on top about the owners of the addresses.

  3. Artem K

    So, crypto-tech itself is too sweet to solve so much problems of human misbehaviour at every scale, that it sometimes seems that earn and spend in crypto is just the top of the iceberg

  4. Adam Parish

    People are exhausted by all the projects that started, failed or stalled. I think this is a normal phase.

    1. AOLscreenname

      Including Fred, 😉

    2. Matt A. Myers

      And yet still no one when I ask has directed me to something useful that uses crypto-“currencies” – a solution that can’t be done without needing a crypto-“currency” – a blockchain with non-crypto-“currency” application being different.

      1. awaldstein

        transactions for the cannabis segment.

        1. Matt A. Myers

          So how can’t this be done without crypto-“currencies” or just basic blockchain or normal transactions?

          1. awaldstein

            Gateways like authorize and all major credit cards will not handle the transactions. For Cannabis and often hemp-based CBD extractions as well.Choices:1. Cash2. Kludged gift cards3, Crypto4. High-risk credit cards 18-25% charge.Dash is strong in this market with some POS infrastructures that appear to have some penetration but in Cal, almost every dispensary has an ATM in store and takes only cash,.This provides some background:Crypto, CBD, Cannabis and the broader markets…Tons of info if interested.

          2. Matt A. Myers

            It’s a solved problem though, it just hasn’t scaled everywhere yet – but it certainly will? If you look further than short-term then it’s easy to argue democracy is dealing with/solving that. I can walk into any store in Toronto and buy weed with credit cards; the forms it’s available or legal to sell in will expand once society and politicians etc. trust the process more, and as society becomes more educated, more conscious, self-aware, and therefore less exploitable – having better self-control, self-regulation.

          3. awaldstein

            I have no idea what you are talking about.

          4. Matt A. Myers

            Uhm?”Gateways like authorize and all major credit cards will not handle the transactions. For Cannabis and often hemp-based CBD extractions as well.”You just claimed gateways etc. won’t handle the transactions – however, they do in places the rules and laws are clear, where it’s legal: proof point to counter your argument being you could walk into any of the pot shops in downtown Toronto, show your ID when entering, stand in line, put your order from a menu on a tablet, walk to the checkout/pay line where they’ll grab your order, then you can pull out your credit card – and pay.

          5. awaldstein

            this relates to the $15b cannabis business in the states how?

          6. Matt A. Myers

            I don’t understand how you’re missing my point – are you saying you can’t buy weed in Colorado using your credit card?Edit to add: Denver has already even decriminalized magic mushrooms –… – things are shifting quite quickly.

          7. awaldstein

            You are not listening Matt.That is precisely what I am saying here, in my post because that is how it is. Everywhere in the states.Decriminalizing has zip to do with being able to use standard payment systems, thus the list i gave you above including Dash and crypto.Sure mushrooms are legal in Denver–that has absolutely no relationships with the backbone of the transactions. None.

  5. Tom Labus

    What happens if the world goes into recession? Is it good or bad for crypto?

    1. Michael Brill

      Bad for crypto in general. If you want to derisk, you don’t dump money into a volatile and bearish asset class. BTC specifically… who knows, it could go to $3K or $30K.

      1. TRoberts

        My guess is that institutional holders will hold, but all the smaller holders will have economic pressure leading to higher rates of BTC liquidation, driving down the price.

    2. Girish Mehta

      Its Sept 2008. The epicentre of the crisis is the US. What happens ?A wave of money came into the US. From Sept 2008 to Dec 2008, US securities markets had net capital inflows that was more than 3X the total net inflows in the first 8 months of the year. Prices of US treasury securities went up. Over some days in December, yields on 3-month Treasury bills briefly turned slightly negative. Investors were nervous, so they were willing to pay the US govt to hold those securities.And the dollar. What about the dollar ? It went up against virtually every other major currency except for the Japanese yen. To pressure-test my recollection, I just went back and checked 3 months from Lehman day. From Sep 15 2008 to Dec 15 2008 – the US Dollar was Up 4.7% against the Euro, Up 18.6% against the British pound, Up 4% against the Swiss franc.To re-cap – When the world looked like it was coming to an end, with the epicentre of the crisis in the US, money flowed where over the next 3 months ? Right back into the US dollar. Why ? The Dollar was the safe haven.Now, when the economy gets bad, and the investors get really nervous, they are going to pour their money into….Bitcoin ? Yup, that makes perfect sense.

      1. Michael Brill

        In the event of a normal (mild) recession, it’s not clear at all that BTC goes down. It’s a small asset class with huge volatility and has evolving context that could push up (or down) its value 10X over the course of a typical recession. In the event of the catastrophe you outline above, don’t you have to look at the cause (e.g., runaway inflation from runaway debt) to make an assessment?

        1. Tom Labus

          Money likes 17% prime rate!!

      2. Tom Labus

        Great comment. I wonder about a stagflation scenario like Mr. Volcker dealt with in 1980. I don’t really see a role there either but I also don’t think crypto’s use case has been discovered as yet.

        1. Girish Mehta

          I remember joking with JLM here a couple of year’s back that in the hither-to futile quest of finding a killer app for bitcoin…maybe the killer app for bitcoin is bitcoin itself.That doesn’t fit in with the “Change the world” narrative though :-).Related – read something recently that you might find fascinating. That in the peak of the 1979-81 inflation period, when American tourists traveled in Europe, hotels/restaurants etc would refuse to accept US dollars and asked for local currency instead. I did not know that (haven’t verified if true)…have you heard this before ?

          1. Tom Labus

            I have never heard that. Maybe be just stories or a one off scenario.I thought Hank Paulson’s book was most insightful for the lead up to the Lehman demise,

      3. jason wright

        If the epicentre of the next crisis is in China will global capital flow to the RMB, or will its masses seek refuge in…Bitcoin?

        1. Girish Mehta

          The point is that money flowed to the US despite the crisis because of risk-aversion. During times of turmoil, money seeks safety, not return.It will flow toward whichever currency/currencies are considered safe when the next crisis hits, but I am fairly certain that list does not include Bitcoin.The Central Bank backstop also makes a big difference during times of turmoil. Three words from Draghi – “whatever it takes” made a big difference to the fate of the euro in 2012. Who is going to do that for Bitcoin ?

          1. jason wright

            It does not include Bitcoin because that money is native to that system. Bitcoin needs to build its own native value by leveraging its innate technical suite of capabilities and not seek to imitate and pander to the traditional system.A backstop is a signal that there’s an inherent flaw in the traditional system, but it’s more than that. A backstop actively encourages bad behaviour. That’s a double flaw.What turmoil would require Bitcoin to have a backstop? By definition it does not need one, which is ironic when we consider what triggers money to seek a safe haven in the traditional system, which is turmoil brought about by it its flaws.The euro is political artifice. It’s not required for the individual economies of its members to function. That’s its flaw. It doesn’t need to exist.

          2. Girish Mehta

            Agree completely.A backstop comes with a lot of moral hazard. Not theoretical, we have seen that play out.The euro was a political project from the start. It is very deeply flawed and has caused a lot of harm to many member nations.

          3. jason wright

            It’s a perception problem. Bitcoin will succeed when people stop thinking of it as money, as a store of value, as digital gold, et.c. et.c. These false attributes have become attached to Bitcoin because people have used money to buy Bitcoin. People need to ‘buy’ Bitcoin through actions of value and not through money as a proxy for value.One can buy a horse with money, but that doesn’t mean the horse becomes money. The horse has its own native attributes, and for a range of beneficial applications. Bitcoin must find its native purpose by going in the opposite direction of money, store and gold.

      4. Andrew Cashion

        I like this comment.20/20 hindsight, what is the next bubble?

    3. JLM

      .Flight to quality will be in the opposite direction from all things crypto.The world is in a recession right now. The USA is the sole outlier and will be for another 18 months.It will be a more “traditional” recession meaning it will be negative GDP growth for two consecutive quarters.Our real enemy right now is the Fed.JLMwww.themusingsofthebigredca…

      1. Tom Labus

        You want the fed to raise rates, I’m sure.

        1. JLM

          .Get to the doctor right away, Tommie. Tell them what you said.I want the Fed to lower interest rates and show a lot of leg in the process.Why should the Fed be anything other than a supporter of the American economy rather than an angry Dutch uncle punishing us for wanting to be successful and make a shit pot of profit? A spot of inflation would be a good thing about right now.Hope you are well up there in the lap of luxury. I had to evacuate from Savannah before the storm. Living large in

          1. Tom Labus

            You may want to head north!! Be safe and I hope all is well. Some kid down in spring lake got pulled out by the rip tide and was gone. Jeeze.Come on, I couldn’t resist that meatball down the middle of the plate.

      2. Michael Brill

        Yet BTC is up 270% in the past 6 months.

        1. JLM

          .If you 10X-ed the amount of capital in BTC today, it would not even begin to approximate the flows that will go to Treasuries in the event of a real recession.There is no question that BTC is a better known currency than 5 years ago. That does not mean it is an attractive recession safe harbor.JLMwww.themusingsofthebigredca…

          1. Michael Brill

            The question was about what happens to BTC prices in a recession, not whether BTC is considered a safe place to sit on money. BTC trades $5b a day. What happens if just 0.001% of those Treasuries inflows go to BTC volume?When you have such huge volatility, multiple narratives that can move price 10X, a tiny float, and people are moving money around already, I just don’t see it as a no-brainer that price drops. And I can think of lots of reasons it could go up… way up.

          2. Richard

            It’s hard to find a sophisticated investor who doesn’t view bitcoin as pure speculation. It has been a pure marketing stunt from the beginning. No serious person disputes this. The treasury market has zero to do with bitcoin. Mostly because, Treasuries raise money for your country. The ignorance about Finance is astounding. Sad, but astounding.

          3. Michael Brill

            All asset classes are related because they all compete for investment. Sorry that makes you sad.

          4. Richard

            There is a reason that bitcoin enthusiast’s replies are routinely nothing more than a personal attack. The merits your hypothesis are slim to none. And that was slim who left the building. Putting US Government Securities and Bitcoin into the same pool of investable income producing assets is ignorant – on so many levels.

          5. Michael Brill

            The vast majority of btc investors also have some government debt in their portfolio (typically through a fund/etf). Here is an example… I have some btc in a self-directed ira. If I didn’t do that, I would have just left that money in my fidelity ira in some balanced portfolio configuration that would undoubtedly include some treasuries.

          6. Richard

            Head in Sand

  6. kidmercury

    IMHO there is a lot of doubt technology alone can provide a stablecoin. even with libra, the stability comes with the composition and defense of the reserves — the key to which will be technology-enabled governance. but the operative word there is governance, not technology. just as currency traders have tried, and in some instances succeeded, in breaking pegged exchange rates, so too will crypto traders try to break pegs when the stakes get high enough. IMHO algorithmic management of reserves will not be able to fully prevent pegs from breaking. i think it is more likely that the solution will be involve exertion of greater control (i.e. confiscation of wallets, suspension of transactions, etc) in an attempt to preserve the peg. this type of control, while it is enabled by technology, will only work if the governance model is trustworthy enough. it is in that regard that i am very skeptical of all the stablecoins we’ve seen thus far; IMHO the governance model that will possess the trust to exert such control will need to have substantial moral authority, which IMHO will be most easily achieved through an allegiance to truth that may run contrary to the desire of the nation-state system.

    1. Michael Brill

      Stability comes from 1:1 backing.

      1. kidmercury

        yes, let’s see if that 1:1 backing can be maintained. swiss national bank was pegged to the euro, the market broke that peg in 2016. soros broke the peg of the pound to the deutsche mark back in the day. right now, lebanon is pegged to the dollar, and i think it is very reasonable that peg is going to break.more specifically, if traders are start shorting libra vs us dollars, the peg becomes harder to maintain. facebook will need to start buying back libra or pushing the dollar lower. i doubt they have the expertise or the market strength needed to do this. another option they might have is to restrict transactions, confiscate wallets, etc. but what will be people’s reaction to that? have they earned the trust to exert that kind of control? and who will make all these decisions? just trust the computer? i doubt that approach is viable, both politically and technologically.

        1. Michael Brill

          Those are all fractional reserve models. Most stablecoins are backed by 100% reserves… and certainly CBDCs will have 100% reserves. It’s not about pegging currency-currency value 1:1, it’s ensuring that for every, say, USD-denominated stablecoin, there are hard, liquid assets (say, actual USD) that equal the total stablecoin pool value.

          1. kidmercury

            it will ultimately be about pegging value within a band, i.e. libra/usd trades between 1.01 and 1.05 or whatever. that is where the “stable” in stablecoin comes from, and it is that kind of stability that is desired to give confidence in transactions (rather than hoarding). from a utility perspective, that is the real goal. as history and central bank activity has shown, achieving that goal is not as easy as simply maintaining adequate reserves, because other participants in the market can impact both the supply and demand of those reserves — and can do so with the explicit goal of disrupting the stability the central bank desires.

          2. Michael Brill

            There is no pegging. The market determines the value. And where you have 100% securitization of the underlying fiat, and you can redeem your token for fiat at any time, then that token will be worth exactly one unit of the underlying currency (adjusted for counterparty risk, shifts in supply/demand for the token). If the fiat value of the token drops to, say, $0.99, then I’ll buy them all day long and redeem them for $1.00 – which is possible because they are backed 1:1.Stablecoins are more or less just a proxy for fiat. We should see this in China by the end of the year and other country’s central banks will follow.

        2. Girish Mehta

          you are right about the breaking of the CHF-Euro peg, but it happened in January 2015 and was broken by the SNB. See attached.…Black Wednesday (16 Sep 1992) Soros’ breaking of the GBP peg in the ERM to the DM is a case study. He understood the fundamental trilemma – Between (1) – interest rates that are optimized for the local market, (2) – free capital flows across borders, and (3) – a pegged exchange rate…you can only get 2 out of 3, and an attempt to get 3 out of 3 (which was what the UK was attempting in 1992) is going to break-down.But I honestly don’t know how that trilemma dynamic applies to a crypto stablecoin peg. First glance, seems apples-oranges. I don’t understand crypto stablecoin.p.s. welcome back kid.

        3. JLM

          .Very astute comment. Anything pegged can be broken.JLMwww.themusingsofthebigredca…

    2. Richard

      Facebook maintaining a stable coin is as likely as pigs flying.

  7. DJL

    My biggest complaint about crypto (and it has only gotten worse) for real apps is the lack of a standard development environment and foundation currency (token). We need picks and shovels. And yet big projects that promise this continue to fail.For years we have looked into porting our key cyber security functions to blockchain – but which one? ETH seemed like the natural. Everyone is developing different tokens and different standards. The lack of standardization has lead to “vertical” blockchains in different industries like finance and insurance. It is the crypto tower of Babel.Desktop applications took off when VB was created, which opened the market for third party widgets. Browser apps flourished with JavaScrtipt. .Net created a similar platform for web apps. Until we have stable, supported platform on a common crypto chain we will flail.I understand the notion behind Libra, but strongly believe that FB is not the right custodian.

    1. AOLscreenname

      That standard is Ethereum. Here’s a developer of Synthetix, a major DeFi application that has been growing rapidly, that explored building on Ethereum and another chain, EOS. They scrapped those plans because it’s much harder to build on anything that isn’t Ethereum, when considering the whole costs.…The author lists 4 reasons:ToolingComposabilitySocialMonetary premiums

      1. jason wright

        Consensys would have the world believe this to be so through its strategy of investing in applications to be built on… Ethereum. The whole costs calculation is being distorted by a form of protectionism.

    2. Evan

      Take a look at NEM. Their major network upgrade Catapult releases this year and it is very developer friendly unlike ETH. Full APIs for common programming languages and 1500 tps on public chain after upgrade.

  8. Girish Mehta

    Re: “And maybe most of all, crypto has not gone mainstream…(..)..Very few do anything with crypto other than buy, sell, and mostly hold.”I think, maybe, some of us have been saying something like this right here for some time. The responses were along two lines – (1) – This is still early days, like back in 1993 when nobody took the web seriously and (2) – There are very promising, impactful projects in development in stealth which only those “who are in the know”….know.(1) was always a specious argument (unless you believe the year 1993 was 7 years long).(2) was always an inherently un-falsifiable argument. Now it seems that the promising, impactful projects will take…a little longer ?Even in today’s post, this is hype -“In some ways, Bitcoin is the one protocol that has found lasting product-market fit. In terms of a censorship proof digital store of wealth, there is nothing that comes close to Bitcoin.” No. A “censorship proof digital store of wealth” is a nice sounding term that does not stand up to scrutiny . Where money is concerned, who is the censor ? There is only one that matters – the nation-state.And like I have said here before, the nation-state does not need to break any encryption to censor. It is simpler and more direct than that.When you hear somebody make the argument that Bitcoin is code and code is freedom of speech and freedom of speech cannot be outlawed, tell them that the consequences of freedom of speech can be controlled. When somebody says Bitcoin is math, and math cannot be outlawed…tell them that the outcome of math can be controlled.One of the funniest arguments I once saw was that Bitcoin is like gravity and gravity cannot be outlawed. No, Bitcoin is nothing like gravity. There is a difference between physical laws of the universe and laws made by humans.Why I keep saying that, as a digital store of wealth, bitcoin can certainly operate on the fringes. But the idea that bitcoin can become a censorship resistant digital store of wealth at any meaningful/mainstream scale does not work with the idea of the nation-state.I wonder how dark it must be for Facebook-Libra to appear as a bright spot.

    1. Mike Cautillo

      Your whole thesis is based on this notion or premise that nation state will never evolve nor adapt with innovation. I think that is flawed logic or quite short sighted, if I’m being honest.

      1. Girish Mehta

        Appreciate your point, thanks. Maybe you mis-understand. I love the optimism in Star Trek The Next Generation, and the Federation.This isn’t about adapting with innovation. If you dig into the global monetary system, you see how inextricably it is linked to the nation-state. It is also about law-enforcement.

      2. JLM

        .Brilliant observation.I agree more with you than you do with yourself.JLMwww.themusingsofthebigredca…

      3. jdrive

        Just did. My comments stand. Your clear implication is that the 1993 internet assertion is a false equivalency to crypto and therefore a ‘specious argument’ because it has not bloomed with the same obvious utility in a similar timeframe. I addressed this. Your Cambrian points are mismatched. The crypto-isn’t-like-internet-because-it’s-not-already-useful meme is a common refrain these days, but it’s false.If you remember ftp et al, then you know those referencing ‘1993’ over several years are sharing a sentiment but have their timeframes off, likely because they didn’t live through the earlier days. My point is this doesn’t invalidate the central premise.As for some of your later points,I address those as well,including those to which I agree.

        1. teri

          I commonly have nearly 6,000 $ to 7,000 $ almost every 30 days using the net. I ended up losing my job after doing work for the same company for a long period, I wanted very trustworthy earnings. I was not thinking about packages that misguide you to make you millionnare within few days you can see all over the net. The most exciting part of working on the net is that I am always home with the little ones and also enjoy lots of free time with my family members in various beautiful beaches of the world. The instructions are very simple, you don’t have to be a computer expert, however you must be aware how to use the net. It’s as easy as being on Instagram. Here’s the means with which to begun ===>

    2. Richard

      Anyone who wants a candid summary of cryptocurrencies and why it was traded in the early days should look to Sam Freid from Alameda Research.

  9. AOLscreenname

    But it remains hard to build on, scaling issues abound, and many developers are looking elsewhere.This is not what I have heard from actual application builders, especially the “hard to build on” part as no rival to Ethereum has the all-in infrastructure to make building as easy. Ethereum has been dysfunctional on an absolute basis but Ethereum is also highly FUNCTIONAL compared to its smart contract rivals, most of which are facing incredible delays (much more so than what Ethereum has experienced, Ethereum is functional and live), a lack of any kind of organic interest from devs and users (like Blockstack is unfortunately) and a difficult roadmap to developing their infrastructure or getting attention.Here’s an example of what a developer of a successful project had to say about building on Ethereum vs other chains, and why other chains don’t make sense. He specifically says that not just going with Ethereum as their single standard set them back half a year.…He focused on Tooling, Composability, Social, and the Monetary premium. Each one alone will be very hard for any rival to compete with. Taken together, the challenge is more daunting.Ethereum’s future right now looks very solid relative to the field and DeFi gives it a large barrier.

  10. William Mougayar

    I agree with most of what you said, except this about Ethereum, “But it remains hard to build on, scaling issues abound, and many developers are looking elsewhere.”As it turns out, one of Ethereum’s biggest strength is its stack! Ethereum is the easiest platform (and most diversified from a development tools point of view) to get into crypto. I wrote extensively about this.http://startupmanagement.or…And those that are allegedly looking elsewhere most probably weren’t meant to be on Ethereum in the first place. The other biggest strength of Ethereum is its ecosystem, which is the envy of other aspiring chains in the decentralized App world. Plus, all of the innovation around DeFi is really on Ethereum.When you’re #1, everyone attacks you and wants to compare themselves to you.

    1. Vitomir Jevremovic

      Last week we deployed crypto-based cashless app for a music festival ticketing and loyalty system. We had thousands of people downloading an app in a day and few accounts created every second. Each account received four free tickets all through the block-chain implemented layer. We used forked Stellar (like Kik) to do that. The whole thing was shaking like a rocket launched in 1969. but it survived. In one moment we decided to cut-off the crypto layer and remain only on the local database, so that we could potentially survive the nightmare at the doors of the festival if things go south. It was not necessary, but for the sake of not committing suicide we decided not to risk tens of thousands of people not entering the festival if something-crypto went wrong or slow.and now for the hard fact: Ethereum could not do that, not now, and who know when. Ethereum is not suitable for anything real-time yet. It is a sandbox for playing crypto, but not doing crypto for real-world large-scale project (not even small scale).and now for one more hard fact: We could have skipped crypto implementation all together. Users would never notice. Users didn’t even know there was a crypto layer behind the app.

      1. Evan

        Check out NEM. With their network upgrade coming this year they will have about 1500 tps on their public chain. Full APIs for common programming languages are already developed.

        1. Vitomir Jevremovic

          Currently I believe choice of stack is less important if it serves the purpose of the application layer, as long as it works (speed and stability). Biggest challenge is reason behind blockchain use, adoption and economic modeling of tokenization (if one exists at all).

    2. awaldstein

      Curious how you measure winning or #1?For a currency needs to be the amount of value stored–or no?

      1. William Mougayar

        I’m not the only one measuring it. One measure is the number of developers in the ecosystem. This report pegs it at over 250K which is far ahead than any other blockchain, perhaps aside from bitcoin. https://www.theblockcrypto….

        1. awaldstein

          thanks.i find this interesting and useful, but I don’t see the leap between capabilities and sentiments to winning.the best, the most capitalized, the most perfect often doesn’t win.we always should start by where we want to end–so what does winning mean?

          1. William Mougayar

            Are you discounting what 250,000 committed devs can do, when the next community after them is orders of magnitude smaller? I wouldn’t.

          2. awaldstein

            I am discounting nothing.I hold ETH.I am active in the NFT game and philanthropic world, actually programming one in the image of samthecat with Harberger Tax annuities in the smart contract to raise funds for blind cat rescues ;)My question was however how to you define winning is all.I have been involved in massive open source projects that faded away.

  11. Kirsten Lambertsen

    My husband is a teacher. His school district was hit with ransomware over the summer this year. The district’s insurance had to negotiate and pay the thieves. They had to pay using crypto.For the pedestrian public (like the folks who run his school district), that’s a pretty bad introduction to crypto.I’m a rank amateur in this department, but my view right now is that dapps are going to be the game changer, and they’re going to get traction with users like political campaigns and school districts. Users with small budgets but high stakes.

    1. Richard

      Volcanoes have a splendour that is grimAnd earthquakes only terrify the doltsBut to him who’s scientificThere’s nothing that’s terrificIn the falling of a flight of thunderbolts!

  12. pointsnfigures

    Crypto hasn’t found the killer app yet. Netscape brought the web into people’s arms. There is always an easier alternative to crypto. I think there are three areas where a killer app might be found; Trust, Reputation, Privacy…

    1. Matt A. Myers

      The killer app related to all of those things first starts with trusting the person in-person, the killer “app” is blockchain itself.

      1. @mikeriddell62

        Nah, the killer app is shared purpose

        1. Matt A. Myers

          Sure, or love – if we want to use rhetoric, however if that happens with crypto-“currencies” that collaboration is through a mechanism of greed – and is unnecessary.

    2. Andu @

      Problem and solution, that’s what the story is about – and not killer apps. Products in this space should start with the problem, and these problems should not be solvable in any other way than with blockchain. The tech stack is of 0 importance to end users, be it blockchain or not.

  13. Michael Brill

    “Very few do anything with crypto other than buy, sell, and mostly hold.”Which tells us something. Speculation is crypto’s killer app. Why fight that?Make it easy to create, tokenize, fractionalize and exchange any asset and watch the world transform.

  14. Matt A. Myers

    I don’t see what market cap proves here?Madoff reached $64.8 billion market cap all on his own – from just 4,800 clients. If anything a global, decentralized Ponzi-Pyramid scheme that’s difficult for regulators to enforce actions against only reaching its current market cap is more embarrassing, no?And isn’t it disingenuous to claim “Kin, built by our portfolio company Kik, has become one of the most used cryptocurrencies in the world and is built into more than fifty mobile apps?” Imagine if Facebook started do create a crypto-“currency” layer as part of “everything” – and then they claim the same title? And just because Facebook “invests” some of their profits from ads — and then gives those away via the crypto-“currency” “rewards” — it’s all just a vanity metric; of course people will accept free money, or free whatever that can be converted into something (aka digital good primarily).And didn’t Kik have a developer support program where they paid developers to integrate with Kin? Ah yup —

  15. @mikeriddell62

    Got to admire your honesty…

  16. Chris McCoy

    I think the era of data-light decentralized apps (dApps) will soon evolve into an era of data-rich decentralized apps (tokenized apps). We’re building for it @storecoin. https://uploads.disquscdn.c

  17. jason wright

    When Bitcoin returns to 80% market cap dominance (80/20) we might then be ready to move forward.

  18. Phuoc Do

    I think the money use case is missing a piece, a blockchain with inflating supply. This type of token is more suitable for spending than Bitcoin. With Bitcoin, people just HODL and not do anything useful. Litecoin and Ethereum suffer from the same issue because they also have limited supply. People just like to HODL their coins and speculate on price. We need to depart from this limited supply idea.I’m working on Bitflate, it’s a Bitcoin fork with constant inflation. Inflation makes it not a Store of Value. I think it can be a token for spending. It will encourage average people to adopt crypto currency. Overall, I think it’ll benefit crypto currency space. Check out my project:

  19. Albert Mavashev

    First Bitcoin is not digital gold. It is a nice metaphore designed for retail investors who don’t understand gold or crypto. The fact that btc dominance is growing is bearish for the whole crypto space — nobody needs these other shitcoins. Bitcoin does have a use case for sure, but it is the only use case, most other cryptos including Ethereum are completely useless. Most people just use it for speculation, let’s be honest.. the only folks making money in crypto are miners (maybe), speculators, exchanges.. the rest are totally lost.

    1. sigmaalgebra

      It seems that crypto is like tulips except that (i) tulips were pretty and (ii) couldn’t use tulips for evading taxes, hidden international money transfers, or buying illegal drugs.

    2. Richard

      At some point within this decade the mainland Chinese will learn – from the people of Taiwan – the lesson that investing trumps gambling. That point will be the death of bitcoin.

  20. Mike

    “Bitcoin bugs”…

  21. Michael Feng

    People get too hung up on the purism of whether an app is sufficiently decentralized and trust-less, when what really matters is practical utility: how does this improve upon the status quo?I think the “killer app” for Ethereum is the simplest one: it’s the best way to automate payments to a large number of global recipients.I predict that we’ll see more and more “normal” apps implement reward programs using crypto rather than traditional DBs, boosting the number of folks earning crypto and creating a flywheel that eventually goes mainstream.

  22. JLM

    .The simple fact that BTC 70% of the market cap of crypto is an indictment of the weakness in the market. This is tantamount to delving the health of the auto industry and finding that 70% of the market owns a black Ford sedan.It makes the rest of the offerings crap.The killer app thus far for crypto is speculation.JLMwww.themusingsofthebigredca…

  23. Girish Mehta

    Sigh. I didn’t say what you say I said. If it matters, then maybe read it again.p.s. I remember ftp. I also remember Gopher and Veronica in the early 90s…

  24. Greg Wixted

    The crypto market does not need a better gaming technology or a cool widget. It needs Insurance! There is not a single industry that has stood the test of time without insurance playing a key role in its successes. Real estate, manufacturing, retail, finance, lending and the internet were all built on the idea that insurance protects investments, businesses and people. For years, the cryptocurrency community has been very vocal on the subject—a quick Google search brings up over 16,000 pages. Owners want insurance, security and peace of mind, because cryptocurrency exchanges are prime targets for attacks: exchanges provide custodianship of their users’ assets and significant amounts of liquid capital. While banks are required to ensure their depositors’ assets, there is no such element for cryptocurrency exchanges.Insurance policies currently are difficult to acquire and come with high premiums. There are options for exchanges to purchase insurance for hacks, but these are few and far between. Those companies willing to offer a policy to cover a hack have strict security requirements, that most exchanges find either too difficult or too prohibitively costly to follow. Exchanges themselves claim this is deterring large fund managers from investing in a nascent market. Another sticking point is that coverage amounts often fall short of the sums that could potentially be lost. When the market suffers a series of hacks it fuels distrust in the existing market infrastructure for storing and trading digital assets; which in turn can depress prices.

  25. Chris Phenner

    This post strikes me as a ‘sector post.’ It tries to make sense of sector-wide trends, with mentions of a few firms. I get why a ‘sector post’ happens, as exposure to the sector sends varying signals (the scope of which I never see, and that’s why I am here).Crypto seems to draw ‘sector thoughts,’ faster. It’s an ecosystem, so that’s not confusing or weird. I came of age when v1 internet firms (Netscape et. al.) came into being, but I’m certain the channels of comms were not there for all to share ‘sector thoughts.’I used to print/read ‘Above The Crowd’ (Gurley @ DMG) at lunch when I worked at Spyglass (Mosaic), and that was weird, statistically. When I think back to what he wrote, he never wrote sector-wide; he went company-by-company (eg, those who were public).I think he had a basket of stocks (and drew insights from their performance), but his writing focused on digging into individual firms’ performance and metrics. At the time, it was like being shown numbers you couldn’t imagine were possible (in one missive).I like the bits where Dapps in individual ecosystems (eg, Blockstack & Kik) are itemized, independently of currency trends (eg, ‘Bitcoin Dominates’). Meshing the two muddies for me how I track crypto (and I wish the two were separated).I think back fondly to the time when a ‘MediaMetrix’ report (now ComScore) continued to validate that web usage was growing, and who was winning. I crave the same within crypto, even if the metrics are different (I get they are). When crypto posts muddle ‘currency with adoption’ (ie, apps and usage), it makes my head hurt.If being ‘long in crypto’ means ‘focusing on adoption,’ my hope is sector-wide posts diminish, and ecosystem/user adoption prevails as the smarter focus. I get there are conflicting signals, but I pine for a clear-headed, consistent analysis.

  26. Joshua Unseth

    ETH didn’t pave the way for anything Fred. It was an ill-fated project from the beginning. It is ill conceived. All the problems that abound in it are the reasons no one else built it. All of the problems it has were predicted by every single person who knew the space except you.

  27. Ebere234

    Crypto is gaining ground undoubtedly. But the heavier ones are the early comers like BTC, ETH and the likes. Just like everything in life, crypto investment has its own risks.

  28. Matt A. Myers

    That’s blockchain yes, not crypto-“currencies.”