Posts from crypto

Starting At The Start

A reader emailed me yesterday and I replied:

Hi Fred, do you have any suggestion for good primers/book explaining cryptocurrencies a bit better to the inexperienced and uninitiated?   

i would start at the start

https://bitcoin.org/bitcoin.pdf

The Bitcoin Whitepaper, originally published in October 2008, is a work of art. Eight pages long and it describes most of what we now know as the crypto sector.

If you want to understand crypto, I recommend starting there.

#crypto

Bitcoin - The Gateway Drug

The first crypto asset most people purchase is Bitcoin. It has the highest market capitalization. It has way more search interest.

But Bitcoin is not all there is to the crypto sector. There is about $160bn of market value in the crypto sector outside of Bitcoin.

The “non-Bitcoin” portion of the crypto sector has risen over $100bn in 2020 and is up 2.7x this year.

Bitcoin is up about 2.2x in 2020.

What seems to happen is that individuals, and increasingly institutions, purchase Bitcoin to start their crypto portfolios and journeys, but over time they move some of their gains into other assets.

According to Coinbase, there are now 24 crypto assets with a market capitalization of greater than $1bn. I expect that list to expand greatly over this crypto bull run we are in that started this past spring.

We are starting to see sectors of the economy decentralize using blockchain technology, starting with the finance sector, naturally. This is a ten to twenty year trend that is just getting started. And owning crypto assets is the way to play that trend. Starting, but not ending, with Bitcoin.

#blockchain#crypto

Educating Electeds

A number of members of Congress sent a letter to the Office of Comptroller of the Currency (OCC) on Tuesday. I have embedded it below but readers via email may need to click here to read it.

Letter to the OCC on Fintec… by CoinDesk

These elected officials are correct that way too many people in the US are unbanked or underbanked. They are also correct that community banks and minority owned banks are closing at a rapid rate, which is contributing to these alarming unbanked and underbanked numbers.

However, I think that the OCC and, more importantly, the crypto industry, owe these elected officials an education on how crypto can address these important issues and why it is not a distraction from them.

In the letter, the members of congress mention “the immediate needs of millions of at-risk individuals who have not yet received an economic stimulus check and/or cannot deposit their funds in a bank.”

If the United States was developing (as is China), a digital currency stablecoin (a digital dollar), then those millions of at-risk individuals would have been able to receive their economic stimulus funds via any one of the popular mobile apps that support or will soon support digital assets, like Coinbase, Square, PayPal, Robinhood, and many more.

It would have been less expensive (by an order of magnitude or more) and much simpler to get funds to these at-risk individuals with blockchain based assets vs outdated technologies like paper checks.

I am not taking a swipe at these well-meaning elected officials. I am saying that the crypto sector needs to sit down with them and their staffs, pull out their phones, have them do the same, and send them some money. And then talk about regulations that will accelerate the adoption of these new technologies among the at-risk communities instead of what we have now which are regulations that are holding all of this progress back.

#blockchain#crypto#policy#Politics

Setting Off On Your Own

I read Alex Konrad’s profile of Fred Ehrsam and Matt Huang of Paradigm yesterday and was reminded of my own career.

In 1996, after almost a decade at Euclid Partners, I left to start Flatiron Partners with Jerry Colonna. I was 35. Jerry was 33. We had a lot to learn but we did know one thing. We knew that the Internet was upon us and it was going to be big.

We had absolutely no clue how big it was going to be. But that did not matter. We got to work investing in Internet companies and we did very well until the bubble and crash.

If you read Alex’s profile of Fred and Matt, you will learn that they are 32 and 31, and that they believe that crypto will be big.

The Gotham Gal and I are investors in Paradigm, so I am biased, but I believe that Fred and Matt are right and that, like Jerry and me, they have no idea how big it will be.

#crypto#VC & Technology

Negative Social Proof

I explained this last week on a call with some of our investors and I thought it might be useful to explain it more broadly.

Most of USV’s big wins have been in companies where we were the first institutional VC to talk to the company or where we had way more conviction about the opportunity than other investors at the time of our investment.

There was no social proof on these investments other than the fact that nobody else wanted to make the investment as much as we did. You can call it negative social proof.

I like to tell the story of when I met Brian Armstrong, the founder of our portfolio company Coinbase in the summer of 2012. Paul Graham had asked me to do office hours at Y Combinator and so I came to their offices and spent four hours meeting sixteen companies in back to back 15 minute pitches. At the end of the four hours, I walked out of the conference room and Paul was waiting for me. He asked “which ones did you like best?” and I replied “I like Coinbase. I think Brian Armstrong is on to something big.” He was surprised and said “You are the first VC to say that.” And I said “Then its going to be huge. Please make sure we get the call when they want to raise.”

That’s negative social proof. When nobody else likes the deal but you. That’s how you win big.

#crypto#VC & Technology

NBA Top Shot Public Launch

Our portfolio company Dapper took the ropes off NBA Top Shot this past week and it is now open to anyone who wants to play this super fun NBA collectibles game.

I wrote about NBA Top Shot in early August and provided access codes to AVC readers who wanted to get in on the beta. So some of you are already playing the game. But now all of you can do so.

I just bought a couple of packs this morning in the new and improved UI and scored a Nikola Jokic jumper (over AD) from the western conference finals.

I love the Joker so I am going to hold onto this one.

This is my pack opening experience from this morning:

I will put some of those cards into the marketplace and sell them. But I am holding onto Jayson Tatum and Joker. I already have a few Kyle Lowry cards so I am probably going to put that one into the marketplace.

I have a few cards that I am not ever letting go of. This Kawhi #1 (out of 1256) is my prized possession:

The #2 of that card is listed for $10k in the marketplace so I think mine is worth even more:

I do have some choice cards listed in the marketplace for sale:

So get into the game and pick them up from me 🙂

Anyway, you all get the idea. NBA Top Shot is a ton of fun and will be a great way for us fans to stay connected to the game during the offseason that seems like it is coming quickly. LeBron and this guy are quite the combination:

#crypto#Sports

Tabs

Our portfolio company Helium started shipping a new product called Tabs last week. Tabs competes with Tile and a bunch of other Bluetooth trackers and smart dog collars. But Tabs uses the Helium network (aka The People’s Network) and that makes all of the difference as you can see in this chart:

The Helium Network is powered by people like you and me who run Helium hotspots and earn Helium tokens. I wrote about my Helium Hotspot here on AVC last year. Since installing that hotspot, I have earned 8,266 Helium tokens. That is the People’s Network in action.

You do not need to own and operate a hotspot to use Tab. Anyone can use a Tab on the network.

I set up Tab today for my Citibike key fob which I lose all the time. It was as simple as downloading the Tab app on iOS or Android and capturing the QR code on my Tab. Now I will know where my Citibike fob is at all times.

Update: this is what my find screen looks like right now

#crypto

Stablecoin Adoption Revisited

I saw that the SEC and the OCC issued guidance on fiat backed stablecoins yesterday. Better late than never. Because fiat backed stablecoins are seeing significant adoption this year.

I wrote a post about stablecoin adoption in June in which I said this:

I was perusing the crypto markets today and noticed that Tether, the grandfather of all stablecoins, is approaching a $10bn market cap, making it the third most valuable crypto asset after Bitcoin and Ethereum.

I also noticed that USDC, the US Dollar stablecoin that Circle and our portfolio company Coinbase are behind, is approaching a $1bn market cap.

https://avc.com/2020/06/stablecoin-adoption/

Well, today those numbers are up by 50% and 150% respectively, as you can see on Coinbase:

I heard about a transaction that closed last week in which the buyer sent millions of USDC to the sellers’ wallet.

Instead of wire instructions, scan a QR code and hit send.

This is the future my friends.

#crypto

Mobile App Stores and Crypto

I have written extensively on this blog over the last decade and a half about the significant negative consequences that the two large mobile operating systems have on distribution of software. I am strongly opposed to the monopolies that Apple and Google have over mobile apps that run on iOS and Android.

I am rooting for Epic/Fortnite in their battle with Apple over the 30% tax that Apple charges developers for distribution in their app store. But more than the tax, what bothers me about these monopolies is the innovation tax they impose on the broad tech sector with their terms of service/rules.

There is no better place to see that than crypto, the next big wave in computing (after web and mobile). There are a number of reasons that decentralized crypto apps (dapps) have not gone mainstream, but certainly one of them is that the Apple and Google app stores don’t allow a number of important features that decentralized apps require.

The founder and CEO of our portfolio company Coinbase, Brian Armstrong, explained this well in a tweetstorm last week:

He ended with this tweet:

Coinbase, Epic, and Spotify are not alone in their struggles with Apple and Google. They are simply large enough and protected enough to go public with their struggles. The truth is every developer that distributes software through these two app stores struggles with them.

In what world does it makes sense for two large and powerful companies to completely control software distribution on mobile phones? In no world does it make sense. It must stop.

#crypto#entrepreneurship#mobile