Posts from crypto

ENS

ENS stands for Ethereum Name Service and it is a decentralized domain name system built on the Ethereum blockchain. You can get domains with the .eth extension by going here, connecting a wallet, and searching and purchasing a domain.

I have purchased fredwilson.eth and avc.eth and a bunch of other .eth domains for my family. It does not cost a lot of ETH to register a domain, but you need to remember to go back and renew it as there is no company/registrar operating a business to do that for you.

An interesting angle on ENS is that the .xyz extensions are interoperable with ENS and that is explained here.

So if you own .xyz domains, you can participate in the ENS system. I also bought fredwilson.xyz and avc.xyz and a bunch of other .xyz domains for my family.

It is interesting to me to see blockchains and smart contracts being used to replicate many of the things we use to build applications on the Internet. Slowly but surely a decentralized infrastructure that mirrors the centralized infrastructure is getting built out.

While there aren’t a lot of things you can do with a ENS domain today, I expect that there will be a lot of things you can do with one in the future. And that is why I think it is a good idea to purchase ENS domains for the ones you own in the .com world.

#blockchain#crypto

Meme Investing

I remember when a friend of mine told me five or six years ago that he had bought some Dogecoin. I thought “what is he doing?” and dismissed it as something silly and or crazy.

Dogecoin was initially introduced in late 2013 and 7 1/2 years later it has amassed a market cap of $43bn and is one of the most popular crypto assets in the world. It may be silly and crazy, but it has also been a good investment for my friend and anyone who bought it in the early years.

For those that don’t know, Doge is an internet meme that became popular around that same time. The combination of memes and investing is a powerful cocktail that I have been ignoring for a long time, probably incorrectly.

More recently we have seen meme investing move into public market stocks like Gamestop, AMC Theaters, Wendy’s, and more. The community that drives these “meme stocks” is based in Reddit and the combined purchasing power of this community is substantial, particularly in illquid stocks (and crypto assets).

It is easy to dismiss meme investing. The market capitalizations that these meme assets trade at make no sense on any fundamental analysis. But, as I’ve come to understand, that is not the point.

Memes are fun and memes are also something to come together around. Speculating on the popularity of memes and their staying power is no different than any other form of speculation.

But more than that, and this is where my head has been going on this topic, the market caps of these memes are also economically powerful. If the board and management teams of the companies with meme stocks choose to issue more shares at these prices, they can raise a lot of capital to transform these companies. Similar opportunities could exist with meme tokens. AMC recently did this with their “meme stock.”

I’ve decided that I am going to stop ignoring and dismissing meme investing and start trying to understand it better. I think it is not something that is going away anytime soon and may turn into something even more interesting.

That said, I am not suggesting that anyone invest their retirement money or their savings for their kids’ eduction into memes. I believe it is more appropriate for speculating right now. That may change. Or it may not. That is yet to be determined.

#crypto#stocks

Digital Asset Mining In New York State

Digital Asset Mining is shorthand for “proof of work consensus validation of public blockchain infrastructure”. Thankfully we have the shorthand. But it is important to understand what digital asset mining is.

Public blockchains, like Bitcoin and Ethereum, store data securely but publicly in a cooperative ecosystem that is not controlled by any company or government. When you store data on a public blockchain, it is your data, secured by your keys, and nobody can do anything to it without your approval.

That is a big deal and it is the future of all internet data. In time, all software systems will operate on top of secure public blockchains.

The consensus mechanism in public blockchains is the method that they use to cooperatively validate transactions without a controlling party.

Proof of work consensus is when computers all over the world run software (called nodes) and validate transactions and are rewarded with digital assets (tokens).

So proof of work mining and its cousins like proof of stake validating is the foundational infrastructure for the coming architecture for internet data.

Think of Bitcoin mining operations as the next Amazon, Google, and Microsoft Cloud offerings except that they are owned by everyone.

That’s a huge deal. As big of a deal as anything in tech and tech policy right now.

Ok. Now that we’ve had that discussion, let’s talk about a bill under consideration by the New York State Legislature that would put a three-year moratorium on proof of work mining in New York State. I had thought that this bill was going nowhere as of last weekend, but it seems to be back on the table now.

I am a fan of regulation on the emerging blockchain and crypto sectors. Anything as important as the next generation of internet data architecture needs regulation.

But this New York State bill is like using a sledgehammer when what is needed is a scalpel.

Three years is a long time in a fast growing emerging tech sector. The foundational infrastructure for public blockchains is being built now and regions that get going now will have long lasting businesses that provide good jobs and lots of growth. Who wouldn’t want Google, Amazon, and Microsoft operating their data centers in their state? This is the next generation of that.

The issue that has everyone up in arms is the carbon footprint of proof of work mining and that is something that is important to discuss and using regulation to address it makes sense. It may well be that proof of work consensus has no larger carbon footprint than the data centers of the cloud era, but that’s not really the point. We can and should do better. We can have a climate-neutral data architecture when we build the next-generation tech stack.

So here is what I think would be better policy for New York State:

1/ Apply a tax surcharge to digital mining operations in New York State that use fossil fuels to power them.

2/ Use those tax revenues to subsidize digital mining operations in New York State that use clean (renewable, nuclear, etc) energy to power them.

3/ Encourage digital asset mining in New York State with other policies that will bring the data centers here vs elsewhere.

4/ Become the home to the cleanest and largest digital asset mining operations in the world.

We can do that New York State. We just need to want to.

#blockchain#crypto

Scaling Ethereum

One of the biggest challenges for developers building on Ethereum’s market leading smart contract platform/blockchain are the high fees and slow transactions. These issues arise from the fact that the Ethereum blockchain’s current architecture is not particularly scalable.

The Ethereum core developers have been working on these issues for years and there are changes coming in the core Ethereum protocol that will help with scalability. But the broader Ethereum community is not relying entirely on the core developers to address these issues. There are a number of “layer two” solutions that have emerged that will bring very significant increases in speed and lower fees.

One of these layer two solutions, called Zero Knowledge Rollups, is particularly exciting to us at USV and earlier this year we invested in a project called Matter Labs (also known as ZKSync) that has built what we think is the best approach to Rollups on top of Ethereum.

My partner Nick posted today about ZKSync and outlined why we are so excited about this approach. If you are a developer building on Ethereum and are looking for a good layer two solution, you should absolutely read Nick’s post. I would also recommend it for anyone who is invested in or interested in Ethereum as layer two scaling solutions will likely unlock a lot of value in the Ethereum community over the coming years.

#blockchain#crypto

Decentralized Media

Back in the early 2000s, it was exciting to blog and use social networks to create our own media and move away from the traditional media outlets. That was the pull that got me into blogging and got me investing in Twitter. It was a powerful feeling.

But a decade and a half later, it is obvious that we just replaced one type of media company for another and that we don’t really control our own media yet. I have a bit more control over this blog because I run it on my own domain using open source WordPress software, but most people are blogging on Medium or Substack or some other centralized service these days. And the social media platforms, well we know all about them in the wake of recent takedowns. You don’t control your own media platform if you run it on a centralized service.

So a few months ago, I mirrored this blog on Mirror, a decentralized blogging platform. You can view it here.

And yesterday, I claimed @fredwilson on Bitclout with this tweet:

Around that same time, I saw this post on Bitclout:

Here is the thing about blockchains and crypto – the data is public on the blockchain. Nobody controls it other than you with your private keys. And when you put open source software together with that, you get decentralized applications that nobody can mess with, not even the creators of those applications.

I don’t know if Mirror is the new WordPress or if Bitclout is the new Twitter. We will see. But it sure feels like we are back in the early 2000s again, experimenting with decentralizing media. I have the same feeling of excitement I had back then.

#blockchain#crypto#Weblogs

The Coinbase Wallet Browser Extension

Coinbase shipped an important piece of its wallet product portfolio yesterday, the Coinbase Wallet Browser Extension.

You can download the chrome extension here.

If you want to use DeFi apps, buy and collect NFTs, or do anything that requires a crypto wallet in your browser, then the Coinbase Wallet Extension is the best way to do all of those things.

Coinbase Wallet, the mobile app, allows you to sync with your main Coinbase account so that you can hold your crypto at Coinbase and move it to Wallet when you want to transact. I like to think of this like a savings account and a checking account.

And now all of this is available in the browser.

Wallets and storing crypto have been too hard for too long. I am excited for Coinbase to make all of this easier and mainstream.

Disclosure: I am on the board of Coinbase and am a large shareholder.

#crypto

The Demand Side Of A Crypto-Network

I was purchasing some domains with Ethereum yesterday and ran out of funds in my wallet and went to Coinbase to buy some more ETH. The price was approaching $3000 and I thought to myself, “the demand side of this network is exploding.”

The way crypto-networks work is that the supply side gets built first with incentives to mine, validate, stake, etc. This has been going on for over a decade now. People started mining Bitcoin twelve years ago.

The demand side of most crypto-networks has been dominated by buying, holding, and speculating for those twelve years. There is nothing wrong with that. Buying, holding, and speculating has provided the funding to pay for building out the supply side of these networks.

But I think that is changing now, certainly with Ethereum and a number of other crypto-networks. You need ETH to do things on the Ethereum network. And people are doing things on it; buying domains, peer-to-peer lending, buying art, racing horses, etc.

The more people use ETH, the more the demand side grows, and the value of Ethereum goes up.

Of course, we could be witnessing another speculative wave, but it feels different to me this time. I think the demand side is taking off now.

Disclosure: Long ETH personally and professionally

#crypto

Sending Crypto To India

I saw this tweet in my feed yesterday and I sent some ETH to India this morning.

Sandeep followed with a bunch more wallet addresses to use if you want to send other crypto assets:

With the pandemic easing in the US, thanks to vaccines, we cannot turn a blind eye to what is happening elsewhere, particularly India.

I appreciate the crypto community, which is global, stepping up to do this and I encourage anyone with some crypto to participate.

And we finally found something useful to do with DOGE coins.

#crowdfunding#crypto#Current Affairs#hacking philanthropy

Funding Friday: Burn Alpha

Emily Segal is writing her next novel called Burn Alpha and she is crowdfunding it on her Mirror blog.

I contributed 0.1 ETH to the effort yesterday evening and she is now approaching her 25 ETH goal.

If you have an Ethereum wallet, like Coinbase Wallet or Metamask, you can participate in her crowdfunding project here. The rewards are pretty cool as is the premise of the novel. You can see all of that on her blog.

If you read this post on my Mirror blog, you will see the crowdfunding project embedded in this post. That’s pretty cool too.

#Books#crowdfunding#crypto

Dapper Labs, Flow, and NBA Top Shot

I have written about all of these things here at AVC before. But I am writing again as there is likely to be a bunch of chatter about Dapper, Flow, and NBA Top Shot as the news of a financing round comes out today.

Financings don’t really interest me but companies do. And this is a fascinating company.

Dapper Labs came out of an incubator called Axiom Zen back in 2017. The Axiom Zen team was looking at interesting things they could build using Ethereum. They contributed to the ERC 721 standard for non-fungible tokens and started building an NFT collectible game that became Cryptokitties. That got our attention and led to a financing that spun out the team and Cryptokitties into Dapper Labs. I wrote a short post on the USV blog announcing that we had invested in Cryptokitties, but in truth, we invested in much more. We are only seeing the entire vision now.

After building a few more collectible experiences on Ethereum, the Dapper Labs team concluded that the NFT experiences they wanted to create needed a different blockchain and they started building Flow. Flow is a proof of stake blockchain that was designed from the ground up for consumer experiences that require scale and performance and more.

And then they started building NBA Top Shot on Flow. That required a deal with the NBA which they made happen a few years ago. And it required Flow to launch. And it required a crypto wallet experience that was tightly integrated into the game that allowed new users to fund their wallets with credit cards in addition to crypto assets. Building all of that was quite a task but they got it all done by the middle of last year and launched NBA Top Shot into beta last summer.

Slowly but surely Dapper let more users into NBA Top Shot and iterated on the experience and by the end of the year, they had a hit on their hands. Hundreds of millions of dollars of transactions a month happen between collectors on NBA Top Shot. Pack drops sell out more or less instantly.

The success of NBA Top Shot has led many developers to Flow seeking to build additional collectible experiences and I expect that we will see many more great games and experiences on Flow in the coming months and years.

It is rare in the crypto sector to find a team that has successfully launched a blockchain, a wallet, and a number of popular applications. The Dapper team has done all of that and I am excited to watch what they do next.

#blockchain#crypto#digital collectibles#Games