Posts from crypto

Digital Money

I was listening to this podcast on the treadmill this morning. It is a conversation between Peter McCormack and Andreas Antonopoulos about Bitcoin, Privacy, Freedom, and a lot more.

At one point Andreas says that we have digital money already, but it is largely debits and credits on ledgers in banks and other financial services companies. He also says that cash is currently only about 8% of global money and that number has been going down steadily over the last fifty years as digital money has taken over.

His point, and it is a good one, is that cash is decentralized money. But money that is registered on a ledger maintained by a corporation that is highly regulated by the government is an entirely different thing.

After listening to the podcast, I bought some more Bitcoin this morning.

#crypto

The AVC Helium Hotspot Discount Code

Last Thursday I wrote about the Helium launch in NYC and suggested that readers might want to purchase a Helium hotspot.

Well, I have good news. AVC readers can buy a Helium hotspot with a discount.

Here is how you do it.

1/ Go to the Helium Store and hit the Order Now button

2/ Put AVC100 into the field called “Referral or Promo Code”

3/ Complete your order

I enjoy earning Helium tokens every day with my hotspot. I hope they will turn into something someday.

#crypto

History Doesn't Repeat Itself, But It Does Rhyme

So goes the famous Mark Twain quote.

I thought of this in reading a few blockchain sector reports this morning.

David Kelnar‘s “blockchain primer” is a very good summary of what is promising about the crypto sector and what is challenging.

In his summary at the end, he writes:

Tim Berners-Lee developed the protocol for the web in 1989. 10 year later, in 1999, its potential was glimpsed — but technological, commercial and economic challenges brought expectations back to earth with a crash. 15 years later, Tim’s vision for globalised information, e-commerce, and communication was realised. The Bitcoin white paper was published in 2008. 10 years later its potential was glimpsed — but technological, commercial and economic limitations brought expectations down to earth with a crash.

https://medium.com/@dkelnar/fa610002b999

I take that as a suggestion that the crypto sector is following essentially the same timeline as the web sector. Facebook launched in Feb 2004, four years after the start of the internet crash. So using David’s timeline, the killer app for crypto might launch at the end of 2021 or early 2022.

But then there is this chart from Morgan Stanley’s recent report on BTC and Libra:

As you can see in that chart, Morgan Stanley’s timeline for Bitcoin is much faster than for the Nasdaq. It seems that their implicit argument is that the crypto sector will move much more quickly through its ups and downs than the web did back in the 90s and 00s.

I am more in David’s camp than Morgan Stanley’s camp. I think the crypto sector is progressing, but slower than I would like. I remain long term bullish but short term frustrated with the crypto sector. As I have been for quite a while now.

#blockchain#crypto

The NYC Helium Network

On Tuesday night, our portfolio company Helium launched the Helium Network in NYC.

As many of you know, Helium is a peer to peer low bandwidth wireless network that anyone can run a hotspot for. I wrote about our hotspot in our apartment in NYC a few months ago.

When you operate a Helium hotspot, you earn Helium tokens. We earned about 7 Helium tokens yesterday with our hotspot.

The Helium network in NYC is already 133 hotspots strong and the map of lower Manhattan looks like this:

If you would like to buy a Helium hotspot and start earning Helium tokens you can do that here.

The cost of Helium hotspots are $495 right now but early adopters earn Helium tokens at a higher rate. As the cost of Helium hotspots come down to what you are accustomed to with wireless networking equipment, the competition for earning tokens will go up and the rate at which you earn tokens will come down too.

This is token incentive economics at work in building out wireless infrastructure and I am excited to watch this happen.

#crypto

A Decentralized Archive

The Internet Archive and Wayback Machine are awesome.

You can see that in 1998, AVC.com was pointing to something called Fishnet that looked like this. And you can see what AVC looked like in September 2008.

There are many archives, some of them quite specialized, in the physical and digital world. But they all suffer from the same problem, which my colleague Dani explained yesterday:

Archives are extremely important: the survival and ongoing availability of knowledge helps with the continuation of human progress. While there are existing digital archival projects out there, they are mostly donation-based and face the risk that their funding could run out, their hosting provider could one day go out of business or a government could force them to remove files.

Dani wrote that yesterday in our blog post welcoming Arweave to the USV portfolio. Arweave is a decentralized protocol that enables archiving and the funding to support it at web scale.

The key innovation is a sustainable funding model for archives which Dani explained in her post:

Arweave had to invent a new method of paying for storage, one where you can pay once, and store forever. While that sounds almost too good to be true and took us a long time to wrap our heads around, it will be true provided the cost of storage continues to decline at a predictable rate. Machines that provide storage to the network get paid out in small increments over time as they continue to prove that they have held onto archived files. 

Decentralized infrastructure is one of our favorite investment themes in crypto (Filecoin, Helium, Arweave, and at least one unannounced investment) because of the resiliency and sustainability of decentralized infrastructure (just look at bitcoin mining for an example of that).

We think infrastructure will tend to move to decentralized models over time and archives are a great example of that.

#crypto

Bringing It All Back Together

Early-stage companies are exercises in experimentation, iteration, and figuring things out. You try one thing, it sort of works, but you see a tangential opportunity and go after that. Sometimes that leads to a full-on pivot, other times it leads to an evolution of the opportunity.

This process can create multiple products, services, projects, and it can look messy. I love it when founders bring it all back together into one cohesive package. That doesn’t always happen, but when it does, it is a thing of beauty.

That happened this week with our portfolio company Numerai. I saw this tweet by Numerai founder Richard Craib:

If you have not been following Numerai, let me explain.

The initial idea behind Numerai was to build a quant hedge fund using “the crowd” to surface the machine learning models. They do that by running the Numerai Tournament and taking the best models and operating a hedge fund with them. That is what Numerai does and that business is working well.

Along the way, Numerai observed that incenting the players in the tournament with a crypto-asset they could stake on their models was a better way to crowdsource the best models. So they made a crypto-asset called Numeraire.

Numeraire is a crypto-asset that you can trade, own, and, if you are playing in the tournament, stake.

So then Numerai was in several businesses, the hedge fund business and the crypto business.

And then the team observed that there was a generalization of the thing they had built that had much broader applications – a decentralized marketplace for predictions. So they created a protocol called Erasure that allows anyone to build markets for predictions.

It started becoming a fairly messy story.

But last week it all started coming back together when team successfully ported the Numerai Tournament to operate on the Erasure protocol.

This accomplishes several things. First, it starts to tie all these loose threads together and the story becomes easier to understand. And also, you have a very successful application, the Numerai Tournament, running on Erasure. So developers can see what Erasure is good for and can start building other things on it.

I am excited for the Numerai team. And I quite like this example of how things get messy as you expand the opportunity but you can clean things up by bringing it all back together and would encourage founders and teams to look for opportunities to do that whenever possible.

#crypto#entrepreneurship

The Libra Association

I am sitting in the airport lounge in Geneva waiting to board an airplane. I am here because yesterday was the inaugural Libra Association member council meeting. The Libra Association is a Swiss organization which will operate the Libra blockchain network and the Libra reserve.

Yesterday was an important milestone for the Libra project. We adopted the initial charter for the Libra Association, we elected the initial five board members, and we set in motion a number of important initiatives. “We” are the twenty-one founding members of the Libra Association.

It is fashionable to be negative about the Libra project right now. And it is equally fashionable to call it “Facebook’s crypto-currency project.” Both are understandable under the circumstances.

But yesterday was the beginning of an independent effort, one that Facebook does not control, one where Facebook is one founding member among many, and one where Facebook has one board seat out of five.

But even more important is Libra’s mission to create a stable cryptocurrency that can operate at sufficient scale such that Facebook and others can use it as a means of exchange/payment system in their applications.

The most meaningful conversations I had yesterday were with the members from Kiva and Women’s World Banking who joined the Libra Association because the people they serve are under-banked and under-provided for by the legacy financial system. Like them, I believe a stable cryptocurrency that is broadly adopted around the world will bring new services to people who don’t have access to the financial system that many of us who read this blog do.

One of the powerful things about being in the venture capital business is that we can support projects that are necessary but unproven, unpopular, and/or misunderstood. Not everyone can do that and so it is even more important that we do.

#blockchain#crypto#Politics

Audio Of The Week: Crypto In China

A bunch of friends and colleagues were in China a few weeks ago for a big crypto conference and since then, I’ve had a number of fascinating conversations about the crypto sector in China.

Over the last few years, it has become apparent to me and others that China is innovating in the crypto sector in ways that the US and other western countries are not. This is happening for many reasons, including stronger user value propositions for crypto in China, a different regulatory environment, and a vibrant crypto trading sector.

This podcast explores many of these issues and is a good listen if you want to understand what is going on in the Chinese crypto sector better.

#blockchain#crypto