Posts from crypto

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:



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


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.

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.


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.


NBA Top Shot

One of the questions I hear on crypto is “what can I do with it besides trade it?” And that’s a good question because truth be told, there have not been great use cases for crypto other than storing value, sending value, and speculating.

But that is changing, as I mentioned in this blog post last week.

One thing you can do with crypto is make digital assets scarce. Bitcoin is scarce. There will be only 21mm Bitcoins. And Bitcoin is a digital asset.

So using the same technology, you can make any digital asset scarce.

And that’s a big deal. Ever since media went digital (mp3s, jpegs, movs, etc), media creators have been trying to figure out how to put the genie back in the bottle and largely failing. But if you create a crypto-asset, you can make it scarce.

Our portfolio company Dapper Labs has been working with the NBA and the NBA Players Association over the last year to create digital trading cards that are scarce. These digital playing cards are being made available via a game called NBA Top Shot. NBA Top Shot is invite only right now but if you read on, you will be given an opportunity to get an invite.

I’ve been playing NBA Top Shot for about a month now. I have bought something like 5 or 6 “packs” which contain a bunch of cards. When you buy a pack, you don’t know what cards you will get. Opening them is a lot of fun. Players are posting their pack openings on YouTube. Here is one of those videos:

Here is my collection of cards (sorry for the messed up formatting, I had to shrink my screen to get them all):

As you can see, I have put two of my cards up for sale in the NBA Top Shot marketplace. Like a good Knicks fan, I have to trade KP away. I’m only asking $25 for that card.

There is a lot more coming in this game, but for now the game play is buying, opening, collecting, and trading. And it is a lot of fun.

If you want to check it out, here’s a typeform where you can enter your email address and answer one quick question and then you will get an invite. I encourage you to buy my Joe Harris and KP cards so I can turn around and buy RJ Barrett and Julius Randle in the marketplace.

I encourage everyone to check out NBA Top Shot. For one, it is a lot of fun. And it also reveals something important about crypto and how it can and will change videogames, collectibles, and other sectors by making digital/virtual goods scarce and collectible.


Is This One For Real?

Crypto has been on a tear in the last week.

Bitcoin is up 18% in the last seven days:

Ethereum is up over 30% in the last week:

But this isn’t the first time we’ve had a bullish run in crypto since the bear market started in early 2018.

If you look at the total market cap of all crypto tokens you can see that this bear market has had several moves up followed by downward price action:

So why will this time be any different? I certainly don’t have a crystal ball, but there are some underlying factors in this run-up that make me think it might be different this time:

1/ There is real fundamental activity in the decentralized finance sector where lending, borrowing, staking, swapping, and yield optimization are all growing significantly in recent months. This chart of the activity on the Uniswap liquidity network is indicative of that:

This chart of the total value locked up in the Compound lending/borrowing system is another indication of that:

2/ There are a number of interesting consumer projects launching this summer, many in the gaming and NFT (crypto collectible) sector, that could bring more mainstream users to crypto.

3/ Gold has also been on the move recently. Gold is up 10% in the last month as capital looks for safe havens. I realize that using the words crypto and safe haven in the same sentence is hard for most people to understand, but I believe that one of crypto’s primary use cases is store of wealth and Bitcoin is particularly popular for that.

I don’t believe we have left the bear market behind just yet. But if the total market cap of all crypto assets gets above $450bn, where the first bear market rally stalled out in the spring of 2018, then I think we will be back in a bull market in crypto. And we aren’t far from that. A few more weeks like this past week and we could get there pretty quickly.


Stablecoin Adoption

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.

Unlike other crypto assets, the value of stablecoins, particularly “fiat backed” stablecoins, is not theoretical. These coins are backed by fiat deposits of people who have bought them. It is not entirely clear to me how fully reserved Tether is. But USDC is 100% backed by fiat. So that means that almost a billion USD has been paid for and set aside for USDC.

I’ve been spending a lot of USDC lately. I keep USDC at Coinbase and can spend it via the Coinbase mobile app. I’ve settled some golf bets with it, bought crypto with it, and am starting to use to buy crypto gaming assets.

I used to settle golf bets in Bitcoin. I have friends who claim they have tens of thousands of dollars in Bitcoin from golf bets I settled with them six or seven years ago. And we don’t play for a lot of money. So I don’t do that anymore. Settling in a USD backed stablecoin seems a lot more sensible. The same is true of most commerce and p2p payments applications.

I’m bullish on crypto as most readers know and I’m quite bullish on the stablecoin sector in crypto. I think their utility is just beginning to be understood in the west.