Cloudflare’s IPFS Gateway

This post is jam-packed with conflicts. It is about not one, but two, of USV’s portfolio companies. The more the better in my view.

Our portfolio company Cloudflare announced yesterday that they have launched an IPFS Gateway.

IPFS is an open protocol built and supported by our portfolio company Protocol Labs that facilitates a peer-to-peer file system composed of thousands of computers around the world, each of which stores files on behalf of the network.

So why is this a big deal?

Well, here are a few reasons. You can all add more in the comments.

1/ Cloudflare is a massively scaled infrastructure company. By offering a hosted IPFS gateway, none of us need to download and run IPFS software on our computers anymore. Cloudflare will do it for us.

2/ IPFS is awesome. It decentralizes file hosting, which has historically been a centralized affair on the internet. The Cloudflare

Continue reading "Cloudflare’s IPFS Gateway"

Video Of The Week: Brian Armstrong at Disrupt

There is a narrative in crypto land that you are either in the “crypto is money” camp or the “crypto is tech” camp. This blog post from Erik Torenberg sums that up pretty nicely.

The interview below is from TechCrunch Disrupt a week or so ago. Brian Armstrong, founder and CEO of our portfolio company Coinbase, was interviewed by Fitz Tepper.

There are a couple points in this interview where Brian is presented with a version of that narrative. For example Fitz asked Brian “are you a tech company or a finance company.”

I like how Brian acknowledges that framework but ultimately concludes that the answer is neither, that Coinbase is a crypto company and that crypto is both tech and money.

I am of that view as well and I am glad to see leaders in the crypto sector articulating it.

Stablecoins Galore

Several big announcements this morning: Gemini, headed by the Winklevoss twins, announced that they had received approval to issue its first cryptocurrency, a stablecoin called the Gemini Dollar (“GD”). Designed to facilitate the use of cryptocurrency as a medium of exchange, each GD will be backed by a US dollar, “in order to give it the stability of the fiat currency and the speed and borderless nature of a cryptocurrency”. Notable in this announcement is a partnership with State Street Bank, which will hold the cash deposit account tied to the GD. Gemini also acquired a crypto custody patent last week (link here).

Over the past year, several stablecoin projects have raised capital including Basis, Reserve and Carbon. Also announced today by itBit (the 50th largest crypto exchange in the world): a stablecoin initiative and related regulatory approval. In last week’s newsletter, I linked to the funding announcement for Continue reading "Stablecoins Galore"

Crypto On Campus

Our portfolio company Coinbase partnered with Qriously to study the adoption of blockchain and crypto on campuses around the world.

They published their findings on the Coinbase blog yesterday.

Here are some interesting findings:

Stanford, Cornell, and Penn lead the way in the number of crypto and blockchain courses offered to students.

Blockchain and crypto courses are taught by math, science, business, finance, and social sciences departments.

 

Almost 20% of surveyed students own crypto assets and 26% want to take a course on crypto.

You can read the entire report here.

VNX launches a blockchain platform to democratize the VC industry


As the blockchain technology space matures, we‘re seeing an increasing number of platforms designed to help traditional markets tokenize, decentralize, and take advantage of distributed ledgers. VNX Exchange is now launching a European digital asset marketplace aimed at bringing liquidity to the $620 billion global venture capital industry. It has…Read More

Crypto, Identity & the Need for Self-Sovereignty

Last week I wrote about how geopolitics can impact demand for public blockchain cryptocurrencies such as bitcoin. Cryptocurrency can serve as a (relatively) stable store of value when local currencies are devalued or taken out of circulation – most recently witnessed in Turkey.
In Venezuela, where citizens have flocked to bitcoin in light of hyperinflation, the government countered by announcing a state-controlled cryptocurrency called the petro. President Nicolas Maduro claimed to have raised over $700M for the oil-backed coin in February, although that account has not been verified. The petro also does not trade on any exchanges. Last Friday, he announced new economic measures as the IMF warned that Venezuela’s inflation could hit 1 million percent by the end of 2018:

Capitulation?

One of the things I have disliked the most about the crypto sector is the idea that people should “hodl” or “hold on for dear life.”

I have written many times here at AVC that one should take profits when they are available and diversify an investment portfolio.

The idea that an investor should hold on no matter what has always seemed ridiculous to me.

Now, the crypto markets are in the eighth month of a long and painful bear market and we are starting to see some signs of capitulation, particularly in the assets that went up the most last year.

Whether this is the long-awaited capitulation of the HODL crowd or not, I can’t say.

But capitulation would be a good thing for the crypto markets, releasing assets into the market that until now have been locked up by long-term holders.

Until then it is hard to get excited

Continue reading "Capitulation?"

ICE Heats up the Sector

The big news this morning is that Intercontinental Exchange, parent of the New York Stock Exchange, announced the formation of a new company, Bakkt, a global platform to allow consumers and institutions to buy, hold and store digital assets. Its first use cases will be for trading and conversion of Bitcoin versus fiat currencies. Partners include Microsoft, Starbucks and BCG:

“ ‘In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets,’ said Jeffrey C. Sprecher, Founder, Chairman and CEO of Intercontinental Exchange.

As an initial component of the Bakkt offering, Intercontinental Exchange’s U.S.-based futures exchange and clearing house plan to launch a 1-day physically delivered Bitcoin contract along with physical warehousing in November 2018, subject to CFTC Continue reading "ICE Heats up the Sector"

Kin Developer Program

Kin, the cryptocurrency launched by Kik (a USV portfolio company), recently launched a developer challenge. The challenge: build a breakout cryptocurrency-based consumer experience.

Kin is a cryptocurrency focused on driving mainstream consumer transactions. Kin envisions a world where cryptocurrencies are used by people every day.

Consumers have no problem buying coffee with dollars every day. Dollars work great for that transaction.

Kin is focused on driving daily consumer utility in the digital world. Digital value for digital goods.

So, Kin launched a program designed to incentivize developers to build consumer apps with the Kin SDK.  The incentives are described here.

Developers are invited to submit ideas by August 10th. If you’re selected, and you publish an app, and you drive a significant number of active Kin wallets, you will receive the incentives.

This is a greenfield opportunity for developers. There are all sorts of consumer use cases to be discovered. So

Continue reading "Kin Developer Program"

Drinking From The Crypto Firehose

It is my view and our view at USV that the crypto market is in what Carlota Perez calls the installation phase.

We believe that we are still putting the pieces in place for a new technology architecture to take hold.

The “big bang” for this technology cycle was the publishing of Satoshi’s whitepaper, almost ten years ago.

But we still don’t have consensus mechanisms that can scale to transaction speeds that are typical of mainstream web apps, we don’t yet have consensus mechanisms that are energy efficient and battle-tested at scale, we don’t have an array of development tools that make building applications on this stack easy, quick, safe, and secure, we don’t have hundreds of millions of users with crypto browsers & wallets, and we don’t have all the other things that would need to be in place in order to move into the deployment phase.

But we

Continue reading "Drinking From The Crypto Firehose"

Crypto-market Efficiencies?

Last week in NYC I shared a panel with Valerie Szczepanik, SEC’s “crypto czar”. We had a wide-ranging discussion on self-regulation, utility tokens, the SEC’s role in protecting investors, and accredited investor definitions. While the conversation was under Chatham House Rules and I can’t discuss her specific comments in this newsletter, she is very open to collaboration with the crypto community, while being clear that the SEC continues to actively investigate token offerings for potential violations of current securities laws.

Coinbase had several announcements over the past couple of weeks, including one that generated a fair amount of controversy: posting that they were considering adding 5 tokens to their exchange. In December, Coinbase was criticized for potential insider trading/leaks when they added Bitcoin Cash to their exchange. It seems they are trying to get ahead of this with this announcement (and protecting themselves when they list job postings for Continue reading "Crypto-market Efficiencies?"

The Web 3 Stack

Web 3 is the next generation of the web in which decentralized apps (dApps) operate on top of a shared data layer and users have control of their data and the ability to move between dApps with little to no switching costs.

Think about the way domains and email addresses work. We (individuals and/or companies) own these identifying data elements and we can provision them in any app we want (I provision my email addresses in gmail and my domains in wordpress but I could choose many other options). In Web 3, this is how all of our data will work.

But we have a long way to go to get there. The infrastructure for Web 3 is immature and at least a few years away from being mature and stable enough to build mission-critical dApps on. We can see glimpses of Web 3 in games and collectibles, where the stakes are

Continue reading "The Web 3 Stack"

Governance

Software systems have largely been governed by the companies that operate them.

The Washington Post reports that Twitter has been suspending more than a million accounts a day recently.

That certainly is necessary given all of the fake accounts, bots, spammers, and worse plaguing Twitter.

Twitter, the company, is making those determinations.

Twitter the company governs Twitter the software.

But that doesn’t have to be the case.

Back in 2007, a few years too early :), my partner Brad argued on usv.com that governance was the next big thing in software.

I suspect Brad was right, but maybe a decade and a half or possibly two decades too early in making that call.

One of the many interesting ideas that have emerged from the crypto sector is the idea of decentralized governance.

Decentralized governance can be implemented in many ways but the basic idea is that the token holders

Continue reading "Governance"

Dog Days of Summer

As the United States celebrated its Independence Day on July 4th, several jurisdictions around the world, including South Korea, Bermuda and Malta, passed legislation to support crypto assets and virtual currencies. Of these, South Korea’s appears the most detailed by providing a classification scheme as a framework for regulation. This is the most sophisticated understanding of the blockchain sector I have seen to date from a government:

“The government has subdivided its industry classification scheme into three sectors, with ten further subdivisions under the guidance of the Korean Standard Industrial Classification ( KSIC ). The subdivisions include detailed considerations of blockchain-powered infrastructure for DApps such as EOS , Ethereum and NEO , blockchain-based cloud computing services, and cryptocurrency mining.The survey is also covering blockchain systems integration into existing industries, including the financial sector, security, insurance, copyright management, supply chain management, medical services, and software development.” — Cointelegraph, Continue reading "Dog Days of Summer"