Recent Posts

Most Used Categories

Author: jlk

The Fog of War: Three Themes Crypto Investors Should Pay Attention To Now

by jlk
This post is by jlk from The Barefoot VC

“War is the realm of uncertainty; three quarters of the factors on which action in war is based are wrapped in a fog of greater or lesser uncertainty” —Clausewitz

The unspeakable violence and aggression that Russia has unleashed against Ukraine and its people is the first all out “hot war” invasion in Europe since WWII. Fallout is being felt across the global economy, roiling markets and causing many investors to seek relative shelter amidst the volatility. As with any global crisis, it is also a moment of uncertainty and unease for many market participants. There are three key themes crypto investors should be paying attention to over the coming weeks:

1: The power of decentralization of crypto comes into focus

Since its debut in 2009, Bitcoin has been heralded as a self-sovereign alternative to government controlled fiat. Citizens of countries with hyperinflationary environments, capital controls and monetary policy that negatively impacted the populace (ie, India’s demonetization in 2016 which deemed certain notes illegal practically overnight) have often turned to Bitcoin as a relatively safe haven for their assets. In the United States, the COVID crisis and ensuing monetary policy highlighted the benefit of holding Bitcoin as a self-sovereign store of value and hedge against inflation. The decentralization that is at the core of cryptocurrency has come into sharper focus over the past weeks. Yesterday, Infura, a cloud -based node network for Ethereum, cut off access for wallets in Venezuela and quickly reversed course blaming the outage in code that was (Read more...)

Labor in the 21st Century: Cryptoeconomics, Communities and Global Markets

by jlk
This post is by jlk from The Barefoot VC

Today is Labor Day in the United States, a day when we are supposed to reflect on everyday people who work hard to make sure our economy works. The past two years have upended the 20th century industrial model of working – with COVID, many workers had to work from home. Another group of workers, who we called “essential workers”, which included delivery workers, grocery workers, healthcare workers and first responders continued their physical work.

Underlying some of these bifurcations was an even larger movement at play, one that only started to gain momentum in early 2021, one year after COVID forced many workers home – the emergence of a crypto economy that enables creators to connect directly with collectors of their work. Last year we had a “DeFi” summer, where peer-to-peer finance was being conducted through crypto products worldwide. Many people, some of whom who hadn’t been able to previous borrow and lend through their existing markets, were able to do so and accumulate assets; others, not satisfied with the yields they were getting in the traditional markets, turn to DeFi to increase their potential returns.

This year, we saw a markedly different demographic start trading and collecting NFTs. The growing NFT infrastructure allowed those that were not able to find markets for their art before to monetize their work through online global communities. Twitter is full of stories of artists who have been able to make hundreds of thousands of dollars off of their art, and in return (Read more...)

2020: The Year that Contained Multitudes

by jlk
This post is by jlk from The Barefoot VC

There were days this past year that felt like decades, and days that flew by. I can’t quite remember another year of my life that was filled with so much grief and sadness but also hope. Hope for a future that will be better than the past, where my life’s work of creating equitable opportunities for all may actually materialize.

Both the grief and hope come from the same place – a system that finally broke after years of heavy weight born by the masses. I am a venture capitalist and believe in new ventures and capitalism. I do believe both, enabled by technology and human talent, can lead to a true meritocracy – but haven’t been applied to do so in the past. This is the primary reason I started my own VC fund almost 8 years ago, to fulfill that promise. This is the reason I became interested in crypto at first sight – the promise that we could provide more equitable access to assets, broader participation in the world economy, and harness the abilities of everyone according to their own innate talents. This is the only future I can see that solves the challenges that lay ahead of us.

The hope is born from the advances I saw in how we think about equity in finance, in healthcare, in connectivity, in food security and every other aspect of our daily lives – I saw some of the most privileged who previously lived in their bubbles realize they (Read more...)

$20,000 in 2020: Bitcoin’s Point of No Return

by jlk
This post is by jlk from The Barefoot VC

Three years ago (almost to the day), I wrote about Bitcoin reaching $10,000:
Bitcoin is at $10K — and that’s just the beginning of how it will revolutionize money.

We know how that story ended. CNBC put together a clip of my comments on the currency, stating I was the VC who “called Bitcoin’s correction”:

What’s different this time around now that Bitcoin has reached and passed the $20K milestone?

In the 2017 article, I wrote “True alpha returns have been difficult to achieve in the globally low interest-rate environment…”
Fast forward to 2020 and truer words have never been spoken. A global pandemic and recession has put quantitative easing on turbocharge in 2020, leading to near zero interest rates and significant dollar decline, which has led to a search for higher yield as well as an inflation hedge.

In November 2017 I wrote: “It’s important to note that a fair amount of the recent capital in the market is driven by speculation from the astronomical returns that cryptocurrencies have achieved in 2017, and a ‘fear of missing out.’”

In the heady days of 2017, my hairdresser asked me to show him how to buy crypto. Two weeks ago in 2020 the same hairdresser was surprised to hear “Bitcoin was still a thing”. When I told him it was vastly outperforming traditional assets this year, including NASDAQ, he was incredulous. He had long ago sold his BTC at a loss and forgotten about it. Like him, many retail investors (Read more...)

Bitcoin: Resilience in Crisis

by jlk
This post is by jlk from The Barefoot VC

As investors try to navigate the COVID-19 world, they’re taking a hard look at their portfolios and solving for the new normal. In the midst of highly volatile traditional financial markets, savvy investors are searching for new avenues for not only higher returns, but the best risk-adjusted ones as well.

I’ve been investing in the cryptocurrency and blockchain sectors since 2013. I’ve often faced questions from institutional investors who considered Bitcoin a passing fad and too volatile for any serious consideration. Those in countries that have previously experienced massive inflation (Zimbabwe, Venezuela, Argentina) or capital controls (China, India) have long seen relative value in an asset that is independent of government financial manipulation. In the past month however, I have fielded an increasingly number of inquiries from investors in more developed countries who want to enter the sector.

This pandemic seems to be a catalyst that has led investors to rethink their strategies and warm up to the idea of crypto and its underlying blockchain technology. To put it simply, the high volatility in equities, credit, and oil have made the relative volatility of bitcoin more palatable for the typical investor and redefine what is a risky investment during these times.

For example, crude oil prices are down nearly 19% since 2015. On the other hand, bitcoin is up over 3,000% in the past five years, and over 58% in the past year alone. Bitcoin is up 25% from January 1 through April 30, and has seen less volatility on (Read more...)

World on Edge: How Edge Computing Can Make Us More Resilient in Times of Crisis

by jlk
This post is by jlk from The Barefoot VC

“Edge computing” has been heralded as a way to increase access to real-time information and to analyze that information more efficiently. But in this moment of public health crisis, we should recognize a potentially significant opportunity that these technologies offer beyond efficiency: the ability of edge computing to weather massive disruption.

To see why, it’s worth remembering what edge computing involves. These technologies move computer workloads to “the edge” of networks, shifting the collection, processing, and storage of data from central locations (like servers or the cloud) to individual devices such as cell phones.

This is significant because of the massive increase of computing power seen in devices that live away from the center of networks. In 1965, Intel co-founder Gordon Moore famously observed that computer processing doubles every two years, while the cost of that processing power halves in the same time period. The effects of Moore’s Law mean our smartphones now have more processing capability than NASA’s computers when they sent a man to the Moon. This, combined with the associated proliferation of data, enables our devices to get “smarter,” as well as to make select information available to more centralized applications (such as Uber or Instacart) in a more efficient way.
Edge computing during COVID-19

What does this mean for emergency situations like the current pandemic? In times of crisis, the systems on which we depend are closely examined. Dangers test our preparedness, our ability to improvise and our capacity to act and think locally. Globalization through (Read more...)

India: A Historic Crypto Ruling

by jlk
This post is by jlk from The Barefoot VC

India’s Supreme Court today announced a historic ruling: they overturned The Reserve Bank of India’s 2018 circular that effectively banned cryptocurrency trading, making it illegal for crypto exchanges to link to bank accounts. The Court has now ruled that circular as “unconstitutional”. This has re-opened up the world’s largest democracy, steeped in thousands-year old entrepreneurial culture, to the crypto sector. Just hours before the ruling, I flew back from a week in India meeting with entrepreneurs in the sector – it was apparent over the last week that innovators continued to innovate under adverse conditions, and those that had a mission to provide broader financial access to the world’s (soon to be) largest and youngest population were not dissuaded from building solutions to reach the masses.

In November 2016 I was in India when the government announced their demonetisation scheme – taking large bank notes out of circulation suddenly in an effort to move weed out “black market” cash (and, in my longstanding view, to force more transactions to a mobile/digital format so that they could be more easily tracked). The price of Bitcoin on Indian exchanges instantly traded at premiums to other exchanges, with record volumes. People from all socioeconomic levels saw that the government could deem their hard-earned cash illegal literally overnight, a case study on why a decentralized digital currency like Bitcoin matters. Future\Perfect Venture invested in one of the first Indian cryptocurrency exchanges, Unocoin, that year.

While fintech flourished and the numbers of the unbanked decreased (Read more...)

The Final Edition

by jlk
This post is by jlk from The Barefoot VC

Over two years ago, in the early days of the ICO boom of 2017, we launched the Blockchain Weekly. When we started the newsletter, there was a plethora of misinformation in the space and we wanted to create a trusted source to sift through it and provide commentary when needed. Since then, many more publications are covering the sector. Articles and sources have proliferated while the frenzy has died down – leading to better coverage. Taking this into account, I have decided to discontinue publishing the “weekly” newsletter (which as I’m sure you have noticed, has become more infrequent as time passed). We will pivot to publishing more in-depth coverage for those interested in what’s next and provide a view on what I’m seeing “behind the scenes”. FPV’s original 2014 thesis around the intersection of blockchain, AI, marketplaces and Internet of Things is materializing rapidly, and we look forward to exploring this convergence in context of broader societal trends.

Along those lines, I have been spending time thinking of the the continued digitization of the financial services sector. The recently announced $5.3B acquisition of Plaid by Visa, in a highly competitive deal, shows how even the largest incumbents are feeling pressure to innovate and need to think outside of their current business models. I had alluded to this in a piece I wrote in 2015 – Are Banks the Next Dinosaurs?:

“Twenty years from now, we will see disintermediation of banks, and millenials will no longer recognize the current banking (Read more...)

What’s Libra? China Takes the Stage

by jlk
This post is by jlk from The Barefoot VC

While company after company pulled out of Facebook’s Libra project, the US Congress grilled Mark Zuckerberg, the SEC halted Telegram’s token offering, and several US legislators called for a digital dollar, China had a few words for the world…

In the first of a flurry of announcements over the past week, China’s President Xi Jinping made his first public statement on blockchain tech, calling for the country to “seize the opportunity”. A few days later, China’s National People’s Congress passed a cryptography law to regulate the sector. Bitcoin’s price shot up from $7K to nearly $10K, and China had to issue a statement warning against speculation when blockchain related stocks surged on local exchanges – not unlike what happened in 2017 in the US.

China publicly embracing blockchain tech is significant in that it will likely spur other countries to pay attention to the sector, so as to not be left behind. Once China puts its resources behind something, results follow quickly. This announcement reminds me of China’s focus on artificial intelligence – billions have flowed into the sector since China’s stated in 2017 that it wanted to be the world leader in AI by 2030.

None of this is a surprise to those of us following the sector for awhile…China banned crypto exchanges from operating on the mainland in 2017, but it has been widely believed that they would re-enter the space with regulations and a strategy in place. As if on cue, Binance, the largest crypto exchange by (Read more...)

SEC Fines and Libra Woes

by jlk
This post is by jlk from The Barefoot VC

This past week, two companies within the token ecosystem announced settlements with the SEC. The SEC has been pursuing enforcement action for the past couple of years in wake of the ICO boom and bust of 2017. Neither of the companies who settled admitted fault, but both have paid fines. Block.one (EOS creator) paid $24M on its unregistered $4B offering while Nebulous (SIA creator) paid $225K on its unregistered $120K offering. Nebulous also has a utility token offering; interestingly, the SEC agreed not to take action on that token, which seems to allow for a dual token structure going forward. Block.one’s relatively small fine given its massive raise, in my view, is not too dissimilar from the small fines that tech giants Facebook, Google and others have paid due to privacy violations. While regulation is certainly here for crypto, the SEC appears to be making good on its claim that it wants to support innovation while holding companies to current laws.

Meanwhile, Libra, the cryptocurrency announced by Facebook back in June, is facing a tumultuous start. Regulators from France and Germany have vowed to block Libra’s use in Europe due to concerns relating to financial stability, money laundering and consumer risk. Both governments asserted that no private entity should claim monetary power.

In the face of this setback, the Libra Association contends that they will be “firmly maintaining (their) launch schedule” for the second half of 2020. They emphasized that the stablecoin will be backed by fiat reserves from a (Read more...)