Rosetta


This post is curated by Keith Teare. It was written by Fred Wilson. The original is [linked here]

Our portfolio company Coinbase released an open source framework for crypto asssets to make it easier to list them on crypto exchanges. It is called Rosetta. Coinbase is encouraging blockchain projects to integrate Rosetta so that they can more easily list new assets on the Coinbase Exchange.

But as this Coindesk post outlines, any crypto exchange can adopt Rosetta so this could be something that levels the field for everyone.

Coinbase is putting Rosetta out to the broader community under an Apache license in the hopes that other exchanges will kick the tires on it. “All the code is available, it can be forked, it can be edited, so if there’s another exchange or another project that wants to put their code on it they can do that and also suggest their own changes,” Dalal said. “In a perfect world there are people building on top.”

https://www.coindesk.com/coinbase-open-sources-technical-standard-to-streamline-token-listings

Because different blockchains work differently, each crypto exchange needs to build their own interfaces to the blockchains in order to list them. That takes time and slows down listing new assets.

An open source middleware framework like Rosetta should make it much easier for exchanges to list new assets and allow them to support new assets more quickly. This would be great for innovation in the blockchain sector.


USV TEAM POSTS:

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Rosetta


This post is by Fred Wilson from AVC

Our portfolio company Coinbase released an open source framework for crypto asssets to make it easier to list them on crypto exchanges. It is called Rosetta. Coinbase is encouraging blockchain projects to integrate Rosetta so that they can more easily list new assets on the Coinbase Exchange.

But as this Coindesk post outlines, any crypto exchange can adopt Rosetta so this could be something that levels the field for everyone.

Coinbase is putting Rosetta out to the broader community under an Apache license in the hopes that other exchanges will kick the tires on it. “All the code is available, it can be forked, it can be edited, so if there’s another exchange or another project that wants to put their code on it they can do that and also suggest their own changes,” Dalal said. “In a perfect world there are people building on top.”

https://www.coindesk.com/coinbase-open-sources-technical-standard-to-streamline-token-listings

Because different blockchains work differently, each crypto exchange needs to build their own interfaces to the blockchains in order to list them. That takes time and slows down listing new assets.

An open source middleware framework like Rosetta should make it much easier for exchanges to list new assets and allow them to support new assets more quickly. This would be great for innovation in the blockchain sector.


USV TEAM POSTS:

Nick Grossman — Jun 11, 2020
The 1k Project

Albert Wenger — Jun 10, 2020
Meet Clarity

River Financial Will Use $5.7M Seed Round To Expand Bitcoin ‘Bank’


This post is by Christine Hall from Crunchbase News

Bitcoin financial institution River Financial caters to long-term investors, and its first cash infusion will help build out a suite of financial services around the cryptocurrency.

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Firms investing in the $5.7 million seed round include Polychain Capital, Slow Ventures, Castle Island Ventures, DG Lab Fund, Cygni, Pfeffer Capital Ltd. and IDEO CoLab Ventures, as well as several individual investors and advisers including Steve Lee of Square Crypto.

“We see River Financial as bridging the gap between traditional finance and Bitcoin,” Polychain Capital Founder Olaf Carlson-Wee said in a written statement. “The evolution of finance is only happening faster in the wake of the current global economic crisis, which has illuminated holes within traditional financial systems that can potentially be filled by Bitcoin.”

Cousins Alex Leishman and Andrew Benson founded San Francisco-based River Financial in early 2019 to offer a place for people to buy, sell, store and manage Bitcoin, Leishman told Crunchbase News. Many of the tools available to customers include tracking, moving Bitcoin around, as well as withdrawals and deposits via River’s Lightening Network.

“The product today looks a lot like a bank account, but with our take on Bitcoin,” Leishman said. “We would like to be able to offer different types of accounts, including joint and interest-bearing accounts.”

Leishman said he plans to use the new funding to make hires in engineering and operations, as well as to build out infrastructure. River Financial already made several hires in the past two months, but would like to get to 15 employees by the end of the year, he added.

Unlike some of his competitors, Leishman touts several differentiators of River Financial, such as building its own infrastructure versus using the cloud, having a live customer support system, and its new offering, Private Client, which focuses on family offices, high-net-worth individuals, and other investors looking to buy up to $250 million in Bitcoin.

“We are building the ‘Fort Knox’ of Bitcoin while also providing the kind of service that people expect at a private bank,” he said.

Since January, the company noticed the number of clients doubled each month, many of them over the age of 55, who Leishman said began buying Bitcoin to leverage against uncertainty in the market as the U.S. government continues to print money.

“Many of them bought gold and see Bitcoin as the modern version of gold,” he added. “We suspect part of the reason why they are interested is because we are the first company to demystify Bitcoin and give them the level of service they expect.”

Leishman and Benson spent 2019 building the foundation for the company and plan to use 2020 to scale. River Financial’s services are available in 15 states, and Leishman expects to be in 40 states by the end of the year, with a goal to enter New York in early 2021.

Illustration: Li-Anne Dias

Meta Change Capital Launches With €100M Venture Fund Aimed At Blockchain


This post is curated by Keith Teare. It was written by Christine Hall. The original is [linked here]

Blockchain professionals Nikola Stojanow and Luka Sucic announced the creation of Meta Change Capital on Monday and are raising a €100 million venture capital fund focused on blockchain development in emerging markets.

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Stojanow is co-founder of Lichtenstein-based æternity Blockchain and creator of AE Ventures, an investment arm for entrepreneurs building companies using æternity blockchain. Sucic is former head of investments and acceleration at AE Ventures.

The agnostic fund, which equates to about $112 million, is regulated in the United Kingdom and will focus on underdeveloped parts of Europe, Middle East, Asia and Africa. The United States is not off the table for investment opportunities, but there is so much innovation in the blockchain space coming from outside the U.S., where blockchain infrastructure isn’t as developed, Sucic told Crunchbase News.

“The U.S. is functioning very nicely, has a good infrastructure, but in other places, that infrastructure is nonexistent, very bad or absolutely needed,” he said. “We are going to focus on the places where we build that vast network.”

Stojanow added that the fund will also focus on the emerging talent coming out of those areas and provide funding—where there often is none—to people trying to innovate, solve problems and monetize their ideas.

Blockchain technology is often used to send a transaction, such as digital currency, from one place to another in a democratized way, Sucic said.

“Blockchain is so complex,” he said. “The United States has one unifying currency, but there is no such thing in the rest of the world. There is no freedom of transaction, but blockchain technology democratizes finances.”

Eager to begin funding startups, Stojanow and Sucic said they have already performed due diligence on about 30 startups. They see their portfolio consisting of a diverse mix of blockchain companies with ideas including crowdsourcing power plant investments and gaming where reward tokens can be transferred between games.

Stojanow didn’t disclose how much money has been raised for the Meta Change Capital fund so far, but did say there are commitments. He is waiting for the travel bans, put in place during the COVID-19 pandemic, to lift so he can close many of the deals. The fund is expected to close by the fourth quarter of 2020.

Illustration: Li-Anne Dias

Meta Change Capital Launches With €100M Venture Fund Aimed At Blockchain


This post is by Christine Hall from Crunchbase News

Blockchain professionals Nikola Stojanow and Luka Sucic announced the creation of Meta Change Capital on Monday and are raising a €100 million venture capital fund focused on blockchain development in emerging markets.

Subscribe to the Crunchbase Daily

Stojanow is co-founder of Lichtenstein-based æternity Blockchain and creator of AE Ventures, an investment arm for entrepreneurs building companies using æternity blockchain. Sucic is former head of investments and acceleration at AE Ventures.

The agnostic fund, which equates to about $112 million, is regulated in the United Kingdom and will focus on underdeveloped parts of Europe, Middle East, Asia and Africa. The United States is not off the table for investment opportunities, but there is so much innovation in the blockchain space coming from outside the U.S., where blockchain infrastructure isn’t as developed, Sucic told Crunchbase News.

“The U.S. is functioning very nicely, has a good infrastructure, but in other places, that infrastructure is nonexistent, very bad or absolutely needed,” he said. “We are going to focus on the places where we build that vast network.”

Stojanow added that the fund will also focus on the emerging talent coming out of those areas and provide funding—where there often is none—to people trying to innovate, solve problems and monetize their ideas.

Blockchain technology is often used to send a transaction, such as digital currency, from one place to another in a democratized way, Sucic said.

“Blockchain is so complex,” he said. “The United States has one unifying currency, but there is no such thing in the rest of the world. There is no freedom of transaction, but blockchain technology democratizes finances.”

Eager to begin funding startups, Stojanow and Sucic said they have already performed due diligence on about 30 startups. They see their portfolio consisting of a diverse mix of blockchain companies with ideas including crowdsourcing power plant investments and gaming where reward tokens can be transferred between games.

Stojanow didn’t disclose how much money has been raised for the Meta Change Capital fund so far, but did say there are commitments. He is waiting for the travel bans, put in place during the COVID-19 pandemic, to lift so he can close many of the deals. The fund is expected to close by the fourth quarter of 2020.

Illustration: Li-Anne Dias

Coinbase + Tagomi


This post is by Fred Wilson from AVC

Our portfolio company Coinbase announced yesterday that it will acquire Tagomi to build out its institutional prime brokerage business.

This is an important moment in the maturation of the crypto trading business. At USV, we have used Coinbase to transact in the crypto markets and I’ve wanted advanced offerings like we get when we transact in the stock markets like buying or selling on a volume weighted average price (VWAP) and other things like that. Tagomi will bring those kinds of offerings to Coinbase and that will make it easier and better for institutions like USV to trade with Coinbase.

This is also a bit of a reunion for USV as one of Tagomi’s founders, Jennifer Campbell, was an analyst at USV when she co-founded Tagomi. Though USV was not an investor in Tagomi, we’ve always been rooting for Jennifer and her colleagues. Now, as part of Coinbase, we are all on the same team again.

Slowly but surely crypto assets are becoming mainstream holdings for institutions and the prime brokerage offerings from Coinbase will help accelerate that transition.


USV TEAM POSTS:

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American Kingpin


This post is by Fred Wilson from AVC

I read my friend Nick Bilton‘s book American Kingpin over the last few weeks. It is the story of Ross Ulbricht (aka Dread Pirate Roberts), the founder and owner of The Silk Road.

It is a fascinating story with many angles; drug and arms dealing, entrepreneurship, criminal investigation, and much more. I highly recommend the book.

It reminded me that The Silk Road was the original product market fit for Bitcoin. According to Wikipedia:

The total revenue generated from these sales was 9,519,664 Bitcoins, and the total commissions collected by Silk Road from the sales amounted to 614,305 Bitcoins. These figures are equivalent to roughly $1.2 billion in revenue and $79.8 million in commissions, at current Bitcoin exchange rates…”, according to the September 2013 complaint, and involved 146,946 buyers and 3,877 vendors

https://en.wikipedia.org/wiki/Silk_Road_(marketplace)

Those 9.5mm bitcoins, which certainly recirculated a fair bit, represented roughly all of the circulating supply of Bitcoin at that time.

That does not mean that all of the bitcoins that had been mined at that time were in use on The Silk Road. A much smaller percentage of them recirculated back and forth between customers and suppliers in the market.

But I have always believed that The Silk Road was where Bitcoin first found a massive use case and it was where many people first bought and used Bitcoin.

This has led to a narrative around Bitcoin and crypto that it is shady and only useful for illicit behavior. That is unfortunate and not true.

Many technologies that ultimately find mainstream use cases (the web browser, the VHS, etc) find initial product market fit in areas that are edgy at best. And such was the case with Bitcoin and crypto.

These “edgy” use cases prove out the technology, provide an initial user base, and lead to more mainstream adoption down the road. And that is what happened with Bitcoin and The Silk Road.


USV TEAM POSTS:

Albert Wenger — May 15, 2020
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r/CryptoCurrency Moons


This post is by Fred Wilson from AVC

We have been looking for ways in which crypto assets can go mainstream. Our interest and investment in Dapper’s crypto games is an effort in that area. So is our involvement in the Libra project.

We also have been involved in legacy mobile and web apps that have built cryptocurrencies inside of them. Kin and Props are two examples of that.

But we are also always looking outside of our own portfolio for examples of ways in which crypto assets can go mainstream.

And I saw yesterday that two subreddits, r/Cryptocurrency and r/FortNiteBR, have issued crypto assets on the Ethereum blockchain using the ERC20 token standard. The crypto asset associated with r/Cryptocurrency are called Moons. The crypto asset associated with r/FortNiteBR are called Bricks. They are very similar assets but they are not the same.

I don’t play FortNite but I do own cryptocurrencies, so I am a bit more interested in Moons and hope to accumulate them by actively engaging in the r/CryptoCurrency community.

Here is how Moons work.

Moons are a new way for people to be rewarded for their contributions to r/CryptoCurrencyThey represent ownership in the subreddit, they are tokens on the Ethereum blockchain controlled entirely by you, and they can be freely transferred, tipped, and spent in r/CryptoCurrencyClaim your Moons in the new Vault section of the Reddit iOS or Android app! It will be rolled out gradually over the next two days and will be in beta testing until later this summer.

https://www.reddit.com/r/CryptoCurrency/comments/gj96lb/introducing_rcryptocurrency_moons/

The new Vault section of the Reddit mobile app now has an Ethereum wallet that can store Ethereum tokens, like Moon. And as you engage in the community, you earn Moons in your wallet.

I think this is an interesting experiment and could bring more users into the crypto ecosystem. I hope to earn some Moons over the next few months and you may want to do the same.


USV TEAM POSTS:

Bethany Crystal — May 14, 2020
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FalconX raises $17M to power its crypto trading service


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

Over the last few weeks all eyes in the crypto world have been glued to the halvening, a nigh-religious moment in the blockchain realm. Every once in a while, the amount of new bitcoin mined — distributed to miners, the folks with fleets of computers powering bitcoin’s database, or blockchain — is cut in half. Why does that matter? It slows the rate at which new bitcoin is introduced to the world as the cryptocurrency marches toward its 21 million coin cap.

That’s to say that, while you weren’t looking, the world of digital tokens and currencies has marched along, maturing to some degree as cryptocurrencies and other blockchain-based services settle into slightly more predictable trading ranges.

The companies working in the crypto space are growing up as well, building out better, more sophisticated tooling for retail and institutional investors alike. FalconX is one such company, and today it announced that it has raised $17 million to date.

The crypto trading service — more on what it does in a moment — is backed by a legion of investors including Fidelity-affiliated Avon Ventures, corporate shop Coinbase Ventures, and a host of more traditional players including Lightspeed, Flybridge, Accel, Fenbushi, and Accomplice. Normally we’d curtail the list of investors to merely the most interesting, but in this case it felt reasonable to include them all, as the sheer number of capital shops that put up money for FalconX details that there is still niche and mainstream venture interest in at least some crypto-focused companies.

FalconX is also a company that anyone can understand, which probably helped. The company’s tech helps provide pricing information for cryptocurrencies, offering what it calls the “best” price for a period of time (seconds). That might sound somewhat simple, but it’s not; the crypto world is made of up a host of exchanges, is awash with fake trading volume and has a history of being pushed around by large accounts. To be able to offer a price, and hold onto it, is material.

The company is currently focused on institutional customers, which the company’s founders Raghu Yarlagadda and Prabhakar Reddy loosely described to TechCrunch as those with $10 million AUM (assets under management) and up. This likely makes KYC (know your customers) rules easier for the startup to follow.

FalconX makes money from trading fees, albeit in two ways. It offers either crypto prices with its fees included or on a fixed-fee model. Notably the firm says that crypto-native customers prefer the baked-in approach, while more traditional customers prefer the visible-fee method.

Either way, FalconX’s tech has found an audience. It has executed $7 billion in trading volume in the last 10 months (I asked about the seemingly odd time interval, which the firm explained as its most recent, fully-audited time period; it has seen more total volume during its life.)

That $7 billion volume result is likely why FalconX was able to attract external capital. And the fact that the startup appears to care about treating crypto seriously and not as a way to get around traditional banking regulations.

For example, after FalconX brought up anti-money laundering work during a discussing about regulation, TechCrunch asked the company how far it can look into its transactions to make sure that it isn’t accidentally helping bad folks get money. Yarlagadda responded, saying that “the future of regulation” in his space is “solving some of these problems and showing [them] to the [regulatory] agencies so that they get comfortable about the space.”

How is FalconX going about that? It uses “internal on-chain analytics” as well as third-parties to help get “context [into] which bitcoin addresses, or ethereum addresses, are associated with dark web or terrorist activities” to make sure that its trades are not winding up helping the wrong folks. This isn’t easy; the startup has to look through “six, seven hops” so that it can see if any money that goes through its service is suspect.

That seems pretty good, right? I found it impressive. Even more, after Yarlagadda joked that it’s not cheap to pay for the computing power needed to pull off that work, FalconX told TechCrunch that the expense counts as COGS. Neat!

There’s a fine line when covering anything blockchain-related between producing something that regular folks can understand, and writing something that the crypto-believing world won’t dismiss out of hand as insufficiently nuanced. Summing then, in case I swung too far towards the latter, FalconX built a pricing engine that allows big investors to make trades with more confidence. It gets paid when they trade and is processing lots of volume. That means its revenues are going up. And that’s why it raised more money.

The next question for FalconX is how fast it can scale volume. The faster it can, the more enticing it will prove to investors. And in time, if it does open up to more retail-sized traders, who knows, it could even become a household name.

At least in crypto.

Quantitative Tightening


This post is curated by Keith Teare. It was written by Fred Wilson. The original is [linked here]

I saw this tweet a few days ago and thought “that’s clever”:

On or about May 12th, Bitcoin will go through its third “halvening” in which the rewards for mining bitocin will be cut in half. This will reduce the “inflation rate” of new bitcoins being mined and will also change the economics of mining bitcoin.

In the past, halvenings have been bullish for the price of Bitcoin over the medium to long term, but there is no guarantee it will play out that way this time. There are a bunch of impacts to the Bitcoin ecosystem of a halvening and the past is certainly not a predictor of the future.

However, as the Grayscale tweet above points out, there is a stark contrast between the way Bitcoin works and the way central banks work. Bitcoin is tightening its money supply at the same time central banks are loosening it.

That is a reason to have some exposure to Bitcoin in my view. We are long Bitcoin and have been for many years.


USV TEAM POSTS:

Albert Wenger — May 2, 2020
COVID19 and the Decentralization of Money

Quantitative Tightening


This post is by Fred Wilson from AVC

I saw this tweet a few days ago and thought “that’s clever”:

On or about May 12th, Bitcoin will go through its third “halvening” in which the rewards for mining bitocin will be cut in half. This will reduce the “inflation rate” of new bitcoins being mined and will also change the economics of mining bitcoin.

In the past, halvenings have been bullish for the price of Bitcoin over the medium to long term, but there is no guarantee it will play out that way this time. There are a bunch of impacts to the Bitcoin ecosystem of a halvening and the past is certainly not a predictor of the future.

However, as the Grayscale tweet above points out, there is a stark contrast between the way Bitcoin works and the way central banks work. Bitcoin is tightening its money supply at the same time central banks are loosening it.

That is a reason to have some exposure to Bitcoin in my view. We are long Bitcoin and have been for many years.


USV TEAM POSTS:

Albert Wenger — May 2, 2020
COVID19 and the Decentralization of Money

COVID19 and the Decentralization of Money


This post is by Continuations by Albert Wenger from Continuations by Albert Wenger

One key lesson from COVID19 is that we need a lot more decentralization. This is especially true when the center is as inept at managing the crisis as the US federal government has proven to be. For example, the power of agencies such as the CDC and the FDA has turned out to be problematic, e.g. in giving guidance on mask wearing or trying to increase the availability of testing (both central to the road back). This is not just a critique of current leadership but rather of the accretion of excessive federal power more generally.

The size of the economy of New York State is roughy $1.7 trillion as measured by the equivalent of GDP (an admittedly bad measure). That is about 150 times the GDP of the entire United States in 1800 (assuming I did my math right on that).  Or if New York were a country, it would rank 11th in the world, ahead of over 150 other countries. California is even bigger coming in 4th in the world (and ~275 times the size of the United States in 1800). It is completely unclear why outside a few crucial topics — that can only be regulated at the federal level — states of this size should not be making independent policy decisions. For example, why shouldn’t New York and California approve their own at home tests?

COVID19 may, however, turn out to be a catalyst for the ultimate decentralization, that of money. The dollar’s role as a global reserve currency has for many years put the US in a position of strength. But dollar dominance has proven to be a massive problem in this crisis — everyone who has dollar denominated debt, which includes not just US corporations and states, but also foreign sovereigns and corporates was relying on economic activity, including international trade, to produce the dollar necessary for debt service. With the COVID19 lockdowns that source of dollars has suddenly dried up which has forced the Federal Reserve to step in, producing an extraordinary 2.35 trillion dollars in the space of 6 weeks. For a super clear explanation of this see Jill Carlson’s great post.

The Fed is effectively making a last ditch attempt to prevent a massive global debt collapse. Even if we can stave that off in the near term, the crisis will make many entities around the world accelerate their search for an alternative to the dollar. This isn’t just idle thinking as the extraordinary speech by then Bank of England governor Mark Carney shows and is further illustrated by the massive freakout that central banks had over Libra’s plan for a stable coin based on a currency basket (the search for an alternative clearly does not include one that was feared could be controlled by Facebook).

One of the most interesting ways the decentralization of money could really pick up steam is with community currencies. US States cannot print money but will find themselves with massive budget holes from a combination of increased crisis response spending with a massive loss in tax revenues (footnote: there may be a way for states around this, but it is likely complicated and might result in an ugly fight). But there is a long history of community currencies in the US. And of course there is the famous “Miracle of Wörgl” in which a town helped lift itself out of economic depression by creating its own currency.

This is also an opportunity for crypto technology to really come into its own. For example we have been spending time upstate New York in Columbia County. It would be fantastic to have a local digital currency that is created on and settles via a blockchain. The county, or even a single city like Hudson, could issue it. Or better yet, citizens could create it for themselves. If anyone is aware of such experiments, I would love to learn more about them.

H/T to Tamar and Pete for getting my thinking on this going earlier today with an email exchange starting with this post by the Schumacher Center.

Silicon Valley Startups’ Funding Troubles Poses Unique Threat to the Crypto Industry


This post is curated by Keith Teare. It was written by Samuel Wan. The original is [linked here]

A report from law firm Fenwick & West LLP reveals venture capitalists have tightened spending in light of the economic crisis, spelling trouble for crypto startups looking for investment money.
Not only that, but the findings of the report also show deflation in company valuations when compared to pre-pandemic times.
Indeed, in January this year, Silicon Valley funding rounds typically boosted company valuations by 117% on average. However, startups in this region saw that figure drop to just 46% in March.
A Decline in Confidence See Investment Spending Dry Up
In view of the deteriorating economic situation, it should come as no surprise that the number of Silicon Valley companies able to secure investor funding is on a downward slide. With that, crypto startups can expect tough times ahead.
The total number of startups that raised funding in January stood at 126 companies, which the report deems as an exceptionally large number. But come February time, this fell to 60, which is more than a half drop, but is still a comparable year-on-year figure.
The Trump administration first announced a lockdown in March. This was followed by an extension to at least the end of the following month. In line with expectation, this tanked the number of firms able to raise funding in the Silicon Valley area. For March, the figure stood at just 44 firms. In effect, reducing the pool of money for the crypto firms.
Source: twitter.com
Barry Kramer, Partner at Fenwick & West LLP, who co-authored the report, said:
“Companies just like shoring up the balance sheet, just like people are stocking up on toilet paper. It makes them feel better to have it in the attic.”
Undoubtedly, sufficient cash reserves could make all the difference in a company’s survival during these times of uncertainty. But with a tightening pool of available money, crypto firms could see themselves frozen out of essential funding.
Typically, crypto startups, indeed all startups, tend to lack revenue in the early stages of development. But as venture capitalists flip bearish on the economy, crypto industry innovation is under threat. And a lack of funding presents a real concern for crypto startups looking to make it through these times.
Nascent Crypto Startups Struggle to Attract Investors During Pandemic Times
What’s more, the problem is further compounded as a result of risk aversion in times of uncertainty. And with crypto startups falling into the category of high risk and novel, the appetite to invest money in them has all but dried up.
Although venture capitalist money has not evaporated completely, the report uncovered a trend towards favoring safer bets. Rather than risky crypto startups.
Indeed, Fenwick and West LLP found that a greater proportion of established companies, and later-stage startups, had managed to secure funding.
This would suggest that venture capitalists were looking to protect existing investments, as opposed to looking for the next big thing.
Silicon Valley Startups’ Funding Troubles Poses Unique Threat to the Crypto Industry was last modified: April 22nd, 2020 by Samuel Wan

Bitcoin Supporter Palihapitiya Doubles Down in Viral Tweet: No Bailouts, Let Hedge Funds ‘Get Wiped Out’


This post is curated by Keith Teare. It was written by Daily Hodl Staff. The original is [linked here]

With over seven million views, 45,000 likes, 16,000 retweets and counting, a viral clip on Twitter shows Chamath Palihapitiya, founder and CEO of venture capital firm Social Capital, denouncing bailouts for billionaires and hedge funds.

The former Facebook executive and Bitcoin investor, who has a net worth of roughly $1 billion and has referred to the leading cryptocurrency as ‘schmuck insurance‘, argues that the US government should support individual Americans directly by giving them larger payments instead of funneling massive emergency funds and stimulus packages to rescue the wealthy.

In a new interview on CNBC’s Fast Money Halftime Report, Palihapitiya, who is also the chairman of Virgin Galactic, says ordinary Americans are the ones being wiped out by the current economic crisis caused by the coronavirus pandemic. But it’s the wealthy CEOs and corporate board members who are on the receiving end of billions in government aid.

“On Main Street today, people are getting wiped out. Right now, rich CEOs are not, boards that have horrible governance are not. People are.”

“When you look at what it means, this is a lie that’s been purported by Wall Street. When a company fails, it does not fire their employees. It goes through a packaged bankruptcy. If anything, what happens is the people who have the pensions inside those companies, the employees of these companies, end up owning more of the company.

The people that get wiped out are the speculators that own the unsecured tranches of debt or the folks that own the equity.

And by the way, those are the rules of the game. That’s right. Because these are the people that purport to be the most sophisticated investors in the world. They deserve to get wiped out.”

Amidst the Fed’s efforts to pump a whopping $2.3 trillion into the economy via loans to embattled companies, Palihapitiya says the primary beneficiaries will include hedge funds that will not entirely feel the full ripple effect of the crisis.

“We’re talking about a hedge fund that serves a bunch of billionaire family offices. Who cares? Let them get wiped out. Who cares? They don’t get the summer in the Hamptons? Who cares?”

Palihapitiya also underscored the soaring number of unemployment claims in the US this week, adding another 6 million to reach an estimated total of nearly 17 million people who filed for benefits since the start of the pandemic-induced economic fallout. They join workers all around the world who have lost their jobs as more than 80% of the global workforce copes with adjustments due to business closures, according to the International Labor Organization.

Palihapitiya argues that it makes sense to let airlines fail since they’re underperforming. He adds,

“What we’ve done is disproportionately prop up poor performing CEOs and boards, and you have to wash these people out.”

The venture capitalist said in a previous interview with CNBC host Scott Wapner that the government needs to get it right this time and stop the bailouts.

“You can’t just bail folks out financially for being financially greedy. It’s unfair. And what we did in 2008 was incomplete. All we did was ship risk off balance sheet…This time around you have to pin these guys down.”

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The post Bitcoin Supporter Palihapitiya Doubles Down in Viral Tweet: No Bailouts, Let Hedge Funds ‘Get Wiped Out’ appeared first on The Daily Hodl.

Buying Bitcoin In Your IRA – The Alto IRA


This post is by Fred Wilson from AVC

I wrote about the idea of buying Bitcoin in your IRA last year. I got a lot of responses to that post and one of them was from the founder of Alto IRA.

I set up an Alto IRA, moved my old IRA over to it, and waited. When they had an alpha version of the crypto service up and running, I bought some Bitcoin in my Alto IRA via their Coinbase integration.

Now that service is fully battle-tested and ready for everyone.

Here are the details of the Alto Crypto IRA. If you are interested in buying crypto in your IRA, they have a slick Coinbase integration that worked great for me and should work well for you too.


USV TEAM POSTS:

Nick Grossman — Mar 24, 2020
Post-COVID: Which Behaviors Will Stick?

Bethany Crystal — Mar 24, 2020
Introducing Everyday Experts: A New Podcast

David Gabeau — Mar 22, 2020
Synchronous Entertainment

Albert Wenger — Mar 21, 2020
Putting the Economy in Suspended Animation: A Proposal

Hannah Murdoch — Mar 18, 2020
Joining USV

Hanel Baveja — Mar 18, 2020
Joining Union Square Ventures

OnCoins


This post is by Fred Wilson from AVC

If you are a crypto enthusiast like me, how do you stay on top of the daily crypto news cycle? There is crypto twitter, but that’s not for the faint of heart. If you hang out there, you know what I mean. You can read the news at Coindesk, Cointelegraph, and the other leading crypto news sites. I do both of these things as well as participate in a number of chat groups where we trade links. It gets the job done, but it’s a lot of work.

Enter OnCoins, a crypto news aggregator by our friend William Mougayar. It looks like this:

You will find the format familiar if you use Techmeme to follow the tech sector news. It’s a great format, efficient, clean, fast, and it lets you go deep when you want to.

William told me that he has used some technology and some tricks to make this work a bit differently than Techmeme and he has more planned.

You can get OnCoins by email once a day if you prefer that format. Sign up here if you are interested.

Well done William. I look forward to getting my daily email and staying on top of the fast-moving crypto sector.


USV TEAM POSTS:

Nick Grossman — Mar 24, 2020
Post-COVID: Which Behaviors Will Stick?

Bethany Crystal — Mar 24, 2020
Introducing Everyday Experts: A New Podcast

David Gabeau — Mar 22, 2020
Synchronous Entertainment

Albert Wenger — Mar 21, 2020
Putting the Economy in Suspended Animation: A Proposal

Hannah Murdoch — Mar 18, 2020
Joining USV

Hanel Baveja — Mar 18, 2020
Joining Union Square Ventures

Correlation and Market Meltdowns


This post is curated by Keith Teare. It was written by Fred Wilson. The original is [linked here]

On the first episode of Howard’s new podcast, his guest said, “in panics, all assets are correlated.” I suspect that is true to some extent.

When bad news hits, I have seen traders sell quickly, get to cash, and then take some time to evaluate the situation before acting on the news. That is true of a company missing its quarter, a sudden management change, and many other forms of bad news. It is also the case when macro events hit the market.

So when a macro event hits the markets, all assets get sold in a “risk off” trade to increase liquidity and buy some time to figure out what is going on.

But soon enough, the market starts to sort through winners and losers. That’s when things stop correlating.

The obvious example is Zoom which is clearly a major beneficiary of this macro event we are in the middle of.

Zoom sold off with the market over the last week and a half but has rebounded nicely and year to date is up something like 75%.

Blue Apron, which the market had left for dead, is another example of a business that will likely do well in this macro environment, or at least it seems that the market thinks so.

Contrast that chart with Bookings, one of the largest (the largest?) online travel businesses, and you can see the lack of correlation.

I believe this downturn will see a greater number of winners and losers than most of the downturns I have lived through. That is because we are already into a pretty meaningful transition from an industrial/physical economy to a knowledge/digital economy and the very nature of this macro event is accelerating that transition in many ways. We just won’t go back to doing some things the same way.

I do plan to go out to my favorite restaurants as soon as I can. But I also plan to fly even less for business when this thing is over. Some things will return to normal. Others won’t.

And that is what the market will sort out over the course of this downturn and is already busy sorting out.

Which takes me, naturally, to crypto. Crypto, to true believers like me, was supposed to be a place to go for safety. We can trust crypto when we can’t trust banks or governments, right?

Wrong.

Bitcoin crashed harder than anything in the first few days of the market selloff. It was down 60% over five days from March 7th to March 12th. But since then it has recovered nicely and is now only down about 30%.

Howard’s guest was right. In panics, all assets are correlated because the market needs to deleverage. Margin loans get called. Leveraged bets go bad. Weak hands fold. And in crypto that happened faster and more furiously than any other asset class. That’s because the market infrastructure is less mature, there are places (largely outside of the US) where you could (and maybe still can) get 100x leverage on a crypto trade, and because these markets are not as liquid and other markets.

But now that the deleveraging has happened, we can look at what crypto has to offer.

Bitcoin is “hard money.” There is a fixed supply of it. 21mm bitcoins to be exact, some of which are gone and are never coming back.

Contrast that to what the central banks are doing right now. The printing presses are melting down there is so much money being printed to stabilize the global economy.

So if you want to hedge your portfolio from that risk, where can you go? Actually a few places. But one of them is Bitcoin. And I suspect that will be where some smart money will go over the next few months, quarters, etc.

But that’s not all that crypto has to offer. The entire decentralized finance stack (fintech 2.0) is being built on Ethereum. And we are seeing decentralized bandwidth, storage, and other critical infrastructure being developed in a number of new protocols.

I’m not going to write an entire crypto thesis here. But my point is that crypto won’t be correlated with the overall market for long. It’s doesn’t even appear to be a week in.


USV TEAM POSTS:

Hannah Murdoch — Mar 18, 2020
Joining USV

David Gabeau — Mar 18, 2020
David @ USV

Hanel Baveja — Mar 18, 2020
Joining Union Square Ventures

Nick Grossman — Mar 17, 2020
The Great Shift to Video

Albert Wenger — Mar 16, 2020
COVID19 What’s Next? Innovation FTW

Bethany Crystal — Mar 12, 2020
Keep Calm and Stay Human

Correlation and Market Meltdowns


This post is by Fred Wilson from AVC

On the first episode of Howard’s new podcast, his guest said, “in panics, all assets are correlated.” I suspect that is true to some extent.

When bad news hits, I have seen traders sell quickly, get to cash, and then take some time to evaluate the situation before acting on the news. That is true of a company missing its quarter, a sudden management change, and many other forms of bad news. It is also the case when macro events hit the market.

So when a macro event hits the markets, all assets get sold in a “risk off” trade to increase liquidity and buy some time to figure out what is going on.

But soon enough, the market starts to sort through winners and losers. That’s when things stop correlating.

The obvious example is Zoom which is clearly a major beneficiary of this macro event we are in the middle of.

Zoom sold off with the market over the last week and a half but has rebounded nicely and year to date is up something like 75%.

Blue Apron, which the market had left for dead, is another example of a business that will likely do well in this macro environment, or at least it seems that the market thinks so.

Contrast that chart with Bookings, one of the largest (the largest?) online travel businesses, and you can see the lack of correlation.

I believe this downturn will see a greater number of winners and losers than most of the downturns I have lived through. That is because we are already into a pretty meaningful transition from an industrial/physical economy to a knowledge/digital economy and the very nature of this macro event is accelerating that transition in many ways. We just won’t go back to doing some things the same way.

I do plan to go out to my favorite restaurants as soon as I can. But I also plan to fly even less for business when this thing is over. Some things will return to normal. Others won’t.

And that is what the market will sort out over the course of this downturn and is already busy sorting out.

Which takes me, naturally, to crypto. Crypto, to true believers like me, was supposed to be a place to go for safety. We can trust crypto when we can’t trust banks or governments, right?

Wrong.

Bitcoin crashed harder than anything in the first few days of the market selloff. It was down 60% over five days from March 7th to March 12th. But since then it has recovered nicely and is now only down about 30%.

Howard’s guest was right. In panics, all assets are correlated because the market needs to deleverage. Margin loans get called. Leveraged bets go bad. Weak hands fold. And in crypto that happened faster and more furiously than any other asset class. That’s because the market infrastructure is less mature, there are places (largely outside of the US) where you could (and maybe still can) get 100x leverage on a crypto trade, and because these markets are not as liquid and other markets.

But now that the deleveraging has happened, we can look at what crypto has to offer.

Bitcoin is “hard money.” There is a fixed supply of it. 21mm bitcoins to be exact, some of which are gone and are never coming back.

Contrast that to what the central banks are doing right now. The printing presses are melting down there is so much money being printed to stabilize the global economy.

So if you want to hedge your portfolio from that risk, where can you go? Actually a few places. But one of them is Bitcoin. And I suspect that will be where some smart money will go over the next few months, quarters, etc.

But that’s not all that crypto has to offer. The entire decentralized finance stack (fintech 2.0) is being built on Ethereum. And we are seeing decentralized bandwidth, storage, and other critical infrastructure being developed in a number of new protocols.

I’m not going to write an entire crypto thesis here. But my point is that crypto won’t be correlated with the overall market for long. It’s doesn’t even appear to be a week in.


USV TEAM POSTS:

Hannah Murdoch — Mar 18, 2020
Joining USV

David Gabeau — Mar 18, 2020
David @ USV

Hanel Baveja — Mar 18, 2020
Joining Union Square Ventures

Nick Grossman — Mar 17, 2020
The Great Shift to Video

Albert Wenger — Mar 16, 2020
COVID19 What’s Next? Innovation FTW

Bethany Crystal — Mar 12, 2020
Keep Calm and Stay Human

Flow Playground


This post is by Fred Wilson from AVC

Our portfolio company Dapper (creator of Cryptokitties among other crypto games) has been developing a new blockchain designed for high throughput consumer experiences (like crypto games). That blockchain is called Flow.

Today, Dapper is opening up the Flow Playground so that developers can start building things on Flow.

The Flow Playground is the first taste of what building on Flow feels like: it is an interactive web environment where developers can write Cadence smart contracts and run them against the Flow Emulator being hosted by Dapper.

Cadence is the smart contract programming language for Flow and it uses resource-oriented programming concepts to deliver a faster, safer, and better user experiences when it comes to writing smart contracts.

Here are some screenshots of what it is like to develop in Cadence in the Flow Playground:

If you are a developer who likes to create fun consumer experiences and wants to build something on a blockchain, you should check out Flow and the Flow Playground. You can get started here.


USV TEAM POSTS:

Nick Grossman — Mar 2, 2020
Forcing Change

Albert Wenger — Feb 28, 2020
Sanders over Trump

Fan Shares


This post is by Fred Wilson from AVC

I’ve written a bit about “crypto adjacent” projects. These are projects that capture some of the aspects/behaviors/benefits of crypto without being full-on crypto projects.

One of these “aspects/behaviors/benefits” of crypto that I like is the fractionalization of ownership. I believe the broader that something can be owned, the better. I also like the idea of early ownership in something by the users. Imagine if all of us who created the content that made Facebook, Instagram, and Twitter what they are got ownership in these services for those contributions. I also like the idea of owning a piece of something that we care about and are passionate about.

Like a basketball player.

I’ve been following Spencer Dinwiddie‘s efforts to fractionalize his NBA contract and sell it in small pieces to his fans.

I like Spencer. He plays for the Brooklyn Nets. He’s fun to watch. He plays with a ton of energy. So the idea of “being in business” with him appeals to me.

Yesterday I got the opportunity to sign up for this offering:

Unfortunately, this offering is only available to accredited (ie rich) investors and is not broadly available to his fan base. That is in order to comply with the laws of the United States, as regulated by the SEC.

So this is not quite like Bitcoin where anyone can buy it and own it.

But it is a step in that direction and I think it is interesting. I want to hang around this rim and Continue reading “Fan Shares”