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Video Of The Week: Coinbase’s Vision

Fortune recently did a big profile on Brian Armstrong, founder and CEO of our portfolio company Coinbase and in concert with that, they made this video featuring Brian and Emilie Choi, who leads corp dev, M&A, and a few other strategic efforts at Coinbase. It’s a short video, less than five mins, and does a nice job of explaining the company’s mission and strategy. USV TEAM POSTS: Bethany Crystal — October 22, 2018Weekly [relationship] stand-ups Bethany Crystal — October 20, 2018Meeting in the middle

Blockchain media startup Civil is issuing full refunds to all buyers of its cryptocurrency

Many doubted The Civil Media Company‘s ambitious plan to sell $8 million worth of its cryptocurrency, called CVL.  The skeptics, as it turns out, were right. Civil’s initial coin offering, meant to fund the company’s effort to create a new economy for journalism using the blockchain, failed to attract sufficient interest. The company announced today that it would provide refunds to all CVL token buyers by October 29. Civil’s goal was to sell 34 million CVL tokens for between $8 million and $24 million. The sale began on September 18 and concluded yesterday. Ultimately, 1,012 buyers purchased $1,435,491 worth of CVL tokens. A spokesperson for Civil told TechCrunch an additional 1,738 buyers successfully registered for the sale, but never completed their transaction. Civil isn’t giving up. The company says “a new, much simpler token sale is in the works,” details of which will be shared soon. Once those new tokens are distributed, Civil will launch three new features: a blockchain-publishing plugin for WordPress, a community governance application called The Civil Registry and a developer tool for non-blockchain developers to build apps on Civil. ConsenSys, a blockchain venture studio that invested $5 million in Civil last fall, has agreed to purchase $3.5 million worth of those new tokens. The purchase is not an equity; all capital from the token sale is committed to the Civil Foundation, an independent nonprofit initially funded by Civil that funds grants to the newsrooms in Civil’s network. In a blog post today, Civil chief executive officer Matthew Iles wrote that the token sale failure was a disappointment but not a shock. Days prior, he’d authored a separate post where he admitted things weren’t looking good. “This isn’t how we saw this going,” Iles wrote. “The numbers will show clearly enough that we are not where we wanted to be at this point in the sale when we started out. But one thing we want to say at the top is that until the clock strikes midnight on Monday, we are still working nonstop on the goal of making our soft cap of $8 million.” A recent Wall…

Why IoT needs blockchain to grow

What if every company had their own version of WiFi that did not communicate? Can you imagine how difficult it would be to try to connect and get anything done? But that is exactly what is going on with the Internet of Things (IoT) today: many companies are building their own version of authentication and communication protocols that don’t talk to each other, crippling IoT’s growth and innovation. A lot has been written about IoT, and for good reason. By 2020 there will be over 30 billion devices—from cameras and alarm systems to cars and trains—connected to the internet, with billions more coming online every year. Firms spend billions every year to bring IoT devices into these complex ecosystems. Deploying … Read More The post Why IoT needs blockchain to grow appeared first on 500 Startups.

Origin launches protocol for building cheaper decentralized Ubers & Airbnbs

The sharing economy ends up sharing a ton of labor’s earnings with middlemen like Uber and Airbnb, and $38 million-funded Origin wants the next great two-sided marketplace to be decentralized on the blockchain so drivers and riders or hosts and guests can connect directly and avoid paying steep fees that can range up to 20 percent or higher. So today Origin launches its decentralized marketplace protocol on the ethereum mainnet that replaces a central business that connects users and vendors with a smart contract. “Marketplaces don’t redistribute the profits they make to members. They accrue to founders and venture capitalists,” said Origin co-founder Matt Liu, who was the third product manager at YouTube. “Building these decentralized marketplaces, we want to make them peer-to-peer, not peer-to-corporate-monopoly-to-peer.” When people transact through Origin, it plans to issue them tokens that will let them participate in the governance of the protocol, and could incentivize them to get on these marketplaces early as well as convince others to use them. Origin’s in-house marketplace DApp Today’s mainnet beta sees Origin offering its own basic decentralized app that operates like a Craigslist on the blockchain. Users can create a profile, connect their ethereum wallet through services like MetaMask, browse product and service listings, message each other to arrange transactions through smart contracts with no extra fees, leave reviews and appeal disputes to Origin’s in-house arbitrators. Eventually, with the Origin protocol, developers will be able to quickly build their own sub-marketplaces for specific services like dog walking, house cleaning, ridesharing and more. These developers can opt to charge fees, though Origin hopes the cost-savings from its blockchain platform will let them undercut non-blockchain services. And vendors can offer a commission to any marketplace that gets their listing matched/sold. It might be years before the necessary infrastructure like login systems and simple wallets make it easy for developers and mainstream users to build and adopt DApps built on Origin. But it has plenty of runway thanks to $3 million in seed token sale funding from Pantera Capital, $6.6 million raised through a Coinlist token sale, plus $26.4 million in traditional…

Fully Diluted Market Value

When someone asks you how much of a company you own, the answer could be two very different numbers. You might own 10,000 shares and there might be 1mm shares issued and outstanding. That would suggest you own 1% of the company. And that would be correct, as of right now. What is often not calculated in these sorts of numbers is future dilution, particularly dilution that is visible if you look closely. The most common form of future dilution that is visible are outstanding options and warrants to issue stock that have not been exercised. Let’s say this fictional company that has 1mm shares outstanding also has a 20% unissued option pool (so 200,000 options in it), and lenders have warrants to purchase 50,000 shares. That would be another 250,000 shares that are not issued, but will be at some point, making the “fully diluted shares outstanding” equal to 1.25mm, and your 10,000 shares now represent 0.8% of the company. That is your “fully diluted ownership.” Nowhere is this issue more important than the crypto token sector. There are many crypto tokens trading in the market that have a relatively small amount of their total supply outstanding and the market value numbers on many of the sites that track this market are a bit misleading. For this reason, I like the concept of “year 2050 market cap” that the site OnChainFx reports. Take Numeraire, a token issued by our portfolio company Numerai, and a token that USV owns some of (that is a disclosure if anyone is confused). Coinmarketcap reports Numeraire’s market cap at roughly $7mm suggesting that you could purchase 1% of Numeraire for $70k. But by 2050, there will be a lot more Numeraire out there and as OnChainFX reports, the 2050 Market Cap is more like $110mm. It would take more like $1mm to purchase 1% of Numeraire’s total supply. This concept of a market cap that includes future dilution is called a “Fully Diluted Market Value” and it is something investors need to be focused on when thinking about value, upside, and dilution. USV TEAM…

The Apps=>Infrastructure=>Apps=>Infrastructure Cycle

My view has been, and is, that we are in the “infrastructure phase” of the crypto market development cycle. To elaborate, I believe that we need better infrastructure (e.g. better base chains, better interchain interoperability, better clients, wallets and browsers) before we can see a robust application development environment and so I have stated many times that right now is a time to focus on building (and investing in) that infrastructure. That view has been the prevailing wisdom inside of USV for quite a while now. Well a couple of our colleagues at USV decided to poke holes in that argument and spent a few weeks doing research and then writing this post. The post is called “The Myth Of The Infrastructure Phase” and it was researched and written by Dani and Nick. I have a feeling that this post may be headed to similar territory as Joel‘s now famous Fat Protocols post because, like that one, it takes a conventional wisdom and turns it on its head. Dani and Nick argue that there are no distinct phases but in fact, a virtuous cycle of apps>infrastructure>apps>infrastructure that brings a new market/technology into its own. Read the post, as this argument is well researched and well made. However, as much as I agree with their arguments, I continue to believe that for investors, the best bets right now are infrastructure bets. It remains too hard, too expensive, and too frustrating, to build decentralized apps and the big value unlock will come when that changes. I think the returns on investment on infrastructure will be higher in the phase we are in right now. There will come a time when apps development will have a better ROI, but I do not think we are there right now. USV has made investments in decentralized apps, like OB1 and CryptoKitties, and we will continue to do that. But our primary focus is on infrastructure right now. USV TEAM POSTS: Bethany Crystal — October 7, 2018Fans and foes Bethany Crystal — October 6, 2018Color coding your clothes

Overstock’s investment arm funded blockchain for wine

Of all the things to add to the blockchain, wine makes a lot of sense. Given the need for provenance for every grape and barrel, it’s clear that the ancient industry could use a way to track ingredients from farm to glass. VinX, an Israeli company founded by Jacob Ner-David, is ready to give it a try. According to a release, the plan is to create a “token-based digital wine futures platform based on the Bordeaux futures model” that lets you track wine from end to end “at a cost bearable to the industry.” Investment banker Gil Picovsky joined Ner-David to build out the service. “I was relating to Gil my frustrations with the way most wine is sold, and I had some early thoughts around using blockchain and tokens to radically remake the wine industry,” said Ner-David. “Together Gil and I developed the core concepts of VinX, and started to actively devote ourselves full time to VinX in November 2017.” “VinX is democratizing the capital structure of the wine industry by bringing consumers in direct contact with producers early in the wine-making cycle,” said Ner-David. “We are riding the wave of direct-to-consumer. In addition, because we are registering all wine futures as tokens on a blockchain, we are bringing a powerful validating force that will go a long way toward reducing fraud.” Overstock’s investment arm, Medici Ventures, is not reporting how much cash they are dumping into VinX, but the company claims that “it is a seven-figure investment.” The tool will help reduce the rate of fakery in winemaking. Experts estimate that 20 percent of all wine in the world is counterfeit. VinX will follow individual bottles from filling to drinking, ensuring a bottle is real. Ner-David is also the co-founder of Jezreel Valley Winery, a boutique winery in Israel. “We want to use modern technologies, including blockchain and tokening assets, in bringing consumers in direct contact with wineries around the world, humanizing the connection, and leaving more value in the hands of wineries and wine lovers,” he said.

Circle Invest lets you buy cryptocurrency collections

With Circle Invest, Circle has been trying to make it as easy as possible to get started with cryptocurrency trading. And the company wants to go one step further with collections of multiple tokens. When it first launched, Circle Invest was pretty straightforward. You could download an app, sign up and buy Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic and Litecoin in just a few taps. But the company then started adding more coins. And if you’re new to the cryptocurrency industry, it’s hard to understand the difference between Ethereum and Ethereum Classic if you weren’t looking at the market when the fork happened. That’s why Circle introduced a feature called “buy the market”. In one tap, you can buy all the coins on Circle Invest, weighted depending on their respective market capitalization. For instance, the total market capitalization of Bitcoin is much higher than the market cap of Monero. So you’ll end up with a lot of bitcoins. 30 percent of Circle Invest users are using this feature. People who buy this package probably don’t invest as much as users who build their own portfolio, so it might not be 30 percent of Circle Invest’s transaction volume. Coinbase recently introduced a similar feature called bundles. In just a few taps, you can purchase all the coins on Coinbase. Of course, both Coinbase and Circle Invest provide a limited selection of coins. But it’s clear that they both want to list more assets in the future. With collections, you can buy a subset of the tokens available on Circle Invest. There are three packages for now — Platforms, Payments and Privacy. For instance, you’ll find Bitcoin, Bitcoin Cash, Stellar and Litecoin in the Payments collection. Once again, collections are weighted by market cap.

Blok.Party raises $10M, will adapt Settlers of Catan to its blockchain game console

Blok.Party, the company that built the upcoming PlayTable game console, announced today it raised $10 million in new funding. It’s also unveiling a big content partnership, where Blok.Party will create its own version of the popular board game Settlers of Catan. I first wrote about Blok.Party and PlayTable earlier this year, when co-founder and CEO Jimmy Chen first laid out his vision to use blockchain technology to build a console that can recognize real-world objects (like figurines and cards), creating a hybrid between tabletop and video gaming. The idea may have sounded a little abstract at the time, but it got a lot clearer when Chen dropped by the TechCrunch New York office to play a couple rounds of Catan with me. I’ll admit that I hadn’t played in a while, but it was clear from the start that PlayTable saved us some setup time — instead of putting all the pieces of the physical board together, you play on a digital representation of the board. Most of the pieces are digitized too, and we used and traded our cards using smartphones. But there is a physical “robber” piece, because Chen said this allows the robber’s movement to remain “a very visceral experience … that a digital version can’t ever capture.” It may not be too long before you get to try this out for yourself, at least if you’re among the 10,000 pre-orders Blok.Party has received so far. Chen said the company will start shipping its first devices this fall. He added that Catan, like many of the other games built for PlayTable, will be priced at around $20. “For us, it’s not about trying to compete based on price,” Chen said. “We’re trying to compete based on experience.” The new funding comes from crypto fund JRR Capital and other investors. Chen said the company will use the money to continue scaling the product, including further software development and building out the library of games. At the same time, he emphasized that although Blok.Party is manufacturing the initial devices, his vision is to achieve real scale through partnerships with hardware…

Vinay Gupta to talk about Mattereum at Disrupt Berlin

Cryptocurrency speculation is over. That’s why I’m excited to announce that Vinay Gupta will join us at TechCrunch Disrupt Berlin to talk about cool use cases that could make blockchain projects useful, beyond financial services. Gupta worked on the initial release of Ethereum back in 2015. He contributed when it comes to project management. He then worked with the Consensys team on other cryptocurrency projects. But he’s now 100 percent focused on his own project — Mattereum. As the name suggests, it’s all about bringing physical objects to the blockchain. For instance, if you buy an expensive painting, you want to make sure that you sign a contract with the previous owner that says that you now own this painting. Mattereum helps you set up self-executing smart contracts to transfer digital assets (including tokens that could prove the ownership of a painting). But if you want to combine smart contracts with good old legal contracts, Mattereum has also worked on Ricardian contracts so that those contracts have a legal value. Finally, Mattereum also worked on a decentralized dispute resolution platform that can be enforced in a national court. If you want to listen to Gupta talk about Mattereum himself, then you should come to Disrupt Berlin. Buy your ticket to Disrupt Berlin to listen to this discussion and many others. The conference will take place on November 29-30. In addition to fireside chats and panels, like this one, new startups will participate in the Startup Battlefield Europe to win the highly coveted Battlefield cup. Vinay Gupta Founder, Mattereum Ltd. Vinay Gupta is a technologist and policy analyst with a particular interest in how specific technologies can close or create new avenues for decision makers. This interest has taken him through cryptography, energy policy, defence, security, resilience and disaster management arenas. He is the founder of Hexayurt.Capital, a fund which invests in creating the Internet of Agreements. Mattereum is the first Internet of Agreements infrastructure project, bringing legally-enforceable smart contracts, and enabling the sale, lease, and transfer of physical property and legal rights. He is known for his work on the hexayurt,…

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