I wrote about something called TxTenna back in May. It is a way to move Bitcoin from one wallet to another without needing to be connected to the Internet. Well TxTenna is now live and if you want to see it in action you can try it out by following the instructions here. And here is a blog post by Richard Myers, the engineer at GoTenna (a USV portfolio company) who managed the TxTenna project in which he explains how it works and why they built it. And for good measure, here are a few more links: Play Store link: https://play.google.com/store/apps/details?id=com.samourai.txtenna … Github link: https://github.com/MuleTools/txTenna … Certainly this is not a mainstream use case, but it does showcase the resiliency of decentralized systems and that is pretty neat. USV TEAM POSTS: Bethany Crystal — October 14, 2018Losing your words Bethany Crystal — October 13, 2018Game day morning
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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…
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
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. USV TEAM POSTS: Nick Grossman — September 22, 2018The Utility Infielder
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.
Silvio Micali is the founder of USV portfolio company Algorand, which is building a foundational blockchain of the same name. In this video, Silvio explains what is different and important about Algorand.
Is crypto just another trading platform or can it evolve into something with real long-term value? If you’re reading Cointelegraph, Cryptonews, or other industry outlets, you’ll notice the news is dominated by coin trading information, from BTC price changes to the analysis of alt-coin price movements. To a casual observer, crypto is highly focused on coin trading, much of which is driven by speculators. There’s less of an emphasis on the long-term value of the underlying products in crypto. Functional products are few and far between, and the majority of coins have little practical use as a way to pay for products or services. Speculation does have some positive effects on the ecosystem. More speculators buying coins tends to drive … Read More The post The evolution of crypto – It’s time to ship some product appeared first on 500 Startups.
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 about buying anything in crypto. USV TEAM POSTS: Albert Wenger — August 11, 2018Speech and Power
On this episode of the Epicenter podcast, Ryan Selkis, founder of the Messari project, talks about what they are trying to do with Messari and how it might bring needed transparency and accountability to ICOs and other token projects. USV TEAM POSTS: Albert Wenger — August 11, 2018Speech and Power
Three weeks ago, 500 Startups launched a new summer education program for blockchain companies in San Francisco. The new cohort consists of six innovative startups from four countries, all working in the cryptocurrency and blockchain space, many of them post-token offering and rapidly growing. The participants’ solutions range from helping governments collect and audit crypto trader taxes, to innovative human resources systems helping companies find and hire the best employees, to the next Bloomberg for the Crypto world. The beginning of a new tradition at 500, this program will run over the summer and will be focused on helping crypto companies develop focused growth strategies specifically tailored for their industry and carrying no investment. 500 Partner Robert Neivert and Entrepreneur … Read More The post Announcing 500 Summer School for Blockchain! appeared first on 500 Startups.