Conversations about blockchain

For all the hand-wringing going on about the crash of crypto (Bitcoin), the larger prize is still to be claimed.   9 charts that tell the real story.

Those of you following Applied Crypto Ventures (previously called AVG Blockchain Fund) are probably aware of our laser focus on the foundational layers of the blockchain stack. Our strategy has been largely based on our published thoughts regarding near-term opportunities in the sector in infrastructure and protocols.

We have also developed a view that in this nascent sector, the best deals in line with that strategy (entrepreneurs, technology teams, and investor syndicates) are based in the US — and consequently our early stage investments have been concentrated here.

However, we are now revisiting our geographical concentration strategy based on three observations:

While reports have been pouring in of Thanksgiving dinner conversations this year leading to retirees investing in cryptocurrencies, like much else at the feast, this is probably not healthy except in moderation. But the average retail tech investor could still make a play at blockchain based returns.  However, accessing the blockchain investment opportunity is non-trivial.  There are really three options at their disposal:

  1. Open an exchange account (on Coinbase, Binance, etc.) and trade in listed Cryptocurrencies
  2. Invest in equity of existing technology companies that will benefit from the adoption of blockchain
  3. Invest in a blockchain fund - usually a crypto hedgefund or crypto VC fund.

In this post, I will only address the first two, as the third is addressed elsewhere on our website.

A commonly held and reasonable view of why blockchain investing makes sense is that the technology is transformational on the scale of what the Internet did for businesses over the past twenty-four years, and possibly a lot more so. But just like the Internet boom of the dot-com-era (late 1990s) we are seeing a lot of hype, euphoria, and speculative buying of securities scarcely anybody understands. By most anecdotal estimates, less than 3% of blockchain tokens are actually being used to buy goods or services or real assets.

There are several primers out there on blockchain and cryptocurrencies — often used interchangeably, incorrectly — so I will not try to put forth another one here. Further, this post is not intended to be a guide to investing in cryptocurrencies (like Bitcoin), or the mechanics of investing in tokens/ICO, or a framework for professional investors to map tokens against existing equity investing paradigms.

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