We believe blockchain technology has the potential to transform vast segments of the global economy
Exposure to both White and Black Swans
White swans: if the Internet continues to permeate every aspect of our lives, devices will negotiate payment with one another using digital currencies.
Black swans: if a major economy collapses, if interest rates shoot up, if countries clamp down on currency leaving their borders, we will see a huge amount of capital flow to decentralized cryptographic assets that are free from government control.
We Invest in Coins, not Companies
An investment in blockchain companies has three layers of risk:
- The underlying currency must appreciate.
- The company must execute well.
- The investor must wait until a liquidity event.
By investing in the underlying digital currency, we remove these last two risks.
There's more to Digital Currencies than Bitcoin
Bitcoin is not anonymous. All balances and all transactions are visible to everyone, for all time.
However, there’s a huge desire for anonymity. It’s why 30% of the wealth of High Net Worth individuals is held offshore.
An anonymous protocol could eat into a significant portion of bitcoin’s market cap (if not the majority).
Consensus and Governance
Bitcoin’s Proof-of-Work approach to consensus wastes energy, and is vulnerable to 51% attacks. Many people believe the underlying dynamics of asic-driven mining will lead to a centralized duopoly.
In contrast, other coins have different consensus mechanisms, and one of these may emerge as superior to bitcoin proof-of-work. And some coins have governance models that allow for rapid evolution of the underlying protocols, allowing for much faster innovation than bitcoin.
The Bitcoin protocol is very simple, allowing little more than moving value from one address to another.
In contrast, some coins have fuller expressability at the protocol layer, which allows for the creation of smart contracts and Distributed Autonomous Organizations. Because of this expressability, there are currently far more applications being built on top of Ethereum than Bitcoin.