Real Ventures Crypto Brief - October 12, 2017

Bloomberg did a profile on Zug, Switzerland, which has otherwise come to be known as “Crypto Valley”. Early on, the government in Zug recognized the importance of a favorable regulatory climate for the development of a crytpo ecosystem, and they committed to making Zug an inviting place for entrepreneurs building in the space. In addition to low tax rates, they are careful to not apply stifling requirements that in other places (New York, for example) have created a chilling effect on innovation. As a result, many crypto engineers and entities, including the Ethereum Foundation, have chosen to locate in Zug. Other governments could take notes on how to foster an ecosystem in this manner. 

Vice did a quick interview with the founder of Polychain Capital, a hedge fund now managing more than $200 million from the likes of Sequoia, Andreesen Horowitz, and others. Olaf was the first employee at Coinbase, and he has a unique technical and fundamentals focus on the blockchain space. 

Fidelity - yes, that Fidelity, the large “legacy” financial services giant - has recognized the importance of crypto and is working to develop an internal expertise on the space. One of the best ways to understand crypto better is to participate in the ecosystem by purchasing crypto assets, transacting with them, participating in crowdsales, or mining them. 

The price of Bitcoin has been on an absolute tear in recent days, setting a record high at $5,200 at the time of this newsletter’s publication. It’s interesting to follow how the price of crypto assets evolve over time and how this does - or does not - correlate with improvements in underlying fundamentals. In Bitcoin’s case, no new big announcements or advancements have happened, but the price is increasing nonetheless. It’s hard to say why, but it’s exciting for sure. 

Bitcoin Core, the group of developers who maintain and upgrade the Bitcoin protocol that governs how the Bitcoin blockchain operates, are working on an upgrade that would allow for a higher throughput of transactions. Currently, Bitcoin can handle ~4 transactions per second, which will need to increase by many orders of magnitude in order for Bitcoin to work as a common currency. The recent SegWit upgrade was a step in this direction, as is this new work on “Schnorr signatures”. Bitcoin Core is composed of many developers from Blockstream, a Real Ventures portfolio company. 

Joe Lubin, founder of ConsenSys and co-founder of Ethereum, is one of the most influential and well-respected voices in the blockchain space. He spearheaded the launch of the Enterprise Ethereum Alliance, the largest blockchain consortium in the world that boasts JP Morgan and Microsoft as members. He has a very long-term perspective on blockchain technology, always talking about how much good it will do for humanity as opposed to more short-term oriented aspects like the price of crypto assets today. 

The Ethereum Foundation has always been great about keeping the public community informed and up-to-date about progress being made on development of the Ethereum protocol. This “Roundup” post covers the technical progress that has been made in the past several weeks as Ethereum approaches the Metropolis hard-fork upgrade. 

This is an interesting project that is attempting to tackle the massive challenge of rights management and attribution in the music industry. The key element to pay attention to is how this project is using blockchain technology to re-architect how data is stored and accessed. By creating a common standard that mediates access to data according to its value, commercially adversarial stakeholders can be aligned to cooperate in ways that were previously impossible. This same technique of using blockchains to create innovative incentive structures will be applied to countless industries in addition to music. 

Previously, we have discussed interesting terms in the blockchain space like airdrops. It’s helpful to be aware of these new developments not only because they are exciting novel uses of blockchain technology, but because they have big implications for how the opportunity landscape will evolve over time. Atomic swaps are a method of linking blockchains together by allowing logic to operate across them. For example, a smart contract on Ethereum might only release funds if Bitcoins are sent to a certain address. While some hold the opinion that there will eventually be one or a few blockchains to rule them all, others envision a future of many blockchains - potentially millions - that coexist and organically evolve together. Atomic swaps would likely be an important part of such a future. 

As always, the folks at Blockgeeks deliver a very well-researched, thorough, yet understandable of the various challenges and proposed solutions for scaling blockchain technology. Blockchains have a very long way to go in order to fulfill the vision for a global internet of value. Not only will they need to be large enough to accommodate 8 billion human beings, but they will need to handle billions and potentially trillions of sensors and devices that are economically networked together. 

This video of a discussion between Ethereum strategist and blockchain advisor Vinay Gupta and Sweetbridge CEO Scott Nelson is a long one - almost 2 hours - but it’s worth the watch. Nelson is a true expert on the world of supply chains and presents a lot of compelling statistics to illustrate just how big a part they are of the global economic machine. In this discussion, they go into detail about how blockchains will radically improve efficiency and fundamentally re-architect supply chains, and the associated impacts this will have on industries and businesses of all kinds.