Interview from Japan’s Cryptocurrency Conference

September 8, 2017

Here’s the English version of the interview I gave at this week’s Japan Cryptocurrency Conference in Tokyo.

You mentioned that you believe Japan is taking a leadership role in cryptocurrency. What did you mean by that?

I was referring to both the government and the consumer. As another speaker explained, earlier this year the Japanese government defined bitcoin as a means of payment. This is incredibly forward-thinking as it brings legitimacy to the domain, and now over 200 physical retail locations in Japan accept bitcoin already. Furthermore, I understand that Japan-based entities (mostly consumers) now account for 30-50% of bitcoin transaction volume worldwide.

You come from France. How is cryptocurrency viewed there?

Actually I originally come from Silicon Valley, but yes, I lived over 17 years in Europe. The French establishment has been slow to acknowledge crypto. However, there is a niche segment of highly passionate fans of cryptocurrency, with many talented blockchain developers in France. I would say that the European countries demonstrating true leadership in cryptocurrency would be Switzerland, with their Crypto Valley in Zug, and Estonia, who is contemplating issuing their own government-managed crypto token.

When did you first begin investing in cryptocurrency?

Although our fund skipped the first wave, I became a bitcoin investor personally back in 2012 by sheer dumb luck. Somebody on another continent owed me a couple hundred dollars and offered to pay me in bitcoin. I didn’t really know bitcoin at that point but was curious. So I opened a wallet, received his money, and then promptly forgot about it for a few years. It turned out to be the best accidental investment I ever made.

So which cryptocurrencies do you hold today?

I would rather not give specifics, but I will say that I cashed out a chunk of my bitcoin recently because I’ve already lived through two major bubble corrections in the past. I diversified into a basket of tokens too. However, I’m far from being an expert. In fact, it was only recently that I learned the importance of securing cryptocurrency assets off the exchanges. I am prepared to lose my entire crypto portfolio, so any other outcome I view as pure upside.

Do you believe cryptocurrency will disrupt your business as a VC?

I certainly believe that, by granting access and liquidity, ICOs and decentralized funding methods will fundamentally impact our business. The amplitude and sign of the impact will depend on the VC.

What do you mean by “depend on the VC”?

I see 5 types of VCs:

  • First, the true visionaries who developed an early conviction for blockchain and began staking out positions in blockchain infrastructure companies, Union Square Ventures and Andreessen Horowitz probably being the most famous.
  • Second are the new funds dedicated to cryptocurrency, like Panterra or Blockchain Capital.
  • Third are the conventional VC funds who have already amended their LP agreements to allow investment in the asset class and who have been participating in ICO pre-sales.
  • Fourth is the vast majority of VCs: a group who have recently woken up to the potential of cryptocurrency but haven’t yet become active in the asset class. The main hurdle is that their limited partnership agreements require modification to allow for this.
  • The fifth category are those funds who remain blissfully ignorant of the space. This group will probably be the first to be disrupted.
What are your predictions for cryptocurrency?

Reiterating the caveat that I’m no expert, my gut tells me that the potential of cryptocurrency is being overestimated in the short term but dramatically underestimated in the long term.

Secondly, I think we’re going to see more and more non-blockchain companies issue tokens. Many of these projects will not bear fruit. My best guess as of now is that the projects with the greatest chance of success will be those where the token is integrated into their core business activity. For example, next week Kik Messenger will open the crowd-sale of their Kin token which empowers and enriches their active base of millions of users.

Thirdly, I am excited about the potential for portfolio management solutions for cryptocurrency assets. Solutions like ShapeShift’s Prism, which I’ve just started using, have the power to be truly transformative and democratizing in my opinion.

Lastly, I’d like to point out a brilliant prediction my analyst made: insurance companies should consider offering tailored insurance packages which cover crypto assets.

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posted in venture capital by mark bivens

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