When decentralized blockchain protocols start displacing the centralized web services that dominate the current Internet, we'll start to see real internet-based sovereignty. The future Internet will be decentralized.
Olaf Carlson-Wee
I view Bitcoin as the more democratic version of money and value transfer because no one controls it... I expect the Internet to be around longer than any nation-state, so a nation-state-backed currency is actually less safe than an Internet currency in my mind.
We are seeing more managed money and, to an extent, institutional money entering the space. Anecdotally speaking, I know of many people who are working at hedge funds or other investment managers who are trading cryptocurrency personally, the question is, when do people start doing it with their firms and funds?
In a world with many blockchains and hundreds of tradable tokens built on top of them, entire industries are automated through software, venture capital and stock markets are circumvented, entrepreneurship is streamlined, and networks gain sovereignty through their own digital currency. This is the next phase of the Internet.
Polychain is investing in blockchain assets. We do not invest in private companies or hold shares in private companies. We invest purely in tokens or digital assets, and those include assets that people are familiar with, like bitcoin and ethereum, as well as very early-stage projects.
I've been through a lot of moments when other people thought Bitcoin was going to implode, and in those instances, I generally have seen through inaccurate coverage of it.
It doesn't always make sense to have a token on the blockchain that is both useful and represents ownership - it has to be something where there's a network effect. That's why I cite Facebook as an example of what could be disrupted more so than, say, Amazon - which is bit more centralized and is not exactly a network of users in the same way.
VCs are used to being the gatekeepers of capital. There's this old narrative of entrepreneurs going hat in hand begging VCs for money. That absolutely is not the world we're in anymore.
Taxes have been complicated. Every single time I spend a Bitcoin, it's a taxable event. It's like I bought and sold an asset. It counts as an investment, with a short- or long-term capital gain or loss.
I think the technology will get bigger and the price of Bitcoin will go up, so I'm speculating to increase my purchasing power. But I don't intend to sell the Bitcoin. I intend to hold it until there's a day where I can just use Bitcoin completely.
Polychain manages a hedge fund that invests exclusively in digital assets. We invest exclusively in protocols, not companies, and we do this by investing in things made scarce through the blockchain.
There will be many types of assets codified into the blockchain, and they are all not just going to be on the bitcoin blockchain - it's going to be a number of different assets here. And the best way to invest in that is a diversified portfolio.
For the first time, open source, peer-to-peer protocol developers can monetize their project on a protocol level.
We are seeing entrepreneurs issuing their own blockchain-based tokens to raise money for their networks, sidestepping the traditional, exclusive world of venture capital altogether. The importance of this cannot be overstated - in this new world, there are no companies, just protocols.
Application-specific tokens, or app-tokens, are built on top of existing general-purpose blockchains like Bitcoin and Ethereum. For the first time, open-source project creators can directly monetize their open-source network.
This is unproven technology, and if you don't know what you're doing, you shouldn't interact with tokens - from an investor and security perspective.
If you want to buy $10 of Ethereum and poke around with smart contracts, I encourage that. But use it as a technology, not as an investment, unless you know what you're doing.
It's like the American democratic system. When you vote, even if your candidate doesn't win, you accept that democracy was in action. When people participate in a Tezos network, they're accepting that the democratic vote of the other coin holders will govern the way the protocol moves.
If the Numerai fund performs well, that should lead to more assets under management, which should lead to more revenue for Numerai's general partner, which should lead to higher payouts for the data scientists, which implies a higher Numeraire valuation.
For the first time, entrepreneurs can monetize their own open-source and peer-to-peer network. They can crowdfund and raise money from people across the world on the Internet in crypto-currency.
