Issue # 68
It’s been a busy couple of weeks for me. It started in the Netherlands at The Hague. I was invited to speak at the World Pension Summit on the topic of crypto currency.
Crypto currency is a super hot topic and generated a lot of interest from attendees, see below. Institutional investors are just starting to look at the space and are beginning to get educated on how they might participate. I got a lot of questions on how to buy crypto currencies, where to custodian crypto currencies and how do you determine the optimal position size in a broadly diversified portfolio?
Ironically, retail investors have been involved in crypto currencies for a while via Coinbase and other online platforms. So it was no surprise when the ProShares Bitcoin Strategy ETF (BITO) launched last week that interest would be extremely high, but it was a surprise when the rush of web traffic crashed the ProShares website!
Interest in Bitcoin in particular is high. Whether that is due to central banks printing money, government policies distorting labor markets or general concerns around fiscal irresponsibility is anyone’s guess. But it is hard to deny that Bitcoin has many attributes that make it attractive as an inflation hedge, a hedge against unsound monetary policies and fiscal irresponsibility, to many it is Digital Gold.
And now, via ETFs it is pretty easy for anyone to get exposure to Bitcoin /Digital Gold.
Below is a re-posting of a note that I sent out to my Angel List syndicate last week.
We are all reading about the explosive growth in NFTs. NFTs, or non-fungible tokens, trading volume surged in the third quarter of 2021 to $10.67 billion, according to a report by analytics platform DappRadar. That’s a 704% increase from the previous quarter!
NFTs are digital assets and can be anything online, such as art, collectibles and even memes. Certain projects are considered rare, like CryptoPunks, which was one of the first NFT projects. CryptoPunks are highly respected within the community and commonly sell for six or seven figures each.
Technologist and investors are bullish on the tech that surrounds NFTs and see a number of use cases for it.
For example, there is huge growth in the demand for NFTs for in-game items, in which users can buy things like skins or accessories to be used in blockchain-based video games. In the third quarter of 2021, in-game items generated $2.3 billion in trading volume, according to DappRadar. This represents 22% of the total NFT trading volume.
An NFT is a unique and non-interchangeable unit of data stored on a digital ledger (blockchain). NFTs can be used to represent easily-reproducible items such as photos, videos, audio, and other types of digital files as unique items (analogous to a certificate of authenticity), and use blockchain technology to establish a verified and public proof of ownership. The lack of interchangeability (fungibility) distinguishes NFTs from blockchain cryptocurrencies, such as Bitcoin.
The technology is extremely versatile and innovations are happening rapidly.
For example, NFTs have the potential to store, certify and document a number of different assets and data, beyond art. NFTs started with artwork that people use as their profile picture, but it could expand to other items like passports, music, airline tickets and even land, houses and cars.
From CNBC, there is also a social component that is driving NFT volumes in the WEB 3.0 community, just like a Rolex or a Lamborghini does in “real life,” according notable NFT collector Gmoney. “When someone buys a Rolex in the real world, they don’t spend the thousands of dollars because of the watch’s utility value. A simple $5 watch could perform the same utility. It is to ‘flex’ their status,” Gmoney said. “With an NFT, by posting it as my avatar on Twitter and Discord, I can quickly ‘flex’ with a picture.”
We’re making a play in this space through Creatify.art, which has completed two 10,000 NFT drops, the first sold out in 27 minutes and the second sold out in 1 minute! Both drops raised over $1.5 million each for the artist. We think that this is a great opportunity to get involved in the NFT space with a great team of serial entrepreneurs and hope you will join us on this adventure.
NOTE: The Creatify.art syndicate filled in 24 hours and was up-sized 50% twice, both of those filled immediately too! If you are an Accredited investor you can check out the deal memo here.
I recently wrote about the CitiBike in New York and how much I enjoyed exploring the City on a bicycle. But, I have to say that I was blown away by what I saw in Amsterdam. Everyone bikes Everywhere, it was pretty incredible.
I arrived Saturday night at 10:00 pm and took a cab into the City. While we were stuck in downtown traffic bikes were whizzing by, tons of them, so many that I couldn’t believe what I was seeing.
I decided to rent a bike and was able to cover most of the City over a two day period. Amsterdam is a small, flat city with very narrow roads along the canals. Not a place that you would necesarily want to drive a car. But, they have made it really easy to get around on a bicycle. They created seperate bike lanes that are protected by a curb and cyclist get priority over pedestrians and cars. If there is an accident involving a bike it is not the cyclist fault, or so I was told.
Because they have their own seperate bike lanes no one feels compelled to wear a helmet. Even when it was raining the bike lanes were filled wiht people without a helmet. You would never see that in the US, we don’t bike in the rain!
I also noticed that the population seemed to be slim and trim….. I did not see any overweight people, which was also very interesting.
The infrastructure built around bikes is really great. You can jump on a tram, bus or train with a bike without any hassle. And the bike garages like the one pictured above at the Central Train station are pretty amazing too.
It makes me think that we could be doing more with bikes here in California.
Digital Currencies and Revolution in the Payments Space, with Professor Darrell Duffie, The Adams Distinguished Professor of Management and Professor of Finance at the Stanford Graduate School of Business. He gives an in-depth look at how the latest digital currencies are revolutionizing how we pay, and where central bank-backed currencies will fit into our future.
Recorded September 30, 2021 during GSB Alumni Week.
Pension Bridge Alternatives 2021: November 1-3, Virtual Conference. I will be participating on a panel covering currency & crypto. I think this one will be a bit more macro on how to position a portfolio for a weaker dollar and what role crypto currencies can play in an institutional portfolio.
World Investment Forum 2021: November 7-10, at the Montage in Healdsburg, CA. Panel: Do Digital Assets have a Role in Institutional Portfolios? You can probably already guess what my answer is to this question, but I will try to break it down into simple blocks of why it makes sense for institutional investors to have exposure.
These are the last two events that I plan to participate in for 2021.
I hope that you enjoy the letter as much as I enjoyed writing it and please feel free to share the links with friends and associates. If you are interested in startups and are an accredited investor you can join over 750 other backers that follow my AngelList syndicate here.