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a16z Podcast | Cryptocurrencies, App Coins, and Investing in Protocols

a16zChris Dixon, Sonal Chokshi, Olaf Carlson-Wee
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  • Approximately 15 new cryptocurrencies were launched in March, with frequent launches expected to drive competition as the asset class expands.
  • The .com domain market holds aggregate values in the billions, where typical five-letter English word domains are valued between $500,000 and $1 million.
  • Ether has appreciated over 100x since inception despite limited venture funding, while crowdsales for Ethereum-based application cryptocurrencies have exceeded $300 million.
  • Specific funding events include the Gollum project raising $9 million within 19 minutes of launch, with founders retaining 18% equity, contrasted against the Bitcoin creator's accumulated wealth of over $1 billion.
  • Financial structures vary significantly, exemplified by the SSL protocol's supporting nonprofit foundation operating on an approximate $500,000 annual budget.
  • New funding mechanisms and infrastructure are anticipated to generate a "whole new asset class" and shift economic energy toward open development forces.
  • Long-term vision forecasts a user-owned web where value generated by centralized venture capitalists and entrepreneurs is redirected to everyday investors.
  • Building the decentralized internet stack is projected to require the collective effort of thousands of brilliant technologists worldwide.
  • Open protocols are expected to produce emergent behaviors and innovations currently unimagined through swarm intelligence.
  • Only a handful of protocols from the last 20 years remain in widespread use, with BitTorrent cited as a potential exception.
  • The Maker system faces a high probability of failure despite its goal of creating a stable, endogenous stablecoin.
  • Significant risks are highlighted for average individuals who do not dedicate daily research to the sector, with high likelihoods of financial loss.
  • Average investors are advised to avoid individual stocks and cryptocurrencies unless they possess a deep understanding of the technology.