Over the last few quarters, we’ve watched entrepreneurs shift their fundraising focus from token-based protocols to the relative safety of equity-capitalized, cash-flow extracting businesses. Within crypto, if 2017 deal-flow was 75% token-based, 25% equity-based, then 2019 has been the inverse, and the token-based deals are continuing to slow [1].

Long run, we expect there to be thousands of equity-capitalized businesses making use of each successful protocol, which means there will be more companies than protocols, and the noted inversion of deal-flow is rational. …

To follow is a very rough analysis, zoomed out to give us perspective on Bitcoin’s 10 years of life, and Ethereum’s 3+ years. If you disagree with my approximations, I encourage you to perform your own exploration of fundamentals vs. price and share your findings with the world.

Before going on Bloomberg or CNBC, I always run through the fundamentals of the network(s) I’ll be talking about. When doing this last, I realized that fundamentals of quality cryptonetworks are down less than prices, and significantly so.

For me, fundamentals of a cryptonetwork come down to the health of the supply-siders…

As an industry fixated on the immutability of transactions, we often make the mistake of transposing that expectation of immutability onto people and ideas, both of which are constantly changing. Even Bitcoin’s narrative (an idea), which is the most straightforward of any cryptoasset, has changed dramatically over the years (see here and here).

I’ve watched every smart person in crypto be wrong many times over — the smartest ones learn quickly from their mistakes, changing their opinion when presented with data or arguments of substance. As Fred Wilson has popularized, strong views, weakly held.

But crypto’s widely used social platforms…

Joel was the first person that stuck the word cryptoeconomy in my mind. It was mid-2017 and the idea struck me because most everyone was thinking about cryptonetwork valuations (most commonly ICOs) in the context of company valuations. Which is partially why they were considered so obscene.

What the crypto market vaguely understood, though could not fully articulate, is that the prices being paid were for emerging economies. Emerging economies using a protocol in place of the government, specializing in a single (digital) service, and capable of global scale from inception. The good ones, at least.

Perhaps the best way…

Humans have an innate desire to first understand, and secondly reason, about what they see in the world. We go from observing things (facts), to reasoning about those facts (theories), to then applying those theories back on present facts to predict future facts. This habit pattern explains the birth of religion. It also explains how we can expect quantitative models to be formed, evolved, and applied by cryptomarket participants in the years to come.

New asset-classes, or exotic creations within asset-classes, gain mainstream attention via asset bubbles. It is only when an asset class is worth enough, for long enough…

Thus far, cryptonetworks have used their native asset to entice early investment in their economies via two primary pathways:

  • Minting to supply-siders that install productive capital
  • Selling to investors that contribute investment capital

While investment capital can ultimately be converted into productive capital, the two are not synonymous, and value doesn’t always make the leap from investment capital → productive capital. Sometimes investment capital can waste away on balance sheets like unused kindling. The question comes down to who is first prioritized, the supply-side that installs the productive capital or the investors that float the investment capital?

Minting models like…

This week crypto has been afire with Nouriel news. After voicing my own disgust at Nouriel’s behavior, Chris King responded:

“He’s triggered and we’re triggered. No one really wins.”

Chris is right. We’re all so triggered that conversation between the crypto-community and Nouriel has devolved into an intolerant pissing contest of insults, and such rhetoric between groups goes nowhere. We appear just as badly to Nouriel, as Nouriel appears to us.

I raise it as a reflection now, because a rhetoric of intolerance is dangerously common in crypto. If someone doesn’t agree with a tribe’s ideas, too quickly do things…

By Jonathan Cheesman and Chris Burniske

We may look back on this time as the “Crypto Tax Crisis of 2018,” as thanks to tax liabilities we’re witnessing the most concentrated period of net fiat outflows that the cryptoasset ecosystem has experienced in its short life.

These large flows have a first and second order effect. First, they can severely impact asset prices in illiquid markets, with large sells single handedly crashing prices in thin order books. …

Recently, in personal communications and small Telegram groups, I’ve noticed signs of quiet desperation growing as dreams of a quick reversal to new all-time-highs fade.

Meanwhile, Twitter is noisy with technicians, and egos attached to price predictions. Predictions are made with seeming conviction, because if right, egos will claim clairvoyance.

Here’s the truth: no one knows how far we’ll fall.

Certainly, we can make educated guesses based on technical indicators, and even predict points of support based on our early explorations of crypto fundamentals, but these are all educated guesses. Our techniques will mature over time, but reflecting on my…

Recently, an increasing number of crypto market participants and observers have become interested in a framework for valuing cryptoassets. Over the years many a dinosaur has proclaimed bitcoin valueless, an asset worse than tulips (at least with tulips you got a flower). Now they’re trying to figure out how valuable these assets really are. That’s a big win for the magic internet money community.

In this piece I share some early attempts at crypto valuations to give perspective on how early we still are, then discuss the theory I’m currently using and why, before walking through a fictional bandwidth coin…

Chris Burniske

partner @placeholdervc, twitter @cburniske, formerly led @ARKInvest’s crypto efforts. Co-author of “Cryptoassets” 👉 bitcoinandbeyond.com

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