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Today, I’m excited to announce that I have joined the investment team at CoinFund, and am eager to contribute to the continued momentum and future success of the firm’s network lifecycle investing approach which covers liquid, venture, and cryptonative investing in the blockchain space. Blockchain continues to be a fascinating, humbling, and uniquely interesting space. But before we get to talking about the future, I thought it was an appropriate time to take a look at the recent past.

There has never been a more exciting time to be in the space, where the pace of innovation is inspiring, at times frightening, but always exciting. Even though I’ve only been immersed in the world of digital assets for a short time compared to my preceding finance career, the wholesale progress made by the sum total of people, projects, and market participants in our world is nothing short of amazing. We have seen the waning of the SAFTs and the STOs that tried to fill big shoes in a post-ICO world, the excitement over and subsequent disappointment in the first generation of Ethereum-killers as some have fallen short of their ambitions. More recently, the explosion of DeFi protocol TVL (total value locked) and the resulting hangover threatens to throw out the baby (unique use cases that have found product-market fit) with the bathwater (the many forked clones of the aforementioned baby, seeking to cash in on unaware retail investors late to the party). Despite all that excitement, we are now on the cusp of unleashing the building blocks of the next wave of technology-enabled finance in a way that is inclusive, safe, and value-additive in a universal and deeply unifying way for all of us that share the stewardship of this planet. For example: blockchain-enabled cross-border remittance capabilities are already life-changing for a migrant worker and her family back home especially in the presence of foreign currency controls, but adding a full suite of financial services on top, such as the ability to earn interest or be insured against losses fundamentally changes the game in a radically inclusive way for previously excluded people, while lowering costs for all market participants globally. …


Examining the historical record of China-domiciled mining operations, international entrants, and the implications of the CCP’s new blockchain policy on Bitcoin’s security model

The Leshan Buddha in Sichuan (the province which leads Bitcoin hashpower)
The Leshan Buddha in Sichuan (the province which leads Bitcoin hashpower)
The Leshan Buddha in Sichuan (the province which leads Bitcoin hashpower)

Introduction: Miners Still Matter More Than Most Think

The mining process for Bitcoin and other cryptocurrencies of similar architecture (grouped together as “Proof of Work” coins) has remained essentially unchanged in principal since the first blocks were generated by Satoshi in 2009. However, the actual hardware that runs the mining node software has improved dramatically in speed and energy efficiency over the last 10 decades, as the increase in the bitcoin price in the intervening period ignited the dynamics of free market competition for the cryptocurrency mining industry, resulting in the current environment where purpose-built ASIC (application-specific integrated circuit) machines must be used in order to have a chance of successfully finding the next block (to append to the blockchain) and earn the associated BTC reward. As a result, profitable mining operations naturally started to scale up in size as the cottage industry developed from hobbyists tinkering around with FPGAs (field programmable gate arrays, an intermediate step before ASICs became the norm) in sheds, to today’s megawatt-plus deployments of the latest hardware from specialty ASIC manufacturers like Bitmain, Canaan, and others. These operations also tend to be at least partially vertically integrated in the sense that there often is meaningful overlap between the 1) manufacturers of ASICs, as well as the 2) mining farm owners who purchase and run the equipment, and 3) mining pool operators which add a layer of abstraction and volatility reduction (in actual block rewards earned, when compared to solo-mining) by coordinating and sharing rewards among voluntary participants in their associated pool (and taking a cut of profits earned). …


As Bitcoin’s success is now a necessary (but not sufficient) condition for the entire digital asset ecosystem to thrive, we examine and challenge the major bull and bear near-term narrative drivers for BTC over the next 6–12 months.

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Bitcoin dominance index, circa 2019 (Colorized)

Introduction: Bitcoin Drives the Bus, Everything Else is Along for the Ride

There is a tendency for people to overcomplicate matters, whether because they’re unsure of their convictions, or have something they’re selling. While there are plenty of projects that have continue to design, build, pivot, and launch new features or main nets to broaden the possibilities and capabilities of the digital asset ecosystem, I’m increasingly of the belief that how Bitcoin (BTC) acts over the next 6–12 months will be the primary driver of whether cryptocurrencies take the next stepwise functions up in awareness, adoption, and yes, price, or continue to languish in relative obscurity and apathy. This will not be an article seen through rose-colored classes, but an attempt to honestly frame how the space is running short on time to deliver on the bold promises that have been made. Specifically, I’ll summarize and opine on the most common narratives from both the bull and bear camp as it relates to Bitcoin. While historically this monthly thematic overview has focused more on overarching themes as opposed to asset-level research, but I felt that now is the right time to reexamine the Bitcoin juggernaut following the recent 11th birthday of the whitepaper, and ahead of the next wave of potential catalysts.


Looking beyond the hype to review the actual building blocks of institutional investment adoption from an evidence-based analysis of potential sources of inflows.

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The precarious path to institutional adoption may feel wobbly at times…

Introduction: Professional Managers Have a High Bar for Entry, but No Dogma Against It Either

Let’s start with refuting a common myth that remains pervasive for much of the retail investors: the dream that institutional investors are going to come in and market-buy bitcoin and the rest of liquid cryptocurrencies without discipline or a long-term plan (or their own price targets at which they’d trim initial positions). At the same time, there is also a continued tendency for many digital asset enthusiasts to conflate all non-retail investors as “institutional”, despite major differences in appetite between family office, pension and endowment allocators, as well as the actual variation in the professional investment management firms (including mutual funds and hedge funds) who invest on behalf of these allocators who generally tend to diversify between a mix of outsourced strategies, while also retaining some flexibility to do direct investments (especially family offices). …


Exploring the claims behind the persistent criticism commonly leveled against cryptocurrency, and why the Greater Fool Theory fails to make its case convincingly when scrutinized.

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Early investor / adopter of cryptocurrencies, circa 2019 (colorized)

Introduction: The Many Faces of the Greater Fool

There’s not a specific definition or even attribution of the origin of the Greater Fool Theory (hereafter abbreviated to GFT), probably since the concept of investment mania divorced from fundamentals has existed for as long as trade and commerce. While definitions are extremely important, the lack of a formal origin means we’ll have to settle for the slightly more imprecise language of convention. …


What a bitcoin ban could look like, and how the worst case scenario might be avoided in favor of finding common ground between crypto-enthusiasts and lawmakers as digital asset policy takes center stage.

Uncle Sam eyeing the nascent digital asset industry with curiosity and suspicion.
Uncle Sam eyeing the nascent digital asset industry with curiosity and suspicion.

Introduction: Beating Them vs. Joining Them

There was an early moment in bitcoin history when its mysterious creator, Satoshi Nakamoto, urged caution just as the community was eager to help support Wikileaks via donations, citing that at that time (this was early 2010), the need for the project to grow stronger and avoid the risk of destruction relied on staying under the radar. This summer, we’ve seen an unprecedented level of interest from all facets of the United States government as the one-two punch of the Trump tweet and the Mnuchin press conference put all of the digital asset world on notice, at least by the Executive branch. At the same time, we’ve now seen both chambers of Congress question David Marcus about Facebook’s Libra plans, and the Senate itself follow up by holding a hearing and inviting panelists to continue educating the Banking Committee members about blockchain and Bitcoin. …


Why accelerating adoption of distributed (Libra) and decentralized (Bitcoin) forms of value transfer and storage is now a matter of when, not if.

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Introduction: Simplifying the Set of Outcomes

Whenever market volatility flares up, I find it helpful to take a step back and compress the continuum of possible outcomes for the digital asset movement into a simplified case of three potential future realities which I’ll call the Lesser, Equal, and Greater scenarios (think of them like math expressions). In the Lesser case: digitally scarce assets fail to scale effectively in usage and mind-share, and are relegated to the dustbin of history along with other failed innovations, and we see the total cumulative value of digital assets decline along with popular interest as a majority of current developers and investors move on to the next big thing. The Equal scenario sees us treading water from a market capitalization perspective relatively speaking, hovering within the current band on the logarithmic scale (between $100B and $1T simplistically) in a perpetual homeostasis as cryptocurrencies largely remain a fringe asset class with occasional mainstream uses but fail to integrate further into the broader economy. …


Comparing expectation versus reality, getting the most out of the conferences and social calendar — a retrospective on the past 2 weeks and summary of key lessons learned.

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The place where the magic happens (Consensus @ the Hilton on 53rd/6th Ave). NYC residents can probably smell the chicken and rice already!

Introduction: My Approach

Like everything else in the frontier world of digital assets, the flurry of activity in mid-May centered here in New York City has multiple names, which might confuse those on who haven’t yet had the pleasure of immersing themselves in digital assets full-time. What’s called Blockchain week by some, is also known as “Consensus” by others, referring to the largest conference by attendance, organized by CoinDesk. As further clarification, Ethereal, which is a 2-day summit organized by the ecosystem incubator ConsenSys headed up by Joe Lubin, is part of blockchain week but is a totally separate event and not affiliated with Consensus the conference. …


Exploring the history of theft, common attack vectors within digital assets, and how to arm yourself with the knowledge to stay safe.

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“Damnatio ad bestias”, the punishment for counterfeiters in Ancient Rome (alternatively, a metaphor for the battle for cryptocurrency users to secure their assets today)

Introduction: A Brief History of Thieves

As long as civilizations have existed, there have been unscrupulous people, unburdened by morality, more interested in getting something for nothing at the expense of others. Anthropologists studying Sumerian and Ancient Egyptian cultures have found plenty of evidence documenting the penalties for theft, which ranged from limb removal to death, demonstrating how the plague of thievery has been one of the carrying costs of civilization’s growth. …


Cumbersome, yet vital during the education and onboarding phase, though ultimately vestigial post-mass adoption.

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Introduction

I’m sure many of you remember the joy of learning to ride a bicycle for the first time and feeling the exhilarating freedom of mastering something that had seemed a formidable challenge only days or weeks prior. What you probably remember less fondly, if at all, are the days, weeks, or months right before that moment when you dutifully practiced the skills of pedaling, turning, and braking while rocking the world’s ugliest vehicle accessory, the trusty training wheel. I believe the pace of stablecoin projects announcements (JPM, FB recently) is likely to continue and for others to join the already-robust lineup of other asset-backed (Paxos, USDC, GUSD) and crypto-backed (DAI) stablecoins. Going back to the training wheel example, I view this group of projects as a net benefit for the still-nascent ecosystem during this early phase of adoption given the important benefit of mitigating short-term volatility and sidestepping thorny political issues which still plague the more traditional cryptocurrencies. …

About

Evan Feng

NYC-based digital asset L/S investor @ https://coinfund.io/. Traditional finance background (IB and HF x2), now seeking to understand and price the future of $.

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