Our primary focus at Cosimo Ventures is deep tech plays such as in the blockchain and AI space. You may have heard me speak at one of the many crypto events across the globe about promise of the blockchain. I see the blockchain as capable of supplanting our outdated, centralized model of trust management which goes to the heart of how societies and economies function.
By deferring the management of trust to a decentralized network guided by a common protocol instead of relying upon a trusted intermediary we can change the very nature of social and economic organization.
The launch of our tokenized venture fund, COSIMO X, was prompted by the onset of what we envision as the “Fourth Phase of the Internet”. My partners and I, having successfully built technology companies through Phases 1, 2 and 3, eagerly anticipated the next phase of the Internet. A phase that we believe has the potential to be the largest to date. Phase Four is the phase of the Inter-Trust-Net or the Decentralized Trust Economy, some call it The Internet of Value. This “decentralized trust revolution” will enable revolutionary new approaches to sharing, transactions and collaboration that were not possible before, transforming a wide array of industries and organizational settings.
COSIMO seeks to invest in companies that align with this decentralized trust economy and we have created a framework or technology stack to guide our investing activities shown below:
One layer of our Technology Stack is Digital Assets and Cryptocurrencies.
Bitcoin was merely the first crack at using a distributed computing and decentralized ledger keeping system to resolve the age-old problem of trust and achieve this open, low-cost architecture for intermediary-free global transactions. It may or may not be the platform that wins out.
The dotcom bubble taught me a valuable lesson:
Most new ventures die…but those that learn, optimize and then enter the market usually become: WINNER TAKE All.
While we are long on Bitcoin, we believe that it is more likely than not that something other than Bitcoin will come along and fulfill the ultimate promise of the Inter-Trust-Net. Something will emerge as a standard, base-layer protocol that dictates how all computers everywhere exchange value with each other. Will it be Bitcoin, Ethereum, EOS or something else entirely new? Or will there be protocols specifically designed for highly specific purposes?
Specifically, while Bitcoin represents a Protocol and a currency, it was never designed to be a long-term store of value. There are significant advantages to being first mover. However, given the lessons we learned as entrepreneurs, we as investors in very early markets always ask: is there a new approach that has learned from the first mover, overcomes its issues, and is poised for market entry?
ndau is a new type of digital currency known as an Adaptive Coin, and it is in our sweet spot because it fits our strategic premises on two levels. First, ndau is designed to claim the high ground as to where we at Cosimo think blockchain and digital assets must go in the long run. Secondly, ndau makes use of some innovative new ideas in the ndau Epistemology blockchain that both make use of AI tech, and that also will become a fundamental source of input truth for future AI reliability.
The biggest market for digital currencies — bigger than all others combined — is long-term store of value, which we’ll define here as those held for a year or more.
Once you accept that long-term store of value is the most important type of digital asset to get right, it’s important to have a clear picture of what the most desirable properties are, and how they differ from existing alternatives. Existing digital currencies that have no stabilizing features are just too volatile to serve as a long-term store of value for most purposes:
And “stable coins” digital currencies that are pegged to fiat currencies such as the USD lose value over time due to inflationary monetary policies.
What is it we seek instead in a Adaptive Currency for a better long-term store of value? Where is the “high ground” play that will ultimately win out for this purpose? We want it to have:
- Ability to rise in value when market demand increases so supply doesn’t over-expand
- Ability to reward long-term holders over short term speculators
- Ability to mitigate downside volatility while holding long term
- Resiliency against Soros-style attacks
- Robust security with recovery safeguards
- De-centralized, resilient governance by its holders
ndau has all of these features, designed and optimized to be a better choice for long-term store of value than existing digital currencies like bitcoin or stable coins.
Unlike other cryptos, the price movement of ndau has been highly predictable with the efficient issuance of new ndau only when market demand warrants higher prices. This is very different than other major cryptos like Bitcoin that issue new coins on a regular time interval, regardless of the demand is at the time.
As a result, ndau allows me to focus my attention on other active investments rather than monitoring daily price fluctuations. I want to spend my time creating value from high quality analysis and good strategy in my capital allocation and hands-on entrepreneurial support rather than being lucky as a speculative crypto trader. ndau’s unique design lends itself to theoretically low correlation and possibly even negative correlation over time with rest of market. This lets me construct asset allocations with significantly better Sharpe Ratios than I otherwise could.
Now don’t get me wrong — I’m doing all I can to help ensure ndau gets off to a solid early start, but as it decentralizes further, it’s the design and how it works I’m betting on long-term since no one group alone will have much influence or be the primary to its success.
In the long run, it’s not just the asset performance characteristics that matter of course. ndau has a hard-core principled governance structure that gives me confidence high-quality policy decisions for the ndau ecosystem will guide it forward it no matter which BPC delegates are elected by ndau holders at any given moment.
Another preference we have at Cosimo is for great platform plays. And ndau provides a new kind of platform desperately needed in the blockchain space for many other companies to build on top of, including some of our own newer portfolio companies we hope to announce in the new future. Platform plays in general are great because every time a new entity builds a source of new value on top of them, they add more value to the underlying platform in the process.
In summary, we see a future in which long-term stores of value like ndau function as a core missing piece of today’s internet: a unit of trust; of collateral for smart contracts; and of assurance that participants in the growing new global jurisdiction of blockchain activity will act in good faith with one another. In our opinion, there is more value to be unlocked in having such a global level playing field of entities playing fair with one another in positive sum collaboration than virtually anything else going on out there. And we expect to be long ndau for a long time because no other digital currency is as focused and well-designed to serve as the long-term store of value required to unlock the tremendous potential of the 4th wave of the Internet.