My Hopes and Fears for Filecoin
Thinking through whether or not to invest.
I first heard about Filecoin in 2015. My friend, Siraj Raval, was writing a book about decentralised applications and he told me about the project. I skimmed the website and thought it sounded interesting.
Last year, one of my business partners told me that his roommate had joined Protocol Labs, the company behind Filecoin. I asked him what was happening with the project since the website hadn’t changed much. He told me that they had huge plans.
This year, my Ether holdings started spiking and I wanted to understand why. After chatting to some of the people at Protocol Labs, I was invited to the island of Caribbean island of Curuçao to meet the team on their retreat. What followed was one of the most fascinating weeks of my life. I got to meet Juan Benet, the CEO of Protocol Labs, and the people behind Filecoin. Their ambitions were so large it actually hurt my head when I started to understand them. They spoke of a world where protocols would be more important than startups and blockchains could challenge everything.
Their dreams filled me with hope. A few of their plans filled me with fear. I shared these thoughts with the team during the retreat. We had lots of great debates about my concerns and they were incredibly patient with me. I know very little about the inner workings of blockchains and so I was worried that I was missing something.
Over the last few months, I have gone back down the rabbit hole to try and fully comprehend what Juan and the team told me. This has helped me understand what Filecoin is and what the team are trying to do. My hopes and fears are much clearer now. I wanted to write this post to help me think them through. I wanted to share this information publicly because I believe everyone who is investing in Filecoin deserves to have the same information as me. This is not investment advice, this is my mental thought process for assessing Filecoin as an investment. These are my hopes and my fears.
I hope that Filecoin will decentralise the internet.
I fear that the centralised token sale will demotivate the community.
I hope that lots of people will mine Filecoin.
I fear that they will work for a protocol that accepts their capital.
I hope that Filecoin will be loved by developers.
I fear that developers who cannot invest will seek revenge.
I hope that Filecoin will set the standard for regulated tokens.
I fear it will pay a price for excluding the unaccredited.
I hope that Filecoin can raise all the capital it needs.
I fear that the “one round” model is wrong.
I hope that this one round will be enough to compete with Jeff Bezos.
I fear that he will use his resources to destroy them.
I hope I am wrong about the one round model.
I fear that VCs invest in rounds of equity for a reason.
I hope that Filecoin will appreciate 1,000x in value.
I fear it will be hard if it is valued at $1bn+ on day one.
I hope that Filecoin is the best system for decentralised storage.
I fear that a much better implementation exists.
I hope that Protocol Labs can stay lean with half a billion dollars.
I fear that frugality is impossible when you have that much capital.
I hope that Protocol Labs can deploy a 9-figure sum of capital well.
I fear that is too much to ask when you are used to 7 figures.
I hope that this amazing team will execute flawlessly on their vision.
I fear that is too much to ask from any team.
I hope that Filecoin succeeds.
I fear that it will fail.
My hopes and fears are 50:50. I am not bearish and I am not bullish. I am straight down the middle. I love what they are doing and I think the team are incredible. I am not in love with the “one round” model of token sales. When I worked at Ethereum, they raised roughly $17 million and delivered billions in value. That is an incredible result. However, if they had left themselves room to issue more Ether, they could now raise a billion dollars to help fuel the protocol further.
Startup founders issue more shares when they have shown progress and need more capital. I wish that protocol creators could issue more tokens when they have protocol-market fit.
These are just my hopes and fears for Filecoin. What are yours?
Full Disclosure: I was paid $1,500 in Filecoin for the 5 days of consulting and Protocol Labs covered my flights and hotel room. This week I was offered the opportunity to invest in the Advisor round. I worked round the clock with an accountant but I couldn’t get accredited in time. My dad is an accredited investor and he is considering buying Filecoin in the normal sale. I have been investing for 15 years and he asked me to make the final call. I wrote this post to think it through.