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What Crypto Investors (and Warren Buffett) Can Learn From VC

Would you invest in Facebook’s Series B round?

This is one of my favorite questions to ask people pondering an investment in crypto. Facebook’s Series B round is an easy bet in retrospect, but at the time, just five years after the dot-com bust, a $475M pre-money valuation was an incredibly steep price for a nascent website for college kids.

How much would you bet on one spin of the roulette wheel?

Would you rather bet the same amount across ten spins?

Sizing Your Bets

Bet sizing is a delicate mix: what you are willing to lose, what your beliefs of the probability distribution of outcomes, and what you believe could become meaningful.

Playing the long game

Where much of the trouble will come with crypto is not in prices paid — but in incorrectly sized bets by market participants.

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