JBC2019 — Travis Kling, Ikigai Asset Management
The Japan Blockchain Conference 2019 kicked off in Yokohama today, and one of the highlights of the first day certainly was the presentation by Travis Kling, Chief Investment Officer at Ikigai Asset Management.
Travis crystallized the key learnings from the fund’s research during the setup phase in 2018, which he positioned as starting points for further research and learning for the audience. Here is what he had to say.
Money is the killer app for DLT right now
The value proposition for Bitcoin (BTC) relative to its status quo (i.e., gold) is much more clearly understood than any other crypto asset’s value proposition is relative to its unique status quo.
The velocity problem is real
The Working Capital Problem. Chuck E. Cheese problem. All else being equal, the faster a token spins through an ecosystem, the lower the price of that token needs to be to satisfy the economic demands of that ecosystem. Money as a use case does not have this problem.
The Deflation problem is real
If a rent-seeking middleman is charging $100 for $10 worth of services, a DLT may very well be able to provide that service for $2. But that is not so much a great investment proposition in the DLT as it is an awesome deal for the consumer. Money as a use case does not have this problem.
The value created by the technology and the value accrued by the crypto asset are two different things; the bridge between those is the token structure
For many types of crypto assets, we have not discovered a token structure that allows for the value created by the technology to be accrued in the token in the long term.
Stablecoins are going to be systemically important for years, if not forever
BTC works so well as a store of value that it does not work very well as a medium of exchange and likely will not for many years. Stablecoins can be the Venmo of the world.
The market is not accurately ascribing fundamental value to projects
Ethereum Classic (ETC) was 51% attacked and has a current market cap >$400mm. NEO went four hours yesterday without generating a block and has a current market cap >450mm. There is >350mm aggregate market cap of actual scams.
Most things do not need a blockchain
We will see continued moves towards application layer solutions that capture value.
The Fat Protocol Thesis as it was applied to consensus protocols was a fallacy
Value accrual on a large scale will require network effect for most crypto assets, which will require “last mile” access to users. Underlying consensus protocol value may trend towards the marginal value of the utility provided.
DAOs will likely be a big part of our future
Distributed Autonomous Organizations (DAOs) will take decades to play out, but the first pieces are beginning to fall into place already. Enabling the trust revolution.
Lightning Network is under-discussed and over-achieving
From zero to >2,700 active channel nodes in a year. $2mm of current capacity.
“DeFi” is 18–24 months away but the stack could end up being compelling
Denctralized Finance: Wyre + Dai + Compound + Balance.io gives a glimpse of into what could be possible.
Prediction markets may be the most compelling use case after money
The Oracle Problem refers to the difficulty in accurately, truestlessly writing real-world things to a blockchain. Prediction markets could solve that.
Layer 2 scaling makes sense and the market is coming around to that
State channels on Ethereum; Funfair; Raiden; Spankchain; Lightning Network on BTC.
Privacy is coming to most/all chains
Mimblewimble; Starks; Snarks; Ring signatures; but current demand is unclear
Ethereum 2.0 is a long way away and the path to execution is highly uncertain
Five part, multiyear process. Several parts have no clear path to a solution.
Digital wallets will be ubiquitous
WeChat already. Facebook Messenger coming. Venmo has the fourth largest number of users of any US bank after Wells Fargo, Bank of America and JPMorganChase.
There is an inevitability to the direction and distance this technology and asset class will go
The world is not going to wake up tomorrow and decide not to use this technology, any more than the world would wake up and decide autonomous cars are not compelling, or augmented reality is not fascinating.
While we are not precisely sure about the path of the train tracks or the speed of the locomotive, the crypto train has left the station and is moving down the towards a multi-trillion dollar valuation.
It is going to happen.
Other JBC2019 stories:
Genki Oda, BITPoint [slides only]
If you found value in this article, please “clap” (up to 50 times).
This article is part of our Tokyo FinTech Publication, please follow us to read more from our writers, like hundreds of readers do every day. Should you live in Tokyo, or just pass through, please also join our Tokyo FinTech Meetup.
