Why do you think digital assets/blockchain/crypto is a good investment right now?
- Adding digital assets to a traditional portfolio improves returns without increasing risk.
- Blockchain investments provide asymmetric returns (we expect the market to grow 160x in next 10 years)
- Blockchain value proposition creates new business models and disrupts existing industries (i.e., remittances, payments, cloud computing, data monetization, and others)
Can cryptocurrencies go to zero?
Taking Bitcoin as an example, it is mathematically impossible for Bitcoin to have zero value if people are using it.
How many people are using cryptocurrencies?
Who is using blockchain right now?
The currently most widely adopted use case is peer to peer money transfer. You can send money on Sunday evening, and the receiver gets them in the next few seconds whether he is next to you or in another part of the world. Blockchain-based payments are utilized mainly by the young generation.
What are the blockchain use cases?
Blockchain disrupts existing business models and enables the core value proposition by lowering the cost of trust to zero. This can be exploited in the following areas:
- Payments – fast and cheap peer to peer value transfer without intermediaries (i.e., DAI, Bitcoin)
- Remittances – instant cross-border transaction for very little cost (i.e., DAI, Bitcoin)
- Resource Monetization
- Data – monetization of sensitive data without compromising privacy or GDPR (i.e., Ocean Protocol)
- Hardware – monetization of unused computing power, storage, and networks (i.e., iExec)
- Open Finance
- Credit – lending without the need of financial institution (i.e., Maker)
- Fixed Income – earn interest on crypto-assets (i.e., Dharma or Compound)
- Derivatives – managed and settled by smart contract (i.e., Vega Protocol)
What is the difference between traditional VC investing and crypto-VC investing?
In general, they are very similar. Our experience in both areas shows:
- from the risk perspective, traditional VC and crypto VC is almost the same
- from the potential upside perspective, crypto provides significantly higher returns than traditional VC
- from the complexity perspective, crypto is more complex and requires much broader team skillet than traditional VC
How should I use cryptocurrencies when the value is so volatile?
If volatility is an issue, one can use cryptocurrencies backed by real-world assets called stablecoins (such as USDC or DAI).
Will Facebook Libra dominate all cryptocurrencies?
No, Libra has definitely a disruptive potential, but its features are limiting its use cases. Libra is primarily targeting peer to peer value transfer for unbanked people in Africa and Asia. It lacks important features such as privacy, transparent governance, decentralization, and others.
Why are digital assets not correlated with traditional assets?
Value of non-collateralized digital assets (such as Bitcoin) is driven by their usage and speculation. The connection to the traditional world is very weak, and therefore, the correlation with the traditional world is low. Such digital assets are not managed by a central authority and thus are purely driven by market movement.
Should I wait for the space to become more mature before investing?
No. Investing in digital assets provides benefits to your portfolio right now. There is no need to wait. A general rule of thumb is to start small (up to 2.5% of your Net Worth).
Where is the opportunity? What is there to be developed?
The technology implementation into real-world use cases is in its infancy. For example, in the financial industry, the opportunities include user-facing applications for payments, credit, debit derivative financial products. On the technological level, improvement needs to be achieved in transaction throughput, security, and development tools. And there are many more areas…
Are Slovak and Czech developers good at blockchain?
Yes, we have hundreds of developers, business, and crypto-friendly people participating in community events. Most of them are held in Paralelni Polis, coffee and co-working space in Prague and Bratislava. Globally recognized companies founded by Czechs include first Bitcoin mining pool Slush Pool, hardware wallet Trezor, and crypto-ATMs General Bytes.
Can a European/Slovak/Czech project compete with the US and Asian ones?
Yes. Unlike traditional businesses, crypto endeavors are not tight to constraining local markets. Given the nature of blockchain, most of the projects compete immediately on a global level. One may consider such characteristic as a disadvantage; however, the chances of becoming a global market player are much higher than in traditional businesses, where the continental leap is usually very difficult to make.
Can regulation stop cryptocurrencies?
It is very unlikely for cryptocurrencies to be stopped by regulation. Due to their decentralized nature, one cannot turn off blockchain by a single switch. As experience shows, there are countries like India or China actively hindering adoption by blocking related services such as trading platforms, wallets, or mining. However, people always find a suitable workaround practically eliminating the constraints (i.e., when exchanges were banned in China, people started to trade cryptocurrencies in Telegram groups). Blockchain is more resistant to malicious attacks than the internet.
Which countries are blockchain-hostile, blockchain-neutral, and blockchain-friendly?
- Hostile (actively hinder adoption): China, India
- Neutral (wait): United States, European Union
- Friendly (actively support adoption): South Korea, Singapore, Japan, Malta, Gibraltar, Switzerland, Lichtenstein