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1/ Why does the ICO opportunity exist at all?
2/ The last decade VCs outsourced market risk to angels and seed investors
3/ One famous investor (top 3 venture firm in returns) said that seed investing is not a business and they were glad to outsource risk
4/ As a result the average traction needed to raise a series A dramatically increased, becoming more like a growth round
6/ the problem is that even with YC there are so many founders that can be admitted or funded. If you don't fit the mold or live in SF.
7/ Plus there are only so many investors. There are flooded with deals. Now that technology education is available for everyone.
8/ But now there is a new class of investors that became wealthy as a result of speculating on bitcoin and ether, and a gold rush.
9/ The way negative way to see this is to seem this as scam coins and another bust that will cause unbelievable pain.
10/ The difference in this case is the teams are completely global, diverse, code and product completely transparent all secured by crypto
11/ You now have a global ecosystem of traders that are betting in real time on GitHub commits, version releases, and tech partnerships.
12/ Now any tech that can ICO will ICO and a lot of VCs are saying they couldn't even raise venture money
13/ But is that a good thing or a bad thing? I think that's a good thing. Now code and product is priced in real time.
14/ so you can argue that tokens are technology options valued by black scholes. That's why it's not a equity and behaves just like futures.
15/ this is also why it's so volatile. All of the future is priced in at any time so any bad news makes it gap down by 70%.
16/ average draw down for alt coins for peak to through is 70%.
17/ of course there are going to be losers and winners, but for the first time the technology risk that VCs were supposed to bet on.
18/ now got outsourced to the crowd, the traders, the users, and the other developers using the projects.
19/ all of this completely global. The US tried to democratize this by allowing non accredited investors invest
20/ this is he first time law, finance got democratized to that degree.
21/ just like how facebook is an entire country. How will the cloud replace and augment Silicon Valley and New York?
22/ already the amount of money for ICOs exceed seed investing. So it's not something that's going to happen. It's already happening.
23/ the best performing VC in 5 years I predict will be a an ICO venture fund and not one of the traditional guys. It's a matter of focus.
24/ filecoin was invested by everyone but that's because he fit the standard mold. Stanford white male dropout trying to disrupt storage.
25/ Now you have a fully international monetary system. You have the reserve currency of the western world $btc
26/ you have the competing currency formed in the east $bch $bcc
27/ you have PayPal which is $dash and/ or litcoin $ltc or ripple.
28/ and you have the emerging global investment bank which is called Etherum $eth and $neo
29/ it's no accident then that as the decentralized community organize, the previous era institution look very different
30/ sell side research is bitcoin talk forum, sell side analysts are on YouTube, telegram, slack, the developers have global google hangout
31/ conversations. So what happens in this world when debt, equity, junk bonds happen in this world. It's the consumer tools.
32/ are used to communicate and coordinate. The crypto gate keepers are like the original ultra high net worth individual or institutions
33/ who now back the IPO, *cough* ICOs in the space and flip it to the alt coin traders.
34/ the monetary system is being invented in real time and it's no accident that many minutes of central banks now have bitcoin on the agend
35/ however they've only wrapped their head around store of value, but there's so much more.
36/ now you have people trying to warn other people of scams. It's true a number of the alt coins will go to 0, yes 0.
37/ but humans are just an organic neural network. They can only recognize previous patterns.
38/ one of the previous patterns is the dot com boom, and one of the mental models is from @CarlotaPrzPerez
39/ @naval had a joke that he saw a bumper sticker at the end of the dot com bust "dear god, just give me one more bubble."
40/ but the joke has a kernel of truth to it. Technology cycles in waves from infastructure to application.
41/ usually when the infrastructure waves happens there is euphoria and a bubble *ehem*. Remind of you of anything?
42/ so now the pattern recognition is that you should not participate because there is going to be volatility.
43/ the argument is give it to the big boys. You retail investors are going to get slaughtered. What are you guys doing? Again?
44/ so given that you know it's a bubble, should you participate?
45/ I would argue yes and no. There were many people that were scarred by the aftermath of the bust and missed 2005 and 2007.
46/ not again. Valuing facebook on eyeballs is so 1997.
47/ So these people while well intentioned are still undervaluing the crypto boom as just another wave. What if it's not?
48/ what if it's internet 2.0 mediating trust. In that case, both understanding crypto, trading crypto will build
49/ its own sort of intellectual capital. Volatility be damned. Ultimately intellectual capital trumps all capital.
50/ that being said, in order for this to be sustainable, it'll have to provide a return for investors.
51/ it's not really an equity, which I will address in a separate post.
52/ in conclusion, central bank of bitcoin leading to the investment bank of Etherum leading to this massive funding of global technology.
