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An executive summary is presented below. Download our complete 12-page analysis:
Note: Multicoin Capital will be hosting its first live conversation to discuss the findings of this report on Wednesday, January 24th at 11am US Central Time. If you’d like to attend live, please register here. For those unable to attend, please submit any questions to email@example.com. We will update this blog post with a download link for an audio recording of the conversation afterwards.
IOTA is a digital currency project that aims to be the backbone of the internet of things (IoT). It is touted as having a “post-blockchain” architecture. While IOTA shares some similarities with many blockchain projects, its design does not include blocks or a single, linear chain. Instead, it is based on a concept called Directed Acyclic Graph (DAG). While IOTA is not a blockchain, its DAG is still a public, permissionless, distributed ledger. Because of its unique structure, it offers some advantages over traditional blockchains.
On Tuesday January 23rd at 10:00 AM US Central Time, we will publish our latest research report on IOTA. Following that, on Wednesday January 24th at 11:00 AM US Central Time, we will host our first live conversation discussing the IOTA report.
IOTA is a direct acyclic graph (DAG) based distributed ledger with a focus on zero-fee transactions, scalability, and the internet of things. IOTA is one of the most controversial projects in crypto. It has experienced a meteoric price rise towards the end of 2017 despite skepticism from leading crypto experts. The IOTA team has defended their claims, and many supporters have suggested that IOTA’s unique technology can make blockchains obsolete.Read More
Stablecoins have been one of my major areas of interest since I got involved in crypto. I first learned of Bitcoin when I was studying abroad in Argentina in 2014. At the time, Argentina was in the midst of a currency crisis that had resulted in widespread inflation, and Argentinian citizens were still reeling from a 2001 market crash that ended with the government freezing bank accounts for a year.
To combat hyperinflation, Argentinian citizens developed a thriving black market for US dollars. Citizens purchased US dollars legally, but their purchases were capped. People regularly exchanged pesos for dollars from black market vendors, literally stashing their savings in mattresses. When the government currency stopped serving their needs, people widely turned to other currencies. Amidst this crisis, certain features of Bitcoin had serious appeal. It was a currency that wasn’t controlled by any government, could easily be sent or transported internationally without interference, was easier to safeguard than physical dollars, and couldn’t be seized. The only problem was that Bitcoin wasn’t a safe hedge against fiat inflation because Bitcoin itself was too volatile.
The solution is a stablecoin. Stablecoins, in their most ideal form, are simply cryptocurrencies with stable value. They share all the features listed above that make Bitcoin so appealing, but don’t suffer from the same volatility, making them much more usable as a store of value, medium of exchange, and unit of account.Read More
In August, we published an analysis of XRP, the native token of the Ripple network. We presented a bearish view of XRP tokens. A quick summary:
Ripple, Inc. – the company that builds and maintains the Ripple network – has built a blockchain-based system that banks use to issue IOUs and settle debts. XRP has two uses: to pay fees on the Ripple network, and as a “bridge currency” for value transfers between any two institutions that don’t have a trusted relationship. However, its native token, XRP, is simply not necessary for the network to function.Read More
An executive summary is presented below. Download our complete 19 page analysis, including full valuation and price targets:
0x is a protocol for decentralized exchange (DEX) of ERC20 tokens. ZRX is the native token of the protocol. At its core, 0x is a system of smart contracts that can be used by anyone—it is open-source and completely free to use. Developers can use the 0x protocol as infrastructure to build user-facing decentralized exchange applications. 0x is one of the early examples of a protocol using the franchising go-to-market strategy.Read More
Basically, all token pitches include a line that goes something like this: “There is a fixed supply of tokens. As demand for the token increases, so must the price.”
This logic fails to take into account the velocity problem.
In this post, I’ll explain the velocity problem by providing an in-depth example. Then I’ll examine mechanisms that reduce velocity.Read More
We are extremely excited to welcome Vinny Lingham (Twitter, Linkedin) to Multicoin Capital as General Partner. Vinny is the CEO of Civic, a solution for identity verification on blockchain. He was also previously the founder and CEO of Gyft & Yola, Inc.
Vinny is a deep thinker in the space, understanding both the technology and the business implications of crypto. He’s one of the most widely recognized and followed individuals in the ecosystem. He will be joining our investment committee and play an active role in sourcing deals.Read More
Franchising is a widely understood model for retail food businesses. Many of the oldest and most successful retail food businesses in the world are franchises: McDonald’s, Subway, etc.
Newer retail food businesses such as Chipotle and Starbucks never adopted the franchise model. I can’t prove it, but I think was possible because of the Internet. Before the Internet, it was too hard to centrally plan, open, and manage thousands of stores across the world given local nuances and idiosyncrasies. The Internet changed everything. Centrally managed companies used Google Maps, richer retail and real estate data, more granular demographic data, and a plethora of other tools to efficiently plan and grow their retail businesses across many cities.
This is exactly why Internet companies don’t franchise: they use data from the Internet to determine go-to-market strategies, manage customer acquisition funnels, and refine their products.Read More
Many have asked “how would a merger or acquisition work in crypto?”
Although a merger could work in theory, in practice it’s not possible. The economics, individual sovereignty, and lack of drag along rights on both sides will prevent any sort of meaningful and cleanly executable acquisition.Read More