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Cryptocurrencies, app coins, and investing in protocols

by
Olaf Carson-Wee, Chris Dixon, Sonal Chokshi
a16z
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Investing in Cryptocurrency Protocols

In 1993, you could try to invest in the Amazons of the Internet, or you could buy DNS names that would be popular - Similarly, you can invest in crypto companies like Coinbase, or in the protocols/coins themselves - Polychain is a hedge fund investing exclusively in cryptocurrency protocols

The beginnings of Internet relied on open-source protocols built by academics and government

  • This enabled the development of private, closed platforms, which suck up all the money and power, centralizing it among a few people
  • Coins can shift power back to open-source models - instead of being nonprofit and begging for money, you can issue coins
  • Users are incentivized to build protocols people want because it improves the value of their coin
  • Various protocols exist - eg. Gollum (renting spare compute power), Tezos (alternative governance of a protocol), MKR (smart contracts tracking the dollar)

Polychain is interested in taking centralized tech to a decentralized state (eg. DNS to ENS)

  • Polychain exists because investing in protocols requires deep knowledge of crypto
  • To invest in protocols, you're often transacting in Ethereum and reading protocol whitepapers along with talking to founders Cryptocurrency is a chance for users to retake control of and invest in platforms.
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