Last month at the Cryptocurrency, Money, and the Future Token Summit II from San Francisco, Naval Ravikant shared his thoughts about the present condition of cryptocurrency.
Naval Ravikant is CEO and founder of AngelList and one of the world’s leading investors in tech startups, has moved between 60% and 80% of his investing into cryptocurrencies.
Key points to take home
NR believes that the rapid appreciation of cryptocurrencies is due in part to it catching up to, if not exceeding, the underlying technology. Crypto has gone mainstream faster than he imagined, but the technology is beginning to fall behind.
There are not many real applications for crypto outside financial and speculative investing. However, he believes that the rapid value appreciation is a good thing as it will bring in capital and entrepreneurs who will come up with more applications, but it could be 5-10 years before the problem of little application is solved.
Furthermore, he thinks that the hype behind watching other investors quickly become rich has been a driving factor behind the growth. American administrations goal of financial deregulation has allowed crypto to grow. Most people are attracted only to the chance of becoming wealthy, not in the underlying innovative technology of block chain among others.
Crypto is a unique speculative class as it can absorb unlimited amounts of capital. This makes it a very volatile and risky investment as it is disconnected from financial fundamentals other investments are tied to.
As of the summit, he did not know if the bubble would pop or if it would ever pop. He believes that a long-term view is better. While it is volatile short term, it has overall proven to increase 5-10% per year.
Enormous risk that bitcoin could lose its value, but does not believe crypto itself will ever go away. Protocol development is the next big thing in tech, developers are moving away from app development.
About investing
NR said that he doesn’t even find himself to be technologically knowledgeable enough to invest in crypto, so he works with more knowledgeable partners and his investing tends to be in funds, not individual cryptocurrencies. The set of people who is more qualified to invest in this space is probably like less than 1% of the size of all the venture capitalists out there today. It’s a deeply deeply technical space, it might be like the chip investors were back, when a venture investing was starting out in the 1970s or 1980s, so it’s a very, very specialized discipline. Money tokens are most interesting to him, financial and money use cases are the simplest to follow. Much more lucrative outcome from there.
Also, he believes that many of the companies who got involved with using blockchain in 2017 will fall out in 2018.
There are many coins out there that are trading far above their worth, and if the bubble pops, it will be due to these lower quality crypto coins collapse.
Forking cryptocurrencies allows each to try different path simultaneously, so odds that one will work is higher, i.e. bitcoin split into cash and gold.
Q&A with audience
What happens if you lose bitcoin?
Bitcoins are bearer assets, so if you lose it, it is gone forever. Custody of crypto will be one of the biggest spaces for growth this year. Businesses who hold your currencies for you so you don’t need to worry about losing them.
Financial infrastructure is being developed, such as wallets, transfer services, transactional uses, crypto ATMs
What applications for crypto are you excited for outside financial?
Creation of various social connections such as un-censorable file storage, use of cryto coins to use wifi networks or solar energy, use of a coin to use a driverless car, creation of a separate p2p internet separate from current ISPs. Blockchain is the next step of the internet.
When do governments get blockchain?
NR doesn’t think it’s a question of when but a question of HOW they get blockchain… it’s not when governments figure it out, it’s how they figure it out, how they interpret it, relative to their morals, their norms and their society.
For further information: Token Summit II – Cryptocurrency, Money, and the Future with Naval Ravikant