a16z Podcast | Cryptocurrencies, App Coins, and Investing in Protocols | Summary and Q&A

TL;DR

Poly Chain Capital, a crypto-currency hedge fund, invests in protocols instead of companies, creating a new asset class for open source projects.

Key Insights

• 🤗 Crypto-currency hedge funds, such as Poly Chain Capital, are bringing capitalism to open source development by investing in protocols instead of companies.
• 👻 Investing in protocols allows for direct ownership in the core technology, providing economic incentives for founders and users.
• 😮 The rise of crypto-currency hedge funds creates a new asset class that is uncorrelated with traditional markets.
• 👤 The decentralized nature of these protocols enables greater privacy and control over data for users.

Transcript

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Questions & Answers

Q: What is a crypto-currency hedge fund?

A crypto-currency hedge fund is a fund that invests exclusively in crypto-currencies, taking equity ownership of protocols instead of companies.

Q: What is the difference between investing in protocols and investing in companies building on top of those protocols?

Investing in protocols means taking equity ownership of the core technology, while investing in companies means investing in specific teams, business models, and applications built on top of those protocols.

Q: How do investors benefit from investing in protocols?

Investing in protocols allows investors to participate in the growth of the protocol itself, as well as the value created by the network effect of users using the protocol.

Q: What are some challenges in this space?

One major challenge is the esoteric nature of these technologies, making it difficult for average investors to understand and evaluate the potential of different protocols.

Summary & Key Takeaways

• Poly Chain Capital is a crypto-currency hedge fund that invests exclusively in crypto-currencies, taking equity ownership of protocols instead of companies.

• The fund focuses on investing in the underlying protocols that enable various use cases, such as distributed storage and distributed payments.

• By investing in protocols, the fund aims to bring capitalism to open source development, providing economic incentives for protocol founders and users.