Ep 21. Blockchain for good & gold
Cardano goes to Ethiopia. Paxos gets OCC charter. JP Morgan change of heart.
Spring is upon us! Flowers are blooming, the sun is shining and allergies are in season. (Sneeze!) This week I gave a Blockchain 101 presentation for an Austin-based company. It was great discussing what blockchain is and how it could impact a variety of industries. I’m super pumped about the future. What a great time to be alive! This edition, I’ve introduced a new section called “Question of the week” where I address a reader’s question. Keep the texts and emails coming, let me know what’s on your mind.
1. Cardano is supporting education in Ethiopia
Ethiopia’s Rift Valley is known as the ‘cradle of humanity’. A generation after famine wreaked havoc on the ancient land, the country has had one of the fastest growing economies in the world for a decade. Now blockchain has come to play.
IOHK, the company behind the Cardano protocol, is partnering with Ethiopia’s government to reduce academic fraud and improve record keeping.
5 million students will receive a Cardano blockchain-based ID to track academic performance. 750k teachers will use the system too. A Chinese company will be providing laptops and tablets too.
This solution could be scaled across Africa. Beyond education, there are blockchain experiments across Africa in property titles, health and supply chain. These blockchain solutions are a giant step up from the existing broken systems. Stay tuned.
2. Andreessen Horowitz launches $1B crypto fund
When was the last time your investment went up 300x in 8 years? The firm first invested in Coinbase in 2013 at $1 per share. Coinbase recently went public, the shares closed at $298 on Friday. That’s a 300x return in 8 years.
The tech VC is reportedly raising up to $1B for its third crypto focused fund. Previous funds included investments in Coinbase, Compound, Anchorage etc.
I’m excited to see what companies and themes they will focus on in the next fund. Chances are those ideas will be mainstream in about a decade.
3. Paxos is the 3rd crypto firm to snag a federal charter from the OCC
Paxos provides stablecoins-as-a-service, exchange and custody products; and crypto brokerage services to clients like PayPal, Revolut and Credit Suisse
It is the first crypto firm regulated at the state (NY) and federal levels; enabling Paxos to serve customers across the US while adhering to the highest standards
I’m excited about Paxos mission to modernize financial market infrastructure and enable the movement of any asset, any time, in a trustworthy way
4. Binance to launch NFT platform
In June, Binance will launch what it hopes will become the worlds’s largest NFT platform. This new entrant will compete with OpenSea, Nifty Gateway etc.
The marketplace will have 2 tracks. The premium will feature artists and exclusive partners. The trading track would allow anyone to sell or buy NFTs.
Binance operates the largest crypto exchange; they have a big vision including payments and now NFTs. It’s large user base is a competitive advantage.
5. JP Morgan completes bitcoin change of heart
Jamie Dimon, CEO, called bitcoin a fraud and threatened to fire anyone who traded it. He later regretted his comments and affirmed his belief in blockchain.
The bank is expected to launch an actively managed investment fund with bitcoin for its high net worth clients this summer. About-face complete!
This raises another question. Why ask legacy companies about technology that is disrupting them? Remember Blockbuster dismissed Netflix.
For the record, I think JP Morgan will endure but I am not not convinced all banks and financial institutions will.
1. Urgh, taxes. Did you know you could buy crypto with your 401(k)?
Digital currencies are taxed as assets. This means users have to pay capital gains taxes (15-25%) whenever they sell digital currencies. For example, if you purchased 1 bitcoin for $1,000 then 2 years later you sell it for $5000, you would have to pay long-term capital gains tax of $600 ([$5000-$1000] x 15%]).
Long-term investors could consider using tax-advantaged retirement funds to buy digital currencies. Some 401(k) plans permit alternative digital assets.
Otherwise, investors could use self-directed retirement accounts like Choice
2. What’s smart money buying?
If you have already acquired positions in bitcoin and ether but curious what else to consider, you might like the list below.
Messari, a leading digital assets research house, analyzed the portfolios of over 35 crypto focused VCs and hedge funds. They identified the most commonly held digital assets, besides bitcoin and ether, to be Polkadot, Keep and Uniswap.
Question of the day
Should I leave my crypto on the Coinbase exchange?
Would you cry if your favorite crypto exchange was hacked and you lost all your digital assets? If the answer is yes, then you should reconsider your strategy.
One option is to distribute your assets across a variety of platforms. Bitcoiners love to say “Not your keys, not your cheese”. Basically, if you don’t self custody your private keys to your digital assets then you could lose them.
The refrain was born of pain. Many OGs lost eye-watering sums of bitcoin in hacks. Today, exchanges have strengthened their security but you never know.
Lately, I’ve been checking out Casa. It provides 10x the security of a hardware wallet by using an app. It’s Multisig blends security, privacy, and control. Check it out!