Andreessen Horowitz on Cryptocurrency and Blockchain (2017)

As many of you may have recently purchased digital assets like Bitcoin and Ethereum, I want to provide some more informational content on the site explaining how these assets work. They can be highly speculative as institutional firms are just starting to get their feet wet in the space and begin making markets. I came across a solid presentation from Alex Rampell, General Partner at VC firm Andreessen Horrowitz (a16z) who explains the history of blockchain and crypto. This was one of the better presentations that I’ve seen, so I’ll jot down my key takeaways below. Let me know what you found interesting.

• 3 main value propositions of Bitcoin and other cryptocurrencies operating under blockchain technology:
  • currency cannot be faked (no counterfeiting)
  • records/ledgers cannot be altered (no accounting fraud)
  • owner of assets is uniquely identified (no identity theft)
• Be cautious about investing in companies using terms like “blockchain”, “machine learning”, and “AI” that are not the large blue chip tech companies. Blockchain and AI are in vogue for good reason in 2017, but some companies may use those terms as marketing to inflate their value just like many companies added “.com” to their name in the dot-com bubble.
• Bitcoin operates on “Rules without Rulers”, it’s a decentralized monetary system where no 3rd parties (e.g. Bank of America, Equifax) is involved.
• Although Satoshi Nakamoto had initially designed Bitcoin to operate as a currency in his white paper, today it’s much more operates like gold as a store of value. Bitcoin is also a deflationary asset due to it’s fixed quantity (only 21MM coins will ever be mined).
• Think of cryptocurrencies as a new asset class that enables decentralized applications (with first application being money). There are many things developers can build on top of the technology, as done with “smart contracts” being built on the Ethereum Project. If Bitcoin is like digital gold. Ethereum is like a utility, say electricity that you use to supercharge your Tesla.