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THIS Will Either Boost or Break Crypto - YouTube
Channel: Max Maher
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The crypto market.
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- Fear, uncertainty, doubt.
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- So we talk about being in a bear market.
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- What exactly is a bear market?
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- All good bear market rallies end.
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- Are we in a bear market?
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- There is a crypto winner or a downturn
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- There's a lot of fear right
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now going on in crypto markets.
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Bitcoin is down more than 50%.
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- That's not reassuring.
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But if this is the end of crypto, then why
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is one of the largest venture capital funds committing to
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$4.5 billion into this supposedly disastrous sector?
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Is this venture capital to the rescue?
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Maybe, sort of.
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But there's more to this than meets the eye.
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Let's take a close look at what VC investment means
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for the crypto industry and how this makes it you
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an edge when making investments during a -
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Bear Market.
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Bear market, period.
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Announcement:
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Today is the last day to join our
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new membership platform Finova, and be eligible for
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our $10,000 giveaway on June 20th,
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on top of getting access to the best investor
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community on the planet, coaching every single day,
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trade signals, buy alerts, and a whole lot more
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that will be linked in the description below.
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Well, in 2009, Marc Andreessen and Benjamin Horowitz
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founded their venture capital firm, Andreessen Horowitz, aka a16z,
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which is kind of an acronym.
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- Clever girl
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And they're pretty good at what they do,
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investing in companies like Skype, Twitter,
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Facebook, and a whole lot more.
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Their interest in the tech space should be no surprise
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once you learn a little bit more about the founders.
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In 1993, Mark Andreessen while in college,
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co-created the Mosaic Web browser.
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Mosaic was the first web browser to
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successfully integrate inline images with text.
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It became the new standard for early Web surfers.
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Andreessen took the Mosaic web browser private
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and renamed it Netscape Navigator 1994.
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And this is where Horowitz came in.
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He used to be an engineer at
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Silicon Graphics and was hired at Netscape.
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He was quickly promoted to vice president
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of an entire department.
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And a few years later, Microsoft licensed
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the Mosaic code to create Internet Explorer.
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In 1998, AOL acquired Netscape for
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$4.2 billion and made Andreessen the Chief Technology Officer.
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But he didn't stay long because in
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1999, Andreessen and Horowitz founded a cloud
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computing company called Loudcloud.
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This was later renamed Opsware and was then
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sold to HP for $1.6 billion in 2007.
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So, clearly, both these guys have a
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knack for the whole tech space.
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And that means one important thing:
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once your name is cemented in tech history,
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people will practically throw money at you.
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So after selling their companies for a
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combined $5.8 billion, they started their new
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venture capital firm aimed at building a
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new type of relationship with technology companies.
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They wanted to offer their experience and expertise
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to the next generation of entrepreneurs and, of
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course, make a boatload of cash.
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I mean, it's not a charity.
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Okay, so they're a big fancy VC firm.
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What does this have to do with crypto?
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Why should you even care? Great question.
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In 2013, Andreessen Horowitz began investing in
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all kinds of crypto companies, and boy,
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have they picked some winners.
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In 2013, they helped raise
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$25 million for Coinbase's expansion.
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They also invested in Ripple before
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even the seed funding round.
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Then in 2018, they really got serious about investing
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in crypto and raised $300 million for additional projects
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in what's now called Crypto Fund 1.
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And just two years later, they
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raised $515 million for Crypto Fund 2.
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In July 2021, they raised $2.2 billion for crypto
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investment and you guessed it, Crypto Fund 3: Tokyo drift.
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Now in Crypto Fund 4,
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just last month, there was $4.5 billion.
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That's mind bogglingly large.
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In this round of funding $1.5 billion
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is earmarked for seed investments, $3 billion is
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set aside for venture investments of projects at
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any stage in their development.
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And to drive home how much Andreessen Horowitz
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has been involved in this sphere, here are some
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of the projects that they're invested in.
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Real quick sidebar: What does me, Tom
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Brady, and Steph Curry have in common?
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Definitely not athletic ability or net worth or
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fame, but we're all sponsored by FTX.
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FTX is one of the largest crypto brokerages in
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the world, offering a super secure platform and insanely
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low fees for trading cryptos, NFTs, and now stocks.
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They do it all.
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Plus, if you use my link in the
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description, you'll save an additional 10% off for
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life on top of helping support this channel.
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Okay, by now you're probably like, yeah, I get it.
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This VC fund invest a lot
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of money into crypto projects. So what?
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Well, look at why they chose to invest so
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much in the sector gives us insight into
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And it offers insights into the future
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of blockchain technology, which you may or may not,
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not financial advice,
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want to start using in your own portfolio.
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According to Mark Andreessen, many of the smartest
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people in computer science are going to blockchain tech,
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which is important for growth in the sphere,
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and we can't ignore that.
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Yes, the market is down right now, but that doesn't take
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away from the fact that tons of talent is leaving the
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Googles and the Amazons to get into web 3.
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This is just the beginning.
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Andreessen sees distributed consensus as
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one of the most important
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technological breakthroughs in recent years.
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That's just basically the ability of a decentralized system
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to pass information without the need for a central
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authority, aka the whole point of the blockchain.
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This opportunity is bigger than just finance.
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Distributed systems could be great for
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insurance, ecommerce, voting, and really anything
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that currently has a middleman.
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So what is the a16z strategy
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coming into this bear market?
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Well, in their 2022 State of Crypto newsletter, they acknowledge
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that while the market is down, they see this as
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an inevitable and natural phase of the market.
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Sure, we might be heading into this dark, scary,
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cold winter, but this in no way appears to
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be a concern for a16zcrypto.
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Their motto for this type of season
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is that it's better to build.
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It's better to build in times like this.
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As Internet veterans who have weathered the .com bust, the death
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of AOL, the rise of selfie sticks, they've seen it all
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and kept investing in new technologies along the way
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and kept making billions along the way.
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Web 3 is just the latest playing field.
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You know, I could try to explain the reasoning,
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but I think they said it best.
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Consider that any prospective founders who swore off tech and the
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Internet in the aftermath of the early 2000s .com crash
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missed the best opportunities of the decade: cloud computing,
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social networks, online video streaming, smartphones, etc.
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And now is the time to consider what
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the equivalent successes will be in Web 3.
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So basically, don't jump ship.
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It's just getting good.
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This is the time to do research, the time to build
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and this is a strong reminder to focus on value creation.
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A crypto project that actually generates revenue or offers
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a service that people use will weather a bear
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market far better than the latest meme.
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Now, what if I told you you can steal from a16z?
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It's not actually that nefarious.
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They have a team of more than 70 crypto analysts
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and being that they have the manpower of the entire
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Chiefs football team dedicated to just sorting out which projects
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are worthy of their $4.5 billion, maybe it would
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be wise to start paying some attention to where they
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and other VC firms are investing their money.
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Now, you might hate VCs, and that's fine, but that
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shouldn't get in the way of learning from them.
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But don't confuse that with blindly following them.
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While they've certainly made some good moves
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in the crypto space, they aren't perfect.
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And I have some major concerns.
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First, it's important to recognize that
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VC firms raise money for investment.
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Meaning it's not their money being invested
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or gambled occasionally. When you invest, it's your
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money, for better or for worse.
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As exhilarating as it is to make money,
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it's infinitely more heart wrenching to lose it.
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Just ask Luna UST investors.
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Second, when it comes to angel investments and
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seed funding, these aren't always opportunities that the
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average crypto joe can buy into.
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So what I'm trying to say is maybe keep an eye
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on what they do, read the justifications given by their small
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army of analysts and then do your own research.
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Don't rush yourself.
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Understand what you're considering investing into and do this
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even if it means missing out on a project.
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Because there will always be others.
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There will always be others.
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Another concern is what the influence of
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so much VC money will have on
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the most essential tenet of crypto: decentralization.
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No one entity is supposed to have all the power
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in this space, but they already kind of do.
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Have you ever voted on a crypto projects proposal?
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If so, I'm sure you've noticed that your 100 token
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vote doesn't matter much next to some whale's 5.3 million.
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And this centralization is more than just frustrating.
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It can actually be dangerous.
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Hacks like Axie Infinity's Ronin Bridge revealed a
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shockingly easy path to obtaining the required 51%
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of validators needed to make way with more
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than $600 million by forging fake withdrawals.
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And anyone who is part of the Luna
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Anchor UST community probably noticed the centralized power
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of the Luna Foundation guard in Terraform Labs.
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Nevertheless, decentralization remains one of the
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core tenets of the crypto community.
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So what effect will large VC investments
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into crypto projects have on decentralization?
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Will those who invest early at the lowest price
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possible end up with far too much power?
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Will project founders be so indebted to their
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VC investors that they make decisions to enrich
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and protect smart money over retail investors?
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These are all distinct possibilities.
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And for all entries in Horowitz's talk about
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working with founders and developers that they invest in,
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there isn't much emphasis placed on how
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this will affect anyone but their own investors.
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Listen to this: In 2016, Mark Andreessen, who is
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a Facebook board member, was criticized for working on
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behalf of Mark Zuckerberg, who was trying to maintain
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majority voting control of Facebook while at the same
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time selling off shares of the company.
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The plan was to convert the Zuck's shares
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after he sold them into this new kind
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of share without any voting rights.
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Sounds like a perfect plan.
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Make money and lose zero power.
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And Mark Andreessen, whose job as a
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board member is to do what's best for
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the company and its shareholders, worked tirelessly on
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behalf of Zuckerberg to make that a reality.
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Now, Facebook shareholders sued Facebook,
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and Zuckerberg eventually backed down.
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But what I got from this is that
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the powerful protect the powerful, not retail investors.
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He was definitely not interested in decentralization
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when it came to Facebook's power.
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So is all hope lost? No.
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VC investments are a double-edged sword.
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Without VC funds, many projects wouldn't
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exist and even more wouldn't survive.
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This is still a new market, and in a new
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market, there are so many opportunities, even for regular folk
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who are diligent in their research and careful in their
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investments to make a ton of money.
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But just remember that while we can learn from the
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big guys, big money can and will influence investments.
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Do you think a company like
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a16z always has your back?
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I think you already know the answer.
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