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|Apr 1||Public post|
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Naval needs no introduction. He is co-founder and chairman of AngelList, and partner at crypto hedge fund MetaStable.
A pioneer and influencer in the space, with a background on both sides of the startup funding scene, he has a large following on Twitter - and with good reason. Check out this Twitterstorm from the philosopher-king of crypto Twitter.
1/ Blockchains will replace networks with markets.June 21, 2017
TL; DL (Too Long; Didn't Listen)
“Essentially by turning writing into code that computers can interpret, and turning code into money that computers can exchange, you can’t stop money from moving around anymore.” Naval
“Even though I think I’m fairly sophisticated in this space, it’s very, very difficult to evaluate anything.” Naval
“I feel like speculation is what’s fueling everything right now. If somebody’s being really rational they’re not going to get all in on this because they’ll realise that profits are going to be pretty limited.” Laura Shin
“The right to exit creates better governance than almost any other system that we’ve ever had.” Naval
“It’s going to take years to evolve, and my fear is that it’s going to be a boom-bust cycle and then a crackdown, which doesn’t give it a chance to evolve.” Naval
“Everyone is still waiting for end-use use cases where crypto-currencies are better than existing currencies. We still haven’t seen a lot of those…but the infrastructure just hasn’t been in place.” Naval
On investing decisions
Naval’s partners in MetaStable—Lucas Ryan and Joshua Seims—do a lot of the heavy lifting when it comes to the technical due diligence.
He has a distinct point of view about crypto, and the skills and experience to have earned his authority on the subject.
When evaluating what to get involved in, Naval is primarily looking at money and money-like tokens, after his partners Lucas and Josh have done the audits on the code.
Considers things can be platforms that will become a store of value, a medium of exchange or power financial contracts.
Those are the most near-term applications close to being fulfilled (within a decade) and also the applications with the largest markets.
Naval believes strongly that we’re still in the infrastructure phase
Even the two biggest coins, Bitcoin and Ethereum, haven’t figured out how to scale or decentralize properly—so a lot of the platforms out right now are simply too early.
“Everyone is still waiting for end-use use cases where crypto-currencies are better than existing currencies. We still haven’t seen a lot of those…but the infrastructure just hasn’t been in place.”
There will be a market correction( for much of the junk), so his suggestion to others wanting to invest in this asset class is to buy a tiny amount in an index fund.
On the democratizing force
Naval believes that the internet is fundamentally a democratizing force.
The big promise of the internet was getting rid of the chokehold that companies and institutions have over our lives;
The New York Times, the Banks, VCs and even the US government don’t have the same power that they used to have, but now there are new overlords in Google, Facebook, Amazon, and Twitter.
While Twitter could be the greatest force for freedom in human history, due to the ability to broadcast censorship free to the world, it doesn’t run as a censorship-free platform and it isn’t available in certain countries.
That would be addressed if Twitter were built on a blockchain. It would be “available in every country, it would be very hard to repress and you couldn’t shut down any speech.”
The blockchain also allows for consumer choice, which brings freedom. Most people don’t want to manage their own personal data but they want to have a choice about who manages it for them.
In a blockchain world, the data is in the blockchain and it’s ultimately controlled by the user, who can crypto-graphically lock it and unlock it for different entities based on how well the entities serve them.
“If I even think about managing my own private keys and my identity, it feels like another burden and thing to worry about.” Laura Shin
To creates a level of honesty that just doesn’t exist currently. It’s good to have a diversity of coins, with different governance models, philosophies and communities, and allow users to choose.
On governance and decentralization
The good news is that with blockchains, the long arc of the internet is bending back towards decentralization.
The decision making model for blockchain comes straight out of the open source movement, which Naval says is the best model we’ve found to date for code-based systems, but it can still be improved.
Humans have always been trying to figure out how to govern large groups, punish cheaters and reward the people who are contributing.
So far the best way to do this is through markets, where users vote with money, but blockchains extend that concept into networks that before would have needed a central corporation or individual in charge.
It’s a new form of governance that’s going to upend every power structure that exists.
Blockchains will remake and eventually perhaps even replace a lot of government.
Of course, governments and institutions don’t want to give up their power, and they’re usually the last adopter of any innovation.
Naval’s involvement with getting the Jobs Act passed has given him an insight into this. With blockchains, startups have created their own financing mechanisms native to the internet, and it is upending the VC model.
Current regulatory infrastructure is a giant mess of individual regulations piled on since the 1930s, but it’s the infrastructure that runs Wall Street, the most powerful lobby in the world and one that doesn’t want anything to change.
Over the long term, Naval predicts there will be a lot of Wall Street money coming into crypto and he hopes it will get concentrated in the good currencies, and that it might lead to “enlightened non-regulation of crypto, just like there was non-regulation of the internet in the early days.”
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