Talk Crypto to Me

BACKGROUND

I work for Devonshire Investors, a private investment firm affiliated with Fidelity Investments. Fidelity is a widely recognized brand name and as a surprise to some, is also a private company. The goal of Devonshire Investors is to diversify a portion of Fidelity’s profits on behalf of the Johnson family, owners of the firm, and also high stakeholders in the firm. Devonshire makes investments outside of the stock market holding investments ranging from oil fields to numerous properties around the globe and even an avocado farm. The firm also invests in start-ups that require rounds of funding with the anticipation of significant returns if the particular company becomes successful or can be bought out or becomes public.  The Devonshire Board of Directors approved the fund to begin investing cryptocurrency and blockchain in the past six months. The directors in charge of the crypto fund requested assistance with crypto research: my finance team’s task is to determine at which point of the investment stage should the directors be investing at, whether that be at the seed stage, series A, or at an even later stage.

The finance team is still in the early stages of our research using Pitchbook– a research database which provides up to date information on companies, deals, funds, and investors across the entire private investment lifecycle. I’m not going to give a lesson on cryptocurrency as we covered it a few weeks back, instead I will dive into a few interesting companies I have come across. Let’s start on a serious note with Wyre– a blockchain based payment platform with the hope of changing the future of how international payments are completed. This platform provides real-time payouts, same-day transfers and direct to bank transfers. All of these elements allow business to move money from country to country at competitive foreign exchange rates. The company raised eight million dollars of Series B venture funding in December of 2018, which put its valuation at forty million dollars. A Venmo for crypto? It seems like this could be a very successful business model, but I can see the competitive landscape becoming crowded in a short period of time.

The company is still working to verify users on the global stage

Swytch is a blockchain platform designed to track and verify the carbon impact of renewable energy generation and other sustainable actions. The platform leverages AI and machine learning to determine how much carbon is being displaced and uses a smart meter and blockchain technology to reward the companies and people who reduce carbon emissions the most. Based out of Cambridge, MA, the company raised an undisclosed amount of venture funding as of June 2018 and continues to be privately held as it grows its platform. While this type of platform is still in the early stages, comparable companies to Swytch are popping up and receiving millions of dollars in funding across the globe. Enabling people to be acknowledged for their efforts to adopt renewable energy and support sustainability, coupled with AI and machine learning, can help point companies and individuals in the right direction.

Via Swytch’s Website

While I will not get too much into specifics, there are many cyrptocurrencies dedicated to the adult entertainment industry. Some are designed for product purchases and transactions on adult websites and some push the envelope further providing full-blown blockchain infrastructure for building secure, anonymous adult apps. Outside of the adult entertainment industry, the following currencies exist: TrumpCoin, Billary Coin, PutinCoin, and Ron Paul Coin. No politics, I will leave it at that.

Let’s finish with CryptoKitties-where one can “collect and breed furrever friends!” CryptoKitties is a provider of an online platform intended to offer games built upon blockchain technology. The company, based out of Vancouver, uses cryptocurrencies to buy, sell trade, and breed virtual kittens. The private company was founded in 2017 and has raised fifteen million dollars of series A2 venture funding as of November 2018. The good news: every cat is one of a kind and 100% owned by you- it cannot be replicated, taken away or destroyed! Over one and a half million kittens have been bred with the most expensive Cryptokitty, Dragon, being purchased for one hundred seventy thousand dollars…yes that is six digits. Unfortunately the growth of CryptoKitties has slowed in recent months, but that could change as people read this blog!

As I have learned, money can be made off of anything- crypto aside. Don’t believe me? Ever heard of the Pet Rock? My eyes were first opened to this thanks to a professor I had at Bryant my freshman year who frequently brought up the Pet Rock. Over one and a half million pet rocks were sold for around four dollars each.

The goal of this blog was to open the class up to the breadth and opportunities in the blockchain and crypto world (whether seem serious and others not so much). So what do you think? Do we have any future investors of CryptoKitties in #IS6621?

10 comments

  1. Interesting excerpt. I am pretty distant from Cryptocurrency and the way specific start-ups are being built to support blockchain initiatives. I like how you led with a background on your firm and its efforts to support these new initiatives. I am not sure I will ever be investing in Cryptokitties but certainly have learned more about this world through your lens and look forward to seeing it be more relevant in the media and advertising industries.

  2. Great post! I think you really get at the point that people are trying to use blockchain/crypto to replace anything they can like with Wyre & Venmo. The only real novel ideas I feel that have come from blockchain & cryptocurrencies are really those two things alone. Other implementations, spinoffs seek to merely be copies similar to Wrye’s approach as the Venmo of Crypto. However, it does open your eyes to just how much opportunity there is around this relatively new bit of technology. Like you said, millions of dollars are being thrown at these businesses by VC’s and have the potential to make entrepreneurs very rich. I’m sure eventually some impressive businesses will be based on blockchain/crypto, but until then most of these businesses seem to be uncreative spinoffs just adding blockchain or crypto to existing businesses for the buzzwords.

  3. Really interesting post – I agree with Conor that it seems as though many companies are taking a “just because” approach to integrating blockchain/cryptocurrency into their business models, rather than focusing on harnessing the true disruptive potential of this technology. In some ways, it’s reminiscent of the “dot com” bubble, in which companies could often simply add a digital/web aspect to their business (or sometimes just their company name) to boost profits without actually creating any additional economic value. In the past few years, for example, a number of companies have pivoted (or sometimes just simply rebranded) to include the words “bitcoin” or “blockchain” in their names/DBAs and reaped unprecedented rewards – Long Blockchain Corp (formerly Long Island Iced Tea Corp) enjoyed a 458% increase in its 2017 intraday trading range after its rebrand, while Bitcoin Services Inc (formerly Tulip BioMed and, before that, Direct Music Group) experienced a crazy 42,500% increase in its 2017 intraday trading range for the same reason. Such successes, however, are often unsustainable and short-lived, and they seem to distract from the very legitimate applications of blockchain/cryptocurrency technology that could disrupt a number of industries and lead to reduced volatility in cryptocurrency values as perceived by the market.

  4. I thought this was a very interesting post! It was great to hear about the background of your firm and the real world experience you have as a potential investor in these crypto/blockchain startups. It was also very interesting to hear Conor and Julianna’s comments to get more insight into the space. I agree that Wyre’s platform doesn’t seem all that novel, but who knows, maybe it will have higher impacts than we would expect if cryptocurrencies become more widely adopted and stable. I enjoyed learning a bit about Swytch, and how they plan to combat environmental issues – I think any businesses targeting this as we move into the future has some potential to do good for the world and make a profit while they are at it.

  5. Interesting post. I’m especially intrigued by Swytch. I think that has the potential to completely transform the way we approach our carbon footprint, and will allow us to make changes in real time. I also think this could be implemented on a wide scale to hold corporations more accountable for the daily amount of carbon impact they make and to uphold regulations and penalties for significant carbon footprints.

  6. I’m always fascinated by Crypto companies, and at this point I feel like I’ve heard of a company integrating crypto into almost every industry. My friends dad started an marketplace for advertising spots backed by their own coin. Recently I stumbled across a new search engine call Presearch.io which rewards users for searching through its engine which is connected to providers like google, Netflix, Bing, etc. If I’m being honest, I don’t always get the concept of these digital cryptocurrencies and their use in these types of companies. I think it was in a video we watched but if you want a successful startup just take an idea and put AI with it…I think the same can be said for crypto. It’s new and exciting and I think a lot of times people are confused by it’s applications. The fact that a marketplace to raise digital kittens was given fifteen million dollars is unreal to me. The analogy to the pet rock is funny and seems really applicable. We’ll see what pops up next! Great job,I really enjoyed reading!

  7. Interesting post !! Crypto is such an interesting space, but I find it hard to keep track of these days ! The CryptoKitties thing is hilariously weird ! I’m not sure how I feel about it but as you said pet rocks were a thing so why not CryptoKitties! I am interested also in how bitcoin has bounced back for a second time, seems like it might be here to stay! I’m curious do you think the price will ever settle down or will it remain it volatile for the foreseeable future?

  8. This is really interesting – I don’t know a ton about cryptocurrency and blockchain, so it was great to learn about some start-ups in that space. That being said, I’m a little concerned about the longevity of some of these companies (as well as the people that buy their products) – I can’t imagine spending that kind of money on a CryptoKitty!

    I think the idea of a company like Swytch is great – as we make moves to mitigate climate change, there is real value in ensuring that our so-called sustainable activities are not actually more harmful. I read an article recently that looked at the use of reusable grocery bags vs paper bags vs plastic bags, as many cities (Boston included) are now banning plastic bags. Depending on the product that you are using, it can actually have a larger carbon footprint than the banned plastic bags. Knowing this impact ahead would definitely affect both purchasing decisions and regulatory decisions.

  9. I loved the focus on Swytch! This seems like such an intriguing company with a fantastic identity and mission statement. It seems like a fantastic way to educate people on the decisions they make with regards to the products they buy and the companies they support. In addition, I can see it being a great resource for political figures to understand the implications of their policies. However, CryptoKitties reminds me a lot of NeoPets which, for those of you old enough to remember, was extremely popular for a limited amount of time before quickly falling into oblivion. I may get a CyptoKitty as this seems pretty fun. Maybe I’ll introduce my nieces to it as well (after first doing some homework on the company and asking “how could this go horribly wrong?”)

  10. This class, with the help of having a great guest speaker, made me so much more aware of what blockchain actually is and how it’s used, so I appreciate that you used this blog post to highlight some different companies that are in the space. The concept of Swytch is so interesting – it’s an application of blockchain I never thought of before and seems like a technology that could have a really positive impact on our world. It will be interesting to see how the platform (and others) continues to grow.

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