I can’t help but apply startup investment learnings onto the landscape of crypto-currency investments.
Any startup investor will tell you very few startups make it to success. The path to success looks something like this:
- Build a team, experiment with an idea, build a prototype, try and show there’s a market need.
- Seed round to try and get some semblance of traction.
- Get series A funding ($2-15m) to improve your product as you have shown there’s real potential
- Get Series B funding ($7m+) to mature your product beyond developmental
- Get Series C, D, E…. you’re in fast growth now, it’s time to scale, scale, scale
- IPO onto the public markets, be a house-hold name.
Now here’s the approximate survival rates:
- pre seed 1-2%
- seed funded 2-5%
- series A funded 10-20%
This should be sobering to alt-coin investors. But the story gets worse…One Comment
Do you like my canvas art? I’m calling it “shit runs downhill“. I’m thinking about mounting it on my wall to remind me of the perils of HODLing alt-coins. After finding out that alt-coin index funds don’t really work, I put together a data visualisation of alt-coin price performance as further research into why.14 Comments
This year, the idea of managed portfolios and index fund portfolios has been on the rise, you can bet on many hitting the market in 2017. It’s a popular idea borrowed from Wall Street. For stocks 99% of index funds, namely a fund that buys the entire market passively, outperform actively managed funds.
Sounds like a great idea for crypto-land right?
I’ve been running simulations in the alt-coin markets to see if this is true. If so it would be prudent to diversify across many alt-coins as a higher performance investment over Bitcoin.
The results are surprising.14 Comments
I ran some charts on the top 10 coins by marketcap, to see how they individually performed had you invested 6, 12, 18, 24 and 30 months ago. Here’s my results. The conclusions are unclear but some thoughts come to mind:
- Over the long term (2 years or more) very few alt-coins out perform Bitcoin
- Recently, in the last 18 months or less, alt-coins have been performing well with very few producing losses and small ones if they do. However many are relatively new arrivals and could be a sign that newer coins have more merit and than alt-coin projects of the past.
- We could be in an alt-coin bubble
I think we have a division in possible conclusions, it’s: “Bitcoin will kill all/most alt-coins given enough time” vs “new alt-coins have utility that will eventually out perform Bitcoin”.
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I made some comments on some of the leading alt-coins on a Slack channel yesterday. People found it useful, so this is an informal quick and dirty paste of comments for reference. I might add more to this post later.
FCT – I like Factom, have just recently started holding them. I like that the project comes from a founder deep inside an industry working on a solution rather than the other way around which is the norm for crypto projects. You can see this playing out with industry players coming onto the technology, including government departmentsOne Comment
Metcalfe’s Law states the value of a network is proportional to the number of members squared.
I thought it’d be fun to run the numbers on the Bitcoin Network.
Since we don’t have solid figures on the number of active users on the network, I’ve had to use network transactions** as a proxy to active users.
** Network transactions per day excluding long chains (e.g. produced by bitcoin mixers)
In my pursuit to analyse Alt-coin returns if you had bought the entire market like an index fund, I just ran some numbers: Bitcoin Alt-coins Sep…Comments closed
Out of curiosity, I put together a graph to analyse the market cap growth of alt-coins compare to Bitcoin. Very interesting…Comments closed