Venture capital giant Andreessen Horowitz argues that what seems like a boom-and-bust cycle in crypto has an underlying logic.
Driving the news: In a blog post accompanying the first of what it promises will be an ongoing series of annual reports on cryptocurrency, several members of the firm explained why crypto is different.
"Whereas prices are often a lagging indicator of performance in some industries, in crypto they are a leading indicator. Prices are a hook. The numbers drive interest, which drives ideas and activity, which in turn drives innovation."
"Yes, but: The post and the report are unabashedly booster-y. It should be read as a report written by a company that's massively invested in the sector's success. Nevertheless, it provides some points of illumination:
- Web3 could be great for creatives. It points out that creators on OpenSea, the leading marketplace for NFTs, have generated an estimated $3.9 billion in sales.
- Our thought bubble: That said, it might be worth asking how much of that went to lone artists or small teams versus well-resourced startups that farmed out much of the creative work.
- Ethereum is leading in smart contracts, but other chains are chasing it. It notes that Ethereum's commitment to remaining decentralized has held it back in terms of efficiency.
- It's still early. "We estimate there are somewhere between 7 million and 50 million active Ethereum users today, based on various on-chain metrics," the blog post states. So, it's somewhere between the population of Paraguay and Spain, roughly.
The bottom line: The authors remain bullish on their bets. "Consider that any prospective founders who swore off tech and the internet in the aftermath of the early-2000s dot-com crash missed the best opportunities of the decade," they write. "Now is the time to consider what the equivalent successes will be in web3."
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May 17, 2022 at 04:18PM
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Andreessen Horowitz explains the crypto hype cycle - Axios
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