According to Mike Jarmuz of Bitcoin Magazine, “the smartest individuals in the world are working on Bitcoin, not some other project.” They aren’t developing alternative coinage or offering real estate in a metaverse fantasy world. Your medical records won’t be placed on a different system that poses as a blockchain. These proposals, in our opinion, are absurd and totally uninvestable.
Jarmuz is the managing partner of a venture capital firm called Lightning Ventures, which is unique in that it only invests in businesses that provide goods and services for bitcoin, not any other cryptocurrency.
McShane, a venture partner at Lightning Ventures and an employee of BTC Inc, the company that runs Bitcoin Magazine, continued, “The 21st century digital economy is being constructed on Bitcoin-native firms.” “We invest in top-tier Bitcoin founders who provide the human race with unique and targeted value,” they say. Through Bitcoin-related businesses that aim to have a beneficial impact on the world, we are committed to giving our investors a multiple of their initial investment.
And Lightning Ventures is not the only venture capital firm focused solely on Bitcoin; rather, it is a member of a burgeoning industry (VCs).
CRYPTO HEDGE FUNDS FAILURE
At the height of the bull market last year, it was the crypto VCs that dominated the news, investing over $33 billion in projects and enterprises related to cryptocurrencies, blockchain technology, and the Web 3. This era of prosperity was short-lived because the market fall this year also claimed notable hedge fund victims, including Three Arrows Capital, which went into default last June after failing to repay a loan of more than $670 million.
For a venture capital fund, which typically approaches investments with a 10-year time horizon, rather than timeframes of just a few months, such abrupt gains and crashes are not particularly usual. However, the temptation to turn investment activity into speculative activity is especially great when the bet is on enterprises that create tokens out of thin air. This increases the risk of being burned when the markets take a turn for the worse.
TIME PREFERENCE FOR LESS
The short-term mindset of the crypto hedge funds is the antithesis of that of the venture capitalists who support Bitcoin’s long-term success and invest in businesses that attempt to create services with genuine market value rather than issuing fictitious tokens.
Early-stage Bitcoin startups or angel investing are unquestionably low time preference options, according to Jarmuz. Many “crypto” projects opt to issue unlicensed, unregistered securities in return for equity, although this strategy rarely attracts quality investors. Investors then sell those “tokens” or shares of equity as soon as they can. We are dedicated for the duration of the company with our Lightning Ventures’ thesis and Bitcoin-only investments and are not worried about selling “tokens.”
Christopher Calicott of Trammell Venture Partners, or TVP, stated on the same page that the idea of backing ventures that draw clients by generating tokens is not only indicative of a short-term perspective, but is also at odds with the traditional incentives of a venture capital fund.
Calicott claimed that purchasing these tokens would be a fundamental misalignment of interest with regard to the company’s ability to expand and achieve maximum success. Investors in fact become into speculators as they attempt to exit their positions at the most advantageous time.
Additionally, while it was once believed that it was difficult to build on Bitcoin, leading many users to switch to alternative cryptocurrencies, things are now changing:
We see ourselves as long-term investors. We are trying to make wise bets on businesses that we believe can usher in a whole new global monetary order on a solid standard: Bitcoin. Calicott continued, “There’s blood in the streets being brought by the crypto industry, but despite this, there are now more entrepreneurs willing to build services on Bitcoin than ever before.
SUCCESSING IN A COMPLETE SYSTEM
a peer-to-peer payment system that replaces the major established players in finance, a new monetary standard, and a universal store of value. Regardless of your perspective, Bitcoin offers a vision of the future that completely challenges the paradigms to which we are accustomed: the notion that inflation is necessary for economic growth, the idea that governments and central banks control the macroeconomic environment, and the idea that intermediaries must be trusted with the management of savings and digital payments.
Is the conventional viewpoint compatible with the potential of Bitcoin? It isn’t, according to the website of Ego Death Capital.
According to the website of the VC firm, whose CEO is Jeff Booth, author of “The Price of Tomorrow,” “the old system must self-destruct for a new system to grow, to deliver plenty, opportunity, and accessibility, and for this to happen, it will require a time of’self-surrender and transition’.”
Nico Lechuga and Andi Pitt, both general partners of Ego Death, support the opinion.
The Visa and Mastercard duopoly inhibits innovation and opportunity, so as competition arises, including through the Lightning Network, which offers extremely fast and low-cost transactions, they are already in the process of self-destructing, they added. “Banking systems fail billions of people around the world — it is very evident in emerging markets but even in Western countries.
Oleg Mikhalsky of Fulgur Ventures believes that the Lightning Network will revolutionize payments because it offers “almost-instant settlement with very limited counterparty risk, which is a feature that is well positioned to reduce traditional payment overheads and lower counterparty risk existing in fiat rails.”
We require a native digital currency with two characteristics—velocity and the capacity for microtransactions—in order for the digital economy to develop, continued Mikhalsky. We believe Bitcoin and Lightning will become the global monetary and payment standards. We have seen some acceptance in video games and digital content monetisation, but there are other use cases like machine-to-machine payments and micro-transactions for energy that have yet to be investigated.
We want a native digital currency with two features: velocity and the capacity for micro-transactions if we want the digital economy to expand, continued Mikhalsky. We predict that the world’s currency and payment standards will eventually be Bitcoin and Lightning. We have seen some acceptance in video games and digital content monetisation, but there are other use cases like machine-to-machine payments and micro-transactions for energy that are still to be investigated.
The future expansion was stressed by Julian Liniger, CEO of Relai, a Swiss firm that enables users to purchase and trade bitcoin in a non-custodial manner.
Investors view Bitcoin-focused businesses as having a more lucrative and long-lasting business strategy, therefore they are less hazardous in the long term than crypto startups, he added. “We are completely in agreement with Bitcoin-only VCs. They can envision the world in ten years, they know where we’re heading, and they know that all the experimentation taking place on other blockchains will lead to Bitcoin.
