The race to fund the future of crypto is expensive – TechCrunch
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Welcome to the weekend! We created it. Barely, I think, given how tired everyone seems on the phone and on Twitter. But we still beat workdays, which means we can relax and have fun for a minute. Yes, we are talking about crypto today. Rejoice!
The race to fund the future of crypto is expensive
I am impressed with the rate at which Coinbase has poured capital into other companies in the broader blockchain market. It’s a smart move, because the US public company can shell out relatively small sums (when stacked next to its revenue base) and buy both ownership and access to information in startups, letting it providing early warning data on what is happening. Since Coinbase is an obvious holder – and gatekeeper, to some extent – in the crypto market, its investments make sense.
But there is investment, and there is invest. And it looks like the newly announced FTX fund is something more aggressive than what Coinbase has been running, despite its fairly fast pace of transactions.
FTX’s crypto fund will total around $2 billion and, according to interviews, could be disbursed just this year. It’s a blistering pace of investing, perhaps reminiscent of how quickly a16z put its recent $2.2 billion crypto fund to work.
- Why does the crypto market need so much money when its user base is quite small compared to the wider internet?
- Why do we use so much fiat to fund crypto?
These are interrelated issues. They sum up a simple confusion on my part regarding why it is so difficult to create useful things in the crypto market. Coinbase and FTX exist on the fringes of the crypto world, shuttling money from the mainstream economy to what its future might be. That they’re investing is smart, but the amount of money they’re willing to invest, as well as what traditional venture capitalists are pushing blockchain startups as well, has me somewhat confused – what all is it spent?
The two big blockchains are established, and barely new (Ethereum was dreamed up in 2013 and launched in 2015; the Bitcoin white paper came out in 2008); stablecoins exist and have a number of stable players; and a bunch of capital went to NFT markets and a few crypto games. Some of them have even built modest player bases. But it does seem a bit concentrated when we compare the amount of money flowing through space to what we can see in terms of usable results.
Institutional Investor reports that a total of $32.8 billion was invested in “crypto and blockchain tech companies” last year. Maybe a lot of things built with that money will come out soon and blow us away, but now well north of a decade after bitcoin said “hello world” I still don’t use apps or of blockchain-powered services today. Unless I’m tinkering with some part of the crypto world for research purposes, of course.
And I spend more time online than I care to admit! Perhaps the new FTX fund will bring the mainstream blockchain product to market that is not just another vehicle for speculation. Let’s wait and see, I guess.