Bitcoin has fallen a bit since its lofty values at the end of 2017. But that won’t stop anyone in the Austin cryptocurrency community, some who have been in it since the earliest days, from innovating and finding opportunities in the space.
While we covered some of the top bitcoin and blockchain startups previously, we’ll now focus on the implications cryptocurrency has currently, its future in the City of Austin and some of the movers and shakers behind it.
For this piece, we chatted with Christopher Calicott, managing director of Trammell Venture Partners, Paul Snow, founder of Factom and the Texas Bitcoin Conference, Marcello Milteer, the director of marketing at Algebraix Data Corporation and founder of The Bitcoin Podcast, and Kyle Samani, co-founder of Multicoin Capital.
The interviews were conducted by phone and email. Their responses are edited here for clarity and brevity.
Austin Inno: What should Austinites know about bitcoin and the crypto world?
Milteer: Austin is a unique city. Ten years ago there were only 14,000 households in the Austin metropolitan area that possessed at least $1 million in income. Fast forward to 2018, and there are almost 40,000. That shows there isn't just money in this city, but smart money. If you’ve been following Bitcoin for a bit, you’ve probably known that its price skyrocketed. While volatility opens up the door to great opportunities, it also paves the way with high risk options. Austin has a great opportunity to really pour value into crypto's market cap and have a real stake in its value. We are seeing a lot of startups pop up around Austin, and we are in a prime spot to where if you have a technical background, know a bit about crypto, need a job... all you have to do is ask and you can work in this space. We are at the very beginning here.
Samani: Cryptocurrencies such as Bitcoin and Ethereum are still quite nascent. Their hype suggests they are much further along than they are. If you're going to invest, invest with a long time horizon, and be prepared to lose 100 percent of your investment.
Calicott: Bitcoin has been community-driven and there are a lot of fundamental learnings when it comes to the crypto world -- investors will have to be prepared to deliver as much value as they can. Austin has a lot of the components to be an important center for blockchain.
Snow: Bitcoin can support large shifts of values in an easy way. It may not work for small transactions, but if I’m buying a boat, I can pay in bitcoin in an hour and have cryptographic proof I paid. A wire transfer could take two weeks. Not only that, but sending money to countries in Africa would be impossible via wire transfer, and bitcoin makes it easy. (Snow noted that one of the Finance Ministers in Nigeria said that proofs of reserves in the developing world should be in bitcoin, not dollars).
AI: What are the trends you see in the crypto world?
Milteer: The decentralization and absence of central authority is a double edged knife for cryptos. You have to do your homework before making a move. The market is young and it is easy to make money and give into greed. When most people are in it for quick gains, it'll destroy its credibility when we correct hard. All it's going to take are a few news stories tugging people's emotions about people who lost their 401k on an unregulated wild-west financial market that is plagued by hackers and Russian companies. Most people who have heard of Bitcoin don't understand how it works so it is very easy for the media to spin in whatever direction they want.
Snow: More women are becoming involved in the cryptocurrency scene. In 2013, we had a whole bunch of guys at Bitcoin meetups, and it was hard to get women to participate. Now we have a good percentage of women, and more grey-haired adults, as more and more people get interested in Bitcoin.
In terms of blockchain, it will change society in a variety of ways -- how we take responsibility for decisions that are made, business processes and make banking and finance more accountable and more transparent in the eyes of consumers.
How has bitcoin impacted retail/consumer behavior already in Austin, or will that come down the line?
Milteer: Depending on who you talk too, some firmly believe retailer and merchant adoption is the key to bitcoin mainstream adoption. The fees of bitcoin itself has risen so high that merchant adoption just doesn't make sense at the moment. Listen, I'll be honest with you, you're questioning me on behalf of my knowledge of crypto, but from what I have observed in Austin, for the average consumer, fiat does everything that bitcoin promises, like instant and cheap (at least to consumers) transfers. It doesn't suffer from the safety issues, extreme volatility and lack of regulation. Looking back we've had several serious attempts to develop internet currencies and alternative payment systems, but none of them was successful and fiat simply caught up.
Snow: Merchant adoption has fallen away -- and Austin isn’t totally immune to that. There are more bitcoin and crypto ATMs being deployed. At the bitcoin meetups I’ve been running, there is a tremendous interest in cryptocurrency, with more focus on investment than merchant adoption, however.
AI: What’s the hardest issue for you as a crypto/blockchain investor/enthusiast?
Samani: Dealing with the noise. There are way too many unqualified projects vying for funding.
Calicott and Snow: Helping people understand that you can’t throw a token on every business.
When Developing your crypto businesses, what are you looking for?
Calicott: We at Trammell Venture Partners are looking for companies that are developing enterprise infrastructure around asset class itself -- and technologies to support custodial banking, and companies that are creating ideas that connect the digital asset exchange. We were early investors in Kraken and want to see truly disruptive market opportunities.
Snow: Using our company (Factom) products and in order to figure out a better way for how we look at medical records, and using the blockchain to improve data integrity.
Samani: We don't invest in companies. Within the crypto ecosystem, we expect decentralized exchanges such as 0x and privacy coins such as Monero to be two of the major themes of 2018.
Editor's Note: An earlier version of this story said Christopher Calicott is managing director of Trammell Ventures. He is managing director of Trammell Venture Partners, which is a related, but separate, entity. The story has been updated.
