Mars Session | The Investment Logic in the Bull and Bear Market

Mars Session | The Investment Logic in the Bull and Bear Market

Dec 12th 2018| Investment By:Max
Peter Vessenes started his business at the age of 13 and worked for himself all his life. He was one of the first bitcoin miners and the founder of Bitcoin Foundation.

At the age of 13, he started his first business in order to realize his dream of "working only for himself". The Bitcoin Foundation is his 12th start up project. He was one of the first bitcoin miners to dig out 150 coins a day and once sold them for six cents each. Some people say that if he had not been involved in the development of bitcoin, the current pattern of blockchain and cryptocurrency may be very different, today he will talk about his legendary life! Let’s welcome the guest, he is Peter Vessenes, Founder chairman of the Bitcoin Foundation and Founder of New Alchemy.

First question-

Max: How did you get your first pot of gold?

Peter: I grew up really poor and I was always interested in business. I sold my first company in college, so I guess that was my first 'pot of gold', but I spent it mostly on going out with girls and having a good time, so it didn't form a core of investment money. That came later. Anyway, I've done a lot of things, but I have mostly only made money in software and later blockchain investments.

Max: In your numerous startup projects, which was the most successful one?

Peter: Hmm, at a financial level, I would say none of them yielded the results I hoped for. On a culture change level, I think the Bitcoin Foundation could be said to be most successful. We created the concept of a non profit foundation to back and boost opern source blockchain software, and that's turned out to be a very influential idea. I now often advise blockchain groups not to do it, but it had a major impact in the history of early crypto.

Max: Which was the most unsuccessful project?

Peter: Wow so many! They failed for a variety of reasons, equally split between failure to achieve market fit and lack of capital to get through a hard time. The number one problem is always product market fit. Then there's this question of how you see clear through tough times with a team that trusts each other and has a clear vision. Also a number of my projects failed because they were too early. I tried to startup a digital currency company in 1997 for instance.

Max: Timing is not right.

Peter: Yes, there's another way to say too early: 'wrong'.

Second question-

Max: Last week I interviewed Jeffrey Wernick, he shared lots of deep insight of bitcoin, he thought bitcoin increase to be $1 million is feasible, he thought“We live in an overindebted world. Fragile. Look at the markets. look at all the debt created to support fiat and the government guarantees behind bank deposits. If fiat fails, and bitcoin becomes the global currency. Its price would exceed 1 million.” and he thought the bottom of bitcoin is 0, he said “During 2001-2. Amazon was down about 99% from its high, so what? who is richer today? Buffet, Cuban and Bezos” Do you agree with that? What is your opinion about the lowest and the highest price of bitcoin.

Peter: That’s not a very narrow range. Bitcoin occupies a unique place in the cryptocurrency and decentralized markets. It has truly global mindshare, and the name and brand are very valuable. It’s also a way to stay engaged in cryptocurrency with a promise of some stability since innovation has mostly stopped on the main chain. I believe we’ll see significant price moves for Bitcoin in the next year. If Bitcoin can succeed in being what maximalists call the ‘settlement’ layer for crypto, then it could become very, very valuable indeed, in excess of $50-100k. If on the other hand, it’s a sort of alternative to holding gold as a hedge against economic problems, then it’s probably worth more like $10k over the next few years. The bottom is hard to pick of course! But it seems to me that we aren’t far from that pricing right now. Of course, don’t trade on my thoughts, they are just speculation.

Max: A lot of "aircoins" has destroyed the value of Bitcoin.

Peter: Actually we spent a lot of time at the foundation worrying about that. You could say I'm a recovered maximalist. Nowadays I deeply want to see more fundamental innovation, and I think we have to look to other chains to see what will be next, which is a disappointment to me personally, but also is just reality. About price, who knows! I always wish I sold more at the peak and bought more at the bottom. And I always wish I spent more time getting dollar denominated income and projects rolling to see me through bear markets better.

Max: The survival of the bear market.

Peter: Crypto is at some level an oligarch game, crypto markets are a survival game.

Third question-

Max: Once you talked about in the interviewed, you said “The value of community and innovation that bitcoin brings”, can you elaborate?

Peter: Yeah, that's the multimillion dollar question. It’s a combination of money, marketing, sex appeal, community skills, innovation and luck. It really is sort of alchemical. When it comes together, you get amazing things happening. Then you can have great projects which are missing some of these things that just don’t get that adoption in the same way. I believe we’ll have a better way to value these communities in the next five or ten years, right now economists need to do some work to figure out how to assess what the value drivers are for these communities that choose to engage economically on a chain together. Until then, there’s going to be a lot of trying out stuff and seeing what works.

Max: Community is important. How can a DApp to increase its users at the beginning?

Peter: It's hard to give a formula. Some just do a good job. I advise companies to stay engaged, be honest, be effective with trolls, and pitch vision plus meet deadlines Even then, some get a community together and some don't, I can't really explain it.

Fourth question-

Max: I see, the following questions are about today's theme -the investment logic in the bull and bear market, the fourth question is, what is the investment strategy in bear market?

Peter: Buy, but carefully..It’s not a bad time to average your way in. There are a lot of interesting teams and projects out there that need cash right now, so this is another way if you have more capital - is to look for some bargains. I’m actively looking for companies like this, and just made my first equity investment since January yesterday in fact. Definitely get in touch if you think you have a good story and need a bailout.


Fifth question-

Max: Many projects are at a low price now, did you have invested some company undervalued?

Peter: There are definitely undervalued companies out there right now.

Max: Some people thought the cost of labour and the value of project are much more lower compare with bull market, as the investor who experience both bull and bear market, what is your opinion?

Peter: Yeah I hear that. The industry is still figuring out what fair values are. As an example social media companies trade at like $70 on the Hong Kong stock exchange. So we can engage in rational growth investment for those companies because we know a market price. This is still hard for crypto companies. But we will get there I think. I suggest that it will be based on size of community and transaction volume among other metrics.

Max: based on data of the projects?

Peter: And on participation.


Sixth question-

Max: What is the project you thought is the most successful in your portfolio? Could you tell us how much bitcoin do you have?

Peter: I’d say bitcoin. When I started there were just a few hundred people. More recently I’m really excited about some media investments.

Max: Which year you start to mining?

Peter: I started mining in 2010.


Seventh question-

Max: What is the project that you feel most regret not being able to invest?

Peter: Hah, so many. I have a list of investments I passed on that I think about a lot; I passed on Coinbase’s first round coming out of Y Combinator; that was not smart. I offered to put $1mm in to the Ethereum foundation before their token sale but we didn’t come to terms. (I was too greedy I think) Hi Vitalik if you're still on the chat, we have a conference room named after you at New Alchemy.

Max: Coinbase and Ethereum are very big now.

Sakura: @Vitalik Buterin Some people are working in your direction.

Peter: We're always thinking about him. Both of those cost at least $500mm each, maybe more. I opted to invest in mining companies rather than just buy Bitcoins in 2013, that was a terrible decision as well. I tried to buy the first Bitcoin exchange three times, but it never panned out.


Eighth question-

Max: I heard that you have invested more than 40 blockchain projects, could you share the layout of your portfolio?

Peter: Sure. It’s split up about 2/3 Dapps/platforms and 1/3 blockchain/tech investments. I put some money into media and entertainment companies this year like Fanchise, Heir Apparent and Decentralized Pictures, all really great investments. There are some high tech blockchain companies, AI and edge computing plays and we have a number of STO related companies as well, from incubated platforms like RE:LQD (Real estate tokenization) to just cap table tokenization (like Moonlighting). On the blockchain side right now I'm focused on asset backed tokenization, cross chain platforms and what I term v5 blockchain projects - what's after the dfinities of the world.

Max: These are forefront.


Ninth question-

Max: The Consensus Lab have already invested 60 projects,@fred is the Founder of Consensus Lab and @kevin is the Partner of Consensus Lab, the portfolio of Consensus Lab include public chain and exchanges, what’s your opinion to public chains and exchanges?

Peter: Exchanges are great, they can make money in volatile down markets. I am not super interested in traditional ‘centralized’ exchanges right now. I do think there’s probably one more cycle of a new wave of hybrid regulated exchanges coming online, in the US, they would be termed “ATS”, but I’m more interested in what comes after. Maybe the closest right now is Stellar - a blockchain that enables trading as a fundamental interaction between decentralized clients. Stellar isn’t really a blockchain by my terms, it’s more of a large scale ledger, but I’m very interested in that decentralized exchange future.

On public chains: Of course public chains are always interesting, and in particular I look to them to see what innovation is happening. One of my own projects, Deluge, is coming soon as a way to let these smaller chains transfer value and data between chains - they need some of this infrastructure built out to really flourish. Many very smart people are thinking through what lessons they could bring from the unregulated ICO industry into a safer enterprise context, and there are a lot of lessons there.

Sakura: I believe blockchain can do more not just cryptocurrency.

Peter: Of course; and this ability to enforce interactions and provide truth between multiple untrusted parties is very powerful.

Kevin: On behave of Consensus Lab, thanks for the advice and attention on those exchanges and public chain projects@peter vessenes.

Peter: @Kevin Ren-consensus lab thank you. I'm always impressed at the work of investment groups doing the volume of deals you Chinese investors seem to be able to do. It's a lot of work.


Tenth question-

Max: What’s your advice to the blockchain projects?

Peter: Stay focused, build cool shit, engage with your community, don’t worry about the price, just innovate and remember you’re working on some of the coolest technology in the world.  Send me your advice back.

Max: Have enough money for winter -my advice.

Peter: I like that idea, that cadence and delivery time matter a lot. They really do in this industry. A bias towards shipping is super important. By shipping I mean delivering product.

Max: Thank you for your sharing! Awesome! Learn a lot from you@peter vessenes

Peter: Max these are such good things to be thinking about right now, let's do it again soon. I always appreciate learning from different communities around the world.