What I Look for in Cryptocoins

Posted on May 23, 2017. Filed under: Uncategorized |

I sat around in a circle of 10 people, many of whom are pretty well credentialed by startup ecosystem standards and asked people to raise their hands if they owned any cryptocurrencies. Almost everyone raised their hands. I then asked if anyone in the circle could articulated their thesis or how they are trying to value their holdings. Nobody could. Literally, and quite candidly, the entire circle basically answered “Fear of Missing Out.” And that was a conscious and willing investment thesis to put tens or hundreds of thousands of dollars behind.

Personally, I have been pretty disciplined about resisting the urge to trade these crazy swings and spurts in the cryptocurrency landscape. I hold some assets that are openly traded today, but only with an eye toward 5 years+ into the future. For me, riding momentum into a 100% gain in 2 weeks does not make you a sophisticated cryptoinvestor, it makes you a reasonably good gambler…and there’s a difference.

The questions I find myself asking, are often around how people will try to start fundamentally valuing coins and currencies, whereas today I think the level of analysis is quite crude. Wealthy retail investors and instituions alike look at inputs like

• notable founders / early contributors
• branded institutional backers
• trading volume
• technical integrity of the whitepaper and protocol design
• moderately understandable utility promise
• and i’m sure a bunch of technical trading indicators that I won’t pretend to understand

I’m all for making decisions on limited data…i built an entire career out of doing that as an early stage venture capitalist…but there is a difference between buying semi-blind, pre traction securities at $3-10M valuations, and doing the same at $300M-$10B valuations.

My attention has gravitated a bit, beyond the excitement of “pubic market” frenzy, toward more pre-ICO investing opportunities. There is a period before a blockchain project conducts their ICO (Initial Coin Offering), that looks very similar to the earliest days of a startup, where a small number of contributors works to design their protocol and build their technology before going to market..and that’s an area where I think I can be helpful…and candidly it’s an area that is somewhat insulated from the frenzy of speculative capital that is driving interesting and uninteresting projects into statospheric valuation (as measure by market cap). I still own a lot of “public” coin, but I hold a very firm belief that there will be better entry points even for projects of deep merit, than are available in today’s landscape.

On the pre-ICO side, there are certain shapes of project and characteristics that I find myself looking for. I won’t claim these attributes are science…some of them are deeply reasoned, and some of them are feel (which you can trust my feel or not give a shit about it as an input)…but regardless they are things I believe are important and leading indicators of value. I’ll try to outline some of them below:

1) Native protocols and applications: I am most interested in projects that simply could not exist prior to the Blockchain. There is a large body of projects that are simply the decentralized alternative to an existing centralized solution or service, there are not my focus. I think the ideology around decentralization is important, especially because it is powerful enough to harness early user participation in the absence of compelling economic incentives, but the upside of a decentralization-first value proposition as the defining attribute of a project feels capped at say a Duck Duck Go sized opportunity if I can draw that parallel (respect for Duck Duck Go btw, i’m just hunting for elephants to a certain extent here).

2) Bottom Up: For me, I am interested in the blockchain’s ability to organize a group of people or businesses into a specific behavior that has not previously been organized. This is not the only path or complexion of opportunity in the space, but it’s the one I’m most excited about. In areas where the margin was not available or interesting enough for a top down enterprise to pull customers or users together to act or behave a certain way, I see opportunity for blockchain projects to thrive. In areas where the will or incentive wasn’t their for governments or political bodies to organize a group of citizens or businesses to behave a certain way, I see opportunity for blockchain projects to thrive.

2) Public not Private: For me, private chains (blockchain projects that a closed group of participants utilize often for a specific cost savings or efficiency) are completely uninteresting. I think there will be real value built their, but these projects look more like enterprise software companies than movements or networks and I find enterprise software completely boring. Also, I think their upside feels capped for the most part at sub $10B enterprise values, where as I believe there will be 1 or more public projects beyond Bitcoin and Etherium that will achieve market caps in excess of $50B.

3) Deep integration of coin into Protocol or service: ICOs and coin models are in vogue…and that’s not surprising given the market caps and available capital flowing into the sector as a whole. Without having waded through the now thousands of projects in the market, I can say with some confidence that the coins surrounding certain protocols are very much slapped on top of projects or software as opposed to deeply and natively integrated into the functioning of the service. If you think about the difference between Google monetizing their search service with Display advertising vs Adwords, that’s a not perfect analogy to the difference between deeply integrated coin designs and those that are slapped on top. To do this will requires deep elegance in design. I am not personally a fan of Steem, for a number of reasons, but their entry into the landscape was an expression of what’s possible along this axis, and I think that contribution opened up many eyes to how coins can interact with utility of a service or software that rides on top of a protocol. I think Etherium’s gas model is also a good example of this. Getting this right feels like a requirement to me, and also a double edged sword in today’s speculative wild wild west market. The reason double edged, is because elegant integration actually makes it easier to fundamentally value and measure the utility of a project and it’s corresponding coin value. I can start to grasp at hard metrics and build a model around the number of downstream projects being built on Etherium, their level of interaction/dependance with the Etherium blockchain, and the corresponding demands for gas in way that I can’t really for many others. If the “store of value” use case starts to fall away from Etherium and consolidates around Bitcoin, the utility measurement around Ehterium’s developer facing use case as it’s killer application (which I think is undeniably strong) will start to raise questions as to whether it is $4B market cap strong or $18B market cap strong today…and I think that’s very possibly coming.

4) Non-zero sum actors: It took me a while to figure this one out. When I started to look at protocol designs on the blockchain, I thought primarily with my economic mind. The blockchain is a great tool to structure and restructure economic incentives between a group of people or companies, and so it’s logical to try to speak to every participants economic rationale when designing for usage and liquidity of behavior. The interesting thing is that when you try to incentivize multiple parties on opposite sides of a transaction or behavior with money alone, most designs net out to zero. Value attained by one party is given by another, and in thin margin environments it’s tough to get the flywheel spinning. What I realized, first through the aforementioned ideology around decentralization, but later through other non-economic incentives, is that interesting designs allow for specified nodes or roles to house actors with variable incentives or reasons for participation. In designs where two parties on opposite sides of a transaction or behavior both feel like their winning, despite one of those two parties objectively winning from an economic standpoint, liquidity of behavior is easier to achieve. Lastly, I think it’s important to point out that in cases like this that occur within services owned or run by a company, the available margin of non-zero sum actors tends to be sucked up by the company itself, in the form of margin. I like that in these decentralized models that value gets 100% spread over the other participants in the protocol, greasing behavioral liquidity without the liquidity-stifling rake of a company that’s hosting it’s participants.

5) The role of speculation as a means to liquidity of behavior: When a participant in a protocol contributes work, excess owned resource, or even faith in an earned coin vs exchanging it for BTC or Fiat, actors who are not participants in the protocol itself can speculate on a projects coin. So if a protocol organizes for the behavior and potentially also the exchange of work, time, or value between parties A, B, and C in a blockchain based project, investment capital from outside investors represents party D, who is not fundamentally using the service in which she is investing. Party D could be someone who got rich of Bitcoin who is now realizing their profits and diversifying into new coins, or it could be a hedge fund on wall st, buying a basket of cryptocoins because it’s an emergent asset class that has low correlation to their other holdings. But not all speculative capital enhances the value of the underlying protocol. It is possible to design a system where the speculative capital spreads value over some or all of parties A, B, or C, in a way that makes early participation in the behavior we’re shooting for more likely. This can be a real asset when the terminal form of the service offers better economics to participants than are available in the early days, and in that case speculative capital is designed into the success of the protocol. In other cases, the economic incentives baked into the protocol don’t improve absent of price gains resultant from outside speculation, and that feels like a much less sustainable position.

6) Organizing behaviors that are naturally transactional: Not all behaviors can be incentivized through economics or money. If you try to pay participants to do something that people tend to do for love, or self-expression, or any other non-economic reason, I think that’s a path to illiquidity of behavior and weak value of end product or service. I think Steem suffered form this, and I think others will too, especially as product thinkers start to hone in on the ideologies of their participant base. If money doesn’t fit in naturally to a behavior your trying to organize, I think your barking up the wrong tree trying to incentive participation via a coin model.

7) Collective economic force: This is not a deeply baked idea, but I am interested in exploring blockchain projects that attempt to organize large groups of people from the bottom up to act or express collective economic force. I wrote this post on “Blockchain based tax resistance” as an example, but there are many more possibilities that I think are well suited to this space and I can’t wait to see them. Everything from Coops to collective bargaining to group buying are intriguing and I see many natural points of interface between blockchain based collectives and “real world,” non blockchain based entities, businesses, and even governments that give a louder voice to the individual in contexts previously dominated by groups economically and administratively organized under more traditional structures like corporations or evn NGOs.

8) Shit this list is getting long. I’ve actually got a bunch of others, but if you’ve made it this far, I’m guessing you’ll see that I am beneath the surface of his world and excited and eager to help put language around projects of value. If I can be of help in the design, financing, or even communication around a project you are working on, I’m excited to invest or help or whatever. Jordan.Cooper@gmail.com

Bonus: At different points along my learning, I’ve tried to express some of these principles in designs i’ve outlined for fun. Here’s some early projects I thought would be cool:

First try was Pryntcoin: https://jordancooper.blog/2016/09/12/free-1b-or-maybe-50m-idea-pryntcoin/

Next was Tax resistance: https://jordancooper.blog/2017/02/04/blockchain-based-tax-resistance-aka-resistcoin/

Last was a Genomic Data Protocol: https://jordancooper.blog/2017/05/15/build-this-blockchain-base-genomic-data-protocol/

IMPORTANT: I am not an expert here. I’m learning as I believe even the experts in this world are…there are very few people in the ecosystem who truly have this stuff all figured out, despite how they may posture. Help me if I’m wrong about any of this stuff, or share what I have considered in the comments or via email. Would appreciate learning with others.

Build this: Blockchain based genomic data protocol

Posted on May 15, 2017. Filed under: Uncategorized |

I had this idea a while ago for leveraging the blockchain in order to build, store, surface, and monetize the largest fully sequenced genomic data set in the world.  The premise was that the economics and incentives are not in place for each stakeholder that would need to participate to do so today, but that a blockchain protocol and corresponding coin design could be written to provise for the terms by which participants could and would contribute sequenced genome data, pay/earn economics, attain/grant data access, and perhaps even communicate/participate in higher value interactions (i.e. clinical trials, EMR metadata transmission, etc.). The participants would be healthy people, patients, researchers, pharma companies, hospitals, and anyone else with an interest in advancing genomic research at the system level, monetizing owned genomic data, or query/access the largest repository of said data in the world.

I never fully flushed it out, nor do I really plan to, but it just seems cool to me to be able to anonymously post my sequenced dna to the blockchain, let researchers, computer scientists, or care providers query mine and many other peoples information blindly, and then potentially earn coin(money) when my data contributes to a party that stands to gain economically from my raw information, but only when it’s appended to the metadata of my lifelong EMR, and/or my willingness to participate in some clinical trial, etc…and it just seems obvious to me that all the actors in the system are not willing to finance this collective dataset b/c it’s not in their individual interests to do so without some attribution and downstream economics protocol clearly defined, objectively self governed and authenticated, and organized in such a way that system level gains represented economic gains for parties that pay it forward (and thereby speculate) on the future value of this collective effort.

There are a bunch of rough edges, but I think you can work a system like this out. I also think the speculative nature of financial capital into the ICO world would serve to smooth out some of the economic speed bumps that are gating enterprise from taking this task on, and I think that even with “small levels” of initial genome contribution/participation by information technology data set standards, the aggregate asset would represent a near term market value in a world where clinical trials are run only at the the tens or hundreds of patients scale, and where large / the largest genomic datasets merely exist in the tens of thousands or maybe 6 figure patient realm.

I know it sounds a little pie in the sky to think that there is genuine convergence available at the nexus of blockchain technology, large scale data processing / AI techniques, and genomic research / application…given that these are three super sound-bitey forward tech areas…but I am certain that our collective genomic data set is way too small to apply modern data analysis techniques for progress in the near and out markets within genomics, I am certain that there is an economic and societal alignment within reach on a long enough timescale with baked in trust between all participants, and I am certain that the the shape of this project is a great fit for a coin based project running on the blockchain for too many reasons to write about in this post.

I’m not gonna do anything with this idea, so if you like it, take it, make it happen, and break me off an allocation of coin hardcoded into the first block on the chain.  Pasting some of my past notes below.  Maybe they are incomprehensible, but if you have been thinking in these spaces, I think could be helpful.

If anyone is working on anything in this area, email me, I’d love to invest pre-ICO and help get the project to market.  If this post is inspiring and you decided to start working on it…same deal. jordan.cooper@gmail.com.  Lot’s to figure out, totally worth it!

Blockchain based genome database

1) sample of biz opportunity, albeit not my preferred approach: http://medcitynews.com/2016/12/strata-sequence-100k-tumors-free/

2) earn coin by posting genome, earn coin by showing up in search results, earn coin by allowing contact/communication, earn coin by participating in trials

3) non-economic incentives: all good coin projects, some participants don’t act in a zerosum economic way because of ideals. here it would be advancing cancer therapy.

4) patients who had it done in course of treatment get excess income for free (insurance co or they paid already. similar to sharing excess compute resources.

5) pharma companies and researchers pay buy the coin and spend it in exchange for querying the database, contacting the patients, and ideally assembling trials.

6) patients or contributors may have access to query it for free

7) speculators bet on increased value of the largest genomic dataset in the world and increased volume of genomic research and targeted treatement plus other verticals

8) sequence is posted anonymously with report behind a paywall maybe? can we authenticate sequence on chain?

9) sequence acts as pubic id and is discoverable/analyzable without patient info, EMR metadata. demand side can identify genomes of interest without knowing anything about identity of patient. Raw string is good input for comparison analysis, etc..

10) Start with cancer genomes to seed database, but there is value in “normal genomes” and analysis of genome before cancer is expressed. it will become standard of care to sequence entire genome for every tumor, but currently insurance doesn’t cover if no targeted therapy available for that type (chicken and egg).

11) blockchain is great solution for chicken and egg problems because speculative capital can spread over early marketplace to allign incentives pre-liquidity

12) network effect. the more people who post their genome, the more valuable the dataset is to query and the more valuable the coin becomes

13) There is no incentive for an individual insurance co to finance a genome w/out direct care application, but there is an incentive for a consortium/all to chip in together. similar structure to private chain consortiums in fin services between banks

14) the equivalent of sponsored content in genomic sequencing is interesting. definiing a “sponsor” role in the protocol could be meaningful. certain rights, and downstream economics attached? maybe sponsoring sequencing is a way to speculate/earn coin (rev share). financial speculator as opposed to financing from end consumer/user of data (pharma for example).

extra notes

• figure out financing of widespread full genome sequencing in healthy patients/people
• apparently data storage is an issue given size of dataset…solvable on chain via storj like solution? any benefit to integrating that job into protocol vs using storj or another 3rd party layer in the stack?
• is there a capacity constraint on full genome sequencing if volume rises abruptly? who serves this market as 3rd party?
• genecoin “store you DNA on the bitcoin blockchain”…early project, pre appcoin it looks like
• genome rights management is an interesting question
• michigan pool: https://www.michigangenomics.org/
• genome rights management: https://grants.nih.gov/policy/sharing.htm

The Universe took my iphone

Posted on May 9, 2017. Filed under: Uncategorized |

Saturday around sunset I walked out to a pier on the Hudson river for a little peace and quiet. I was wearing baggy sweatpants and a hoodie, and had my phone in a loose pocket. The day had passed and I didn’t get to exercise so I decided I’d do a little self-guided yoga while the sun went down. Life has been a little hectic lately, but I was able to slow down, and center, and just as i was zeroing in on some kind of equilibrium…THWAP. Not really the thwap of a glass screen hitting the pavement, more actually a SCHWOOP…of say a vacuum cleaner sucking up broken glass.

I opened my eyes and reached for my phone and sure enough it was no longer in my pocket. No problem…the planks that make up this deck are not spaced far enough apart for the phone to have fallen through…EXCEPT…for the two planks directly beneath me, which happen to spaced such that if a phone fell at exactly the right angle, it could just barely clear the opening and reach the promised land of the Hudson River…and that…my friends…is exactly where my phone ended up on Saturday evening.

For a second my mind went to backups, and icloud restores, and all of the anxiety that comes with reduced access to a pure addiction…but strangely, rather than jumping into action to fix the problem, a wave of calm came over me instead. The fall through the cracks was a one in a million type occurrence…so improbable that I just chose to accept that universe was trying to tell me something…rather than rush home, or to the Apple store, or wherever you go to deal with a lost phone…I said fuck it, went back to my yoga practice, watched the rest of a beautiful sunset, walked to the grocery store, cooked a great meal for my wife, and chose to remember that life is pretty sweet without a supercomputer in your pocket.

The next day, I waited until after the gym to walk over to Apple and replace my phone. As I sat at the Setup table, waiting for icloud to restore my new device, i looked over the communal table at another guy, probably late 30s, wearing a yamaka, weird sweater, and glasses. He looked back at me at just the same moment. He too was waiting for his device to restore…and rather than just sitting there, in silence, watching a progress bar eek along, I decided to ask him about his life. I think what drove me to do it, beyond a general interest in talking to strangers, was a shared understanding that we both didn’t have phones to bury ourselves in while we waited. We had this pause, after making eye contact, which was like “have we really forgotten how to pass the time with other human beings because of these things that we’re sitting here waiting to restore from backup?” It was so obvious that in any other collective waiting scenario (think jury duty, flight delay, whatever) in present day, we would be choosing antisocial co-waiting via the very phones we were repairing. In this moment, the shared absence of our digital escape hatch bonded us, without a single word needing to be spoken, and so we started talking.

The conversation lasted about 20 minutes. I learned about his life growing up in queens, his pursuit of a rare branch of yoga called shadow yoga, and his time living in Israel. I shared a bit about traveling through India, my time living in Boston, and the decision to experience more than just New York City in my life. The normally deadening experience of waiting in an Apple Store became rich and interesting, and then…all of the sudden, my screen flickered, the apple load screen emerged, and bam, I had a perfect copy of my universe-snatched river phone replicated on this new device. I thanked the man for the conversation, threw the new phone in my pocket, and walked home without even a contemplation of connecting with him on Facebook or the like.

I’m not sure what the point of this story is exactly, except to say that life is pretty good without the likes, hearts, and texts. An evening is not ruined without connectivity. And real life surroundings and interactions with strangers can be as entertaining as Facebook videos if you choose to make them so. I don’t know if I was particularly in need of this mini-reminder from the universe…I don’t feel blinded by my phone addiction in general…but the yoga felt great, the dinner was delicious, the conversation was enriching, and the phoneless acceptance was freeing…perhaps a 24 hours worth the $700 it put me out.

Last Mile Thinkers

Posted on May 2, 2017. Filed under: Uncategorized |

I have a lot of 80% finished ideas. At any given time maybe i have 10 or so, floating around in my brain. When I stall out on an idea, rather than let it die or evaporate, I like to lob it over the fence into other people’s yards to see what comes back. Often, what comes back is a set of blank stares or even dismissal, but occasionally what comes back is the last 20%. I start tons of conversations with “want to hear an unfinished idea?” There are certain, albeit few, people in the world who are open and receptive to incomplete thinking. Not in a brainstormy “let’s get to the answer together” kind of way… rather in a “drop me in the right zipcode and I’ll navigate the last mile” kind of way. I deeply value the ear of last mile thinkers. They tend to be forgiving of blemishes and opportunistic around kernels of truth. I had a brief conversation today where my 80% idea was met with inaction…where I wanted the recipient to just take the beginning and see it through to the end…and he just couldn’t…and it made me stop for a minute and really appreciate the last mile thinkers I’ve worked with in my life…it’s a rare chemistry when you find people who can finish your thoughts.