The firm founded by disgraced crypto wunderkind, Sam Bankman-Fried, FTX, recently had the details of its venture portfolio released. It’s quite the portfolio in terms of the quantity, quality, and size of the investments: nearly 500 investments across a host of, mostly unknown, crypto projects, totaling over $5.4 billion of capital allocated. Take a look at the company names on the list. If you’ve heard of one of the crypto projects they invested in, ask yourself if the name recognition is due to a press release announcing the close of their investment round OR because of a product they delivered with mass market appeal that you heard about through your kids and their friends. What are these companies and why were they able to raise from FTX at 9 and 10 figure valuations?
Perhaps most notable from the list, however, is what’s missing. Would it surprise you to know that out of these hundreds of investments, FTX Group failed to back any project leveraging the most scalable, efficient, and used blockchain technology?
This chart often surprises people. This screenshot was taken from blockchain analytics firm BitInfoCharts at the time of writing (evening MT on 12/6). The disparity between Bitcoin SV (BSV) and the lesser used, but better known, blockchains trailing it is often much greater, at peak showing BSV dominating with over 93% of all blockchain transactions for that given day. Beyond its daily transaction volume, the BSV ecosystem is also a sector leader in terms of active projects and companies leveraging it, many of which have received, sought, or are actively seeking investment.
Throw a single dart at the blockchain/cryptocurrency investment landscape and you’re unlikely to hit any projects from this dominant ecosystem. When you come to find that the entire room is full of thousands of dart players actively playing games and only a handful have ever hit on this ecosystem even once, then something is clearly up.
Unbounded Capital is one such rare player. We are the world’s first fund solely focused on scalable blockchain technology, today, a thesis synonymous with focusing investments within the Bitcoin SV ecosystem. Alongside a handful of coinvestors from independent angles, to family offices, to venture firms, we have been virtually alone in allocating capital to start ups in this burgeoning ecosystem. The so called “blue-chip” firms like Sequoia, A16Z, Digital Currency Group, Multicoin Capital, and SBF’s FTX/Alameda Research (which were also highly regarded up until a few weeks ago) have been totally absent, investing instead in companies on FTX’s laundry list linked above, many of which appear to Unbounded Capital as fairly transparent frauds, ponzis, and otherwise useless technology demanding preposterous valuations.
In May 2020 we published a book outlining how these exact firms were fundamentally mistaken in their understanding of the value of cryptocurrency and blockchain technology. In hindsight, our critique may have been too generous. At the time of writing, Bitcoin SV, the “version of Bitcoin that scales”, was much smaller than it is today, effectively absent from the pie chart included above. Our optimism about BSV and our critique of the crypto consensus wasn’t empirical yet, we were simply observing the assumptions at these theses’ foundations. The “crypto consensus” being articulated and championed by Forbes cover recipients like SBF, once dubbed the ‘JP Morgan of Crypto’ by household-name CNBC talking heads.
The problem with SBF and his fellow tastemakers at the top of the “crypto consensus” hierarchy was not at their surface level conclusions, but rather at the core of their understanding of what this technology is good for and bad for. This is why, together, they failed to make a single investment in the dominant ecosystem positioned to deliver value while wildly throwing tens of billions of dollars at tech with no real future in sight.
For the majority of firms this is still the case today. The story of the collapse of SBF, and the acolytes his demise will topple, is still developing. Underneath any apparent fraud by SBF which may eventually be proven in court, there is a more pernicious fraudulent understanding of the entire landscape. This cryptocurrency consensus we attacked in our book in 2020 remains fundamentally flawed, rendering even the most earnest attempt to implement this vision of the future almost certain to fail.
At Unbounded Capital,
we will continue to focus on where we see real value creation. Despite the unpopularity of our thesis over the last few years, we are thrilled to be effectively firewalled from the ongoing crypto collapse and the players who initiated it. During that time, we made investments in core micropayments infrastructure companies we anticipate will play a major in the future of the internet. Over the last few months our thesis has become much less contrarian, we expect this trend to continue over time.
Our pessimism about DeFi, DAOs, useless tokens and NFTs, algorithmic stablecoins, Tether, “trustlessness”, “decentralization”, layer two scaling solutions like the lightning network, or headline dominating layer ones like BTC, Ethereum, Solana, or the myriad of other investments in FTX and A16Zs portfolios continues and we expect more entrepreneurs, technologists, and investors to come to these conclusions as the crypto consensus continues to unravel.
If you would like to learn more about the future we are building towards, fueled by the most efficient and scalable blockchain technology in existence, Bitcoin SV, visit UnboundedCapital.com, read our Ebooks and blog posts, and sign up for our twice monthly webinars.