Beyond Innovation #9: Changing Investment Landscape with Pantera Capital's Dan Morehead

the investment community around the world is spending a whole lot of time figuring out where and how exactly to play in crypto currencies and blockchain and there's a tremendous amount of confusion out there it's very early days then you been an adventure business for a long time and you were really early generally back in 2013 when you started this latest focus on blockchain it was essentially zero level of investment at the time you were in on the ground floor how have you seen it evolve yeah it's really changed a lot which is great we thought it would be very transformative to financial services but at the time there really no custodians there were no ETFs there was no way to get exposure we actually created Pentair Bitcoin fund to allow LPS to get exposure to Bitcoin now we have institutional grade custodians and other service providers are going to allow the industry to develop you know there's a tremendous amount of volatility in the prices of cryptocurrency and so from an investor's perspective how do you address that what do you think people should be doing with their portfolios so I think the first thing is we grew up learning that volatility is bad but if you think about Bitcoin or blockchains as a call option on the future payment rail of the world volatility is great when you're long a call and that's way you should think about it put just a very small amount of your money into cryptocurrency and amount you could be willing to lose and let it ride for many years into any other currency but you think I think you should have a basket there are you know I've seen too many investors spend a lot of time thinking about is it gonna be Bitcoin is it gonna be aetherium as it can be Ripple that's not the way to trade a stock portfolio right you don't say I'm gonna put all my eggs in the Google basket and I'm never gonna buy Apple I'm never gonna buy Amazon you buy 30 things and some work really well some don't that's the way you should be with cryptocurrency you've got an expression used to describe what's happening with cryptocurrency and blockchain as money over IP what do you mean by that in the end it's just like what Voigt did to the telephone business back in the day you had a monopolist in the US with AT&T a copper wire to the UK and British Telecom the only way in America could call someone in the UK was via that very expensive phone line right when we figured out you could route voice over the Internet it dropped price more than 99 percent that's what's happening in Finn there's a few monopolist oligopolists that control all the payment rails very expensive to send money across borders very expensive do a credit card swipe all those fees are gonna come way down when you can route money over the Internet one of the things that the community always talks about is the scalability challenge of blockchain where are we on that challenge how we can overcome that you know six or eight years ago blockchain was basically a science experiment we didn't know if it would work it's now proven to work it just needs to scale the basic block chains like Bitcoin and etherium do about seven or eight transactions per second over Christmas visa does fifteen thousand so you got to go up many orders of magnitude and each of those projects has two or three different possible solutions that will increase scalability often orders of magnitude it's going to take a couple years and it's going to be a little bit clunky but I don't really have any doubt that in two or three years you're going to be able to do thousands of transactions per second

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