Page 44 - Forbes - USA (March 2020)

Multicoin Capital Cont.
FORBES
BLOCKCHAIN 50
42 To create our second annual list of big companies
innovating with blockchain technology, we vetted hundreds
G of nominations. The best are leveraging the tech underlying
N In June 2019, after Binance announced that a new
I cryptocurrencies like bitcoin to speed operations and increase
T exchange would comply with U.S. laws, its coin rose
S transparency. Five of the most intriguing are listed below,
E to $40, an eightfold gain for Multicoin.
V with their underlying blockchains.
N
I The full 50 are at forbes.com/blockchain50.
•
N
A lion at current prices. That number has risen, and
I
R BA ID U
A
R China’s search giant has numerous blockchain ventures, including a
T
N canine version of Cryptokitties, which enables millions of Chinese to
O adopt and trade cute digital puppies, each distinct, that “live” on the
C
blockchain. Another service offers student loans, but funds are disbursed
only after the technology is used to verify grades. Baidu uses a popular
open-source blockchain originally developed by IBM.
UNDERLYING TECHNOLOGY: Hyperledger fabric
D E B E E R S
The end of blood diamonds? De Beers’ new software, Tracr, follows
diamonds, which have undergone 3D scans, as the gems are mined,
cut, polished and sold. Already more than 30 participants, including
Signet Jewelers—owner of Kay, Zales and Jared—have signed on.
Tens of thousands of stones are being registered per month.
BLOCKCHAIN: Ethereum
FOXC O N N T E C H N O LO GY G R O U P
The iPhone maker’s trade-finance venture, Chained Finance, pays
more than 20 electronics suppliers using digital coins minted on the
ethereum blockchain. The result: Financing costs have plummeted from
annual percentage rates as high as 24% to 10%, and the time needed to
get funding has been cut from seven days to same-day. Foxconn uses
ethereum’s blockchain, famous for innovating so-called smart contracts,
which automate financial transactions.
BLOCKCHAIN: Ethereum
S Q U A R E
In the third quarter of 2019, Square generated $148 million in revenue
from fees charged to users who paid with bitcoin. Just revealed: a service
that lets people instantly send and receive crypto payments.
BLOCKCHAIN: Bitcoin
U N I T E D N AT I O N S
The 75-year-old organization connecting 193 countries has numerous
blockchain initiatives. To combat warlords who steal aid using pilfered
ID cards, the U.N. recently disbursed funds to 100,000 Syrian refugees
in Jordan, using blockchain-verified iris scans instead of ID cards.
BLOCKCHAIN: Ethereum, bitcoin
F O R B E S . C O M
es. Many investors have shunned Binance’s coin be-
cause unlike Coinbase (see story) its billionaire CEO,
Changpeng Zhao, is known for evading regulatory
oversight and skirting U.S. money-laundering laws.
Multicoin’s founders were impressed by Binance’s
innovative launches, which included a user-run de-
centralized exchange. The Asian firm was also rap-
idly gaining market share among crypto exchanges.
Jain and Samani are also pound-the-table bitcoin
bulls. They closely monitor the number of accounts
holding 1,000 or more bitcoins, worth about $9 mil-
these investors are holding onto their bitcoin for lon-
ger durations. Those factors, combined with the up-
coming May “halving” of bitcoin—the number of
new bitcoins created per day will automatically drop
by 50%—convinced them to buy bitcoin call options.
In addition to its exchange-traded cryptocurrency
bets, Multicoin invests directly in startups like San
Francisco’s Helium, which sells a $495 Wi-Fi hotspot
that allows homeowners the opportunity to share in-
ternet access with others nearby—and earn crypto-
currency by doing so. Using Helium, mobile scooter
provider Lime, for instance, was able to keep tabs on
its bikes without paying Verizon’s Wi-Fi fees.
“I think we’re going to be looking at over a 10x
return,” Jain says. A Samani blog post led to their in-
troduction to Helium’s CEO.
One Multicoin investment that has been a bust
is EOS, a token created by startup Block.one that
raised $4 billion in an initial coin offering (ICO).
Multicoin invested in EOS in early 2019 after pub-
lishing a 31-page analysis of it. The token traded at
$11.60 at the time but sells for $4 today.
“I wish we had developed a better relationship
with the core [EOS] team to understand their vision
for the protocol and how they were going to grow
and scale it,” says Samani, sounding like a value in-
vestor who miscalculated management’s skill.
If there’s a lasting lesson from three years in the
crypto-trading trenches, it’s that there is no room for
passive investing in digital assets. Says Jain: “The
crypto markets are the least efficient markets I’ve
ever seen in my life, and that means active manage-
ment has an opportunity to shine.”
FI NAL THO U G HT
“DON’T BE AFRAID TO FACE
THE FACTS, AND NEVER LOSE
YOUR ABILITY TO ASK THE
QUESTIONS WHY? AND HOW?”
—Immanuel Velikovsky
M A R C H 2 0 2 0