The Unofficial a16z Crypto Wiki
An offshoot of venture capital firm Andreessen Horowitz, a16z Crypto is a $300 million venture fund dedicated to investing in companies at the forefront of blockchain technology. We've got a full explanation of what this means for the crypto world and what we can expect from them in the future. For more on companies at the forefront of blockchain, check out this guide to Consensys.
What Blockchain Companies Has Andreessen Horowitz Invested In?
- Many more tech companies that a16z has invested in can be found here.
An Introduction To Crypto From a16z
Can Blockchain Be Used For More Than Cryptocurrency?
It's important to distinguish the difference between these two things. Cryptocurrency is a form of digital money, while blockchain is the technology behind it. The two most popular cryptocurrencies are Bitcoin and Ether, but Ethereum's blockchain has uses beyond just buying and selling coins. Thanks to the ERC-721 standard, Ether can be used to by crypto collectibles, which includes everything from assets like Factbar to games like Ether Online or MegaCryptoPolis. Funds like a16z Crypto are looking to invest in the blockchain, not necessarily the currency. That means they aren't buying a bunch of Ether, but rather they're purchasing a stake in companies that will use the Ethereum blockchain in new ways.
A new project from Andreessen Horowitz, a16z Crypto is a three hundred million dollar venture fund dedicated to investments in crypto companies and protocols. Their goal is not just to invest in companies that utilize blockchain technology, but those dedicated to expanding its real-world use cases beyond current applications. By putting a traditional venture capital firm behind advances in computing technology, they provide a level of legitimacy that may help skittish investors get past their fear of the crypto world.
The a16z Crypto fund is an offshoot of Andreessen Horowitz, often known as a16z. Founded in 2009 by Marc Andreessen and Ben Horowitz, this Silicon Valley-based enterprise has raised more than $7 billion that they invest in technology companies of all stages, including some of the most well-known companies in tech.
Among the companies they've invested in are Skype, Twitter, Groupon, Coinbase, Lyft, Oculus VR, Medium, and BuzzFeed, just to name a few. These angel investors are major influencers in the tech world, and have a large team of technology and financial experts at their disposal.
With investments in several blockchain-based companies, a16z was created to provide a dedicated team for this exciting new field. The company recognized that there was a need for long-term investment beyond the speculative trading that has dominated the crypto world. With so many new assets demonstrating a demand for decentralized trading, this type of investment is exciting to those who believe these advancements are the future of computing.
Let's take a step back and explain exactly what blockchain is, and why it has so much potential. You've probably heard of cryptocurrencies like Bitcoin and Ether, which employ blockchain technology. By using a decentralized ledger, users can verify transactions without the need for a central authority. Many people have bought Bitcoin and Ether and held onto them as investments, but some are confused about how they can actually be used. You can't yet go to the store and buy groceries with Bitcoin, but some think one day you will.
Ether functions as a currency like Bitcoin, but the network also incorporates "Smart contracts" to allow for the development of decentralized applications, or dapps, that take advantage of its blockchain. When you make a transaction on the Ethereum network, no person is verifying your payment. Instead, it goes through a smart contract for the asset that you're buying or selling.
Beyond Bitcoin and Ethereum, there are many different types of crypto coins available. Often companies will issue an "I.C.O.," where they sell tokens that represent a stake in their company, or use those tokens as currency to participate in that company's business. You can use Ether to buy and sell these tokens, and thanks to a set of standards called ERC721, you can also trade tokens that relate to unique assets.
Most crypto tokens are like Bitcoin and Ether in that they are fungible, meaning all coins of a certain currency are the same. If you have two Bitcoins, and you plan to sell one, it doesn't matter which one you sell because they are worth the same amount. You can also deal in fractions of a coin in the same way you can deal in dollars and cents. But some assets are unique, or non-fungible. Ethereum has led the way in using its blockchain for unique digital assets, also known as crypto collectibles.
To handle unique assets, ERC721 was created. This is a standard for smart contracts dealing in digital assets that are not all the same. One popular example is Factbar, online representations of facts that are researched and verified. If you own a Factbar, you are the only person who owns it at that time, and every Factbar has its own unique value. Highly-desirable Factbars are therefore very valuable because they are rare.
The ability to employ these smart contracts has led to an explosion in decentralized applications. These are mostly games that allow players to put real Ether on the line and potentially earn money by playing. But ERC721 tokens could also be used to prove ownership of real-world items.
Investors like a16z want to move beyond games to figure out what blockchain will be used for in the years to come, when there aren't just millions of users, but billions. Companies like Consensys are pioneering ways to use the blockchain for everything from verifying ownership of music to running smart grids for green electricity.
The way a16z Crypto wants to set itself apart is by taking a long view. This means that they want to hold investments for a decade or more, and space out their investing over time so that small fluctuations in the crypto market won't affect them. Their size and experience allows them to take on companies in a variety of stages and with a variety of business plans.
Their team includes former startup founders, Google engineers, and investment specialists. It also includes Katie Haun, a former DOJ prosecutor who's served on the board of Coinbase. The dedicated team will likely grow in the future, but also has the advantage of working with the greater staff of a16z, which has years of experience in a variety of spaces.
The world of cryptocurrency is a fascinating one, and many people are looking for the next big thing to invest in. While some are looking to make a quick buck, a16z Crypto is taking the long view, supporting this technology's potential for the future. They are a company worth keeping your eye on as they continue to find new partners for investment.