Union Square Ventures & Andreessen Horowitz Inject $10 Million Into Polychain Capital, a Cryptocurrency Hedge Fund

Polychain Capital, a digital currency & blockchain-based digital asset hedge fund led by former head of risk officer at Coinbase, Olaf Carlson-Wee, has raised $10 million from Union Square Ventures and prominent bitcoin investor Andreessen Horowitz.

The San Francisco-based Polychain Capital will be looking to buy into various blockchain tokens with specific use cases and applications in the real world, “Disproportionate returns will go to holders of the tokens rather than investors in private companies built on top of the protocols,” states the Polychain Capital’s Angel page.

Carlson-Wee told Forbes there are many potential investment opportunities beyond bitcoin-focused startups, “There will be many types of assets codified into the blockchain, and they are all not just going to be on the bitcoin blockchain — it’s going to be a number of different assets here. And the best way to invest in that is a diversified portfolio,” he explains.

The 26-year-old entrepreneur believes these blockchain-based, P2P-style networks will eventually replace most of the centralized social media, finance & cloud storage companies on the internet today.

And one of the ways for institutional investors to profit from this trend is to gain exposure to the tokens of these networks. Today, all digital currencies, including bitcoin, are worth approximately $14.3 billion, according to data gathered by Coinmarketcap.com!

While this figure may not seem overly impressive when compared to some other industries, Carlson-Wee tells Forbes’ Laura Shin that a sizable portion of online economic activity may take place on these decentralized services in the near future, which may propel the value of some of these networks and their tokens into the hundreds of billions.

Carlson-Wee’s predictions may come to pass, but majority of alternative digital currencies have struggled over the past few years to maintain their valuations. Even ether - the token of the much-hyped Ethereum smart contract network and the second most valuable digital asset after bitcoin - has dropped close to 60% since May of this year.

An analysis done by cryptocurrency analytics site WooBull.com of 118 digital currencies that achieved a market capitalization of at least $250,000, shows how poorly the vast majority of these digital assets have performed when compared to bitcoin:

However, there are a few exceptions like gaming-focused digital currency Gamecredits, privacy-focused Monero and Storjcoin, the token of the P2P Storj cloud storage network, which have not lost value over the past 2-3 years.

At press time, the Polychain Capital page only displays a short disclaimer and the email address of Olaf Carlson-Wee.

About Author: author Steve Toborov is the founder of Razor-Forex.com, an ardent digital currency enthusiast and Forex trader. Read More...

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  1. The success of a cryptocurrency depends solely on the interest and confidence of a user base who will actively mine the coin with proof or work POW, or mint it with proof of stake POS, and who will also keep their wallets active on the network in order to allow transactions to take place.

    Bitcoin's current big failing is that users do not keep sufficient wallets connected to the network to enable transactions to be processed rapidly enough to satisfy user demand. Bitcoin mining is now limited to specialist "farms" of machines. There are relatively few wallets active to allow the Blockchain process, Bitcoin in a social sense has stalled.

    In the future only coins which garner a degree of interest in maintaining wallets active on the network. Whether this is through an element of Proof of Stake (essentially paying the owners of active wallets a rate of interest on the coins they own), or by supplying some underlying social interest to enthuse the coin owners to maintain their wallets open; will allow the chain to function rapidly enough to respond to user transaction demands.

    Of course the whole point of a cryptocurrency is its active use in financial transactions. However, that will only come about through confidence that the coin will continue to have an active user base and therefore a value. Sadly most cryptocurrencies out there evidence more enthusiasm towards attracting "get rich quick" dreamers than presenting a case that the coin possesses an attractiveness in a wider social sense. In other words, to be successful a cryptocurrency must be seen by its users to be attractive in a wider social sense, to be a social asset, and hence see value in keeping wallets active, and the network turning over transactions efficiently. Few coins currently, or planned, meet that criteria.

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  2. It is my firm belief that science coins namely Gridcoin, CureCoin and FoldingCoin all have a brilliant future.
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