The crypto world is riddled with noise. Memecoins, speculation, rug pulls, scams, hype and doomers distract us from all the innovative stuff people are building with blockchains. And sometimes the noise pollutes the stream of information so much, it can get really difficult to continue to believe in the technology.
Still, one venture capital veteran feels the only way to cut a clear path is to focus on blockchain technology and startups building in the industry.
“Crypto and blockchains are in the news a lot, but a lot of it is around speculation and prices. I feel that there’s another side of the story,” Chris Dixon, partner at Andreessen Horowitz (a16z), told me on TechCrunch’s Chain Reaction podcast. “It’s the side of the story that I live in, that the entrepreneurs we work with live in, which is what I would call the productive side of blockchains.”
Dixon has been at a16z since 2012 and he even helped found the firm’s crypto division, which he currently leads. In the past year or so, he has been heads-down writing his new book, “Read Write Own,” which came out earlier this week.
In the book, Dixon compares blockchains to steel and the Web 2.0 internet to wood — when steel first came about, most people thought it was unnecessary because wood worked fine, but then things changed drastically once steel was adopted at scale.
“Blockchains are a new building material that lets you build internet services,” Dixon said, explaining the analogy. “My core argument is that [you] have all of the wonderful advantages of these corporate networks like Facebook and Twitter, and you can build modern interfaces. You can do all sorts of other interesting stuff. But you don’t have to sacrifice the control and give it over to a small group of people; you can maintain community control.”
He argues that blockchains are the best of both worlds, and “allow entrepreneurs to build new internet services that return the internet through an open and democratic network.”
Dixon also thinks the “casino behavior” in the crypto community needs to be dampened for the industry to be taken more seriously. “I’m not anti-speculation . . . but I think it’s a question of priorities. It’s gotten so much attention around blockchain and crypto; it’s putting the cart before the horse. The focus should be on digital ownership.”
There’s always going to be a massive crypto trading market — it’s worth around $1.64 trillion today — so it would be silly to dismiss it. But Dixon feels this is not the main purpose of crypto.
“Fundamentally, it’s about building great products,” he said. Crypto will make sense when it has a big break the way artificial intelligence did with ChatGPT or smartphones did with the iPhone, he added.
But what will be this great breakthrough product? That’s the trillion-dollar question and a16z is one of the many venture capital firms trying to figure that out through its web3 investments.
While there are a lot of promising signs, it’s hard to predict where a true breakthrough will happen. “It’s sort of easier to predict what technology will be important and harder to predict exactly how,” Dixon said. “So I’m going to hedge a little bit on that.”
It appears he — and a16z’s four crypto funds — are doing just that. The funds make up a total of $7.57 billion, and while all of them still have dry powder to invest, Fund IV still has over $3.8 billion of its $4.5 billion total left, according to PitchBook data.
To date, the firm has invested in a number of blockchains like Avalanche, Aptos, Solana, Celo and Optimism. It has also invested in big crypto entities like Coinbase, Alchemy, Yuga Labs, Worldcoin and Dapper Labs.
“I think it’s good to embrace the future,” Dixon said. “Ultimately, there will be new things; the internet will change and there will be brand-new mega trends. Probably the most important thing one can do career-wise is to get involved in one of those things and to be optimistic about it.”
This story was inspired by an episode of TechCrunch’s podcast Chain Reaction. Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to hear more stories and tips from the entrepreneurs building today’s most innovative companies.
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