This page has been archived and commenting is disabled.

Benchmarking $666M of Venture Capital Investments In the Crypto-currency Space

Reggie Middleton's picture




 

The $665 Million Evolution in a Space Nobody Respected a Year Ago

You probably already know that the Internet circa 1994 was the biggest investment opportunity (for those who had the foresight and resources to capitalize on it) of the 20th century. Imagine a world where there was a near “guarantee” of a similar monumental investment opportunity (x2) and where many (but most certainly not all) of the world’s most powerful and influential investors are quietly backing entrepreneurs from all over the world to monetize and stake claims of control well ahead of the lay investor.

In other words, imagine lightening is about to strike twice

Let me show you something (slides with the “Coindesk” designation are sourced from the State of Bitcoin 2015 slide presentation, annotated as shown):

Yes, the opportunity is real. Growth metrics are popping three years in a row, even as media froth and rampant speculation has died down. (BTW, that’s a good thing!)

Some of us saw through the noise years ago. That is why I started Veritaseum (formerly marketed under the moniker “UltraCoin”). As of late the venture capital community is truly starting to come around. What does this Bitcoin VC investment look like? 

The deals are not necessarily small deals either. Here are the latest:

The “Contrarian Badass” (yours truly)—who has shown a strong proclivity for things finance and technological, and who has created a start-up with a crack-shot team and a first mover advantage on many fronts—is in an ideal position considering this activity.

Investors (should) look for four things when plowing money into startup:

  1. Astute, driven management;
  2. A strong, unique product;
  3. Ample opportunity and timing; and
  4. A charismatic, analytical, and communicative leader.

Let’s walk through each of these and examine exactly what it is we’re doing at Veritaseum with Veritas.

Our launch product is a bitcoin wallet, and there is rapid growth in wallets, worldwide.

But our product is not just any bitcoin wallet. It was (and still is, we believe) the firstMULTISIG, smart contract-aware, universal FinTech wallet that we know of. VCs loveMULTISIG, they adore smart contracts [Bitcoin 2.0], and if there’s something they cream over even more than those two it would be a universal wallet.

I warned early on that, although a lot of money was going into bitcoin payment processors (ex. Bitpay, Coinbase), it was a bad idea to invest in the strategy that the transaction business would enrich all. The margins are indefensible in a market rife with better capitalized competitors with larger existing customer bases. Reference my post from a year ago, “Payment Processors, Patents and a Dollop of Healthy Paranoia”:

… the big media interest in Bitcoin combined with the increasing VC interest in Bitcoin companies (reference BitPay Gets $30 Million in Venture Capital Funding) is a very good thing for the industry, but also illustrates shortsigtedness in both the investment community and many practitioners.

The problem with the processors...

When bitcoin is as easy as PayPal to use then it will be on the path to mass adoption, but to assume that’s the most lucrative path to take in bitcoin company private equity investment begs the wrong question.

...That 25x markup on the high end is significant (even for the Bitcoin companies), and ripe for disintermediation itself (that's right, the disintermediating agents are poised for disintermediaion). Particularly once the UX of Bitcoin evolves, as email and web browsing did, and users realize how easy and cheap it is to jump onto the blockchain and do this stuff themselves.

Even assuming users don’t follow the historical model of those that left proprietary walled gardens (think AOL) and jumped directly into the open World Wide Web themselves, there are no material barriers to entry to enter into the processing business other than potentially a money transmitter license. The only material barrier, hence the business opportunity, is that Bitcoin is cumbersome to use. As the UI/UX polish increases and the amount of competitors in the space increase, the lower the prices charged - hence the margins - will be.

With such low barriers to entry and potentially humongous markups to exploit, what do you think happens next? The wild, untamed hordes of competitors swoop down upon the masses, and we have a concerted race to zero, and likely negative margin as competitors attempt to make processing a loss leader to draw users into the folds of richer, higher margin services!!!

The race to marginal zero, then negative, does not make a strong business plan. So, what do these companies such as BitPay, Coinbase, etc. do once that point is reached (rather quickly)? They look to value added (high margin) services on top of their low margin, utility-like payment infrastructures.

Enter smart contracts and the true use of programmability in the crypto-currencies. The easiest and the likely first implementation of such will be multi-sig operations which allow multiple parties to share funds without having to worry about trusting and single party in a transaction. Our ZeroTrust Letters of Credit (patent pending) is just such a product. It allows for multiple parties to tranfer payment for simple and complex transactions contingent upon the mutual agreed upon successful execution of said transactions. This is done without the parties having to:

    1. Know each other;
    2. Trust each other; or
    3. Have any form of proximity to each other;

and can be done using micropayments all the way up to multi-million dollar macro payments. The barriers to this business are much higher. For one, it takes more than just programming code. You have to be able to congeal the legal logic of the conventional law in equity contract into code. You have to be able to congeal the business logic into code, and you have to be able to implement it into the blockchain or whatever other underlying transmission mechanism you choose to utilize.

Once the race to negative zero is in full swing, a few of the wiser companies will wake-up and say "Hey, there has to be a better way, and we think we found it!". It is at that point Reggie Middleton's UltraCoin products and assets will shine. It is not hard to foresee that the entrenched companies (Visa, Mastercard, PayPal, Western Union) may enter a bidding war with the new comers armed with material VC warchests (much more than we're seeing with $30 million investments of today - all over the guys who had the foresight to see the next evolutionary step in plain vanilla payments - smart transactions and self-executing digital contracts and transactions.

That was a year ago. Was I right? Well, pricing models changed to drop prices and the business slowed down:

Which led to exactly what I predicted, business model drift:

 And at the same time margins shrunk.

What is Multisig?

A multi-signature address is an address that is associated with more than one private key (in cryptograsphy, security is handled by pairs of unique alphanumeric keys - one private to open a lock, the other public to send to the locked funds/data to others through open passageways [ex. Internet, email]. Once the other side gets the locked package, they will need a private key to open it. The two unique keys must fit with and recognize each other in order to open the lock). The simplest type of multisig is an m-of-n address - it is associated with n private keys, and sending bitcoins from this address requires signatures from at least m keys. A multi-signature transaction is one that sends funds from a multi-signature address.

The primary use case is to greatly increase the difficulty of stealing the coins. With a 2-of-2 address, you can keep the two keys on separate machines, and then theft will require compromising both, which is very difficult - especially if the machines are as different as possible (e.g., one pc and one dedicated device, or two hosted machines with a different host and OS).

It can also be used for redundancy to protect against loss - with a 2-of-3 address, not only does theft require obtaining 2 different keys, but you can still use the coins if you forget any single key. This allows for more flexible options than just backups.

It can also be used for more advanced scenarios such as an address shared by multiple people, where a majority vote is required to use the funds.

Cross-reference the companies below with the green spreadsheet graphic above, and you’ll see that VCs simply love MULTISIG technology.

multisg

Veritaseum is also a universal wallet. VCs adore universal wallets. Cross reference the names in this graphic with the names in the funding sheet above.

Veritaseum was not only one of the early universal wallets, but to finance and investment guys, it’s likely the most powerful universal wallet ever made. You see, not only can it send, receive, and store bitcoins. It allows you to act as your own broker by buying exposure to nearly any publicly traded financial asset (over 45k tickers), in any asset class, through any major exchange around the world, and do this with up to 10,000x leverage. This is all done without counterparty, credit, or default risk.

Here’s some obligatory screenshots:

aapl trade

usd-bkx


Crude Oil Volatility Hedge - veritas

With nothing more than a 15 second download of our trading client (no signups, registrations, no accounts) you can:

  1. Create your own bespoke, custom trading vehicles to...
  2. Directly trade peer-to-peer and OTC, exposure to over 45,000 ticker symbols...
  3. In any asset class...
  4. From exchanges from around the world...
  5. Without an exchange or broker...
  6. With up to 10,000x digital leverage...
  7. Without fear of margin calls or negative equity...
  8. While eliminating practically all counterparty/default/credit risks...
  9. For the least expensive transaction and leverage costs in the industry - as little as 5 bp.

Eliminate your broker, exchange and clearing house - all while actually increasing the safety of your trading.

Veritaseum's offerings and technology are right on time:

Let me show you something more:

So, with Veritaseum you have a universal financial services and self-contained P2P exchange wallet—quintessentially what’s in demand by the “smart money” right now.

When I say we do financial services, I mean we do heavy lifting financial services—going after the big money.

Veritaseum Pitch Deck - Public Pre-sale - Copy

This is quite timely from a VC investment perspective:

 

Keep in mind that Veritaseum doesn’t just trade bitcoins. It trades everything that’s available on public exchanges (including stocks, bonds, forex, and commodities) and more!

Veritaseum Pitch Deck - Public Pre-sale 2

Veritaseum Pitch Deck - Public Pre-sale 1

Veritaseum Pitch Deck - Public Pre-sale 3

Veritaseum has a very, very diverse management team with expertise in IP law, software engineering and architecture, investment stategy, forensic/fundamental/global macro strategy and analysis—and we're just getting started. The CEO has a strong media presence as well:

The Business Media Sees This as DISRUPTION!

image001.jpg

"You're going to put JP Morgan out of business! The banks are going to hate you!"

image002.png

"At least one of the top global money center banks have approached us, and I expect to hear from at least 3 of the top 6!" “MP3 technology combined with innovative business models have cut the music industry profits in half, and they're not coming back!  I query all banking execs, 'Do you want to get MP3'd?'"

image003.jpg

"You are building a virtual Goldman Sachs on top of Bitcoin!"

image004.png

“Middleton sounds a bit like an 18th-century pirate striking back against the Empire when he declares that ‘…what I’m doing right now is a direct threat to fiat merchant banking.’”

image005.jpg

“It’s the perfect storm of disruption, as it renders trading fees, brokerage fees, and those infamous Wall Street bonuses obsolete. The sheer scale of disruption this technology brings with it makes it something to watch.”

image006.png

“Veritaseum is ripe for a strategic investor to approach us before the end of the calendar year, likely payment processors, global banks, and innovative technology companies such as Google, Facebook, Microsoft or Apple.”

These are the reasons to learn more about Veritas and Veritaseum.

In closing, I urge all to read Using Veritaseum's Free Crypto 2.0 Valuation Tool To Value Tokens, Crypto Assets & Smart Properties. Feel free to download the model, tweak the assumptions to your liking or value any other Crytpo 2.0 venture you desire. The results are sure to be illuminating.

Vertias Driven Disintermediation

Team Veritaseum is uniquely trained, and highly motivated. Specialists with few equals, immune to the concept of “can’t”!

—Reggie Middleton, CEO and Founder of Veritaseum, Inc

Veritaseum is in the business of disintermediation. Our profit model is based on the displacement of rentseeking entities. As a result, our profit is your profit, since we split the difference of monies extracted by those who have gained as financial gatekeeper. We have demonstrated how Veritaseum poses to disintermediate “legacy” banking system (reference “DACe, Disintermediation and the Death of Wall Street”), but our search for capital has opened our eyes to an ever inreasing pool of industries that will likely be disrupted as our technology and methodologies become more widespread. I will present a barrage of facts and data and let you come to your own conclusions as to whether this is the dawn of a new age.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 03/23/2015 - 23:53 | 5920611 MEAN BUSINESS
MEAN BUSINESS's picture

When you talk about contracts and lawyers and money etc, I realize you're speaking to individuals and businesses. I think it's fascinating. Really. I am focused on the negotiations regarding the public contract known as The Kyoto Protocol, the Parties currently negotiating the legally binding agreement coming in Paris this December, and the $$$ also known as The Green Climate Fund. If BTC can improve matters on the individual level then surely it could improve matters on the above.

I admire your energy // spirit Sir : )

p.s. how do you interpret the recent closing of the cavirtex exchange?

Tue, 03/24/2015 - 04:27 | 5920881 Reggie Middleton
Reggie Middleton's picture

Thank you sir! The Cairtex exchange, like the vast majority of the others, is a legacy centralzed exchanges that fails to take advantage of the safety protocols and features of Bitcoin. Thus, its and any other, failings are more indicative of the shortcomings of the legacy system of exchanging financial assets through a centralized entitry requiring a high level of trust (vs. our system requiring zero trust) than any problems with bitcoin or the bitcoin network. Quite the contrary, it highlights the need for change. to a fully decentralized, Bitcoin-network type exchange such as Veritaseum.

Mon, 03/23/2015 - 23:18 | 5920557 taketheredpill
taketheredpill's picture

 

 

Is Government involvement/restrictions because of inability to monitor/control fund transfers between parties going to be an issue or am I missing something?

Agree that the platform is disruptive and if it evolves the way described would have same impact on banking as Internet on music, etc.

 

 

Tue, 03/24/2015 - 04:21 | 5920878 Reggie Middleton
Reggie Middleton's picture

Listen, governments monitor everything they can and the US .gov can monitor almost everything. My venture is not some libertaruan rant against the government. Every stock trade every made is moniotred by a governmental agency and no one seems to have a problem with that. 

Smart governments are carefully embracing bitcoin, because to drive it underground is akin to baking an atomic timebomb in your mattress. It can be quite secretive if used in certain ways, but that is not where the power lies. The power lies in its incorruptability.

Mon, 03/23/2015 - 20:25 | 5920085 DeficitAlchemist
DeficitAlchemist's picture

all those digits in computers gonna be dang handy for essentials when internet/Mobilenetwrok/power grid are taken down for any time.

Mon, 03/23/2015 - 21:50 | 5920350 TheHound73
TheHound73's picture

Isn't that what gold and silver is supposed to be for? Lord knows we hardly ever use bullion to conduct our daily business while internet/Mobilenetwrok/power grid are actually up and running...

Mon, 03/23/2015 - 19:57 | 5919991 r3ct1f13r
r3ct1f13r's picture

"The Digital Equivalent of a safe deposit box." You mean like the ones .gov can .take?

"They will pry my bitcoins out of my dead cold wallet."

The Max Keiser quote, I watched that episode, I didn't take that as a compliment, per say, humor for sure, but not a compliment.

I've been toying with Bitcoin for a while now. On the fence, about how to approach it, and generally understanding it. Then I bought some silver.

Mon, 03/23/2015 - 18:40 | 5919701 p00k1e
p00k1e's picture

If you come up with a catchy name for a ‘coin’ URL, create it, get depositors > take their money.  LOL

Mon, 03/23/2015 - 18:49 | 5919734 Reggie Middleton
Reggie Middleton's picture

Here I present technology that litereally removes banks and brokers from the equation while INCREASING safety and transparency and that is all you can come up with? And the guy above you complains about a sales pitch???

Mon, 03/23/2015 - 19:05 | 5919778 p00k1e
p00k1e's picture

Sink your disposable production (money) into "loot" coin.  Who’s stopping you?

Mon, 03/23/2015 - 18:25 | 5919656 Greenspazm
Greenspazm's picture

Blatant sales pitch.

Mon, 03/23/2015 - 18:23 | 5919645 Ban KKiller
Ban KKiller's picture

Being ahead of the curve scares most folks. I remember when I got email, 1994, Netcom, and had no one to email to!

 

Will look into this again...thanks!

Mon, 03/23/2015 - 22:30 | 5920451 Abbie Normal
Abbie Normal's picture

Even when I signed onto Prodigy.net back in the late '80s, there was always somebody to e-mail -- just no photos so it was mostly text; and ummmm, the ability to chat with strangers.

Mon, 03/23/2015 - 18:46 | 5919725 Reggie Middleton
Reggie Middleton's picture

Yes, change does seem to frighten many. If it's different, it must be wrong, no?

There's a ton of chunky, useful and uncommon data and info in this article and I already see people complaining. In two years, the same crowd will be saying, but how could anyone have known....

Mon, 03/23/2015 - 21:32 | 5920296 bwh1214
bwh1214's picture

Do you really think the govt is going to give up control of money creation. Crypto currency only has a future under control of the same powers that have had control over money for the past 100 years. Read this: http://debtcrash.report/entry/bitcoin-an-e-dollar-beta-test

I'm sorry but anyone putting money into private crypto currencies might as well be burning it!!!

Mon, 03/23/2015 - 22:11 | 5920404 TheHound73
TheHound73's picture

2/3 of all bitcoin that will ever exist has already been created.  Nobody asked permission from any government to create those bitcoin, they just did it.  

What is money?  Bitcoin is just data.  At its core Bitcoin just stores abstract numbers in an account ledger, it is humans that give Bitcoin market value/purchasing power.  

The technologies behind bitcoin are used throughout the financial and tech sectors (digital signatures and SHA-256, etc) so the government cannot outlaw the technologies themselves.  If Government tries to outlaw broadcasting the unique formulation of bitcoin messages it runs the risk of people ignoring government and/or showing how ineffectual a ban might be. I rather look forward to seeing the government defend itself against 1st ammendment challenges if it tries to outlaw bitcoin.  The government could pass a law "Thou shalt not exchange Bitcoin for any good or service" but the ban would have to be global: Bitcoin does not acknowledge the existence of any government and slips past borders as if they are not even there.

Mon, 03/23/2015 - 21:34 | 5920306 Reggie Middleton
Reggie Middleton's picture

This is not about money creation, it's not about currency. It's about a value trading platform. It's very, very important that you read what is posted - at least what is posted by me :-)

Mon, 03/23/2015 - 22:02 | 5920360 bwh1214
bwh1214's picture

Reggie I appreciate what you are trying to do, I really do, but you are building a value trading platform around a crypto currency that if it is what people believe it is, is going to go head to head with the most powerful economic forces on earth, sovereign currencies and the governments behind them.  That is if Bitcoin is as advertized, why do you think it has been treated so cordially by governments around the world?  I read your article, and it seems clear that capital is flowing into this space, congrats, but have you really considered the risks of what is touted as the destroyer of the dollar.  Please read this article…

http://debtcrash.report/entry/bitcoin-an-e-dollar-beta-test

It makes more sense than a trading platform for a currency that will likely be extinct in a decade.  Do you think your trading platforms would be used for the E Dollar, http://www.businessinsider.com/electronic-currency-2013-11 .  No it will be the same entities that provide trading for sovereign currencies as we type.  

Good Luck, you're going to need it.

Mon, 03/23/2015 - 22:15 | 5920413 Reggie Middleton
Reggie Middleton's picture

The problem is you're still harping on currency. This is not about currencies, it's about platforms. The internet wasn't about email, and bitcoin is not about currencies. We're having the wrong discussion. See this for clarification https://www.youtube.com/watch?v=zSKPoRnimYc

Mon, 03/23/2015 - 18:41 | 5919707 p00k1e
p00k1e's picture

Why didn’t you reply to the sender? 

Mon, 03/23/2015 - 19:12 | 5919794 putaipan
putaipan's picture

go reggie go!

a little above my paygrade, but tryin' to keep up.

speaking of keeping up .... about three months ago on keiser someone was on with a new 'card'- good for atm's etc. the biggest benefit was in the simple aquistion of bitcoin. since third party shit has been the biggest problem for bitcoin it was nice to see something endorsed by max (and a few others)- but i've lost the bookmark- does anyone know which card/bitcoin service i saw?

thanks.

Mon, 03/23/2015 - 22:20 | 5920425 TheHound73
TheHound73's picture

Was it the show when Max went to Hong Kong? If so, he was interviewing the head of https://anxbtc.com/  

https://www.youtube.com/watch?v=jjH7a2dZi_o

Mon, 03/23/2015 - 17:49 | 5919521 Jstanley011
Jstanley011's picture

No thanks. Next!...

Do NOT follow this link or you will be banned from the site!