The bitcoin price is hovering near its best levels of the year, and Comcast Ventures’ Managing Director Gil Beyda says it’s because people are realizing there’s “real value” in bitcoin and blockchain.
While 2017 was a year where investors were focused on getting rich quick and doubling/tripling/quadrupling their money, the froth is now out of the way.
“I think there was a pullback to say, ‘Okay, what are the real applications of cryptocurrency and blockchain technology?’ And I think we’re going to see a surge now around people really understanding the potential for the technology,” Beyda said.
The venture capitalist went on to compare the rise of cryptocurrencies and blockchain to that of mobile phone technology, pointing out underdeveloped countries “leapfrogged” landline telephones and instead went from having “no phones to mobile phones.” PayPal’s Dan Schulman recently noted how this played out in India.
Beyda suggested that the same thing could happen in underdeveloped economies where central banks are corrupt. These countries could “skip” the centralized banking system that’s prevalent in developed economies and “go straight to a crypto-based economy,” he said, pointing to an economy that’s fueled by peer-to-peer transactions on the public ledger with no central authority.
The impact of blockchain technology on traditional financial institutions like Goldman Sachs in the United States will have less of an impact versus the underdeveloped world, Beyda suggested, adding, however, that “there are still a lot of financial applications that don’t necessarily need large banks or traditional financial players.”
Where Beyda sees blockchain technology shining is as a platform for voting, where he says it’s a “great application.” He described a voter coming to the booth and using a cryptographic key to identify themselves. As a result, this prevents “multiple voting” from taking place and ensures the transaction is recorded on the immutable ledger.
“Another aspect is the decentralized control, so there’s no single party or entity that is counting all of the votes,” he said.
Eventually, Beyda expects that ICOs will be regulated in the United States and “this will be another lower-friction way for companies to raise capital.” But he doesn’t expect token sales will disrupt the venture capital model. In addition to capital, the value that venture capitalists bring to the table is tied to experience and advice, and it’s hard to put a price tag on that.
The toughest part about investing in ICO startups is in valuing the startup, as it’s more akin to valuing an economy than valuing a business given the multiple players and moving parts involved with an ICO project, he explained.
Comcast Ventures, the venture capital arm of media giant Comcast Corp, has already backed four blockchain startups from its main fund, one of which is Blockdaemon, which is a blockchain-as-a-service company. And the tally will grow by year-end. Beyda identified other sectors of the economy that the blockchain as the potential to disrupt, pointing to social media, content distribution and e-commerce.
He also explained there are already blockchain-fueled projects under way at NBC Universal and Comcast, both of which are increasingly looking to blockchain technology to “tackle real problems.”
While Comcast Ventures expects to continue to back blockchain startups, Beyda believes we’re still waiting for the “killer app” that introduces things that weren’t possible before. For that reason, he explained, blockchain technology remains in the pre-game stage and has not even entered the early innings yet.
As for investing in bitcoin and cryptocurrencies, Beyda compares it to investing in “high risk commodities,” saying: “If you’re not comfortable with prices changing 5%/10%/20% a day and that volatility in your portfolio can’t handle that sort of stress, then bitcoin and cryptocurrencies are probably not right for you yet.”
Featured image from Facebook/Comcast Ventures.