Bitcoin and blockchain spaces have received much attention in recent years as investors recognize massive opportunities in the spaces – they themselves can enter into the cutting edge of financial technology. Financial technology, in general, has received attention as banks cut down on bank branches, looking to bring their services into the 21st century. Bitcoin has caught a lot of attention but there are key things any investor in the space should know. For one, if you’re looking to invest into the Bitcoin space, remain humble. Bitcoin doesn’t actually need your participation. Its deflationary coding will ensure that the idea Bitcoin proliferates. Many firms in the space celebrate the same innovation they’ve made: they all make Bitcoin easier to use. In reality, Bitcoin and the core wallet it’s pretty easy to use anyway. For that reason, many Bitcoin startups are redundant. Why, for instance, is there a need for so many wallets? Competition for competition’s sake? And, furthermore, what new features do they bring to the table? Most importantly: how do they profit? Many of these same concerns can be lobbied at Bitcoin exchanges, as well, who, like banks, must endure cumbersome AML and KYC regulations while buying and trading bitcoins at no more than a 5% profit margin, and much more often at 1%. In total, bitcoin exchanges become the very regulatory mechanisms Bitcoin participants proclaimed to overcome. To boot, many Bitcoin users prefer privacy over middlemen. Instead of using a startup like Coinbase or Circle, they might oftentimes opt instead for LocalBitcoins, an early Bitcoin company that allows users to meet in public and trade bitcoins for cash. The most pressing need for VC’s to consider in the Bitcoin industry is know your customer and anti money laundering procedures. Currently, due to the pseudonymous nature of bitcoin, […]
