Institutional investment prefers Bitcoin, and most blockchain product funds come from retail crowdfunding

Chapter 0 Introduction

If you want to know a person's attitude, you can't listen to what he says, but look at what he does. It costs nothing to say that you can travel all over the country without spending oil or paying taxes, and you can easily make a big statement. But to really do it, you have to spend real money, so people are much more cautious, and their true attitude is also revealed through their actions.

The debate over which is better, Bitcoin or blockchain, is very lively. Mainstream media claim that Bitcoin is no longer viable and blockchain technology is awesome and great, so let’s embrace blockchain... But in fact, when you really use money to decide right and wrong, you will know who is better.

Chapter 1 Bitcoin accounts for the vast majority of the digital currency market value

The chart below shows Bitcoin’s share of the total market value of cryptocurrencies and crypto assets from April 28, 2013 to July 8, 2016.

As shown in the chart, Bitcoin currently accounts for 83.9% of the total market value of digital cryptocurrencies and digital crypto assets. In most of the history, it has remained above 85%, with a few times exceeding 95%, and only a few times breaking below 75%. This is basically in line with the 80/20 rule, where Bitcoin occupies the vast majority of the market value, leaving only a small arena for a large number of competitors.

It can be said that Bitcoin is the king in this field that was chosen by the market through money voting and has never fallen from the iron throne. This undoubtedly gives a beautiful slap in the face to those who advocate blockchain technology while belittling Bitcoin. People's money will not believe your words.

If history and the present both indicate that Bitcoin is mainstream, what about the future? It is well known that the lock-up period of venture capital is basically more than three years, which represents the market view of venture capital in the next three years.

Chapter 2: Institutional and professional investors prefer Bitcoin

Money is the smartest. We follow the venture capital disclosed by the media to see how money judges the pros and cons of Bitcoin and blockchain products.

There is a column called Coin Ventures in Babbitt, which counts investment events in the field of digital cryptocurrency and digital encrypted assets disclosed by the media. The website is: http://www.8btc.com/vc. It counts the detailed distribution of investment in this field in 2015, with the following results: In 2015, venture capital generally preferred Bitcoin, and the financing amount of Bitcoin-related projects or companies accounted for 76.9% of the total financing.

This is roughly in line with the 80/20 rule. VC money mainly flows into Bitcoin, not blockchain concept products. This is also the fact that VC capital has made a judgment on the development direction of this field in the next three years - Bitcoin is still leading the trend.

Since then, investment in this field has mainly occurred in Bitcoin-related areas. Today, it was just revealed that Coinbase received tens of millions of dollars in financing from Japan. This year, there have been three financing events exceeding tens of millions of dollars, all of which were raised by Bitcoin exchanges.

In addition, the direction can also be seen from the celebrities in the investment world. Li Ka-shing's two investments in the field of digital cryptocurrency and assets are both related to Bitcoin. Silicon Valley investment celebrities Marc Andreessen, Draper Fisher Jurvetson, Barry Silbert... are all strongly pessimistic about non-Bitcoin blockchain products and often despise blockchain conceptual products.

Currently, blockchain concept products are still mainly in the PR (public relations) development stage. Various media outlets have reported on them, exclaiming that they are revolutionary, etc., but only a small number of products have received real money. For example, R3, a blockchain startup that has received 42 major banks in the world, has not yet revealed that it has received real money venture capital.

Blockchain is not favored by most professional investment institutions. Where does its main survival funds come from?

Chapter 3: Non-Bitcoin blockchain products mostly rely on crowdfunding from retail investors to survive

The king of blockchain products is Ethereum. Ethereum is known for its open platform, and a large number of blockchain works are built on its platform. However, Ethereum itself obtained development funds through crowdfunding in the Bitcoin community, raising more than 30,000 Bitcoins at the time, with a total price of 18 million US dollars. Because it was crowdfunded using Bitcoin, the crowdfunding address is here:

36PrZ1KHYMpqSyAQXSG8VwbUiq2EogxLo2. Therefore, the funds involved in the crowdfunding can be clearly checked. This crowdfunding came from a total of 8,890 people, and most of the crowdfunding investments were in bitcoins. I flipped through the first 20 pages, and the smallest investment was only 0.0015 BTC, and the largest investment was 21 BTC. The average investment amount per address was 31529/8890=3.5466 BTC. This shows that it was mainly retail investment behavior.

What is even more surprising is the crowdfunding of The DAO a few months ago. This is also a conceptual blockchain product. It raised more than $100 million in a short period of time, creating the largest crowdfunding event in history. But just last month, a code vulnerability was exposed and tokens worth $60 million were stolen. But no influential investors stood up to speak out, which shows that most of the investment this time came from retail investors.

There are also many cases of conceptual blockchain products crowdfunding in China, such as the famous Antminer, where most of the investors are individuals. There are 267 investments in total from 186 accounts, with an average investment of 11.29 BTC per account. Investors chat every day in QQ groups, and some quarrel every day in forums. Professional institutional investors rarely have time to do this.

Ethereum's boss Vitalik once did an AMA program on the Babbitt Forum, in which someone asked about crowdfunding. Vitalik said: Now, almost every major application on Ethereum has plans to issue digital currency and crowdfunding.

Almost every application on Ethereum has a crowdfunding plan, which shows that crowdfunding is indeed the main financing method for blockchain concept products. I wonder if they skipped contacting professional investment institutions and went directly to crowdfunding.

Chapter 4 Conclusion

In the field of digital cryptocurrency and digital crypto assets, Bitcoin has occupied an absolute mainstream position in history and now. Based on the current evidence, there is reason to believe that this will also be the case in the future.

If you invest or speculate in this field, you must keep your eyes open and not be fooled by the many fancy concepts and revolutionary slogans.