Technologies that change the world often have humble and obscure beginnings. When the Defense Advanced Research Projects Agency of the U.S. Department of Defense created Darpanet, the goal of the project was to create a decentralized and redundant communication network that would allow for continuous communication between cities within the United States in the event of nuclear war. Darpanet, the predecessor to the internet, was built for a narrow and specific purpose-but it also had sufficient funds and resources to get up and running.


Entrepreneurs and pioneers soon reimagined the technology. Startups managed to drum up sufficient funding to add new layers of applications on top of the basic infrastructure, scaling the network with product innovation and capital, creating the internet as we know it today. Companies that are now household names, such as Google, Amazon, eBay and Facebook, created the resulting hundreds of billions of dollars of enterprise value.

Sometimes a startup technology company begins with an idea that fails to gain traction, undergoes a metamorphosis and achieves notable success in a totally new direction. Over the past few years, the denizens of Silicon Valley have coined a new use for a word that embodies this dynamic: “pivot.” In the short time since Satoshi Nakamoto published his Bitcoin whitepaper in 2008, there have been multiple pivots throughout the industry. New and unexpected innovations on top of the blockchain infrastructure have surprised many industry observers. Investment by Blockchain Capital in blockchain technology has mirrored and proudly helped the industry by providing capital, leadership and guidance to this nascent ecosystem.

Many of our early investments were consumer-Bitcoin focused, including numerous Bitcoin wallets, exchanges and payment-related companies. These early entrepreneurs built the “bridges, roads and tunnels” of the Bitcoin infrastructure. Companies at the forefront of the industry, such as Coinbase, have emerged as the leading consumer-facing companies within the Bitcoin industry, but consumer adoption of Bitcoin as the kind of payment technology its creators envisioned has seen slowing growth in developed markets such as North America.

Most consumers in such markets have excellent access to financial services. Although credit cards have high fees for merchants, they work well for consumers. The proliferation of mobile banking services and of bank branches, and access to global capital markets via services such as E*TRADE and Schwab create a high hurdle for new payment technologies to get over before they can gain market share and consumer adoption. Although existing and heavily entrenched financial services technology is broadly serving technologically advanced cultures, that is only one segment of the market.

Emerging Markets

Consumer-facing financial services using Bitcoin may have disappointed early industry enthusiasts, but we remain bullish on their adoption in the developing world. There are 3 billion people in the world, mostly in developing economies, who have no access to the financial services that most people in the U.S. take for granted. They have no credit cards, bank accounts or securities trading accounts.

Many of these consumers, though, now have a smartphone in their pocket, giving them unprecedented access to cutting-edge financial services. There are nearly a million new smartphones turned on every day. In the same way that these consumers leapfrogged landlines to get 4G smartphones, they are likely to leapfrog bank branches and plastic cards to get mobile, ultra-low-cost, blockchain-based financial services.

Financial Firms Pivot to Take a Second Look

The first major pivot for the Bitcoin and blockchain industry was the realization by financial incumbents that blockchain technology is a robust, ultra-secure infrastructure layer for the trading and settlement of traditional assets. Initially, banks, brokerage firms and stock exchanges generally weren’t interested in Bitcoin, per se. Some of these firms were turned off by the fact that criminal activity-namely by the Silk Road-was associated with the early days of Bitcoin. Other firms feared that their traditional roles of being a financial intermediary could be threatened if Bitcoin were to gain broad-based adoption as a peer-to-peer payment technology.

Increasingly, banks learned that the blockchain can enable a better, faster, cheaper way to trade and settle traditional assets like stocks, bonds and commodities. Blockchain and distributed ledger technologies hold the promise to unify the current fragmented approach to trade reconciliation, where all market participants keep their own records in differing formats.

Many of our portfolio companies (Chain, Blockstream, AlphaPoint, PeerNova, itBit and Ripple) have pilots or technology trials underway with large financial firms to address the massive opportunity of re-architecting the way assets are traded and settled. These trials will be completed over the next year. If the return on investment makes sense for these banks and brokerage firms, we expect the trials to turn into large commercial-scale collaborations and integrations that produce significant revenue for our portfolio companies.


The next pivot we are witnessing is the reimagination of the Blockchain as a free-to-use distributed database that can function as an immutable record and can track chain of custody or provenance. Documents and business processes can be “hashed” into the blockchain, allowing consumers and enterprises alike the ability to prove to regulators or customers that their data or documents have not been changed or tampered with. This brings up extensive opportunities for non-financial use cases for blockchain technology. We have seen a flurry of entrepreneurial activity around this expanded view of blockchain applications in non-financial services sectors, including these portfolio companies:

  • Stem is using blockchain technology to better track and monetize content created and distributed online.
  • Tierion has developed a “proof engine” that allows enterprises to easily access the blockchain to certify any document or business process.
  • Wave is addressing the international shipping and logistics market by replacing a 200+ year-old piece of financial technology-the paper-based “bill of lading” that gives the bearer of the paper document ownership of the cargo on a ship.
  • is using the blockchain to create a digital notary service.

We also led the first ever venture capital investment into a start-up in the Ethereum ecosystem called Ethcore. Ethereum is in some ways a competitor to Bitcoin, though our view is that it is complementary. Ethereum is also blockchain-based, but is optimized for smart contracts, compared to Bitcoin’s payment orientation. In addition to some important technical differences, Ethereum has a robust and growing base of world-class developers.

The blockchain technology industry remains an exciting and fertile investment environment. Leveraging our industryleading position, we continue to see fantastic deal flow. Our mission continues to help small companies of today grow into the blockchain behemoths of tomorrow.