It wasn’t long ago that cryptocurrency investing could be (and often was) dismissed as “niche.” In the summer of 2016, the value of all the crypto in the world was barely $10 billion, and in the popular imagination the technology was associated as much with online drug dealing as with venture capital dealmaking. Today it’s a different world: Anyone can buy crypto using a Robinhood account; S&P 500 companies hold digital coins on their balance sheets; and Bitcoin at $30,000, a bullish pipe dream just a year ago, now counts as a serious slump. (The total value of the crypto market, meanwhile, hovered near $1.5 trillion in late July.)
Crypto’s current status reflects more than just the avid trading of tokens themselves. The crypto and blockchain sectors are maturing into complex industries, and that evolution offers investors new inroads, even as trading embeds itself more firmly in the broader financial world. “There’s a mainstream recognition now that crypto is more of an architecture and operating system, and that all kinds of products and services can be built on top of crypto systems,” says Andreessen Horowitz general partner Katie Haun, who coleads the famed venture capital firm’s crypto investing platform.
For investing pros, such products and services represent the next frontier. VC firms have poured an unprecedented $17 billion into the crypto space for the year through mid-June, and they’re diversifying the kinds of blockchain-related bets they’re making.
Andreessen recently raised $2.2 billion for a new crypto fund—its third and largest so far. Haun cites the market for non-fungible tokens, or NFTs, as one that’s squarely in her focus. NFTs allow creators to turn digital media, ranging from artwork to sports highlights to video game avatars, into collectible, tradable commodities. The firm’s recent NFT bets include leading a $100 million funding round for NFT marketplace OpenSea that valued that company at $1.5 billion, along with an investment in Virtually Human Studio, which operates a virtual game that allows users to buy, sell, and breed NFT “racehorses.”
Crypto-conscious investors view the NFT trend as an opportunity to be early movers in a business that could have an enormous reach—like the fine-art market but more democratic and potentially far larger. “Anyone who missed out on the expansion and growth of Instagram [and similar platforms] 10 years ago is looking at NFTs as a new frontier that they can sink their teeth into,” says Craig Russo, director of innovation at digital-asset investment firm Polyient.
Fortune
