Bitcoin may be the king of cryptocurrencies and one of the main applications of blockchain technology in use today, but the managing partner of investment firm Rockaway Blockchain Fund thinks it’s holding blockchain back.
“Bitcoin is the biggest problem in blockchain,” says Viktor Fischer, whose venture capital firm has raised $123 million to invest in blockchain projects. So far, the company has invested in around 30 distinct startups across commerce, financial services, content monetization, and infrastructure. Rockaway was an early investor in the Terra and Solana blockchain ecosystems.
He is not the first to voice his concerns about bitcoin. JP Morgan CEO Jamie Dimon and Warren Buffett of Berkshire Hathaway, among others, have suggested in the past that the world’s largest cryptocurrency amounts to little more than a Ponzi scheme.
However, the Rockaway Blockchain Fund boss’s aversion to bitcoin isn’t driven by the same concerns, many of which are branded as media scaremongering.
“Bitcoin is blockchain’s biggest public relations problem because it’s hard to understand,” Fischer said. Verdict. “Furthermore, there are often fictions that are not true. For example, it is used a lot for illicit transactions and other claims in the media, which does not help us. »
Despite claims by the head of the Rockaway Blockchain Fund, it is certain that bitcoin has become the preferred payment method for ransomware gangs due to its reputation for being difficult for law enforcement to trace. This reputation, however, is not entirely justified. Ordinary police may have trouble tracing bitcoin payments, but major investigative agencies can.
The United States Federal Bureau of Investigation has been able to track and recover ransoms paid to cybercriminals, such as those behind the Colonial Pipeline hack, although these ransoms are paid in bitcoins.
This ability to trace transactions was one of the reasons cryptocurrency exchanges rejected claims that Russian oligarchs were using blockchain assets to evade sanctions imposed on them due to the invasion. of Ukraine by Vladimir Putin.
“It’s so hard for people to understand,” says the Rockaway Blockchain Fund boss. “That’s actually how we all grew up. I was born many years ago [when] we all believed in a central authority – be it a government [or] a bank – and bitcoin puts it all on its head and says there is no central authority.
For him, this is unfortunate, because Fischer believes that blockchain technology has much more to offer than bitcoin. It highlights the ability of a blockchain network of 10,000 computers to compute and process transactions both faster and cheaper than traditional systems. Fischer also argues that such agreements can provide huge benefits to cross-border transactions, smart contracts, and even insurance.
“But when we were fundraising, every time I used the word bitcoin in a meeting, I knew it would be over,” he says.
Is cryptocurrency winter approaching?
The past two years have seen the valuations of bitcoin and other digital currencies skyrocket. They reached record highs last November. At the same time, investments in the cryptocurrency sector have also exploded.
by GlobalData data suggests that the number of investment deals in the cryptocurrency space grew from 40 to 98 deals between 2020 and 2021. So far in 2022, the firm has registered 20 deals.
At the same time, the total value of these transactions has increased from $679 million in 2020 to $8.28 billion in 2021. So far in 2022, the sector has recorded transactions worth 5 million dollars, according to data from GlobalData.
But the sector hasn’t had a great start to 2022. In January, all major cryptocurrencies plummeted and collectively lost over $1 billion in value. Despite some recovery, the market has not fully recovered.
The plunge triggered warnings of an impending cryptocurrency winter around the world. These concerns have hardly been alleviated by the fact that Russia’s invasion of Ukraine has, so far, not created a cryptocurrency push. This arguably undermined the theory that bitcoin functions as a safe-haven asset like gold, which is likely to rise in value during turbulent times.