The rise of bitcoin – Fast Five from the Valley

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“Fast 5 from the Valley” is the Detecon Innovation Institute’s weekly summary of everything that’s going on in the Valley – keeping you up to date with the SV buzz. Breaking news, exclusive events, long-term trends and developments that you wouldn’t believe possible, we bring them all together in this publication for you.

Ever wondered what it is like in FR (Founder Reality)?

First Round Capital (a SV VC firm) surveyed 869 founders to find out. Here is the Goss:

What is the most hyped technology? While Autonomous vehicles and the economy have become more mainstream (and less hyped), VR/AR, the Internet of Things, drones and Bitcoin have become increasingly overhyped each year.

What is the likely hood that they are building a billion-dollar business? 42% of entrepreneurs are confident that they have a decent shot of becoming a billion-dollar company. The reality is that there is a 0.00006% chance of this actually happening.

What’s up with Bitcoin? Bitcoins rise 40% in 40 hours…But why?

The virtual currency has increased by more than 1,500% since the beginning of the year. This Thursday, Bitcoin hit new highs when the price of the digital currency jumped 40% in 40 hours, shooting over $16,000. But why is the value of Bitcoin rising so much? Is this a bubble? And are the gains real?

First, we must understand what drives bitcoin price and this boom: It is all about hype, news and supply.

The primary theory of Bitcoin’s rise is that bitcoin will soon benefit from large institutional investments through the introduction of the futures. CBOE Global Markets and the CME Group have and will (respectively) launch(ed) new futures contracts that will enable investors to buy or sell at Bitcoin. The recent jump of 25% on the launch of the CBOE exchange indicates that the presence of the futures market makes bitcoin much more palatable for large investors and also legitimizes Bitcoin in the eyes of Wall Street, an important point considering that cryptocurrencies are still dubious in the eyes of many.

Further growth comes from the “Bitcoin as a store of value” crowd. This group of enthusiasts bought, have held, and will continue to hold Bitcoin. As more and more Bitcoin fans join this group and drive up the demand for Bitcoin, the price has also risen. In a world where people expect that bitcoin will soon be worth $1m, this type of activity – rational or irrational – is expected to be a significant driver of future price increases.

Data wall?

Countries across the world are embarking on a new trend of “Data localism”. Right now there aren’t any significant laws restricting the free flow of data. However, countries like China, Russia, and Brazil have established rules that require companies to store data on servers inside their borders and the trend is growing. Part of the Trump’s Administration’s efforts to modernize NAFTA have been devoted to trying to stop this trend. However, any further growth in this trend will start to have a significant impact on the growth of SaaS companies. We have already started to see the tail off of the SaaS market, with the funding for new SaaS companies significantly declining (i.e. Seed and Early Stage funding), driven by the fact that most of the most profitable SaaS problems have already been addressed.

IIoT World Tour comes to SF

Steven from our time took some time out to check out the IIoT (Industrial Internet of Things) World Tour in San Francisco, co-organized by Plattform Industrie 4.0. Here’s what he found out from listening to the speakers, checking out some demos and networking with the delegates:

  • Germany (alongside Japan and Korea) is still at the cutting edge in terms of industry automation. Even though the Silicon Valley dominates in software innovation, the U.S. have not been able to extend this to manufacturing.
  • The U.S. are a main target for German vendors (e.g. DESMA – a hidden champion from the “Mittelstand” making shoe manufacturing machines, or Holo Light – essentially a HoloLens pioneer for industry use cases).
  • P.R. China is no longer a market just for cheap manufacturing machinery. As labor costs and the need for mass customization are on the rise, producers are embracing more high-end machinery and Industry 4.0 concepts.

It seems that money grows on Christmas trees

The NCTA (National Christmas Tree Association) has compiled data which indicates that the price of the average Christmas Tree has risen by 125% over the last 3 years, rising to $75 a pop. Turns that Christmas Trees take 10 years to grow and farmers (along with everyone else) were a bit strapped for cash back in 2007. Sounds like we are all paying for it now. It will be interesting (and humorous) to see if any entrepreneurial ideas come out to address the spike.

Any questions or comments on the article?

Please contact Bradley Kalgovas for further information.

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