These Young Investors Are Still Betting Big On Crypto — And Are Taking Harvard And Stanford Along For The RideOctober 18, 2020
An aggressive Bitcoin trade got crypto VC shop Paradigm flying out of the gate. But Fred Ehrsam and Matt Huang aim to do more than just generate outsized returns for their blue-blooded backers — they want to take alt-currencies into finance’s mainstream.
On a secluded back patio of the luxe Ventana Big Sur hotel, several dozen of the world’s leading cryptocurrency experts are playing a special after-dinner game. It’s a brisk weeknight in November 2019, and the attendees congregate around tall heaters to sip wine and hot chocolate and quiz each other – a nerdy, real-life reimagining of a computer science concept called the Byzantine Generals Problem, which imagines a leader passing orders to lieutenants of unreliable loyalty.
Pooling their deductive skills, the participants successfully root out three players instructed to lie. They’ve illustrated, in low-tech form, the power of the blockchain, which combines vast amounts of processing power to create a dynamic, but effectively unbreakable, decentralized public ledger. It’s the technological innovation underpinning crypto currencies like Bitcoin and Ethereum.
The game is a clever ice breaker for a secretive, off-record conference meant to unite different factions of the highly opinionated and cantankerous crypto community. Away from the posturing and flame wars of Telegram chats and Twitter threads, Byzantium’s hosts, an investment firm called Paradigm, are looking to remind this elite group that they’re more similar than not – all united by a common goal, to see crypto become more mainstream.
“There are challenges they’re all facing,” says Paradigm cofounder Matt Huang, who launched the firm with Coinbase cofounder Fred Ehrsam in 2018. “A lot of these folks are building things that look totally different in shape that what’s down the fairway on Sand Hill Road,” Huang adds, invoking the tech world’s most famous fundraising street where he once worked at top-drawer firm Sequoia.
They might disagree about the merits of Bitcoin versus Ethereum, or the role of tech giants like Facebook in setting the agenda. But Paradigm’s point is simple: compared to an outside world full of crypto skeptics, these entrepreneurs, researchers and top university professors are more alike than not. “I think people will look back at this as one of those rare moments in history, where it’s like the Lockheed Martin skunkworks team, or Pixar, or the Apollo program,” raves Ehrsam’s close pal Brian Armstrong, Coinbase’s billionaire CEO. “Where a small group of people came together for a brief moment, did something pretty impactful, and then it had all these huge downstream effects.”
Paradigm moved all $400 million of its initial capital into Bitcoin in 2018 at burst-bubble discount prices under $4,000, converting it back into greenbacks when needed for individual investments.
Nearly a year later, that mission remains a work in progress. When the coronavirus…