One of the more frequent misconceptions about Hivemind as a multi-strategy digital asset fund manager is that our business model is just like a traditional multi-asset fund, except “focused on crypto.” Certainly, elements of Hivemind - especially and critically, our institutional-grade governance functions - resemble those of the best tradfi multi-asset funds. But at our core, we’re organized and we invest very differently because digital assets differ from securities, commodities, and other non-digital investments in that they are, at their roots, technology.
In this post, we walk through a 2050 mindset and the promising outlook for crypto in the next 30+ years. Our challenge to you is to rethink your understanding of crypto and adopt a 2050 mindset also.
Much attention is devoted today to the market value, or lack thereof, of various tokens. Any thorough web3 asset manager, however, has to bear in mind the realities of fixed-supply market caps of many tokens 30 years from now. For one, crypto is anti-inflationary - token supplies can’t be increased by central banks, like fiat currencies. Nor can more tokens be issued by private boards, as equity can be. So while the pool of tokens right now may not be complete, its aggregate, fully-diluted market cap can be projected and pinned in time with far greater precision than is possible with any other asset class.
However, just because the supply for a token is fixed and dated doesn’t mean the assets will be around in 30 years. Again, leveraged correctly, this reality means that for both product development and investment, longer-term planning is essential to good digital asset management in ways not necessarily true of tradfi.
While individual investing in equities - e.g., for retirement - has long stressed long-term thinking and diversification, the same is hardly true of traditional institutional finance. Enormous amounts of algorithmic and quantitative trading take place over incredibly short timescales, and hedge fund, venture, and even private-equity investing rarely, if ever, exceeds ten-year horizons. And in fact, this shorter-term thinking is arguably harder to address. Predicting the value/price of an asset tomorrow is frankly more difficult than projecting certain estimates about its future value in 30 years.
Viewed from this perspective, it’s traditional finance asset management that’s constrained by short-term thinking, not crypto. Given the relentless headlines and one-off anecdotes over the past few years, this can seem counterintuitive.
The reality, however, and the reason that talented investors, as well as liquidity, continues to enter our space is that there is more definable quantitative and technological value over the long term for digital assets than almost any other traditional asset class.
For example, one thing that should be true is that the space as a whole, in three decades, should be much, much bigger in terms of participants, users, and applications. From an investment perspective, this makes short-term volatility and value loss far less relevant. If your timescale is decades vs. a year or two, scale, ubiquity, and user-dependency matter more than even precipitous declines in near-term perceived value.
As we noted above, this mindset is true for developers, not just fund managers. The best of both professions in crypto plans thirty years out, from and on day one - because digital assets have a teleology, unlike traditional ones. Developers can plan around a known increase in supply and consider the expansion of usage and applications against that end. Investment managers should as well. This takes us to a second critical point: to be a great, long-term, multi-strategy digital asset investor, you must be both a developer and an investment manager. The technological function of the blockchain is - or should be - inseparable from its function as an asset class. Investing in crypto is not just about relationships; it’s also about development.
One example of how this perspective and set of capabilities lead to different outcomes from those associated with traditional investment thinking is our work with Napster. We acquired the company partly because it represents an overlooked but scaled, high-revenue business. But we took it private - which a traditional venture fund rarely does - and did so not just to improve its operational efficiency, but also that we could help it re-tool its entire technology backbone. From a Web3 view, this makes sense, but few, if any, public-markets investors would pursue the same course.
What are the implications of these considerations for Hivemind? For one, we’ve built our organization, its functions and our recruiting for the long term. We want to be here and be successful, in 30 years. That means designing our company from the ground up to take advantage of the entire risk spectrum in digital assets. It means having our portfolio management organized thematically, as can be the case in tradfi (our five verticals are market infrastructure, programmable money, open internet, metaverse andgaming, and blockchain protocols). But it also means engineering and research feeds our venture and trading functions. Hivemind’s alpha comes as much from technical as it does from investment expertise.
We planned all this from day one due to our 2050 mindset - a mindset that also directly reflects key, native aspects of digital assets: the known - often fixed - token supply and emission schedules. This terminal thinking shifts us from traditional economics into more technology-based tokenomics - which in turn opens up opportunities to think differently about deploying capital. As we see it, knowing more about the state of digital assets in 30 years transforms how we invest in those assets over the next 30 years - and this sets us apart.