Having spent the first 20 years of his career in software development, Jake Ryan has had no difficulty wrapping his head around the world of cryptocurrency and blockchain technology.
Still, it took him more than seven years since bitcoin's creation in January 2009 to make his first direct purchase of the digital currency at around $480 apiece in 2016.
What convinced him to finally make the leap was not the utopian vision for bitcoin shared by many ardent fans in the tech world, but the antifragile nature of the digital currency.
There were many times that bitcoin could have died, Ryan said, pointing to the spectacular demise of the Tokyo-based crypto exchange Mt. Gox in 2014 as an example. Once the world's largest exchange, Mt. Gox was targeted by hackers and lost hundreds of bitcoins worth millions of dollars at the time.
Unsurprisingly, bitcoin's price plunged with the incident, which resulted in Mt. Gox filing for bankruptcy.
The shutdown of the black market Silk Road in 2013 and 2014 was another time when bitcoin was teetering on the edge of extinction. All transactions on the online platform, which sold illegal drugs, were conducted using bitcoin to ensure the anonymity of buyers and sellers.
In November last year, the US government seized over $1 billion worth of bitcoin tied to Silk Road, but the digital currency's entanglement with illegal activities did not interfere with its relentless ascent to $20,000 in December.
"It was that fourth or fifth time that I was like, wow, this is going to survive," Ryan said. "Its decentralized architecture is what allows it to do so. And for me, that's when it became really investable."
Ryan, who serves as an advisor to at least five venture-backed start-ups, has been an
since May 2014.
As he dug deeper into blockchain technologies and started investing in crypto startups, he began to consider the idea of combining his passions and skills to form a crypto asset hedge fund.
In 2018, he set up Tradecraft Capital, which focuses on investing in liquid coins and tokens, including bitcoin and ethereum.
Out of all the crypto assets Ryan invests in, he finds bitcoin to be the most unique and has had what he describes to be "an immaculate conception."
"We have a moniker Satoshi Nakamoto, but we really don't know who started it. It got mined into existence," he said. "Anybody who knew about it in a free-market approach could have mined Bitcoin and gotten it. It didn't have a price for a long time. Ultimately, the market set price discovery."
Bitcoin is rare not only because of its limited supply of 21 million but also because it is supported by a set of incentives that encourages holders to ensure its survival, he said.
Over time, as bitcoin's monetary value increases on the growing acceptance of corporations and institutional investors, Ryan believes that the digital currency will achieve a network value or market cap of $5 trillion by 2023 and $20 trillion by 2030.
Despite its wild volatility, bitcoin was still hovering above $47,000 as of midday Friday. For investors wishing to capitalize on emerging but riskier opportunities in the crypto-asset landscape, Ryan shares two themes that he's bullish on.
One of them is built around smart contract platforms and autonomous protocols.
"Anything that is dealing with allowing people to build smart contracts and deploy them, and people out there building autonomous protocols," he said, "that is where the value is going to get accrued in the future."
This theme includes sub-areas such as decentralized finance, which refers to financial activities like trading, lending, and interest accounts that take place outside of the traditional financial system.
With the recent craze over non-fungible tokens, which are part of DeFi, the decentralized finance space has gathered a staggering amount of interest.
Billionaire Mark Cuban told the Defiant Podcast in a recent interview that DeFi reminds him of the early days of the internet in the mid-90s. The Nasdaq-listed Decentralized Finance Index, which tracks blockchain tokens focused on DeFi, has soared more than 547% over the past year.
The other theme driving Ryan's portfolio is governance and who has the rights to govern, manage and update blockchains.
An example under the theme is governance tokens, which are tokens created by developers that allow token holders to help decide on protocols, products, or new features.
"You can think of governance tokens almost like a new version of equity. Equity is the rights to cash flow after expenses are paid," he said. "Governance tokens are similar and completely different but may have qualities that allow it to accrue value for similar reasons as to why equity accrues value."