Although crypto prices are depressed and new companies are collapsing, one of the main investors behind the crypto hedge fund Pantera Capital believes that there has never been a better time to start a blockchain company.
As part of a January 23 post about the year ahead from some executives at Pantera Capital, Paul Veradittakit, General Partner at Pantera Capital explained that “On average,” people working in the crypto space are more educated and passionate about crypto than in previous cycles.
Strong start to the year! https://t.co/gFe5fUM0gT
— paul.nft (@veradittakit) January 23, 2023
Overall, he said, “we see a higher percentage of startups coming to the market with strong teams – entrepreneurs coming out of established crypto startups like Coinbase, big tech companies like Facebook, Uber, and Square, and legacy financial institutions like JP Morgan and Goldman Sachs .”
The market is still very bearish, with some companies folding and the price recovering the ground, but Veradittakit believes that there is still a useful time for the board, mentioning the billion invested in the board from venture capital companies in the first half of 2022, adding:
“In our experience, bear markets typically reflect periods of low noise and noise from buildings.”
“In addition, we have observed that institutions and companies are more open than ever to work with blockchain companies to improve their business,” said Veradittakit.
The public partner said they have also observed a shift in volume to highly regulated exchanges and DeFi-based decentralized exchanges as people try to protect their assets from bad actors, which could inspire the next generation to enter the crypto space.
“With more focus on trust and security, we believe there are opportunities for startups in areas like custody, security, insurance, and identity,” he said.
Meanwhile, Dan Morehead, CEO of Pantera Capital, expressed the same bullish view towards the crypto space, arguing:
“Despite the lower price, I think the board is clearly in a better position than before.”
According to Morehead, since 2017, the developer infrastructure, which was “practically non-existent in the past,” has increased significantly.
“Now it’s easier to write systems based on smart contracts than in previous cycles,” he said.
“Every other area of the stack has improved, whether it’s the test suite or automated tools to catch common bugs in smart contracts, to have IDE support for Solidity,” Morehead added.
related: Pantera plans to raise $1.25B for second blockchain fund: Report
Morehead also pointed to scalability solutions that allow for lower transaction fees as a big leap forward for the space, as “decentralized exchanges cannot compete with centralized exchanges if the fees are too high.”
There is still a lot of fear, uncertainty, and doubt (FUD) floating around about the collapse of FTX and the resulting contagion in 2022 but Morehead believes the industry is still alive.
“People say, ‘crypto is dead’, but I believe this is one of the best times to enter the space, start building something serious, and the best time to deploy capital to crypto. It was really dark before the next morning,” he said.