The author is a general partner at True Global Ventures.
Our fund True Global Ventures analysed technology megatrends in 2018, and invested where we believed the opportunities were. As a result of predicting one of the megatrends, the TGV 4 Plus Fund became one of the top-performing venture capital funds globally in about 24 months.
Like in 2018, in January 2023, too, we tracked what was going on in the 15 countries we are covering—across Asia, North America and Europe—to list a few megatrends for 2023 and beyond.
We assess megatrends every five years. Our objective is not to get all of them right but to be bold and take some risks on the megatrends and we are confident we will get some of them right. Where do we stand now on the megatrends announced in January?
The first four of the five megatrends are happening faster than expected. These are ‘Centralisation is Dead. Decentralisation is more than back‘, and ‘Consumer demand will accelerate the need for security, privacy and regulation‘.
The outlook for bitcoin
We also had two megatrends covering bitcoin. One of which was about decentralisation and one about regulation. Where do we stand today on these?
We see institutional consumer demand for exposure to bitcoin accelerating the need for regulation. The big news is specifically concerning the recent ruling against the US Securities and Exchange Commission (SEC) linked to bitcoin ETFs. That SEC is getting a slap on the wrist with the failed appeal against Grayscale’s bitcoin ETF, which is a testimony to more clarity for certain alternative asset classes.
We had stated that we believed that bitcoin would be one of the absolute strongest use cases for blockchain technology since it is completely decentralised and there is nobody to make a legal claim against. In this respect, with all other legal battles between regulators and the industry, bitcoin is untouchable and will be untouchable, and hence the limited downside risk is even clearer now than it was at the beginning of the year.
At the same time, traditional finance is taking over from pure players in terms of market share. The CME Group recently took the top spot on the list of the biggest bitcoin futures exchanges in the world, replacing Binance for the first time in two years.
In the next weeks and months, it will be interesting to see whether Bitcoin ETFs will get approval in the US. They already exist outside of the US, but the US market is key. The 12 US spot-bitcoin ETF applications are from Grayscale, 21Shares & Ark, BlackRock, Bitwise, VanEck, Wisdomtree, Invesco & Galaxy, Fidelity, Valkyrie, Global X, Hashdex and Franklin.
Whether the effect of the expected spot-bitcoin ETF application approval is already priced in today or not is very hard to judge. One could argue that we will only know the real demand once the Bitcoin ETFs are set up, but the question is whether net new money will go into these Bitcoin ETFs or if it will be reallocated from direct investments into bitcoin.
We believe that net new money will be attracted especially if traditional finance companies like Blackrock and Fidelity are awarded the Bitcoin ETF licences.
Our view is that Bitcoin, as the oldest use case of blockchain and decentralisation, will be one of the biggest winners during 2023 and beyond.
“We are optimistic about Bitcoin price increases.”
As the demand for bitcoin increases with spot bitcoin ETFs expected to be approved in early 2024 and the new supply of bitcoin halves in April 2024—bitcoin halving occurs every four years and cuts the rate at which new bitcoins are released in circulation by half—we are optimistic about bitcoin price increases.
There are now also signals of Ethereum ETFs with both Blackrock and Fidelity filing applications and who knows maybe Ripple ETFs and others will follow. We still believe that the most decentralised and best use case from a decentralisation point of view will be the biggest winner.
There is a reason why bitcoin was born in the aftermath of the collapse of Lehman Brothers but with no regulations around. This is about to be solved, once regulation catches up, it will be very difficult to resist this alternative asset class.
Decentralised AI in Web3 getting real user traction
The success of ChatGPT and similar services has driven enormous user adoption. ChatGPT now has 100 million weekly active users and nearly 1.5 billion visitors per month.
USA has the highest number (14.82%) of ChatGPT users, followed by India (8.18%).
A quarter of companies, including Small and Medium Enterprises (SMEs) have saved roughly $50,000 to $70,000 using ChatGPT. The impact is huge not only on Web3 but also on non-tech industries.
We are targeting areas like Legal AI, Education AI, Revenue AI and Code-related AI, where we see that Generative AI has a material impact on productivity and also on new revenue streams.
“Generative AI has a material impact on productivity and also on new revenue streams.”
The recent turmoil within Open AI with Sam Altman fired/resigning and then being reappointed shows how difficult it is to marry research with product development. The firing/resignation of Sam Altman looks like the strangest case since Steve Jobs was fired by the Apple board in 1985 after a power struggle with the board.
Open AI had already seen a part of its research team leaving in 2021 and starting Anthropic, in which Google is heavily invested, and its initial backer Elon Musk leaving in 2018, so this would be at least the third power struggle within Open AI.
The intention is to make sure humanity is not at risk at the expense of rapid AI development. Can that work without a more decentralised and/or regulated AI industry?
Right now, only a few players are developing and launching AI models for the masses, around 15 in the US, 11 in China, 1-2 in other developed nations, limiting access to the mainstream. Our view is that the industry needs to have a more open playfield, that regulation is needed as soon as possible and that it is way more critical than regulating the blockchain industry. AI will have a way more critical impact on our future than blockchain will have.
“AI will have a way more critical impact on our future than blockchain will have.”
The internet was not owned by anyone when it was started. It should be the top priority today to regulate AI development for any country starting with the US, which we estimate is nine months ahead of China and even more ahead of the rest of the world.
Open metaverses cross the chasm to become mainstream
We mentioned already on January 11 that governments will play a role in promoting investments in metaverse ecosystems so as not to be left behind and gave the example of South Korea and Japan.
One recent concrete example is in Saudi Arabia, where the Neom Investment Fund has created a strategic partnership and signed a term sheet investing $50 million in one of our portfolio companies, Animoca Brands. Neom will apply both metaverse and blockchain technologies to their vision of a $500 billion mega smart city.
We believe that like in the aftermaths of the dot-com boom, the real world and virtual world will be increasingly connected. In the dot-com boom days, many believed in the new economy and that all consumption would one day be digital.
This did not happen, but the consumer experience became partly offline and partly online. The development of smart cities connecting the real world with the virtual world is only one example of this megatrend.