InvestStream – Our New Podcast

A few weeks ago, my friend Harjit, and I decided to start recording our conversations about the economy, startups, and tech in the US and India and sharing it with people that may be interested. We are calling this podcast InvestStream. We’ve done two episodes so far and plan to do it weekly.

We’ve discussed everything from market stats to central bank monetary policy to fund raises by startups to where the blockchain and cryptocurrency worlds may be headed. We would love some honest, critical feedback on this experiment and what we can do to improve it. We are still playing with the format and we could really use your feedback on what you find useful.

We will plan to keep the conversation from 20-30 minutes and we will have both audio only versions on SoundCloud as well as video.

The audio episodes are available on SoundCloud.

The full video episode Youtube playlist is below.

We’ve also broken up the second episode into snippets around specific topics. This allows for much shorter videos ranging from 2 – 7 minutes and allows the viewer watch only what they find relevant.

Snippets Playlist

Please subscribe to the SoundCloud or YouTube channels and share your feedback.

Related Posts:

Bitcoin and Crypto Resources For Beginners

I was first introduced to Bitcoin by Vaishali when it was around $30 per BTC. Like most people, I brushed it off as another open source project trying to solve digital payments that was likely to fail. When BTC reached $100 a few months later, I thought maybe it was time to learn about Bitcoin and blockchain . Unfortunately, in 2013, it was very difficult to find people who knew about Bitcoin and online resources were just as difficult to find.

In 2017, it seems the problem of finding the right resources isn’t much easier. Even though, there are many people writing about Bitcoin and crypto, it is still hard for beginners to figure out which resources they can trust and which they can’t. I had tons of questions when I was digging in: “What is Bitcoin?”, “What is Bitcoin backed by?”, “How do I buy Bitcoin?”, “Why would anyone run a full node?”

This isn’t an attempt to answer all of those questions but instead meant to share some resources that I have accumulated and think are useful for people beginning their crypto journey. Teach a man to fish and all that…

This isn’t investment advice and it should not be taken as such. It is purely shared as a resource to learn from.

White Papers

  1. Bitcoin: A Peer-to-Peer Electronic Cash System – this is the quintessential starting point for anyone interested in crypto currencies, crypto assets, and, of course, Bitcoin. Nine pages that have changed technology and economics, forever.
  2. Ethereum White Paper – This is far more technical but worth reading. The Ethereum blockchain has allowed the creation of hundreds of tokens to piggyback off the Ethereum network and completely changed how blockchain technology is looked it.

Books

This book can get a bit technical but you’re diving into crypto currencies, you will need to start understanding the basic technology behind it. This one is on my reading list. I’ve been following Chris Burniske on Twitter and he’s got some really brilliant things to say. I’m sure the book is just as informative.

Podcasts & Videos

Andreas’ videos are a must watch to get started

Charlie Lee discusses “Creating Litecoin”

Blogs

Buying Bitcoin, Ether, Litecoin or other Altcoins (alternate coins)

Depending on where you live, buying Bitcoin can be extremely easy, or quite difficult or expensive. Most people will use a marketplace or an exchange to purchase Bitcoin. However, other methods like buying it from from a friend or using a service like LocalBitcoins is also possible. The folks at CoinCentral put together a review of various exchanges and buying methods including LocalBitcoins.

If you’re in the US, the largest and easiest way to buy Bitcoin, Ether or Litecoin is currently Coinbase (disclaimer: I may get paid $10 if you open an account and buy some coins).

If you’re in India, some of the more commonly used online exchanges are Koinex, Coinome, Zebpay, Coinsecure, and Unocoin amongst others.

Most experts in the crypto currency world agree that it is not safe to leave your crypto assets on an exchange. Though there hasn’t been a case of the blockchain ever being hacked, businesses, websites, and tools are susceptible to hacking just like Equifax, Home Depot, Yahoo!, etc. For that reason, experts recommend moving any amount of crypto currency that you’re not comfortable losing, over to your own wallet where you control the private keys (sorry, I didn’t discuss private keys but the resources above do – it’s critical to understand them and keep them safe).

Wallets

One of the most challenging things for me to figure out was which wallet should I use. I wanted a solid product that had the support of the community and was also safe and secure. I also wanted a wallet that could support multiple currencies. I tried a couple of multi currency wallets but eventually decided on separate wallets for each currency.

Bitcoin

I highly recommend checking the Bitcoin.org site to choose the wallet best for you. I chose to run a Bitcoin Core Full Node and use that as my wallet but that may not be for everyone.

Ether

The Ethereum Foundation, generally, recommends using the Mist wallet as the initially launch point. Now that it supports a light client, it is also pretty fast to sync with the network. If you’re interested in just playing around, you can also try MyEtherWallet which is an amazing web-based Ether and token wallet (yup, I’m leaving out the discussion on tokens in this post).

Installing and setting up a wallet is free (unless you’re using a paid app). Sending Bitcoin, Ether, Litecoin or any crypto currency to another address, will cost some currency. I highly encourage downloading and setting up a wallet and creating your first wallet address, if for no other reason than to learn.

If you want to try out a transaction, feel free to send some​

BTC to 33EBeMRethPPT6ckXEEbAPWuno6pieivcP ETH to 0x1bE8c8660eE07a49B3CD88398B13631a67514Cd5
 

Please make sure to send the right coin to the right address. If you send it to the wrong address, it will be gone forever.

  • Please write down your passphrase and passwords on a piece of paper that is secure and won’t get lost, damaged, stolen, etc.
  • Do not use a password that you’ve used for any other purpose, on any other site, application, etc.
  • Once you’re comfortable with your wallet, export your private key, print it out and store it safely.
  • Anyone with your passphrase or private key can take your coins and you won’t be able to get them back.
  • If your hard drive crashes or your computer gets hacked, etc. you can use your passphrase or private key to recreate your wallet on a secured device (so can anyone else that has access to the passphrase or key).

Good luck on your journey and if you find other resources that you find useful, please do share them in the comments.

Related Posts:

Low Volatility, Low Yield in Stocks Fuel Bitcoin and Altcoins

There’s been no shortage of news about the surge in Bitcoin and some of the altcoins (alternative crypto currencies) in 2017. Japan allowing Bitcoins for transactions was a big factor in fueling the demand for Bitcoin as well as increasing odds that other countries, most notably South Korea, may follow suit.

However, there’s an additional factor that is driving up the demand and speculation in Bitcoin and other altcoins. A low volatility and low yield stock market is forcing many people to look elsewhere for volatility and higher yields. More funds are looking at cryptocurrencies as a place to take on more risk for the higher yield. More traders are finding solace in the volatility that cryptocurrencies like Bitcoin and altcoins such as Ethereum offer. The chart below shows the number of confirmed transactions on the Bitcoin Blockchain per day for the last 12 months.

Confirmed Transactions Per Day (click to enlarge), Source: Blockchain.info

The chart below shows the number Bitcoin Blockchain wallets, which have almost doubled over the last 12 months.

Bitcoin Blockchain Wallets (click to enlarge), Source: Blockchain.info

Now let’s look at the chart below, which is the USD equivalent of daily trading volume of only Bitcoin.

USD Exchange Trade Volume (click to enlarge), Source: Blockchain.info

The final chart shows the average daily market price for Bitcoin across major exchanges in USD.

Average USD market price for Bitcoin (click to enlarge), Source: Blockchain.info

From these charts, we can see:

  • The number of Bitcoin transactions is rising rapidly.
  • The number of wallets, and likely, the number of people jumping into the Bitcoin and cryptocurrency world continues to rise.
  • The daily trading volume of only Bitcoin continues to increase with wild swings.
  • Continued volatility in the price of Bitcoin is making it, and in turn, other cryptocurrencies very attractive to traders and speculators.

I expect volatility to moderate a bit in the short term but I also expect more and more traders, investors and technically savvy users jumping into the cryptocurrency world, mostly because of curiosity but also because other high-yield assets have already been widely invested in and the hunt for yield in a near zero interest rate world continues.

The whole ICO market is fascinating, if not highly speculative, and also offers another path to long-term yield. I expect this to add to the volatility and, hence, the increased speculation in the base cryptocurrencies. There aren’t many places that a company can raise $35 million for their company in less than a minute. Come to think of it, I can’t think of any place one can do that.

Related Posts:

Startups, Angels, Venture Capitalists and the 2017 India Budget

It is Indian budget season for the new fiscal year starting in April and just like every year, the pundits are all weighing in with what they would like to see and what they expect to see. We’ve seen some very positive moves by the India government in terms of setting up a company and various benefits under the “Startup India” program. However, there’s still a long way to go before the true potential of the Indian market is realized.

This is a very important budget for Indian startups and investors. 2016 was not a very pleasant year for global startups but especially Indian startups and investors. Many startups raised follow-on rounds of capital but most struggled to raise the next round of financing. In 2016, the pendulum definitively swung to favor investors once again. Many investors took advantage of the lack of capital by sticking unfriendly terms into agreements, others, simply battered companies with down-rounds. I hope to see more moderation over the long run and expect increased competition amongst investors to create better terms and pricing in the market.

In 2014, I had written about various initiatives which I felt would be beneficial for startups and investors. We’ve seen some of the ideas implemented in various capacities and there’s no doubt that the overall Indian ecosystem has matured significantly since 2014.

I still maintain that the best thing any government can do to spur innovation is to remove or, at least, minimize regulations, provide for a highly educated workforce, enable a robust infrastructure (physical and digital) and get out of the way so that private markets can move unimpeded. However, I’m pretty sure a laissez faire approach to startups and tech investing isn’t going to be the norm in India anytime soon, so below are some suggestions that can have a high impact with some good planning and execution.

  1. Ease of Doing Business – The Indian government needs to understand that over-regulating any industry will put it into a strangle-hold, even with the best intentions in place. Fledgling industries like tech startups, venture capital and angel investing are no different. In fact, they are more susceptible to dying a premature death because of the high risk nature of the business.

    Startup India and other government initiatives have had an overall positive impact but very few startups have been able to take advantage of the various benefits because of continued red tape and regulations left to interpretation by bureaucrats.

    Solution: Simplify or remove specific regulations that continue to make it difficult to do business or invest in India. A large portion of the focus should be on foreign investors for reasons highlighted in the next point.
  2. Downstream or Follow-On Capital – Additional capital at later stages continues to be a major constraint, even after several new funds closed money in 2016. Perhaps the cooling off by foreign hedge funds, mutual funds and corporate investors has had a larger negative impact than was anticipated.

    Solution: Make it simpler and less onerous from a compliance perspective for startups, angels and VCs. India needs to attract more capital domestically and internationally. Make it easy for these stakeholders to participate in the Indian innovation economy with more speed, thru less regulation and less onerous or duplicated compliance.
  3. Accredited Investors and Qualified Institutional Investors – Define what accredited individual (angel) and qualified institutional investors (venture capital funds, accelerator programs and incubators) are in India. For example, in the US an accredited investor is a person who earns $200,000 per year over the last two years or has more than $1,000,000 in assets, not including their primary residence. In India a similar definition could be used.

    Solution: A one time, online only registration with SEBI should allow accredited domestic and foreign investors to easily fund startups with no additional compliance requirements placed on the startup or the investor.

    For foreign investors, the unique identification number can easily be submitted to the RBI when wire transfers are received from international sources. Thus, removing additional compliance steps (and costs) for a startup when it receives an investment from a foreign investor. Many of these suggestions can easily be used outside of investing in just tech startups.
  4. High tax rates and a complex tax code – The current tax rates are very high. Investors take significant risks when investing in startups which have a very high failure rate. Coupled with a very complex tax code, investors, especially smaller ones providing risk capital, don’t have significant financial benefits when investing in high risk startups.

    Solution: Give accredited investors a zero tax rate on long-term capital gains when invested in technology startups. Perhaps a modest 15-20% flat short-term capital gain tax would be appropriate. Currently, foreign investors are subject to 40% withholding.
  5. M&A – It is still incredibly complex for an international company to acquire an Indian startup. It’s also very expensive for all parties involved. This limits the number of smaller acquisitions or acqui-hires that can take place in India. Smaller companies finding modest exits (less than $25 million in value) also helps turn the wheel of tech startups and needs to be addressed.

    Solution: Regulations should be simplified to allow both domestic and international companies to easily acquire or merge with Indian companies. Specifically, smaller companies. In the worst case, a one-time review by a single window, online, clearance entity to approve international acquisitions with minimal government related paperwork or government compliance can be put into effect. This could be an entity under SEBI with participation from the RBI and Invest India.
  6. Single-window clearance for the Startup India program has been wrought with typical Indian bureaucracy. The program needs a complete revamp. Rework the program to automatically grant “startup” status to any company funded by accredited investors (foreign and domestic venture capital funds and angel investors). Status should be granted via a single online form submission with validation from the investor/incubator/accelerator.
  7. Pervasive users – Digital access is still too expensive for most of the non-english speakers in the country.

    Solution: Make “broadband” accessible and affordable.

    1. By putting more government services like BHIM online, citizens, especially those in rural India, will have an additional need to have Internet connectivity.
    2. Fiber optic infrastructure has been put into place across much of India but it’s been expensive to provide. Consequently, demand has been low because price is high and usage beyond WhatsApp or Facebook for much of India has been unnecessary. TRAI should redefine broadband as, at least, 25 megabits per second preferably, closer to 100 mbps. Anything less that this leaves video and audio content out of the hands of hundreds of millions of people.
    3. Encourage telcos to re-invest into infrastructure and provide minimum broadband speeds of 25 megabits per second over wired and wireless. Provide tax incentives for them to re-invest in India’s digital infrastructure and even bigger breaks if they provide higher speeds in rural parts of India at discounted rates.
    4. Invest in an ultra highspeed national Internet backbone.
    5. Invite international companies (e.g. Google, Facebook, NTT Docomo, Verizon, Deutsche Telekom, Telenor, etc.) to invest in the Indian digital infrastructure and compete on a level playing field while maintaining the fundamentals of Net Neutrality.
    6. Provide subsidies to the poor and rural parts of India to get online. Require an Aadhaar card to be eligible.

All of this aside, I think the government will have more far-reaching issues to address in the budget, some will likely be linked to demonetization and the affect it has had on GDP but we can all hope that Indian startups and investors get some love this year.

Related Posts: