Miko Matsumura is a founder of crypto exchange Evercoin, is a General Partner with Gumi Cryptos, and a Venture Partner with BitBull Capital, a cryptocurrency fund-of-funds. He is also an advisor to Arrington XRP Capital.  He is a token holder in FileCoin, Brave, CIVIC, Propy, Polymath, and an investor in Lyft.  As a 25 year operating exec in Silicon Valley, he has raised over $50 million in venture capital for Open Source startups and over $250M in ICO capital.  He currently advises cryptocurrency startups and is also an LP with Focus Ventures, a firm with over $800M under management, 9 IPOs, and 44 exits.  He leads the Crypto Underground meetup in San Francisco and is a well-known speaker at many cryptocurrency and blockchain events.

How did you first get involved in cryptocurrencies and how has the industry changed since you started?

I’m still a newbie.  I got recruited into founding Evercoin in early 2017, ETH was about $13.  I’ve been doing open source software for 30 years though.  One of the biggest challenges has been the utter dominance of a handful of exchanges that all seem to have come from China.

How has the cryptocurrency industry affected venture capital in Silicon Valley?  Do you see ICOs or some variation of them being the new model for raising seed capital or is this a temporary event?

The pendulum has swung strongly back to venture capital because it has both the diligence capability, as well as the governance power, to be able to deal with innovative start-ups.  Tokens will continue to be sold and used and we will see a small handful of very big winners come out of this space.

Given your investment in companies such as Polymath, where do you see crypto-securities in the future?  Will crypto-securities open the door for smaller investor participation or just make things easier for the traditional sophisticated investor?

Asset-backed tokens will add tens of trillions of dollars to the crypto asset market value.  It will complete the process of crypto assets swallowing the real economy, although this will probably impact traditional investors more than main street because of regulations.

What do you think is the largest challenge the cryptocurrency industry is facing right now and how should the industry overcome it?

Right now, the domination of custodial centralized exchanges is problematic because it injects an untrusted and unregulated intermediary into the crypto asset space-this contravenes what Satoshi Nakamoto intended.  Decentralized exchanges can’t fix this yet because there are no high-performance blockchains.  We need non-custodial exchanges to become popular.

Is there a cryptocurrency protocol that you are excited about that you feel the industry has overlooked?  If so, what makes that protocol so special?

I like space mesh which is a novel space time consensus.  It’s a bit like Chia but instead of being based on bitcoin, it is its own novel chain.

How big do you think the cryptocurrency market will get?  Do you see it exceeding the Dotcom-boom and if so, by how much?

It will be tens of trillions before we are done.  It will be 10x bigger than dot com because it’s that much more important.  We are reinventing the world financial system.  I don’t say this as a naive crypto utopian.  We are building decentralized components that will provide more financial inclusion as well as resiliency to the global economy.  We have a long way to go through.

What is your opinion regarding the comments from well-respected Wall Street experts such as Warren Buffett, Charlie Munger, or Jamie Dimon who believe public blockchain networks are fraudulent?  Do you believe public decentralized networks are necessary or is the underlying technology more important?

It’s the innovators’ dilemma to a T.  Of course, those most deeply invested in the existing system will not be enamored of an alternative.  The problem is that the existing system is not sufficiently accountable nor resilient nor inclusive.  So don’t look at the comfortable people who are well served by the existing system for change; this change will be led by the disenfranchised.

How have entrepreneurs in Silicon Balley reacted to the rise of cryptocurrency technology?  Are Silicon Valley entrepreneurs trying to incorporate this technology into their products or are cryptocurrency projects separate from traditional Silicon Valley endeavors?

Slowly.  Some of the best talent in the world is now working in this space but most startups are pretending nothing has happened.

Besides Silicon Valley, what geographical regions in the world do you feel are the most active regarding cryptocurrency adoption and development?

The regulatory havens are interesting including Switzerland, Malta, Singapore, Hong Kong, Taiwan, and a few others.

How has the public responded regarding your efforts to educate others on blockchain technology?  Do you find the public to be receptive to the technology/platforms?  What are some common concerns that you find people have?

It’s slow going because we are still in the early days.  We are talking about the internet before Netscape.  So right now, there’s little compelling reason for consumers to know about this.

If someone has $10,000 to enter the crypto market, how would you advise they spread that investment?  And when do you think they will see significant returns?

I continue to think bitcoin dominance will continue to approximate 50pct.  I would advise them to allocate 50% BTC and 20% to two big coins like ETH or EOS.  The remaining 10% I would place in at least 20 small projects, diversified.

The recent hit in the crypto market, especially Ethereum, has been significant.  Do you feel there is some level of market manipulation at play?  And what do you think needs to happen to reverse what has been a rough year in the crypto space?

One of the really big things hitting ETH is just the ICO phenomenon.  The cycle is that token sellers create a new token, typically ERC20 and they create a smart contract to sell it, typically Solidity, which collects ETH.  The trouble comes when people need to pay engineers or marketers or whoever they need to pay in order to ship and sell products.  All of the billions of dollars of ETH raised in ICO are being burned to fiat, and there’s no choice about it. Even though the price of ETH is low, developers still have to pay rent, so the ETH gets burned to fiat (unless it was converted right after the crowdsale).  So the market is being flooded with new altcoins, 85% of which are below ICO price, and the market is being drained of ETH (aka ETH is being sold for fiat).  This is a large drag on the price.  An example of such an ICO is that EOS raised $4B worth of ETH and they need to sell it in order to build out the EOS network.  So I don’t see the drop in price as being manipulation–however, I do see it as a poorly designed crypto-economy. When applications choose your platform it should add to the value of the platform, not reduce it. The problem here is that the total gas fees being paid to Ethereum miners is very small, whereas the amounts being raised in ICO and burned to fiat is very large.

Visit miko.com to learn more about Miko Matsumura and his work in the crypto and blockchain world.  You can also connect with him on Twitter.