It is no secret that Andreessen Horowitz is bullish about crypto: Not only does the firm boast that it started to invest in the space a decade ago, but it also debuted a $4.5 billion web3 fund last week.
To understand a16z’s bullishness despite what others have described as a “crypto winter,” its 2022 State of Crypto Report is a good start. Per its disclaimers, the document is not directed to any investors or potential investors — yada, yada, yada. But it does read like an argument for crypto, DeFi, NFTs and all things web3.
The problem, in my view, is that the report’s authors, all of whom are part of a16z’s team, are overstating the current opportunity for crypto. By doing so, they are making it sound bigger than it is — and it may take years to get to that point.
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That the report takes an optimistic view of crypto is understandable. After all, if you are about to deploy billions in funding into a market, and you are not even alone, the TAM needs to be up to par. But the report is also meant to be an overview of trends, which is why it seems questionable to allude to opportunities that aren’t real yet.
The point that bothered me the most has to do with remittances — money sent cross-border by individuals, typically from a richer country to a poorer one. The World Bank expects that such annual inflows will reach $630 billion in 2022. And yes, there are inefficiencies and fees along the way. For the authors of the a16z report, that’s more than enough to list remittances as an argument for DeFi.
But are remittance payments and money transfers really ripe for crypto disruption? And is DeFi really the right solution to help what the report describes as the “huge part of the world [ … ] underserved by existing financial institutions”? That’s definitely not what I am hearing from the ground — as also confirmed by two founders I reached out to Tomás Bercovich from Global66 and Ryan Newton from Paisa.
Just earlier this month, I sat in the audience of the Summit as Wise CEO Kristo Käärmann was interviewed on stage. “Currently, Wise doesn’t accept cryptocurrencies. Do you think,” Bloomberg’s Ivan Levingston asked him, “that this might change at some point?”
This is a recurring question for the fintech company, so Käärmann made sure not to sound dismissive. “I am very excited about the technology,” he said, while also adding that “there are interesting experiments going on all around the world.” But the gist of his answer was still a nail in the crypto coffin. “We are just looking for a use case,” he said. “We’re looking for the problem that we can solve with it.”


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