Exploring the Future of Cryptocurrency and Web3 with Dragonfly Capital

By Plug and Play Crypto and Digital Assets team Published on Nov. 17, 2022

Cryptocurrencies and the blockchain technologies that underlie them have captured the attention of both investors and businesses in the past decade. The promise of a digital currency that can be used to purchase goods and services without needing a third party to mediate the transaction has led to the development of a wide range of cryptocurrencies.

Plug and Play Crypto and Digital Assets is diving into the world of crypto to better understand what will likely become the new way we use the internet. We spoke with a VC focused on investing in crypto-based businesses: Dragonfly Capital. Founded in 2018, Dragonfly is a cross-border venture fund that brings access and influence to help crypto teams find innovation and adoption.

Maximillian Jungreis, Head of Plug and Play Crypto and Digital Assets, interviewed Ani Pai, Partner at Dragonfly, to learn more about cryptocurrencies.

Headshot of Pai, photo courtesy ofDragonfly


Plug and Play:What is the investment theme for the next century in crypto?

Pai: In the 20th century, everyone would always talk about the world that they’d like to see in the 21st century. They would discuss telecommunications technology, telekinesis, and even how everyone would eventually own an electric plane. But no one talks about that now.

I think it's become quite clear that crypto has to integrate into mainstream infrastructure in order to actually hit escape velocity. So the four final frontiers are space, the oceans, the mind and body, and then the metaverse – or just crypto.

When we think about space, it’s like the culmination of taking this free energy and using it for exploration. I also think that the nature of consciousness has attracted a lot of hype in recent times, in part because everyone has woken up to the fact that these big tech companies harness our minds and attention for profit. Ultimately, crypto has to integrate with these frontiers – it has to integrate with everything we've discovered in web2 and even in science, which is currently happening with the decentralized science space. So what I’m laser-beam focused on right now is connecting crypto as the substrate for all the other frontiers.

Plug and Play: What is the on-ramp for the next billion users in the metaverse and Web3 world?

Pai: When we think about commodities, we should look at the moral hazard that's been created by centralization. So in the case of decentralized wireless, a lot of the power has been captured by big incumbents like AT&T, Verizon, and T-Mobile - companies that can pay massive fees to get these spectrum licenses. But many other small businesses can’t. So even if you have a better idea, the big incumbents, like AT&T, can simply get the license and crush you via regulatory capture.

So, the first example of where I see decentralized wireless going is that Starlink has repriced all real estate. Now all real estate around the world will be given this worldwide coverage in a way that they had never experienced before.

The second is that all these major companies have to compete in a market where they never had competition. So it's bringing them into the arena, giving them a broadsword, and forcing them to fight again. And I'm just not bullish on the fact that AT&T and its peers can do that. So what I see in the future is that these big players will work with these new startups that we're seeing in order to provide this coverage in a way that they couldn't by themselves. And I think that will speed innovation up because it's creating a new market. So I'm excited that startups actually have a fighting chance because a new blue ocean has appeared.

Plug and Play: Why haven’t we seen a digitized version of real estate within Web3?

Pai: Digitized real estate is a very cyclical idea. It comes back every so often when people think about the use cases of crypto. What I see is that it makes far more sense to create something like this in one, a new city or, two, in a frontier market, where the nature of affairs is so obfuscated that you need a sort of DLT or an open ledger to figure out who owns what. In developed countries. It's bad, but it's not unbearable for the consumer. We know that the New York real estate market is very much like a boy’s club, and if you're in the club, you know exactly how to operate. If you don't, you'll lose tons of money, and that cycle is repeated infinitely. And I like the idea of putting leases and broad ownership on the blockchain, so people actually understand what company is owned by who.

I think a timeshare model is less necessary. I think that'll happen when there's a proper need for it, but I don't see that right now. Because to do 10x or 100x what Airbnb has done requires a lot more work on the crypto side. But certainly, that's one reason I'm excited about frontier and emerging markets and crypto. Just like how China evaded the centralized telecom system and moved straight to mobile, I can see real estate in frontier markets moving from this monolithic real estate process all the way to digitized real estate ownership.

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