Yat Siu has seen a lot in his decade of investing in crypto as a venture capitalist.
The venture studio and video game developer, Animoca Brands, co-founded in Hong Kong, has significantly expanded its influence within Web3 culture. According to data provider CoinGecko, the combined market capitalization of tokens issued by companies in Animoca’s portfolio exceeds $45 billion.
However, during the crypto winter of 2022-2023, Animoca faced a severe challenge as several tokens from its associated companies plummeted nearly 90%. At the lowest point in February 2023, there was speculation by the Financial Times about whether Animoca could continue operations.
2024 saw significant shifts: Bitcoin’s price skyrocketed more than 120%, the United States is about to see a pro-crypto president take office, and Animoca Brands nearly quadrupled its office space in Hong Kong despite the local traditional finance sector shrinking.
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Currently, Siu perceives the cryptocurrency sector as reaching a pivotal moment reminiscent of the transformation he witnessed in the business world during the 1990s, when the internet first started its significant impact.
In earlier times, Hong Kong’s garment industry, which is now a piece of its past, heavily depended on physically transporting samples to clients for examination during manufacturing. At that time, there were no platforms like Slack, Dropbox, or FTP available, and the quality of fax machines was not sufficient for this purpose.
As I reminisced during my conversation with CoinDesk at the Animoca headquarters in Hong Kong, traditionally we would craft our designs here and send them across the ocean to America via DHL. This entire process, from start to finish, could take several days and set some companies back as much as 80,000 dollars per month, I noted.
Siu, on the other hand, proposed a viable approach. Running one of the early broadband internet services, he enabled garment factories to perform high-definition scans previously challenging due to insufficient bandwidth, and subsequently transmit these scans to clients in the Western world.
As an analyst, I can attest that the implementation of broadband internet has revolutionized our client review process, making it significantly less costly and remarkably more streamlined. The archaic method of physically delivering designs for approval, a practice I’ve often referred to as “insane,” is now obsolete, as digital approvals are swiftly becoming the norm.
As a researcher, I liken this groundbreaking development to the widespread acceptance of stablecoins among conventional financial entities in the future, a prediction I firmly stand by.
According to his prediction, if you’re planning on engaging in business and trade with the USA, it seems likely that having cryptocurrency infrastructure (or ‘crypto rails’) will be necessary.
Over the course of events, such a situation may lead to business conflicts… For instance, if someone proposes, ‘Let’s exchange Tether or USDC,’ but the other party only accepts wire transfers, it simply won’t be possible, as Siu explained.
In Asia, stablecoins are commonly utilized for tasks such as supply chain finance. As Siu pointed out, the fashion industry is experiencing shrinking profit margins, and it seems illogical to employ costly wire transfers to settle supply chain payments when stablecoins can do the job just as well.
As a researcher delving into this field, I cannot help but observe the growing significance of stablecoins in facilitating transactions. They seem to be instrumental in reducing costs and accelerating the speed of these financial exchanges.
This, as Siu sees it, is the first part of 2025’s mass adoption of crypto.
Memecoins making community
In Siu’s thoughts, the upcoming phase involves the growth of memecoins from being just individual coins, to becoming a comprehensive blockchain system.
Siu expressed that memecoins will likely develop their own first or second layer networks. These are no longer just digital coins, but rather they’re constructing communities and ecosystems. In essence, memecoins serve as cultural emblems, garnering attention and creating stories that appeal to people beyond simple financial investment.
As suggested by Siu, Non-Fungible Tokens (NFTs) appear to be progressing along a similar path, transitioning from individual assets to essential components within larger systems or ecosystems.
In simpler terms, Siu stated that NFT projects aren’t just focused on releasing tokens anymore; they aim to build comprehensive systems or ecosystems that encompass cultural and symbolic worth. To illustrate this, he referred to the expanding collection of memecoins on Solana, some of which are now introducing NFTs, to boost interaction and strengthen their bond with their respective communities.
To ensure lasting achievement for memecoins and NFTs, it’s crucial that they transform into spaces where people can create games, apps, and unique experiences beyond mere speculation, as suggested by Siu.
Crypto gaming gains momentum
Web-based gaming using decentralized technology isn’t exactly novel, but attempts thus far have not struck a chord with gamers. During the 2021 market surge, attempts by major studios like Ubisoft to infuse NFTs into games such as Ghost Recon were met with cool responses from the gaming community. Similarly, native Web3 games such as Decentraland have failed to attract a player base commensurate with the billion-dollar valuation of their tokens.
Instead of Off the Grid, which initially suggested connecting Web2 and Web3 gaming with appealing graphics and prioritizing gameplay over cryptocurrency, appeared to lose momentum following a brief period.
Siu, however, remains optimistic about crypto gaming.
He views gaming as a potent gateway into Web3, where culture, community, and ownership intersect to form something far greater. Within this environment, trading in-game items becomes an intrinsic aspect of the game experience itself, developing organically from well-known concepts like skin trading, which gamers have encountered in games such as Counter-Strike.
As a crypto investor, my focus lies on developing a network that resonates with Web2 gamers, by crafting an enjoyable and immersive gaming experience. This unique platform would empower players with ownership and trading capabilities, making their journey more rewarding. By the year 2025, I envision games where the distinction between Web3 and traditional Web2 offerings will blur. Gamers will appreciate these experiences for their entertainment value, while the benefits of blockchain technology will serve as an added bonus.
“They’ll just want to play,” he added.
Reputation as currency
In any economic system, trust among parties and counterparties is essential for smooth operation. Transparent systems like blockchain can foster a greater sense of trust, but it’s also crucial to have a mechanism in place to assess the reputation of participants too, as suggested by Siu.
In simpler terms, Siu stated that reputation serves as a form of capital. It’s not only about the benefits or rewards you receive, but also about the esteem in which the community holds you and your efforts.
Animoca’s Moca ID system serves as a unified, yet decentralized, means of identifying users across all the companies within its portfolio. In simpler terms, it was explained that this reputation network, like Animoca’s Moca ID, ensures consistent identification without relying on any central authority.
Theoretically, it could resemble the role of Equifax in conventional finance, facilitating offerings like unsecured cryptocurrency loans – quite distinct from the existing system that relies on heavily collateralized loans.
Siu stated, ‘Without an established reputation, it’s challenging for me to establish trust.’ He posed a question: ‘Consider the years you’ve built your reputation. Would you be willing to jeopardize that with just one unfavorable action?’
Not all about the profits
As a venture capitalist, Siu seeks profit, naturally. He’s not only a firm believer in capitalism but also its positive impacts. In previous conversations, he expressed the view that widespread feelings of despair and inequality stem largely from a lack of financial understanding, leading to economic disparity.
From my perspective as an analyst, individuals who lack the chance to acquire assets and reap returns may struggle to comprehend the capitalist system. Despite its flaws, I firmly believe that this economic structure, in all its complexity, remains the most suitable option for our society.
In his words, Web3 could redefine the capitalist system by empowering users as shareholders and joint owners. Previously, he cautioned that the origins of communism lie in feelings of inequity.
For Siu, Web3 signifies a chance to construct a more equitable type of capitalism, one that’s both inclusive and collaborative. He encourages the sector to prioritize the transformative powers of blockchain over immediate gains, cautioning against the “fear of missing out” (FOMO) mentality.
As a fellow crypto enthusiast, I’d like to emphasize that while earning profits is exciting, it’s important not to lose sight of the bigger picture. We’re not just making money; we’re contributing to something much larger – building the future of digital finance. The industry’s charm lies beyond the immediate gains, it’s about why we chose to embark on this journey in the first place.
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2025-01-06 19:43