Digital Currency Group (DCG) is perhaps the most important company in the Bitcoin and blockchain ecosystem when it comes to early-stage investments. DCG has made over 80 investments in the digital currency and blockchain space thus far, and those investments involve startups from 25 different countries around the world.
Although DCG has invested in many companies building on top of Bitcoin, they’ve found it difficult to find the right Ethereum companies to back so far. Having said that, DCG is now ready to announce their first investment in an Ethereum-related startup, Etherscan, which is an Ethereum block explorer.
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In addition to their interest in the Ethereum blockchain, DCG has invested in RSK Labs, which is the team behind Rootstock (often referred to as an Ethereum-esque sidechain for Bitcoin). DCG Founder and CEO Barry Silbert is also notorious for making bullish tweets regarding ETC, which is the underlying token on the Ethereum Classic platform. Ethereum Classic is the original Ethereum blockchain that did not implement the hard-forking bailout of The DAO.
Bitcoin Magazine recently spoke with Barry Silbert to gain a deeper understanding of DCG’s outlook on Ethereum, Ethereum Classic and Rootstock.
Don’t Decentralize for the Sake of Decentralization
At Consensus 2016, Silbert indicated that many of the projects building on Ethereum right now aren’t all that practical. He noted that he was unsure of what problems would be solved by a decentralized, autonomous version of Uber.
During his conversation with Bitcoin Magazine, Silbert indicated that his general view on Ethereum’s decentralized applications has not changed. “Our view is decentralizing a company or an idea for the fact of decentralization does not necessarily solve a real problem,” said Silbert. “Although, we haven’t seen everything, so maybe there is a decentralized project out there with merit.
“We’ve essentially looked at every Ethereum company looking to raise capital in a traditional way, and we’ve passed on all of them,” added Silbert.
Of course, that changed to a degree with DCG’s investment in Etherscan. “We are excited to make our first Ethereum investment in Etherscan, alongside a great group of other industry investors,” said Silbert. “The Ethereum blockchain contains a vast amount of rich data on native smart contracts, AppCoins and DAOs, but is difficult for a nontechnical user to navigate. We believe Etherscan will be a useful service for entrepreneurs and enterprises building on top of the Ethereum blockchain, and are eager to see more infrastructure developing around the budding Ethereum application ecosystem.”
DCG’s Take on Ethereum Classic
Silbert was one of the first well-known bitcoin investors to purchase and publicly support ETC once the token was made available for trade on Poloniex in the aftermath of the Ethereum hard fork that split the Ethereum network in two. The DCG CEO is so drawn to Ethereum Classic that he may be interested in building a publicly traded ETF for the alternative digital currency. Such a move would make sense for DCG as they’re also behind the Bitcoin Investment Trust, which now has over $150 million worth of assets under management.
In the past, Silbert noted that Ethereum Classic needs to get rid of the difficulty bomb, make a decision on whether to stick with proof of work and finalize a long-term monetary policy before an Ethereum Classic investment fund could be considered. Finalizing a monetary policy is the only task left on that to-do list.
Although Silbert is bullish on the ETC token, he isn’t currently interested in many of the applications that have been pitched for the platform. “A lot [of] ideas on the Ethereum Classic side suffer from some of the same issues as Ethereum — as in why decentralize or use Ethereum?” he said.
From DCG’s perspective, ETC is a useful diversification tool for a digital currency portfolio. According to Silbert, bitcoin is the only asset that should take up the rest of that portfolio. DCG also sees value in Ethereum Classic as a smart-contract platform for the Internet of Things and as a micropayments layer.
DCG currently holds ETC in its portfolio, and they’re also exploring the possibility of getting involved in the mining of ETC.
Investing in the RSK Labs Team
In addition to the ETC token, DCG is also invested in RSK Labs, which is the company working on Rootstock. According to Silbert, the investment in RSK Labs was mainly about the team more than anything else. This is part of DCG’s overall strategy when investing in startups — it considers the team first, then the market opportunity, and finally the product.
In addition to RSK Labs, DCG has also invested in companies that allow users to trade ETH and ETC. Some of the companies DCG has invested in also use private, permissioned versions of the Ethereum blockchain.