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From Crypto Trading to Crypto Investing

During the last bull run, crypto trading led to massive gains. But crypto investing is a different animal that depends on long-term growth.

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Across the world, companies like Google, Visa, and JPMorgan are incorporating digital assets as part of their payments strategy. This means that cryptocurrencies and the blockchain technology that powers them are becoming more prominent – shifting from consumer crypto trading – into more focus on B2B commerce. In my writing here at Cabot, our goal has been to identify best-in-class companies and web3 projects, operating B2B business models, positioned to endure well into the future. These are the investments that will yield the most value over time.

Infrastructure companies historically have generated significant value. Companies like Carnegie Steel, Standard Oil, and Accessory Transit Company all embody infrastructure companies that thrived during the age of robber barons. This notion is still true today, with Google, Amazon, and Apple all monopolizing their respective industries as internet infrastructure companies.

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Another lesser-known internet infrastructure company exists: Ethereum (ETH). This is what I would describe as a platform technology company. These are operating systems that create value because others can build on top of them. Like Apple with iOS and the App Store, Ethereum is a blockchain solution that allows developers to launch their own projects using the standards and code provided by ETH.

Others have tried to compete with Ethereum to limited degrees of success. Solana (SOL) was deemed the ETH killer for a period. With a fully diluted market capitalization of $15B, Solana is no slouch, but much remains to be built to compete with the ETH ecosystem.

Today, I would like to call your attention to a new project – Aptos Labs.

Aptos Labs is a spinout project from Facebook/Meta Platforms (META) created by former employees Mo Shaikh and Avery China who both worked on the Facebook digital currency project called Libra, which later became known as Diem. This project finally launched – it just won’t be from Facebook.

Several leading crypto trading exchanges support trading for Aptos (APT), including, Binance, FTX, and OKX.

Aptos is using their own programming language designed to lower transaction costs and increase speeds in the hopes of becoming the home of decentralized applications. The company has been valued at $2 billion by a16z; the venture fund invested $200 million this year representing one of their largest investments in web3. This is a big bet – the success will largely depend on how developers respond to using this programming language called Move. This language is based on Rust, which is the same code base that powers Solana.

Other projects have fast speeds as well, (see Hedera Hashgraph) and yet it has not amounted to an increase in value creation that many expected. This begs the question, why did Facebook choose to abandon the project entirely? Many will say regulation, etc., but truth be told, Facebook could have launched this project if they wanted to. It seemingly would fit their ambition for creating the Metaverse.

Time will tell if Aptos can become the ecosystem that they intend. Steve Jobs always said you must focus on the use case first and work your way back to creating the technology. I can’t help but wonder in this case, if the focus has been on how to be the fastest, will that move the needle enough? To succeed in business, you must either be a differentiator or a cost leader – the best companies are a mixture of both.

Web3 must continue to build to solve real pressing challenges, empower the creator economy globally, and serve as a secure location for business data. Without this, they will just be crypto trading tokens.

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Senior Analyst
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