A $21m venture capital fund taking equity positions in early-stage companies building on Bitcoin

Timechain is now live, deploying capital and accepting commitments in preparation for a $21m first close. The reception has been truly wonderful as we see LPs value our differentiated, focused, and thoughtful approach to the space. That approach, to put it succinctly, is bitcoin not crypto. Timechain, not blockchain.

Fund Update

4 investments completed (c. $1.5m in aggregate)

  • Deep conviction in bitcoin, a presence across Europe and Africa and a broad network in traditional industries, not just bitcoin, continues to give us a right to win with founders
  • Co-investment rights to LPs soon to be available as the businesses are developing fast
  • Over 60% of the way to our $21m first close target scheduled for this summer

The Timechain Thesis

Aside from highlighting our investment activity, this newsletter will seek to explain why we believe bitcoin to be so profound. We will explain over time why the invention (or discovery?) of bitcoin offers humanity a new and stable economic foundation from which civilisation can build productively. From such a vantage point, the increasingly obvious deficiencies of our current economic paradigm will be laid bare and the wealth creation event that is bitcoin made clear.

In brief, the root of our problem is fiat, as its issuance is centralised, distribution centrally planned, and incurs no cost to the issuer. Indeed, it seems remarkable in our ‘free market’ economies that we allow a committee of elders to set the price of money every 6 weeks. Fiat currency itself is just a monetary platform and came about to solve the problem of the base currency of the world – gold, not being able to travel as fast as information in a digital age. Humanity needs a way of transferring value the way we transfer information via the internet – after all value is just the highest form of information possible.

And so enter bitcoin, the internet of money. Controlled by no-one and yet for anyone. Harder to produce than gold and yet transportable at the speed of light. It is rules without rulers, an opt-in system that has grown entirely organically with no marketing dollar spent or coercion required. Bitcoin is already an unstoppable parallel financial ecosystem (how many times have the Chinese authorities announced a ban?) and one that is not based on the exponential new issuance of credit to keep the wheels turning.

Perversely though there has long existed a chronic funding gap for start-ups in the bitcoin space. VCs have long been attracted to funding, creating, and selling on what are effectively unregistered securities rather than building on bitcoin. It’s certainly been a lucrative trade the last few years, despite the lack of clear use cases! And prior to the advent of the lightning network, opportunities to invest into bitcoin related companies have been limited in large part to mining and exchanges. But we are now at an inflection point. Layer 2’s like lightning and liquid vastly increase the utility of the network, whilst the failings of our manipulated fiat monetary arrangement are becoming all too apparent. The bitcoin ecosystem is poised to explode.

Through our relentless focus on bitcoin only, Timechain is building the brand name in the space. Our investment activity will be focused on building out core infrastructure for this re-architected global economy, with a digital bearer asset capable of moving at the speed of light with instant transaction finality, at its core. In practice that means our investments will reach and far and wide; from energy infrastructure to bitcoin based financial products to payments with use cases familiar and exotic – micropayments and money streaming being two such examples of the latter.

Market Update

Bitcoin adoption is relentless…

  • The % of bitcoin that hasn’t moved in over 1 month; 93% - all time high (indicating increasing coin dormancy)
  • # of addresses with a non-zero balance; c. 42m - all-time high
  • Lightning network capacity increasing exponentially; currently c. 4000 BTC – all time high
  • Bitcoin becomes legal tender in the Central African Republic

… whilst centrally planned monetary systems around the world begin to crack

  • JAPAN – Bank of Japan implemented yield curve control on government debt. BOJ now owns 50% of national debt as private sector demand dries up
  • US – Led drive to seize US treasury reserves of another nation-state, making clear the very political nature of fiat money
  • EMERGING MARKETS - Sri Lanka a formerly OECD classified 'middle income' country is now a failed state. Meanwhile, rampant inflation persists across prominent emerging-market economies (Nigeria, Turkey …etc) far above what has been seen in the West to date. Wealth has become increasingly unattainable for the middle class and instead centralised in the hands of those who own assets

The price of the bitcoin token may oscillate with macro convulsions and the unravelling of vapourware across the crypto landscape, but the bitcoin timechain will continue to do what it was built to do: issue a new block every 10 minutes with the updated property rights of everyone who chooses to use it. It is an object of permanence and peerless reliance in an increasingly uncertain world.

With thanks to the Timechain Calendar Team