Legendary Investor and Industry Pioneer Matthew Roszak: Trillion Dollar Crypto Networks in The Making
“Blockchain technology represents one of the greatest generational opportunities for entrepreneurs and investors.” –Matthew Roszak
Matthew Roszak is chairman and co-founder of Bloq, which is a blockchain technology company focused on building tokenized networks and applications. For most people in China, Bloq may not sound familiar to them, but it actually has close relationships with Chinese market leaders, like Bitmain, Fenbushi Capital and Foxconn.
Meanwhile, Matthew Roszak is an early investor in blockchain and the cryptocurrency space. He started investing in this space back in 2013, including companies like payment processors, exchanges, wallets, miners and software layers. He is also one of the investors of Binance, Block.One, Orchid and Qtum. He also participated in some of the earliest token networks, like Mastercoin, Factom, MaidSafe and Ethereum.
Forbes published a “Crypto Rich List” in February, where Matthew resides along with Ethereum co-founder Vitalik Buterin and Block.One CTO Daniel Larimer.
At Distributed 2018, 8btc got the chance to talk with this legendary investor. He shared some of his investment principles,
The common denominator in investing in operating companies and tokenized networks was people. You still need people to build this stuff out and actually see their whitepapers or their pitchdecks come to life. So this is very much a people business. While we all talk about this awesome technology, disruption and these amazing tokenized communities, it still comes down to partnering with amazing people to make it happen.
What’s more interesting is that when Matthew met celebrities like Bill Clinton, Richard Branson and Steve Wozniak, he would give them a physical bitcoin, because he thinks that “it’s sometimes easier to comprehend and inspire certain folks to learn more about bitcoin when they can see it and feel it.”
EOS, ICOs, speculation and regulation are also key topics of this interview. In his view, Matthew believes bitcoin can reach $25,000 at the end of 2018.
Below is the full text of the dialogue between 8btc and Matthew Roszak.
8btc: Could you tell us about your personal experience with bitcoin and blockchain?
Matthew: I first learnt about bitcoin in 2011. It was very early. At that time, I was a chairman of a social gaming company in Singapore. When you’re in social gaming, payment processing and cross border payments becomes a core competency fast dealing with PayPal, credit cards and bank transfers. When someone initially mentioned bitcoin to me, with all its promises, I was like “wow this could solve a lot of those issues (and beyond),” but I completey discounted it at first. It seemed too good to be true and sounded like some sort of magic Internet money or digital dream money that I’ve always been thinking about.
So I kind of dismissed it initially, like still some people still do today. It took me about a year to get back at it and really start understanding this technology. By 2012, I was way down the bitcoin rabbit hole, and by 2013 started collaborating and investing. I invested in over 20 bitcoin and blockchain technology companies. I couldn’t find anything that remotely came close to competing with my time and energy, than to build and invest in this ecosystem – I still can’t.
So it’s less of a job to me, it’s more of a movement and true calling than anything else. This stuff is going to fundamentally change the world.
8btc: You said that you invested a lot of blockchain and digital currency startups, some of them have already become industry giants, so could you talk about your investment principles or logics?
Matthew: In 2013, I began the journey of investing in over 20 operating companies, and these were the bridges, roads and tunnels for bitcoin and blockchain – like payment processors, exchanges, wallets, miners and software layers.
That was in many ways some of the initial fabric of the space. A lot of those companies today are BTC China, Coinbase, Kraken and Xapo – all industry titans, albeit from humble beginnings. And from there, I participated in some of the earliest token networks, like Mastercoin, Factom, MaidSafe and Ethereum. And then after that, I watched the whole progression of ICOs and participated in over 40 projects.
But the common denominator for both the operating companies and the tokenized networks was people. You still need people to build this stuff out and actually see their whitepapers or their pitch decks come to life. So this is very much a people business. While we all talk about this awesome technology, disruption and these amazing tokenized communities, it still comes down to partnering with key people to make it happen.
I was fortunate to be early in this space, not from a timing standpoint, but lucky to be early in the space to build relationships with pioneering entrepreneurs and technologists. And today if I’m looking at a particular investment, I reach out to them to help me look at a particular project and refine my strategies. So these great friendships from five years ago now form this amazing network of relationships, that continues to grow and expand – relationships matter.
8btc: You are one of the founding investors of Block.One, the company that operates EOS. We all know that EOS is a controversial cryptocurrency. What is your opinion about EOS?
Matthew: Every single currency I’ve been involved with is controversial. In early days, it was bitcoin – then when Vitalik launched Ethereum, the bitcoin people were like WTF?! It was controversial at that time – and in certain ways it trains you to focus on experimenting and driving new innovation, versus what’s popular.
Every time somebody builds a bold new project and tries to inspire new community, sometimes that’s translated into being controversial – and drama follows. It’s all part of the equation now, albeit I’m desensitized to that, and don’t necessarily pay attention to the noise as much as some people do. I try to relay that to other technologists and projects out there.
So much of the the inspiration and fun resides in the new innovations and new ideas, and I think that’s all additive to the space. We are going to see tons of that innovation sprout and scale up in the coming years.
8btc: Do you think that EOS constitution or its governance model is a kind of innovation?
Matthew: I think everybody is trying to figure out and innovate with their governance models. You have quite a range from Tether, to bitcoin with a 51% mining vote; and now Ethereum taking on the acrobatic of going from PoW to PoS. Now EOS is building out their version and fabric of a new governance mechanism.
I think governance and decentralization right now is still a journey, and a ton of smart people are trying to figure it out. I love seeing these new approaches, especially with real money pressure tests out in the wild.
8btc: Do you talk about bitcoin and blockchain with your friends and family?
Matthew: Always, almost to a point where they are like, “Can we talk about something else?” Lol! In the early days, when I with my friends and family, I was always describing this new technology frontier, I was consumed buy it and very passionate about its potential to change the world. Fast forward to today, and I can’t find any better way to spend my time and energy these days. I still get emails from friends from high school like oh what is bitcoin, and I have not talked to them since graduation. Some of my friends will even congratulate me on the price of bitcoin or a headline, but I had nothing to do with it. This is a real movement with of lots of smart and dedicated people, and we are still very early. Some people think it’s game over or too late to jump in the industry – I try to add perspective that we are still in the stone ages of cryptocurrencies right now.
8btc: How much money have you earned from your investments?
Matthew: The fortunes made in this space go up and down every day. What’s evolving in this space is that certain people and companies now have resources to effect change – change for privacy and security, change in advocacy for better regulation and change for philanthropy in giving back. So with these new resources people can really be change agents, which is really important for a new industry. Richard Branson is a solid role model here as he builds great companies, disrupts conventional thinking and uses his resources to make real impact on society and the world.
8btc: What do you think about ICOs?
Matthew: I think it’s a really important way to finance technology and innovation. We saw that with Ethereum, one of its key use cases has been crowdfunding or ICOs. 95% of those may not work out, however 5% of those projects will drive some really profound shifts in money, identity and create entirely new layers of the Internet.
Despite over $20 billion raised to date, we are still in the early days of this Cambrian explosion of ICOs. I think over the next few years we are going to see a massive tokenization of real world assets, like a hotel, cap table, etc. This segment is not a massive technological leap, but it’s a way to get a broader group of people to understand tokenization and how you could have a digital representation of an asset. Some people today still don’t understand bitcoin, but they understand a bar of gold or real estate. So it’s most like a bridge for them to understand this tokenized world a lot better.
I think we are going to see tokenization ramp up like never before. Beyond real world assets, many governments, big and small, are all exploring tokenizing their fiat currencies. Again, not a technological leap here, yet important training wheels for the tokenized future.
8btc: What about speculators? Do you think they are necessary for blockchain to take a leap?
Matthew: I think with any new technological shift, and this is a biggie, speculation helps fund and drive innovation. There will be effervescence, bubbles and roller coast rides, and it’s part of the equation. It’s impossible to go around and say, to build this railroad system or telephony network or Internet it will cost this much. People would never fund such a tab – historically speaking, fear and greed has tended to help finance and build new industries and infrastructure.
8btc: Do you think we are in a bubble?
Matthew: No, I think we are in a bit of a winter. The total crypto market cap is valued at about a quarter trillion dollars today. My sense is that we’ll punch through a trillion some time by the end of this year. My own prediction is that bitcoin will hit $25,000 in 2018, and once bitcoin punches through a trillion dollar market cap, I think the rest of the world will start to seriously take a bite of this new asset class.
Bitcoin has been a very social movement. It’s all been a very bottoms up, comprised of individuals. Not many institutions or governments are involved. The speculative animals on Wall Street aren’t really showing up in any volume, yet. Once that does show up, the market will get driven up even more. I look at that as simply more capital to fund more innovation to help fund the tectonic shifts ahead of us.
8btc: Is it true that you gave Bill Clinton and Richard Branson their first bitcoin?
Matthew: I’ve been fortunate to meet a lot of interesting and influential people, and I always ask them if they own any bitcoin. I have given a bitcoin to Bill Clinton, Richard Branson, Steve Wozniak and many others. They may have heard of bitcoin, but I have found that many folks still do not hold any – I try to change that and hope they carry the message forward. I give them a physical bitcoin. What’s funny in some ways is that a physical bitcoin is kind of like the opposite idea of decentralized digital currency. But giving them something they can feel in their hand is a great conversation piece. I think it’s easier to comprehend and inspire folks to learn more about bitcoin when they have some. It helps opens up your mind.
8btc: Do you think you successfully ‘brainwashed’ some of those famous people?
Matthew: I find it astonishing when people like Warren Buffet call bitcon ‘rat poison.’ Last time I was in Singapore being interviewed by CNBC, the reporter said that the CIO of (a big Asian bank) said that bitcoin was a Ponzi scheme. I was like, yep, some people fear what they do not understand. It would be so much easier for them to simply say they are going to look into it and explore further. That would be a smarter, risk adjusted way to respond.
There’s an old saying that money equals power, typically reserved for the few. With the advent of cryptocurrencies, now money is technology – so technology is now power. So this movement is changing those old power centers, and it may be freaking some of them out.
8btc: Do you think regulation is good or bad for cryptos?
Matthew: Thoughtful regulation is a very important factor in order for this ecosystem to evolve and grow. Most banks won’t touch crypto companies and the overall lack of regulatory clarity has been one of the main issues keeping institutional investors on the sidelines.
Generally, regulators don’t know how to handle crypto right now – its a foreign object to them. There’s very little in their toolbox to help them provide better regulatory clarity. Historically, innovation always outpaces the ability for regulators keep up.
However if you care deeply about this industry like I do, you need to engage and spend time with regulators. Teaching and advocating is a key part of the equation. Once there’s a better regulatory framework established, more money will come in and more innovation will flourish. I think it will be a super positive thing, and unlock billions of dollars of capital flowing into this space.
8btc: Do you have any suggestions for crypto market players and investors?
Matthew: I’ve seen bitcoin go from a dollar to 10 dollars, 10 dollars to a hundred, a hundred to a thousand and a thousand to ten thousand. Every time it hits one of these milestones, it brings in new participants albeit tends to have a pricing pullback. Almost as if it’s testing new entrants.
It’s sorta funny in that a year ago bitcoin was at $2,500, and now it’s $7,500 dollars – up 3x – but somehow everybody’s upset. Being a trader is a bit treacherous in this space, so I elect to be an investor and tend to buy and hold – that discipline has served me well and is the best advice I can give.
8btc: What’s your price prediction for bitcoin?
Matthew: I think by the end of this year we’ll see bitcoin at $25,000. I think the market goes up 4x, so we’ll see a trillion dollar market cap for cryptocurrencies.
The psychology is changing. When the total crypto market cap punches through a trillion, I think it’ll quickly gain momentum and usher a global institutional movement into crypto.
8btc: Could you tell us about Bloq?
Matthew: Bloq is a blockchain technology company. Through BloqEnterprise we build software for companies to engage in tokenized networks, and with BloqLabs we build new decentralized networks and applications.
One of the biggest surprises in building Bloq is the energy and interest we got coming out of Asia. Especially with partners such as Bitmain, Foxconn and Fenbushi Capital. We are sitting here in San Francisco, however in comparison Silicon Valley is completely asleep compared to what’s happening in Asia in crypto and blockchain. I love spending time in Asia, because of the pace of innovation – everything moves 10 times faster.
8btc: What’s your plan for near term?
Matthew: To continue to build and innovate. While most people think the industry is grinding through a bear market or winter, this is the best time to invest, hire and build. Our strategy and commitment in this space has not changed, it’s only gotten stronger.