The Ledger: Legendary Investor Jim Breyer Warns of Crypto ‘Nuclear Winter’
Greetings from China, where Fortune just concluded its 2018 Global Tech Forum in Guangzhou, a city whose industrial potency permeates the air, literally, in the form of a throat-tickling miasma. I am spending the week unwinding in the revivifying climes of Hong Kong, puffing my lungs on hopeful gusts off the Pearl River Delta while the cryptocurrency markets suffocate.
For devotees of The Ledger, the highlight of Fortune’s conference was remarks made by Jim Breyer, a billionaire investor who remains amply bullish on blockchain-based businesses, despite the Bitcoin bloodbath. The present Blackstone- and erstwhile Walmart– and Dell-board director said during the event’s final keynote session on Friday that he continues to be “very interested” in the technology, while cautioning that the near future will be a slog for investors. These are the times that try people’s souls; “we are close to a nuclear winter right now with cryptocurrency,” Breyer warned. (You can view his portfolio investments, which include Circle and Ethereum, here.)
This is not the first time investors have sought fallout shelter. Cryptocurrency bubbles have popped before. “AI winters,” periodic slumps in artificial intelligence excitement, are well-documented phenomena. In the early 2000s, right after the dot-com denouement, venture capitalists—the survivors, anyway—shuddered at the thought of backing more Internet companies. But that didn’t stop Breyer from placing a prescient bet on Facebook in 2005, when shares in the then-upstart were worth mere cents on the dollar. The deal would prove to be one of the venture industry’s biggest bonanzas, reaping billions of dollars for Accel Partners, where Breyer worked before setting out on his own with the self-named firm Breyer Capital in 2013.
“These cycles keep happening every decade or so,” Breyer said, referring to the repetition of technologic booms-and-busts. This seasonality is, he said, “inevitable.”
What makes Breyer so sure blockchains will rebound? In addition to drawing analogies to past experience, he said his many meetings with students, entrepreneurs, and technologists the world over inspired his faith. “So many of the very best computer scientists and deep learning PhD students and post-docs are working on blockchain because they have so much fundamental interest in what blockchain can mean,” Breyer said, name-checking a variety of top-tier academic institutions, including ones at which he holds advisory roles, including Tsinghua University in Beijing as well as Harvard and Stanford universities in the U.S.
Put simply, Breyer said: “You don’t want to bet against the best and brightest in the world.” If he is right—as he has been many times before—the sun will one day shine again. But for now the lot of futurist financiers must prepare to gasp in the pall of skies occluded. The bomb has dropped and, yes, winter is upon us.