A new wave of cryptocurrency startups and businesses are experiencing rapid growth by targeting the more familiar end of the cryptocurrency value chain in a reprisal of the famed “49er” model of entrepreneurship.
Businesses are creating value from the cryptocurrency boom without necessarily trading, holding or creating any cryptocurrencies. While some criticise the growth, likening it to the dotcom boom of the early nineties, service businesses are increasingly voting on the future of crypto with their feet.
Legacy financial institutions are also set to get a piece of the action by investing billions of dollars in firms providing necessary services to cryptocurrency companies, including accounting and bookkeeping, taxes, trading systems and other essential but non-core functions.
A New Iteration of a Successful Old Model
The “49er model” gets its name from the famous California Gold Rush of 1848-1855, where young gold panners from across North America made their way to California in hopes of striking it big when gold was discovered. From early 1849, a category of entrepreneurs made a fortune from the gold rush by selling shovels, headpans and other essential gold panning equipment to the vast market of gold miners.
This model of entrepreneurship that created value from a new industry by selling services and products that were ancillary to its core business model thus became known as the “49er model”, and the cryptocurrency sector is experiencing a successful reboot of this system in 2018.
While a lot of the focus is on the performance of cryptocurrencies against fiat and each other, many businesses in the space do not need to make any bets on digital assets to extract a substantial amount of value.
Jake Benson is the founder of one such business. His specialist tax firm Libra, caters exclusively to the cryptocurrency industry and provides an accounting solution specifically designed to solve the many strange problems associated with cryptocurrency bookkeeping.
Explaining how Libra provides tax services in a way that is unique to cryptocurrency companies, he says:
“Just to name one difference, the number of decimal places in a crypto asset can be up to 18-plus digits. That fact alone actually breaks a lot of accounting systems.”
New Jobs and Institutional Investment
David Wills is the COO at Caspian, a company based in Hong Kong that services hedge funds with crypto trading solutions. In his opinion he says, as long as the cryptocurrency asset class “has a pulse,” the real winners will be the businesses that provide the picks and shovels.
Cryptocurrency enthusiasts share the sentiment, and none more so than Morgan Hill, a partner at the New York-based $30 million Turing Funds. At a conference in New York, Hill observed most companies at the event either looking for ICO investors or cryptocurrency business customers for their back-office operations.
What this means for the crypto industry is that an increasing amount of finance industry talent is leaving traditional firms and pitching up with cryptocurrencies, even as companies in the cryptosphere continue to grapple with an ongoing skills shortage. Everyone from programmers and developers to bankers and analysts, and even insurance brokers and government lobbyists now have a vast array of opportunities available to them in the space.
The post Want to Get into the Bitcoin Gold Rush? Sell Shovels appeared first on BTCMANAGER.
Source: BTCManager.com
Original Post: Want to Get into the Bitcoin Gold Rush? Sell Shovels
