The Bull and Bear Cycles in the Eyes of Venture Capital Giant a16z: Will Microsoft's Embrace of Open Source Architecture Ultimately Reflect the Regulatory Landscape of Cryptocurrency?

In its latest report, legendary venture capital firm Andreessen Horowitz (a16z) pointed out that the crypto market has experienced three significant bull market cycles, following a similar path with new ideas, projects, and startups emerging despite the chaos, leading the market into the next cycle (bull market).

After raising a whopping $515 million crypto fund, a16z elaborated on the established operation mode of the crypto bull market in their latest article. The visionary venture capital firm has spawned renowned projects such as derivative trading platform dYdX, Dfinity, Oasis Labs, Maker, among others. The article mentions that new "high-quality projects" will emerge, once again driving the future prosperity.

Period One: 2009 - 2012

In the first period, the price of Bitcoin began to rise, with a large number of new institutions entering the crypto space, and a significant number of cryptocurrency wallets, exchanges, and mining establishment institutions.

Period Two: 2012 - 2016

The second period saw the emergence of smart contract platforms, with Ethereum leading the second wave. The article points out:

Smart contracts will continue to be the most innovative and potentially disruptive area in the crypto economy. Cryptocurrencies are no longer just digital forms of money. They are transforming into programmable money. The key feature of the crypto cycle is that each stage sows the seeds and drives the next cycle.

Period Three: 2016 - 2019

The third period peaked in 2017, fostered by Ethereum in the second period, and became the foundation driving the prosperity of 2017. Dozens of high-quality projects emerged in various fields including payments, finance, gaming, infrastructure, and applications. Many of these projects are set to launch in the near future and may drive the fourth crypto cycle.

Data compiled by a16z shows that in 2019, the growth of Bitcoin prices, community, development, and institutional activity still lags behind that of 2018. The frenzy of 2017 pushed Bitcoin into a bear market the following year. However, in 2018, apart from the significant price drop, all other activity indices showed an upward trend, which is reassuring but also indicates that the industry must drive more development and construction to enter the next cycle.

a16z did not specify when the fourth period will arrive, but from their past investment portfolios, it can be seen that decentralized exchanges (dYdX), privacy-focused cloud computing platforms (Oasis Labs), and DeFi project Maker are playing crucial roles in the industry and may become the foundation driving the next cycle.

Similarities Between Government Regulation and Microsoft's Attitude

Microsoft President Brad Smith recently publicly admitted that Microsoft's past vigorous resistance to the development of "open source code" was a big mistake. Former Microsoft President and current owner of the NBA's Los Angeles Clippers, Steve Ballmer, even once stated that Linux, famous for its open-source architecture, is a "cancer."

Today, Microsoft is gradually adopting open-source code and has released a complete Linux kernel in a Windows 10 update. In the past, Microsoft not only chose the wrong side in history but the current President Smith was also one of Microsoft's senior lawyers in the battle against open-source software. Could Microsoft's shift in attitude towards open-source code be a reflection of cryptocurrency regulation?

Recent reports state that Telegram's open-source blockchain project TON has officially been abandoned, with its founder expressing dissatisfaction with US regulatory agencies and once again emphasizing the importance of decentralization, describing it as a "righteous struggle." In addition, Facebook's Libra project was strongly opposed by governments around the world last year. Could this be a replay of Microsoft's history from resisting the development of "open-source software" to embracing open-source architecture? Perhaps we can look forward to the day when regulatory trends change.

Related Reading

• Two different situations for startup investments! A16z rumored to be raising a second crypto fund, SoftBank estimated to lose $13 billion
• Venture capital is not holding back! Robinhood raises $280 million, a16z crypto fund size grows 1.7 times

Join Telegram now to get the most accurate information on fintech, blockchain insights, and industry examples!