Abra's chief executive, Bill Barhydt, operates a platform that functions as a cryptocurrency banking service, utilizing Bitcoin and Litecoin-based smart contracts to enable users to maintain various f
Abra's chief executive, Bill Barhydt, operates a platform that functions as a cryptocurrency banking service, utilizing Bitcoin and Litecoin-based smart contracts to enable users to maintain various fiat currency denominations as digital assets accessible through mobile devices. During an extensive conversation with venture capitalist Jason Calacanis for the This Week in Startups program, Barhydt offered his perspective on the dramatic cryptocurrency market movements witnessed throughout 2017. The discussion covered several dimensions of the sector's evolution, particularly focusing on regulatory developments in Japan and the explosive growth of initial coin offerings.
Japan's Regulatory Catalyst
Barhydt attributed much of 2017's cryptocurrency enthusiasm to Japan's governmental decision to formalize its stance on digital assets. "The price surge, in my view, stems from Japan's government providing what amounts to an official endorsement for institutional participants, signaling their backing of this emerging sector," explained Barhydt. "Within Japanese culture, this type of governmental blessing carries weight that differs fundamentally from American contexts. It functions as a directive stating, 'Proceed and flourish.' It's essentially an institutional validation — [a message of] 'We want this to happen' — as the market interpreted it."
This contrasts sharply with Western norms, particularly in the United States, where participants typically move forward with innovations and navigate legal consequences retrospectively if necessary. Barhydt contends that once Japan's institutional investors began accumulating bitcoin, a cascade of anxiety gripped retail investors globally who feared missing out. Many accessed the market through platforms such as Coinbase, which achieved top positioning in the App Store rankings during the latter months of 2017.
"By and large, institutional capital remains largely absent from Western cryptocurrency markets currently," Barhydt noted. "When that eventually shifts, the implications will be substantial."
The Holder Dynamic
Barhydt elaborated on price mechanics, arguing that buyer quantity ultimately determines market value since the number of willing sellers remains relatively constant. "A significant percentage of current holders have zero interest in selling," he explained. "When seller participation stays limited, purchasing volume becomes the primary driver of market movement — a peculiar dynamic worth examining."
These committed participants maintain their positions regardless of whether the market sits at $1,000 or $50,000. Such individuals function as a price foundation, a phenomenon that prominent bitcoin early adopter Trace Mayer has termed the "hodlers of last resort." Indeed, bitcoin valuations have moderated considerably following the subsidence of earlier speculative excitement.
The Token Proliferation Problem
Regarding the ICO phenomenon, Barhydt identified two distinct categories: tokens resembling traditional equity investments and alternative instruments marketed as "utility tokens."
"The majority of recent ICO ventures have attempted positioning themselves as what I term utility tokens, claiming exemption from standard SEC registration procedures or the regulatory framework that conventional investments must navigate when offered through platforms like AngelList," noted Barhydt.
Yet many of these proposed utility offerings are fundamentally equity instruments repackaged using blockchain terminology, Barhydt contended. Legal professionals at various practices have effectively assisted entrepreneurs in pursuing this questionable strategy — a criticism that SEC leadership, including Chairman Jay Clayton, has similarly voiced.
Token offerings function as replacements for traditional "friends and family" financing rounds, which typically rest solely on written proposals with no substantive backing. "Fundamentally, [investors] must have confidence that those receiving their capital will remain committed," Barhydt observed. "Do typical ICO participants operate with the rigor and strategy of professional angel investors? Clearly they do not. From a statistical standpoint, their probability of profitability is essentially nonexistent. Yet participants ignore these realities because immediate trading capability makes tokens appear liquid."
The instant tradability of these tokens incentivizes early participants to rapidly offload holdings on secondary markets rather than maintaining faith in underlying project development. That said, Barhydt did identify Bancor, Orchid, and EOS as projects meeting his legitimacy standards. Nevertheless, he maintains a policy against personally participating in ICO investments, viewing such involvement as incompatible with his responsibilities at Abra.
