Unbounded Capital 2023 Annual Letter: Scalability, micropayments, and AI to power Future Internet

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According to Unbounded Capital, scalable blockchains and the micropayment functionality they support were a huge area of discussion throughout 2023 and continue into 2024.

The team behind Unbounded Capital has understood that blockchains with ceilings such as BTC and ETH, despite how popular they are or how much their native token is worth, will be unable to deliver real business value as demand for micropayment capabilities increases. Like Unbounded Capital, more and more stakeholders in the blockchain space are becoming aware of the importance of scalability when it comes to solving real-world problems and powering the Future Internet with blockchain.

Scalable Blockchain is here

As the demand for things like tokenization of real-world assets (RWA), AI audit trails, and pay-as-you-go services continue to rise, they all converge in one area—micropayments. And micropayments at scale need to be powered by a scalable blockchain.

The maturation of scalable blockchain technology was achieved in late 2023/early 2024; take, for example, the BSV Association’s release of the “next-gen node infrastructure”
Teranode, a network demonstrating a sustained 1 million transactions per second in test mode. A network like this could easily sustain all of Elon Musk’s plans for X features, such as pay-as-you-go content and so much more.

Progress is still slow

Moving in the opposite direction of the blockchain scalability and micropayment advancements, the venture landscape in 2023 (and going into 2024) was depressed. Despite this trend, Unbounded Capital believes they are in a position to grow and expect opportunities to identify and invest in unicorns at discounted valuations.

While the market is developing as Unbounded Capital expected, the progress is still slow, especially in early-stage venture investing.

This means there are companies with amazing products built with solid technology, such as the BSV blockchain, that are struggling to find a market fit. BSV’s unpopularity signified “undervalued” to Unbounded Capital, but there needs to be more forward-thinking investors with the same revelation to achieve long-term potential.

Unbounded Capital updates

In addition to providing updates on their portfolio companies (see below), Unbounded Capital also provided a few updates of their own, such as their Managing Partner’s move from the United States to Portugal, the addition of several new team members and the launch of a new Fund which will focus on micropayments infrastructure for the Future Internet.

Unbounded Capital expects to invest heavily in companies in the RWA tokenization,
artificial intelligence (AI), privacy-focused identity, and social media/content monetization space.

“Unbounded has never been about investing in what is popular today, but what we think are incredible long term investments, which typically means investing in something contrarian today that becomes popular in a short number of years,” Unbounded Capital Managing Partner Zach Resnik told CoinGeek.

“We have already seen our thesis go from wildly contrarian to near consensus amongst blockchain investors and are confident in blockchain’s value to the global economy regardless of what prevailing investor sentiment looks like,” he said.

“Micropayments allow for all sorts of business models to be possible that weren’t beforehand by lowering the minimum viable transaction from $1-2 today that is possible with credit cards to tiny fractions of a penny,” Resnik added.

“The vast majority of synergies that will result in big companies over the coming decades are ones that no one will be smart enough to predict well in advance,” he said.

Portfolio company updates

1. DXS

This micro-trading platform added core features in 2023, significantly growing their market of users.

2. Masa

Masa is a decentralized Google (NASDAQ: GOOGL) tailored for the AI era. In 2023, they launched several flagship products, closed a $5.4 million seed round, and listed on Coinlist, selling $8.75 million worth of Masa tokens.

3. HandCash

2023 was a pivotal year for HandCash. After the sudden Circle pull-out, the team focused on new features such as Ordinals and collectibles in the HandCash wallet.

HandCash enjoyed major revenue growth and an uptick in core KPIs in 2023.

4. UNISOT

UNISOT secured several “high-upside” customers, thanks to a sales focus in 2023, and debuted HalalOnChain and KosherOnChain at GITEX in Dubai, representing a significant entry into the Middle East market.

5. Aldea

It was a tough year for Aldea, but they are still looking for interested users and investors in a ready-to-go, scalable, and efficient Layer 1 blockchain.

6. Haste

It was also a tough year for Haste, mainly due to the slow adoption of blockchain-powered micropayments. In order for their business model to work, they need more users and are hopeful the “bullish” start to 2024 will generate excitement amongst their predominantly ‘crypto’-savvy user base.

7. Xoken

This node infrastructure company has had a slow start, but with the imminent launch of Teranode, they are hopeful their market will grow in 2024.

8. Tokenized

It was a milestone year for Tokenized with the launch of their desktop wallet, which focused on sales and excitement surrounding the tokenization of RWAs.

9. RF Labs

2023 was a year of rapid growth for poker table company RF Labs, complimented by team member Dan Weinman’s impressive World Series of Poker (WSOP) victory while wearing his branded RF Labs arm patch the entire time.

New Investments

1. Provacative

Provacative is an atmospheric carbon-neutral company that turns shipping containers into AI data centers, reducing the environmental and financial cost of high-performance computing.

2. Reactiv

Reactiv is an AI-powered platform for transforming web-only commerce stores into native mobile apps.

3. Liquid Noble

This early customer of Tokenized tokenizes precious metals to simplify ownership and transportation of gold, silver, etc.

4. OnePay

OnePay is a WhatsApp-based micropayment solution for Latin America, with the purpose of streamlining payments for everyday goods and services.

Conclusion

According to Unbounded Capital, the micropayments ecosystem is positioned for extreme growth with high-scale use cases that are now possible with the available technology. We at CoinGeek are also excited about the imminent explosion of micropayment capabilities, including the synergies between micropayments and the AI ecosystem.

To get an idea of what’s possible, Resnick leaves us with a thought-provoking example…

“With the rise of AI, deepfakes are becoming a bigger and bigger problem. Checking the hash of a time stamp on a photo or video at the time of taking it to a scalable blockchain via a tiny micropayment will soon be the only way we can trust anything we see on the internet!”

Watch: Unbounded Capital Summit teaches value of scalable blockchain