The founder of a $75 million crypto fund shares the top trends he's watching in 2019

• The crypto market was in tumult last year, but that doesn't mean it's all doom and gloom.
• Business Insider spoke with Kyle Samani, the founder of $75 million crypto fund Multicoin Capital, to get his take on the key themes he's following this year in the crypto space.

Kyle Samani is cofounder and managing partner of Multicoin Capital, a $75 million fund based in Austin, Texas, that exclusively invests in the crypto space. It's backed by mainstream investors like Marc Andreessen, the Andreessen Horowitz partner, and David Sacks, the former PayPal exec and Yammer CEO.

Samani recently spoke to Business Insider about the biggest trends he's following in 2019 in the crypto space.

The growth of decentralized exchanges

Samani is closely watching Binance, the world's largest crypto exchange by adjusted trade volume, which is poised to unveil its decentralized exchange early this year.

It'll be a massive shift in the crypto space, Samani says.

In contrast to centralized exchanges, decentralized exchanges (DEXs) allow investors to hold their own digital assets, instead of leaving them to middlemen to custody. In addition, DEXs are praised for generating lower, or even zero, trading fees, greater security and more private transactions. Although a growing number of decentralized exchanges have launched over the past couple of years, they haven't yet generated mass adoption. But that may change as Binance enters into the space, said Samani.

Binance, which processes more daily trading volume than top US exchanges like Coinbase and Gemini, already has an established brand. So it may be able to lure customers to use its decentralized exchange, Samani said.

"Binance realizes that the greatest disruptive threat to their business is decentralized exchanges," he said. "On a long enough time scale, they believe it is likely to become a dominant form of exchange. As such, they're aiming to disrupt themselves by pioneering here. I expect that they will create incentives to encourage customers to trade on the decentralized exchange instead of the centralized one, and will actively bridge liquidity pools."

Once Binance unveils its decentralized exchange, others may follow, he said.

Still, decentralized exchanges in the US must comply with existing securities laws. The SEC in November brought an enforcement action against EtherDelta, a decentralized crypto exchange, for operating as an unregistered national securities exchange.

"Whether it's decentralized or not, whether it's on a smart contract or not, what matters is it's an exchange," Robert Cohen, SEC's Cyber Unit Chief, told Forbes in November.

Adoption of blockchain products

Samani also expects to see a number of high profile blockchain products launch this year and attract large group of customers. One such project is Tari, an open source project that aims to disrupt the ticketing industry. Built on top of the Monero network, the company will provide a platform to issue and manage non-fungible assets like tickets, loyalty points, and in-game items. A benefit of using this technology in ticketing is embedding transfer restrictions on concert tickets, which could eradicate the ticket scalping market.

Challenges to Ethereum

Samani believes that a group of well-funded projects, like Dfinity and Cosmos, could pose a threat to Ethereum's leadership as the largest smart contract platform. Ether, which is underpinned by the Ethereum network, is currently the third largest cryptocurrency by market cap.

"All of the new blockchains are aiming to challenge Ethereum," Samani said. "I expect by the end of the year the percentage of total developers building on Ethereum will be lower than it's right now, simply because of the competition," he said. "At the end of 2019, I still expect Ethereum to be the market leader among smart contract platforms. But there is a real probability that by the end of 2020, this is no longer the case."

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