13 ms·

A16Z announces $4.5B fund for crypto and blockchain startups

33 points by thm 4y ago

drumhead 4y ago
Have they found a reservoir of greater fools that no one else has exploited yet? A fund investing in snake oil and perpetual motion machines would add more value to the world economy
- deleted 4y ago
  [deleted]
- zer01 4y ago
  You know, I think if you take a time machine back to the early 90s you’d see similar sentiment about the internet and internet based companies. “You want to put CREDIT CARDS on the INTERNET?!” “You want to replace the POST OFFICE with the INTERNET?!” “You want people to post details about their day on the INTERNET?!” Those “snake oil” investments at the time eventually became Amazon, E-mail, and Facebook. The first ideas funded aren’t always the final execution of it (Facebook was not the first social media platform) but the idea is that VC funding spurs innovation and people taking risks with new ideas, which pushes the entire space forward. People who see the entire crypto space as a “scam” are (in my experience) unaware of the real cryptographic research currently being done. Threshold based signatures, multi party computation, zero knowledge proofs, etc are new tools and primaries to build a better internet and give us better, concretely provable, tools to shape society. Are there scams in the space? Yep, and I don’t like them just as much as you don’t since they delegitimize the real work being done. But I also see the future Googles, Amazons, and Facebooks of the world emerging from this unique space to do some truly amazing things despite those scammers in the same way that those companies rose from the early internet cesspool of scams and ads.
  - LawrenceX 4y ago
    This conflict between I call "technological enthusiasts" and "economic realists" is extremely prevalent in any discussion on cryptocurrencies. I find this extremely fascinating and I think stems from both understanding things that the other side doesn't fully appreciate. I wrote about this more on my blog: https://lawrencexie.wordpress.com/2022/05/13/on-crypto-misconceptions/ https://lawrencexie.wordpress.com/2022/05/13/on-crypto-misco...
    - zer01 4y ago
      Nice blog, I'll preface this response with the fact that I'm not an economist, but I am an engineer and a technologist at my core. I also work in security so that's usually a lens I use to look at these things. Also, sorry for the wall of text, but I'm legitimately interested in engaging with you on this topic (obv). On Terra/Luna - there were a ton of people who did 0 due diligence on it, saw a money printer, and didn't possess the capacity to understand that the economics of it were unsound. On the flipside, I know of a good number of people who predicted that it'd destroy itself on the first bear market cycle. Retail loses here because they believe the hype train, and that's not a good outcome. MIM (https://coinmarketcap.com/currencies/magic-internet-money/ https://coinmarketcap.com/currencies/magic-internet-money/) is another stablecoin that's over-collateralized (first pioneered by MakerDAO with SAI/DAI), but has people similarly nervous, not because of its economic design (which they lifted from MakerDAO's SAI/DAI) but because of the stewards of the protocol - https://rekt.news/sifu-scandal/ https://rekt.news/sifu-scandal/. Similarly the same people who saw Terra on a crash course have sent out warnings about MIM, and in general it has stalled in terms of its market penetration, which is the market working IMO. DAI is the most popular algo stablecoin, and I believe it to be sound because of a smart contract based liquidation process that ensures that any DAI generated are over-collateralized with other assets, even if the underlying price of the collateral falls rapidly (there are economic incentives for people to liquidate others when this happens). I disagree with them using multiple baskets of crypto (DAI's collateralization is largely backed now-a-days with USDC, another stablecoin) vs the initial model where it was backed solely by ETH though, since I think it compounds risk in the system. > In many ways cryptocurrency projects are recreating many of the (failed) experiments in traditional economic history. I agree with this wholeheartedly. People are taking risks and trying to overcome old problems with new technology and sometimes failing as a result. It doesn't to me mean that those risks shouldn't be taken, and I'm extremely glad that the UST/Luna explosion was isolated basically entirely to the crypto markets since I see this all as expieremental. That said, I think that there are other tools/protocols/etc that are being built that are not purely economic in nature - things like multisigs are hugely useful for taking coordinated action in a trustless way, they just haven't been productized properly yet. > However there are some fundamentals that technologists forget when thinking about cryptocurrency projects. One of them is that the total value of a system remains unchanged unless there is actual utility provided by a new product or service. Value creation is something that's always hard to gauge, and is what leads to speculation I think. Take Uniswap for example - it's by far the largest decentralized exchange (DEX) that exists. It recently surpassed $1T worth of value transacted, and even had stretches in the past couple years where it overtook the trading volume of Coinbase (binance of course shadowing both of them - https://www.theblockcrypto.com/data/decentralized-finance/dex-non-custodial/uniswap-vs-coinbase-and-binance-trade-volume-7dma https://www.theblockcrypto.com/data/decentralized-finance/de...). Is that value creation? I'd say providing a service to more easily swap pairs of assets with a very small finality window IS valuable. Additionally, Uniswap (and some other protocols) have this notion of a "flash loan" or "flash swap" that, as far as I understand, are unique to on-chain crypto. The TL;DR is that this mechanism allows someone to borrow essentially infinite money as long as they repay it in the same transaction (with a fee). This leads to a situation where you don't need deep pockets to capture the value from an arbitrage opportunities - you can write an arbitrage contract that will either guarantee you a profit through a complicated chain of arbitrage, or it'll simply revert. To me that's a pretty unique primitive to build a more efficient market. Another example I'll point to is Helium (https://www.helium.com/ https://www.helium.com/), which aims to build a global network of wifi hotspots, but incentivized (by crypto) based on the activity on your hotspot. Fon tried to do this in the early 2010s and couldn't find traction (because why would I share my internet with others for free?). Xfinity took a stab at this recently because they have a near-monopoly on people's internet connections (with no upside to the end user whose internet is being shared). To me, helium is creating value here, and the model is preferable to any alternatives. That's not to say that I'm blind to the fact that there are a ton of ponzis and pump and dump schemes going on in the crypto space, but my point is that there is real value creation happening as well, it's just being drowned out by the other nonsense right now. The reason crypto keeps coming back is because bear markets shake out these crappy schemes and what's left is the projects and builders who are actually creating value and plan risk accordingly. > The second reason there is a considerable amount of misconceptions about cryptocurrencies is the issue of echo chambers I agree 100% with this, but it's also not localized to just crypto. Go look at /r/superstonk or /r/wallstreetbets on reddit and you'll see similar things. We have the same problem with our politics too, just across different mediums. All of these have bad impacts on individuals and as society as a whole, and is IMO one of the greatest threats to global peace that exists. The internet was supposed to unify us, not divide us. > However misconceptions do not emerge purely from lack of access to differing ideas or opinions. Instead they originate when individuals are unable to recognize the limits of their own comprehension. Again, 100% agree. This is also a problem pervasive in a wide band of things from politics to (as you pointed out) vaccine hesitancy. One thing I've grown to learn is that it's easy for me with my skillset to say "go do some research, idiot", but a good chunk of the population literally does not possess the skills to do so. If you google "Is the COVID vaccine harmful" vs "Covid vaccine dangerous", you get likely different results, but most people don't understand that. Even if you do get to the right data it's usually nuanced and long/hard to comprehend so people's attention span falters and they look for a youtube video to explain it to them in 2 mins. Again, a problem that absolutely exists, but I don't think is unique to the crypto space. As for your brainteaser: > A cryptocurrency stablecoin is introduced whereby holders must light a cash dollar bill on fire in order to “earn” one unit of crypto. The issuer reasons that for this reason, each unit is worth $1. Under what circumstances can this reasoning hold sustainably true? Is it possible for this peg to hold indefinitely? This skips over the idea of redeem-ability entirely I think, which is a necessary part of a stablecoin. By destroying a dollar you're not creating something new since it's a one-way track. I can't redeem my crypto for the original dollar because it doesn't exist anymore. If I instead "lock" that dollar in a smart contract to generate $0.50 of crypto, I can "unlock" that dollar by repaying the underlying debt. Likewise, I can take USDC send it to Centre on-chain to have them wire me money since USDC is just a tokenized representation of a dollar in a bank account. Anyway, you seem like a smart person so let me know if you ever want to chat about crypto and economics in a more direct way. I think we could have some interesting discussions! :)
  - drumhead 4y ago
    I was there, and the difference between crypto and the products and services you mentioned is that email, Amazon Facebook, digital banking were all delivering useful outcomes to users. I can't see anything useful from crypto other than laundering the proceeds of criminal activities.
    - zer01 4y ago
      > I can't see anything useful from crypto other than laundering the proceeds of criminal activities. I think it's a pretty arrogant stance to say that just because you don't see the value in a thing that value doesn't exist. I don't see the value in Tiktok/Facebook/Snapchat, but others clearly do. Maybe it just wasn't built for me. My general thesis on the crypto industry is that it's a fertile space, and provides new tools to people who want to build things. Is the next Google going to shake out of it with 100% certainty? Of course not, no-one knows the future. On the flipside though, fertile spaces with new tools are exactly the conditions that gave rise to orgs like Facebook/Google/Netflix/etc, which changed the world in a number of ways. If we're in the 90's and I'm pointing to this newfangled "HTTP 1.0 Protocol" RFC and trying to describe to you web browsers, Netflix, etc, I'm pretty sure most people will look at that as a pipe dream that will never see reality in their lifetimes. It also took many many websites and iterations to get to the Netflix we have today (Netflix being a proxy for "streaming services" for video content). Same deal with putting credit cards on the internet for faster payments and describing Amazon or Ebay. Does e-commerce have obvious credit card fraud and criminal activity on it? Absolutely, if anything it's grown as a parasite in lockstep with the success of e-commerce. Does this mean e-commerce is a bad idea in general? My position is no, new technology just presents new challenges with the benefits they also bring. Social media is the humanity hurdle du jour in a lot of ways, but does that mean we should get rid of it wholesale?
      - oneoff786 4y ago
        > I think it's a pretty arrogant stance to say that just because you don't see the value in a thing that value doesn't exist. I don't see the value in Tiktok/Facebook/Snapchat, but others clearly do. Maybe it just wasn't built for me No, you just don’t appreciate the value of those social media services. If you don’t see it then you’re blind. They let people connect and share stuff they enjoy seeing. It’s fine if you don’t like it, but the use case is obvious. What is the use case for crypto. Do you have a vision for it?
  - gamblor956 4y ago
    Email predates the internet by several decades, as do blogs. Technically, even credit cards were being used "online" before the internet was readily accessible. And what we call the "internet" today was already being used by companies and research institutions prior to becoming commercialized. The pre-web was useful from the moment it was created. It didn't need to "find" a use case; the use was immediately obvious. OTOH, we're still waiting for cryptocurrencies to present a use case that isn't better solved by an existing technology.
jstx1 4y ago
That's a lot of money. And what a time to do it too.
leona_m 4y ago
Great timing for those blockchain startups who held all their cash in crypto and are now feeling the pain.
- zer01 4y ago
  Proper treasury management for raised funds is something that needs done by everyone regardless of the business they’re in. In the non crypto world orgs usually hold short term t-bills or other cash equivalents to help offset inflation. In the crypto space I see a lot of teams holding stablecoins, which is similar. Some hold their entire allocation in something super volatile which is a bad idea in the same way it’s a bad idea to take VC money and buy Tesla stock with it or gamble on GME options. IMO treasury management is just another risk to manage as part of a business. If not managed properly you go out of business and if it’s because you were dumb with VC money by betting it all on Bitcoin then you likely won’t get more VC money again.
deleted 4y ago
[deleted]
mrkramer 4y ago
This guys are clueless; wasting billions investing in Crypto hoping that they will hit killer app but not realising Bitcoin itself is the killer app. Also they invested over $100M in Clubhouse just because it became popular at the time(Pandemic and lockdowns) not because they think Clubhouse will have any reasonable long term value because it won't.
- dqpb 4y ago
  Bitcoins proof-of-waste system is a dealbreaker for me.
  - mrkramer 4y ago
    There is also a lot of waste when mining gold and other metals[1] but nobody cares because gold and other metals have value in conducting electricity and heat and they are used in number of industries and in electronics. Bitcoin is digital commodity which conducts information and is used in order to enable decentralized communication. Bitcoin's uptime[2] is 99.99%, now compare that to centralized software applications and you will be in a better understanding on why Bitcoin is valuable. [1] https://arstechnica.com/science/2022/05/new-study-estimates-how-long-mined-metals-circulate-before-being-lost/ https://arstechnica.com/science/2022/05/new-study-estimates-... [2] https://www.buybitcoinworldwide.com/bitcoin-uptime/ https://www.buybitcoinworldwide.com/bitcoin-uptime/
    - dqpb 4y ago
      Take a look at Turing Award winner Silvio Micali's talk on the Algorand proof-of-stake protocol, and you will have a better understanding of why Bitcoin is needlessly wasteful: https://youtu.be/NykZ-ZSKkxM https://youtu.be/NykZ-ZSKkxM
      - mrkramer 4y ago
        So Satoshi didn't know what he, she or they were doing? Ethereum has proof of stake algorithm and we shall see how will it work in the long term. Btw some people said me here on HN that PoS is the evolution of crypto coins but I think the original design and protocol of Bitcoin is still superior if done right. Just like TCP is still viable to this day although it is almost 50 years old.
ec109685 4y ago
What really is striking is that other VCs are talking about a downturn, and these folks don’t even acknowledge there are people who lost huge amounts of money in the crypto space. It’s cultish.
- twox2 4y ago
  With any given thing there are going to be lot's of people that lose money. Don't VC's lose on the majority of their bets to begin with?
- johnwheeler 4y ago
  Elon Musk, Jack Dorsey, and Cathie Wood have been putting these livestreams on YouTube where they talk about the future of Crypto and offer BTC to lucky viewers. These go on for like 5 hours and are largely Elon talking with the other two nodding. To me, it comes off like an attempt to pump up the price in the short term, because Elon knows he can do that. This announcement from a16z sounds and feels the same.
  - truthslinger 4y ago
    this about sums up the level of depth and knowledge on the crypto industry that HN crypto skeptics are at: Those live streams are not run by Elon Musk, Jack Dorsey or Cathie Wood. They are low effort scams aiming at getting people to send BTC, its just recycled video content with text put beside it.
  - zer01 4y ago
    What you’re describing is a popular scam where a scammer rebroadcasts a previously run live stream with famous people and instructions to send crypto to an address for a “giveaway”. Since the livestreams are about crypto, people tune in and see a banner saying “send crypto here for a chance to win more crypto”, see a conversation that seems live with people they know, and fall for the scam. These people you mentioned are not actually doing a giveaway, and YouTube is completely asleep at the wheel for combating these sorts of scams (they’ve been around for a couple years now, and automated detection is a harder engineering problem than scraping tweets). The problem is that they’ve very lucrative for scammers since the scam is confusing enough for people that they think they’re credible, doubly so when they use hacked channels with changed names but have hundreds of thousands of followers to do the broadcast. IMO YouTube absolutely needs to step up their game here - I’ve fought this sort of fraud at larger orgs and Twitter and Facebook both have pipelines established for security teams to escalate these things, meanwhile YouTube takes a report, let’s the scam run to its entirety, then picks up the pieces after the damage has already been done.
Comevius 4y ago
> There has been a major computing cycle every 10-15 years. > We believe blockchains will power the next major computing cycle, which we call crypto or web3 > For example, with mobile computing, the golden era was 2009-11, when companies like Uber, Venmo, Snap, and Instagram were started. > We think we are now entering the golden era of web3. Prior cycles were pushed by demand after a key innovation (computers, internet, smartphones) changed our habits. Uber became popular because taxi companies were slow to adapt to smartphones. Venmo become popular because the banks were slow to adapt to smartphones. Snap and Instagram become popular because everyone suddenly had a camera on them. Cryptocurrencies became popular due to distrust in the economy, but they did not prove to be a viable replacement. The dream of buying a pizza with Bitcoin is still a dream. At some point venture capitalists realized that they can pump and dump shitcoins, they just have to convince greater fools that they are useful, that they are the future. This is why we have this NFT and Web3 bonanza. There is no demand for them, they don't solve any problem, nor they try to. They are just shiny things for bagholders to look at. Rather than blockchain technology, it's distrust, desperation and greed what's behind it all.
- truthslinger 4y ago
  > Cryptocurrencies became popular due to distrust in the economy, but they did not prove to be a viable replacement. I mean BTC or ETH were a lot better place to keep your capital in the last X years (where you can pick any X since the GFC/Bitcoins inception) than keeping it in dollars or euros. Of course some people had access to a) the free money that the US gov has been printing over that same period, b) connections to early investment opportunities , and so may have had better places to put their capital. But for regular people who didn't have the connections to invest in AirBnB during the earlier rounds and put their capital to work (doing all the good work that AirBnB has done) it seems to have actually worked pretty well if you distrusted the economy. I'll leave it up you to work the ratio of how many people exist in those two groups. Also this comment seems to assume that it's over and everyone trusts the economy now, and that bitcoin & crypto have failed in that use case. Doesn't seem that way to me. You can certainly criticize the actions of VCs in the space, and a bunch of other groups, and I wouldn't disagree, but believe it or not there is people in crypto who still have the original principals, and what is more is there is a constant influx of new people with those same principals.
Proven 4y ago
msarrel 4y ago
These guys can't throw money away fast enough.
ungerik 4y ago
Awesome, time to build!

33 points by thm 4y ago

Have they found a reservoir of greater fools that no one else has exploited yet? A fund investing in snake oil and perpetual motion machines would add more value to the world economy

deleted 4y ago
[deleted]
zer01 4y ago
You know, I think if you take a time machine back to the early 90s you’d see similar sentiment about the internet and internet based companies. “You want to put CREDIT CARDS on the INTERNET?!” “You want to replace the POST OFFICE with the INTERNET?!” “You want people to post details about their day on the INTERNET?!” Those “snake oil” investments at the time eventually became Amazon, E-mail, and Facebook. The first ideas funded aren’t always the final execution of it (Facebook was not the first social media platform) but the idea is that VC funding spurs innovation and people taking risks with new ideas, which pushes the entire space forward. People who see the entire crypto space as a “scam” are (in my experience) unaware of the real cryptographic research currently being done. Threshold based signatures, multi party computation, zero knowledge proofs, etc are new tools and primaries to build a better internet and give us better, concretely provable, tools to shape society. Are there scams in the space? Yep, and I don’t like them just as much as you don’t since they delegitimize the real work being done. But I also see the future Googles, Amazons, and Facebooks of the world emerging from this unique space to do some truly amazing things despite those scammers in the same way that those companies rose from the early internet cesspool of scams and ads.
- LawrenceX 4y ago
  This conflict between I call "technological enthusiasts" and "economic realists" is extremely prevalent in any discussion on cryptocurrencies. I find this extremely fascinating and I think stems from both understanding things that the other side doesn't fully appreciate. I wrote about this more on my blog: https://lawrencexie.wordpress.com/2022/05/13/on-crypto-misconceptions/ https://lawrencexie.wordpress.com/2022/05/13/on-crypto-misco...
  - zer01 4y ago
    Nice blog, I'll preface this response with the fact that I'm not an economist, but I am an engineer and a technologist at my core. I also work in security so that's usually a lens I use to look at these things. Also, sorry for the wall of text, but I'm legitimately interested in engaging with you on this topic (obv). On Terra/Luna - there were a ton of people who did 0 due diligence on it, saw a money printer, and didn't possess the capacity to understand that the economics of it were unsound. On the flipside, I know of a good number of people who predicted that it'd destroy itself on the first bear market cycle. Retail loses here because they believe the hype train, and that's not a good outcome. MIM (https://coinmarketcap.com/currencies/magic-internet-money/ https://coinmarketcap.com/currencies/magic-internet-money/) is another stablecoin that's over-collateralized (first pioneered by MakerDAO with SAI/DAI), but has people similarly nervous, not because of its economic design (which they lifted from MakerDAO's SAI/DAI) but because of the stewards of the protocol - https://rekt.news/sifu-scandal/ https://rekt.news/sifu-scandal/. Similarly the same people who saw Terra on a crash course have sent out warnings about MIM, and in general it has stalled in terms of its market penetration, which is the market working IMO. DAI is the most popular algo stablecoin, and I believe it to be sound because of a smart contract based liquidation process that ensures that any DAI generated are over-collateralized with other assets, even if the underlying price of the collateral falls rapidly (there are economic incentives for people to liquidate others when this happens). I disagree with them using multiple baskets of crypto (DAI's collateralization is largely backed now-a-days with USDC, another stablecoin) vs the initial model where it was backed solely by ETH though, since I think it compounds risk in the system. > In many ways cryptocurrency projects are recreating many of the (failed) experiments in traditional economic history. I agree with this wholeheartedly. People are taking risks and trying to overcome old problems with new technology and sometimes failing as a result. It doesn't to me mean that those risks shouldn't be taken, and I'm extremely glad that the UST/Luna explosion was isolated basically entirely to the crypto markets since I see this all as expieremental. That said, I think that there are other tools/protocols/etc that are being built that are not purely economic in nature - things like multisigs are hugely useful for taking coordinated action in a trustless way, they just haven't been productized properly yet. > However there are some fundamentals that technologists forget when thinking about cryptocurrency projects. One of them is that the total value of a system remains unchanged unless there is actual utility provided by a new product or service. Value creation is something that's always hard to gauge, and is what leads to speculation I think. Take Uniswap for example - it's by far the largest decentralized exchange (DEX) that exists. It recently surpassed $1T worth of value transacted, and even had stretches in the past couple years where it overtook the trading volume of Coinbase (binance of course shadowing both of them - https://www.theblockcrypto.com/data/decentralized-finance/dex-non-custodial/uniswap-vs-coinbase-and-binance-trade-volume-7dma https://www.theblockcrypto.com/data/decentralized-finance/de...). Is that value creation? I'd say providing a service to more easily swap pairs of assets with a very small finality window IS valuable. Additionally, Uniswap (and some other protocols) have this notion of a "flash loan" or "flash swap" that, as far as I understand, are unique to on-chain crypto. The TL;DR is that this mechanism allows someone to borrow essentially infinite money as long as they repay it in the same transaction (with a fee). This leads to a situation where you don't need deep pockets to capture the value from an arbitrage opportunities - you can write an arbitrage contract that will either guarantee you a profit through a complicated chain of arbitrage, or it'll simply revert. To me that's a pretty unique primitive to build a more efficient market. Another example I'll point to is Helium (https://www.helium.com/ https://www.helium.com/), which aims to build a global network of wifi hotspots, but incentivized (by crypto) based on the activity on your hotspot. Fon tried to do this in the early 2010s and couldn't find traction (because why would I share my internet with others for free?). Xfinity took a stab at this recently because they have a near-monopoly on people's internet connections (with no upside to the end user whose internet is being shared). To me, helium is creating value here, and the model is preferable to any alternatives. That's not to say that I'm blind to the fact that there are a ton of ponzis and pump and dump schemes going on in the crypto space, but my point is that there is real value creation happening as well, it's just being drowned out by the other nonsense right now. The reason crypto keeps coming back is because bear markets shake out these crappy schemes and what's left is the projects and builders who are actually creating value and plan risk accordingly. > The second reason there is a considerable amount of misconceptions about cryptocurrencies is the issue of echo chambers I agree 100% with this, but it's also not localized to just crypto. Go look at /r/superstonk or /r/wallstreetbets on reddit and you'll see similar things. We have the same problem with our politics too, just across different mediums. All of these have bad impacts on individuals and as society as a whole, and is IMO one of the greatest threats to global peace that exists. The internet was supposed to unify us, not divide us. > However misconceptions do not emerge purely from lack of access to differing ideas or opinions. Instead they originate when individuals are unable to recognize the limits of their own comprehension. Again, 100% agree. This is also a problem pervasive in a wide band of things from politics to (as you pointed out) vaccine hesitancy. One thing I've grown to learn is that it's easy for me with my skillset to say "go do some research, idiot", but a good chunk of the population literally does not possess the skills to do so. If you google "Is the COVID vaccine harmful" vs "Covid vaccine dangerous", you get likely different results, but most people don't understand that. Even if you do get to the right data it's usually nuanced and long/hard to comprehend so people's attention span falters and they look for a youtube video to explain it to them in 2 mins. Again, a problem that absolutely exists, but I don't think is unique to the crypto space. As for your brainteaser: > A cryptocurrency stablecoin is introduced whereby holders must light a cash dollar bill on fire in order to “earn” one unit of crypto. The issuer reasons that for this reason, each unit is worth $1. Under what circumstances can this reasoning hold sustainably true? Is it possible for this peg to hold indefinitely? This skips over the idea of redeem-ability entirely I think, which is a necessary part of a stablecoin. By destroying a dollar you're not creating something new since it's a one-way track. I can't redeem my crypto for the original dollar because it doesn't exist anymore. If I instead "lock" that dollar in a smart contract to generate $0.50 of crypto, I can "unlock" that dollar by repaying the underlying debt. Likewise, I can take USDC send it to Centre on-chain to have them wire me money since USDC is just a tokenized representation of a dollar in a bank account. Anyway, you seem like a smart person so let me know if you ever want to chat about crypto and economics in a more direct way. I think we could have some interesting discussions! :)
- drumhead 4y ago
  I was there, and the difference between crypto and the products and services you mentioned is that email, Amazon Facebook, digital banking were all delivering useful outcomes to users. I can't see anything useful from crypto other than laundering the proceeds of criminal activities.
  - zer01 4y ago
    > I can't see anything useful from crypto other than laundering the proceeds of criminal activities. I think it's a pretty arrogant stance to say that just because you don't see the value in a thing that value doesn't exist. I don't see the value in Tiktok/Facebook/Snapchat, but others clearly do. Maybe it just wasn't built for me. My general thesis on the crypto industry is that it's a fertile space, and provides new tools to people who want to build things. Is the next Google going to shake out of it with 100% certainty? Of course not, no-one knows the future. On the flipside though, fertile spaces with new tools are exactly the conditions that gave rise to orgs like Facebook/Google/Netflix/etc, which changed the world in a number of ways. If we're in the 90's and I'm pointing to this newfangled "HTTP 1.0 Protocol" RFC and trying to describe to you web browsers, Netflix, etc, I'm pretty sure most people will look at that as a pipe dream that will never see reality in their lifetimes. It also took many many websites and iterations to get to the Netflix we have today (Netflix being a proxy for "streaming services" for video content). Same deal with putting credit cards on the internet for faster payments and describing Amazon or Ebay. Does e-commerce have obvious credit card fraud and criminal activity on it? Absolutely, if anything it's grown as a parasite in lockstep with the success of e-commerce. Does this mean e-commerce is a bad idea in general? My position is no, new technology just presents new challenges with the benefits they also bring. Social media is the humanity hurdle du jour in a lot of ways, but does that mean we should get rid of it wholesale?
    - oneoff786 4y ago
      > I think it's a pretty arrogant stance to say that just because you don't see the value in a thing that value doesn't exist. I don't see the value in Tiktok/Facebook/Snapchat, but others clearly do. Maybe it just wasn't built for me No, you just don’t appreciate the value of those social media services. If you don’t see it then you’re blind. They let people connect and share stuff they enjoy seeing. It’s fine if you don’t like it, but the use case is obvious. What is the use case for crypto. Do you have a vision for it?
- gamblor956 4y ago
  Email predates the internet by several decades, as do blogs. Technically, even credit cards were being used "online" before the internet was readily accessible. And what we call the "internet" today was already being used by companies and research institutions prior to becoming commercialized. The pre-web was useful from the moment it was created. It didn't need to "find" a use case; the use was immediately obvious. OTOH, we're still waiting for cryptocurrencies to present a use case that isn't better solved by an existing technology.

jstx1 4y ago

That's a lot of money. And what a time to do it too.

leona_m 4y ago

Great timing for those blockchain startups who held all their cash in crypto and are now feeling the pain.

zer01 4y ago
Proper treasury management for raised funds is something that needs done by everyone regardless of the business they’re in. In the non crypto world orgs usually hold short term t-bills or other cash equivalents to help offset inflation. In the crypto space I see a lot of teams holding stablecoins, which is similar. Some hold their entire allocation in something super volatile which is a bad idea in the same way it’s a bad idea to take VC money and buy Tesla stock with it or gamble on GME options. IMO treasury management is just another risk to manage as part of a business. If not managed properly you go out of business and if it’s because you were dumb with VC money by betting it all on Bitcoin then you likely won’t get more VC money again.

deleted 4y ago

[deleted]

mrkramer 4y ago

This guys are clueless; wasting billions investing in Crypto hoping that they will hit killer app but not realising Bitcoin itself is the killer app. Also they invested over $100M in Clubhouse just because it became popular at the time(Pandemic and lockdowns) not because they think Clubhouse will have any reasonable long term value because it won't.

dqpb 4y ago
Bitcoins proof-of-waste system is a dealbreaker for me.
- mrkramer 4y ago
  There is also a lot of waste when mining gold and other metals[1] but nobody cares because gold and other metals have value in conducting electricity and heat and they are used in number of industries and in electronics. Bitcoin is digital commodity which conducts information and is used in order to enable decentralized communication. Bitcoin's uptime[2] is 99.99%, now compare that to centralized software applications and you will be in a better understanding on why Bitcoin is valuable. [1] https://arstechnica.com/science/2022/05/new-study-estimates-how-long-mined-metals-circulate-before-being-lost/ https://arstechnica.com/science/2022/05/new-study-estimates-... [2] https://www.buybitcoinworldwide.com/bitcoin-uptime/ https://www.buybitcoinworldwide.com/bitcoin-uptime/
  - dqpb 4y ago
    Take a look at Turing Award winner Silvio Micali's talk on the Algorand proof-of-stake protocol, and you will have a better understanding of why Bitcoin is needlessly wasteful: https://youtu.be/NykZ-ZSKkxM https://youtu.be/NykZ-ZSKkxM
    - mrkramer 4y ago
      So Satoshi didn't know what he, she or they were doing? Ethereum has proof of stake algorithm and we shall see how will it work in the long term. Btw some people said me here on HN that PoS is the evolution of crypto coins but I think the original design and protocol of Bitcoin is still superior if done right. Just like TCP is still viable to this day although it is almost 50 years old.

ec109685 4y ago

What really is striking is that other VCs are talking about a downturn, and these folks don’t even acknowledge there are people who lost huge amounts of money in the crypto space. It’s cultish.

twox2 4y ago
With any given thing there are going to be lot's of people that lose money. Don't VC's lose on the majority of their bets to begin with?
johnwheeler 4y ago
Elon Musk, Jack Dorsey, and Cathie Wood have been putting these livestreams on YouTube where they talk about the future of Crypto and offer BTC to lucky viewers. These go on for like 5 hours and are largely Elon talking with the other two nodding. To me, it comes off like an attempt to pump up the price in the short term, because Elon knows he can do that. This announcement from a16z sounds and feels the same.
- truthslinger 4y ago
  this about sums up the level of depth and knowledge on the crypto industry that HN crypto skeptics are at: Those live streams are not run by Elon Musk, Jack Dorsey or Cathie Wood. They are low effort scams aiming at getting people to send BTC, its just recycled video content with text put beside it.
- zer01 4y ago
  What you’re describing is a popular scam where a scammer rebroadcasts a previously run live stream with famous people and instructions to send crypto to an address for a “giveaway”. Since the livestreams are about crypto, people tune in and see a banner saying “send crypto here for a chance to win more crypto”, see a conversation that seems live with people they know, and fall for the scam. These people you mentioned are not actually doing a giveaway, and YouTube is completely asleep at the wheel for combating these sorts of scams (they’ve been around for a couple years now, and automated detection is a harder engineering problem than scraping tweets). The problem is that they’ve very lucrative for scammers since the scam is confusing enough for people that they think they’re credible, doubly so when they use hacked channels with changed names but have hundreds of thousands of followers to do the broadcast. IMO YouTube absolutely needs to step up their game here - I’ve fought this sort of fraud at larger orgs and Twitter and Facebook both have pipelines established for security teams to escalate these things, meanwhile YouTube takes a report, let’s the scam run to its entirety, then picks up the pieces after the damage has already been done.

Comevius 4y ago

> There has been a major computing cycle every 10-15 years. > We believe blockchains will power the next major computing cycle, which we call crypto or web3 > For example, with mobile computing, the golden era was 2009-11, when companies like Uber, Venmo, Snap, and Instagram were started. > We think we are now entering the golden era of web3. Prior cycles were pushed by demand after a key innovation (computers, internet, smartphones) changed our habits. Uber became popular because taxi companies were slow to adapt to smartphones. Venmo become popular because the banks were slow to adapt to smartphones. Snap and Instagram become popular because everyone suddenly had a camera on them. Cryptocurrencies became popular due to distrust in the economy, but they did not prove to be a viable replacement. The dream of buying a pizza with Bitcoin is still a dream. At some point venture capitalists realized that they can pump and dump shitcoins, they just have to convince greater fools that they are useful, that they are the future. This is why we have this NFT and Web3 bonanza. There is no demand for them, they don't solve any problem, nor they try to. They are just shiny things for bagholders to look at. Rather than blockchain technology, it's distrust, desperation and greed what's behind it all.

truthslinger 4y ago
> Cryptocurrencies became popular due to distrust in the economy, but they did not prove to be a viable replacement. I mean BTC or ETH were a lot better place to keep your capital in the last X years (where you can pick any X since the GFC/Bitcoins inception) than keeping it in dollars or euros. Of course some people had access to a) the free money that the US gov has been printing over that same period, b) connections to early investment opportunities , and so may have had better places to put their capital. But for regular people who didn't have the connections to invest in AirBnB during the earlier rounds and put their capital to work (doing all the good work that AirBnB has done) it seems to have actually worked pretty well if you distrusted the economy. I'll leave it up you to work the ratio of how many people exist in those two groups. Also this comment seems to assume that it's over and everyone trusts the economy now, and that bitcoin & crypto have failed in that use case. Doesn't seem that way to me. You can certainly criticize the actions of VCs in the space, and a bunch of other groups, and I wouldn't disagree, but believe it or not there is people in crypto who still have the original principals, and what is more is there is a constant influx of new people with those same principals.

Proven 4y ago

msarrel 4y ago

These guys can't throw money away fast enough.

ungerik 4y ago

Awesome, time to build!