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Ask HN: My friend is a founder of a blockchain startup. I'm skeptical. What now?

12 points by throwaway9235 ↗ HN
Hey HN! I would like to ask you guys for some advice. Up until recently, I was vaguely aware of one of my friends being involved in some side business. Just yesterday, I found out that the business - a startup - was going to use blockchains for whatever reason. Not only that, he is the founder of said startup! His team has received some investment and has conducted a blockchain workshop or two, and they seem to have no signs of stopping.

Now, I know that there are probably blockchain and cryptocurrency advocates among the HN crowd. That being said, I am skeptical about him running a startup that focuses solely on blockchains. The problems he wants to address (e.g. fraud prevention in charity money transactions) could be easily solved using conventional databases with basic security measures. While I laud my friend for embarking on this venture, I can't help but feel as if this will lead nowhere. His team is basing their tech stack off an open source blockchain developed for a Chinese cryptocurrency, though they are not in charge of it directly - they have an IT team for that.

Both of us are still university students. I have no intention of discouraging him, but at the same time, I would like to nudge him in the right direction. Feel free to ask any questions, but please note that I won't bring up any names unless absolutely necessary. I would really like to hear your take on this.

Thanks!

18 comments

[ 4.3 ms ] story [ 45.1 ms ] thread
algaeontoast
Your friend is probably an idiot or a wanna be scammer or a bifurcation of both.
DamnYuppie
Not really helpful. Youth, and the lack of worldly experience it brings, provides an excess of exuberance for ventures that more mature individuals may lack.

There are viable uses of blockchain, this does not appear to be one of them though. Naivety does not a scammer make.

algaeontoast
I've been deeply involved in the space since 2015. People like this kid's friend are the reason the perception of the industry / space is trash now.
verdverm
Almost every persona in the space is the cause for disillusionment with the general public and tech knowledgeable.
32032141
This isn't uncommon. There's hundreds or thousands of companies that combine [blockchain x thing], in some vague hope of getting people in the [thing] industry will give them money. There's never a technical reason for this to happen, other than someone thought it was an attractive sounding idea. Generally speaking there's very few things which could be conceivably solved by a block chain, it's not a solution which can be pasted over any interesting sounding problem, and manages to create a multitude of problems when it is.
verdverm
Don't criticise, condemn, or complain ~ Dale Carnegie

I feel you though, one of my best friends got too deep. Hanging out in the ecosystem has changed him in non good ways.

I have another friend like the one you speak of. Naive on BC tech, convinced some naive investors. Never really went anywhere, he doesn't really talk about it. With time it will likely pass.

Doing things and not having them work out is valuable learning experience.

kochikame
The problems he wants to address (e.g. fraud prevention in charity money transactions) could be easily solved using conventional databases with basic security measures

Blockchain in a nutshell

RantyDave
He's still at university so the experience will be useful (provided he doesn't quit his uni work to do it). The investors are cretins. Get him to buy you beer :)
ncmncm
Your friend will have a painful learning experience. You might not be his friend anymore by the time he learns the thing. Or you might be there to help him recover from a painful learning experience. Either way is OK.
muzani
Your friend is a student? Then let him do it.

Students normally have the best touch in upcoming technology, even risky ones, better than people in the industry. The whole idea of a risky venture is that there's a very low chance of succeeding, with very high rewards if he does.

But what if he fails? That's exactly what you should be doing in your early 20s. You can't take risks when you're older, so this is when you start. It's not a waste of time either way as you learn a lot, in a related field that you'd normally not explore because it would be unprofitable. It beats learning via grinding homewoek and algorithm questions.

I would treat it sort of like a college friend starting a band. It may or may not lead somewhere useful, but it's all good fun and good memories later on.

notadoctor_ssh
I think this is the best advice in the thread so far.
notahacker
Yep. Thought when reading it the headline OP's concern might have been that his friend was actually trying to scam consumers with crypto-based marketing scams, but it sounds like he's spending the money of investors with money to spare genuinely trying to build a solution a market quite likely won't want. Which is actually what a lot of startups end up being, regardless of how good their original idea sounded on paper and whether it involved blockchains and college students with outsourced tech teams or not. The tech ecosystem relies on some startups massively succeeding, not on none failing.

I mean, I wouldn't encourage the friend in the OP's situation, but I wouldn't see anything more than politely sceptical responses when solicited for feedback as appropriate (you don't have to pretend his band is actually great either!) or likely to make any difference. Of course, feedback can be a lot harsher if you expect that, wittingly or otherwise, a friend is in danger of breaking money transmitting laws or leaving charities out of pocket...

zepearl
I agree, as long as he's not putting directly money into it respectively making debts to sustain it - even if this fails he will assimilate a lot of know-how in a lot of different areas (all kinds of soft-skills plus tech-skills plus mgmt skills from organizational to accounting, etc...) that he can use a lot later on.

One one hand "Chinese cryptocurrency" might be ok but in general the chinese range covers everything from "excellent" (e.g. Huawei & Geely are a great company respectively holding) to "scam" ( e.g. what shown in the funny&interesting doc "the china hustle" https://www.imdb.com/title/tt7215388/?ref_=nv_sr_1?ref_=nv_s... )

Focusing on "Chinese cryptocurrency", if that cryptocurrency is meant to be used (as well) within China then it might have a strong starting position (from what I remember the government prohibited bitcoins & Co therefore if this one is admitted it will have a huuuge market) but on the other hand you're right thinking (I'm interpreting this) that even if it's #1 in China and absolutely flawless from a tech-point-of-view, other countries/people/organizations might still not adopt it for fear of the potentially tech-unknown => you might ask him / set friendly challenges about these and other points to see if he's covered all different angles assuming a successful implementation... .

Cheers :)

patatino
"..but at the same time, I would like to nudge him in the right direction"

Who are you to know the right direction? Only because of blockchain is just another database? Uber is just another taxi service, amazon is just another online shop. This point of view is pretty naive.

You have no idea what he will create, what if he creates something people want? As long as he doesn't do something illegal everything is alright, he should explore.

“No-one ever built a statue of a critic.” - David Nicholls

AznHisoka
And maybe on the path of building that idea, he'll discover an even better one. So you never know what the right decision is at any time.
danieka
Maybe your friend is making a mistake betting on this startup, maybe he isn't, either way it's his mistake make.

Sure, it might not be the optimal path to wealth but there are other positive things you get out of running a startup. A failed startup will (most probably) not ruin your friend, and might just set him up for future success. Also, it's at this stage in life that you can take the most risky gambles.

ps. I'm a former student that is happy he founded a startup, eve though it did not succeed.

AKhoo
Ask him if he's talked to prospective customers and keep urging him to! The risky assumption in this whole venture might be whether customers have the problem and want their solution, not the technology behind the solution.
a-saleh
I thought about this, and I would approach it differently based on who my friend is. Are they a competent person, surrounded by other competent people, not shying away consulting lawyers, and navigating difficult regulatory environment? You might still be right to be skeptical, but if they are have their bases (and backs) covered, even if it explodes under them, it will be mostly a story you laugh about few years down the line (and you will be able to be all "I told you!" ;)

Or they actually pull it off :)

On the other hand, "fraud prevention in charity money transactions" sounds to me a regulatory nightmare, regardless of enthusiasm for the underlying technology. So if your friend and their team don't sound ready for that, I would try to dissuade them, lest their enterprise is just a lawsuit in waiting (or a large fine).

To be honest, the most successful enterprise (mostly because they actually didn't hodl bitcoin :P) in this space I know about, was a small consultancy, doing small proof-of-concept in our local startup ecosystem. As they say, in a gold-rush, money is in selling shovels?