> I am more bullish on ETH personally because it has the best underlying economic model of any web3 asset.
It's amazing how, after wiring money to a few winners, venture capitalists who make such insane statements can be perceived as smart and worthy of respect. For context, here is the token market cap of ETH:
The author would like us to believe that the $146 billion dollar market cap for Ethereum is a low point from which the "asset" will "recover." Sorry, but, I don't see $146B worth of value or earnings potential, or whatever, being created by Ethereum. I've done the deep dive, set up my wallets, generated my own tokens, set up my .eth, the works -- after all of this, I came to the same conclusion as all of the naysayers: it's Magic Internet Money propelled by little more than hopes and dreams.
Jim Cramer has been shouting stock picks on television since the 90s. Just in case you were not aware that he is still around.
You have to treat these people with a certain kind of detachment to exactitude. If you run into Fred Wilson I suggest nodding along knowingly to every single thing he says.
Ethereum's current valuation can be explained fully by its current use. With this I mean, if you take current demand for blockspace (i.e. demand to settle a transaction on Ethereum) in USD and issuance of ETH you get current prices. So Ethereum is not trading at any premium, nor any assumption of future growth cooked in. Ethereum is valued at the price that its current use justifies.
Here is the very quick back of the envelope calculation:
Current daily fee revenues: 2M USD (slightly above but let's round it)
Current daily ETH issued through staking: 1800 ETH (again, rounded)
2M USD / 1800 ETH = 1100 USD/ETH
In fact, if you plug-in 3 month moving average of blockspace demand and issuance you get the current 1200 USD it's trading at.
HN needs to start waking up to the fact that ETH is a productive asset, there are cash-flows behind it and those accrue to token-holders.
The fee revenues come from its users, they pay when they use an application built on Ethereum to settle the transaction. Most of the applications, specially the most successful ones, the ones that spend the most ETH, are financial in nature at the moment. I suspect this is likely always going to be the case, as blockspace is a scarce resource only the most added value applications can compete for it. Non-financial applications will exist in the multiple L2s that are being built on top, these involve various cryptographic proofs to settle batches of transactions onto the L1. So financial applications and L2 proof verifiers will likely dominate the use of Ethereum in the future.
That’s money spent on fees to execute a transaction. It’s usually relatively small to the amount of value transacted. If we assume a 1% fee burden, then Ethereum transferred $200M that day in value. And that’s low-balling it, the actual amount is probably in the billions.
What you fail to understand is that Crypto is huge. $1Bn is a shit-ton-lot of money and the current market cap is $795Bn. Stables tokens alone account for around $100Bn of that. And keep in mind, on a relative basis, this is the worst crypto winter ever. The bottom is probably in or close. I think we’ll see prices rise up again mid-2023.
I don't know Fred's predictions, but just having skin in the game does not indicate truthful or quality forecasts. It may even be a detriment to quality predictions as you reverse engineer stories to rationalize your positions or worse, try to move markets and take advantage of the result if your megaphone is big enough - https://youtu.be/jaGU0FrrXcQ.
There are no founders or startup employees with equity or people with significant investments in the stock market on HN? There are no cryptoids here either?
>I think there is a good chance of a “soft landing” or a very mild recession in 2023.
I doubt the usefulness of pretending that there is not already an ongoing recession, or mucking around with redefining words that are essentially arbitrary but well understood.
1) web1 and even web2 was largely by/for nerds. These things eventually became mainstream but there was a non-ubiquitousness for the core concepts or at least audience. We now are asymptotically 100% mainstream.
2) web3 is principally based on “money”, or things that involve money in some way. That will always bring grifters, and the fact that some random non-tech non-SV-idealist-coming-from-the-60s-counter-culture-movement person can now seize an opportunity for a dodgy way to make money will brings lots of those people. Then you add in Miami which seems to be a home to a lot of these things, with a culture that reinforces material displays of wealth, and you have a huge force for not good with whatever web3 is supposed to be.
Even worse... There was a web 3 already, and it had nothing to do with blockchain. It was HTML 5 + CSS 3 and SPAs. It just became so ubiquitous that no one thought of it by the term. Now the cool kids are headed back to the server.
The new name is because too few business types know what the "www" on web sites stands for.
I think 2023 could be the beginning of a reset in the VC industry when "the tide goes out and you see who's swimming naked". This will include everyone who championed web3, and hopefully take the bro end of the industry down a few notches. There's all these "VC" people who are the industry equivalent of those mortgage brokers or the CDO investor in "The Big Short" and things are going to be a lot better once they're exposed and cleared out
I am not so convinced that 2023 will entail a “soft” anything. The average American is financed to the gills and layoffs are coming. I went to cash in my taxable accounts and am buckling down for the worst.
Who could’ve foreseen that a decade of extremely low interest rates would cause people and businesses to borrow that cheap money? Not the Fed apparently
There is no PMF in anything web3 related. Web3 is a mountain of trash. Token economics is a rebranding of ponzi economics. Really can't take seriously the investors who made a quick buck flipping trash coins and still talk their book. Web3 isn't going to zero, but its going to an industry wide marketcap of like 1B or less. Its only use cases are evading capital controls, KYC, and taxation. Decentralization writ large is not useful, it doesn't provide any interesting product benefits, and customers don't care about it.
The problem i see with web3 as it was is that projects would show up with zero value and all speculation. I think many people just assumed it’s a magic black box that makes you money.
After all the scams of the last few years, I think that in 2023, folks will start approaching these projects more cautiously, only investing when the thing actually delivers some value.
I don’t know what a “valuable” (in terms of what it does, not token value) really means in web3 yet, though it seems like the building blocks are there.
I really want to see a web3/crypto project that has value outside of pure speculation, when we will see that (if ever) is what I’m not sure about
The valuable use cases are capital controls evasion, tax evasion, remittances to Argentina, KYC evasion, money laundering. It is truly and only a pirate currency use case. There is no dapp/smart contract/DAO construct that is fundamentally useful and can find PMF. I’d go as far to say that “Tokenomics”fundamentally destroys your ability to find PMF because it changes the incentive structure such that the biggest thing you can do to drive growth is to pump, not build.
> I think that in 2023, folks will start approaching these projects more cautiously
You have a misplaced faith in people. There is absolutely nothing of societal value in Web3, and the fact that the author of the article can claim otherwise with a straight face shows that enough people haven't understood this yet.
Whether you put the source of truth in a centralized database or a distributed ledger controlled by the crowd, the ultimate arbiter is the rule of law. As soon as you accept this, the only correct engineering solution to any problem of tracking ownership is the one that is the fastest and lowest cost (per transaction, to evolve the spec for new requirements including compliance with new laws, to roll back failures, etc.), and that rules out distributed blockchains.
Usually PMF has a very simple metric: are people using your product, in increasing numbers, and talking about it? (This doesn't mean you have a business, but it means you have a product).
But with "web3" so many projects had insane usage but only because the promise was get-rich-quick. The product itself had no value.
Users and pumpers are not the same. The most successful web3 project (helium) is a horrible failure. No one using the network, node owners being paid Pennie’s per month, and the whole product/company could have been tested and developed at 1/10 the cost if they built using a normal centralized model instead of creating a token.
Wireless communications has terrible geographic distribution.
90% of helium access points will be installed right next to other helium access points in places that are crowded with early adopters. If there are a lot of them they will interfere with each other in some places, but almost everywhere there will be no service.
If there wasn't network planning as in a cellular network you would need very strong market based mechanisms such as people getting paid 100x as much to put up access points in areas without coverage, being charged to join the network if they are in a place that has too many access points, etc. Even cellular networks have awful economics if you demand 100% coverage, they look cheaper than fiber when you have 70% coverage but somewhere in the 90%'s they become expensive again. Big Telecom wishes it could get telematics hardware in all automobiles to add hundreds of millions of subs but it does not have the desire to make the investment to get sufficient coverage for those things to really work.
Just a reminder that no one knows what’s going to happen economically. Fred Wilson’s predictions are as valuable as yours or mine.
People guess, people hope, people pump, people with influence try to make it so, and statistically some will be right because when all possible outcomes are predicted then sure someone will have luckily hit the mark.
I have friends who constantly read financial news and are constantly predicting the future and telling me and I keep saying “no one knows”, and my friends keep updating their predictions.
When VC’s tell you that they predict that seed valuations will be $10M, that’s price anchoring, not prediction.
The valuations are the most transparently self-interested prediction he gives. VCs want desperately to frame investment in terms of business metrics, but it's a market like any other. There are more VCs competing to put money into relatively fewer compelling companies, and that means paying a premium. The big firms I talked to in H2 2022 were still looking at $15-20m A rounds for 20% of $1m+ ARR companies (meaning $75-100m post-money valuations), on average.
Great comment. Predictions used by people with platforms are in their best interests given they can sell or anchor their products better. It’s win win for them even if they are terribly wrong.
Some stories become self-perpetuating, and memes can change the world via those with influence.
> Fred Wilson’s predictions are as valuable as yours or mine.
A cynic might say don’t listen to anyone, while an optimist might say try to find people that can spot trends (even if they are not 100% reliable). Perhaps Fred has the market pulse at his fingertips?
Edit: I would strawman paraphrase your comment as “everyone has equal predictive ability” or “everyone has the same predictive ability as a dog”, either of which make your statement look very weak.
> When VC’s tell you [snip] that’s price anchoring, not prediction.
If the outcome is that they have predicted the market, then that is prediction, even if some of it was influence. Fred is not in charge and he has a chance of being wrong: you pointed out that no-one knows so I think you even contradict yourself.
>> If the outcome is that they have predicted the market, then that is prediction, even if some of it was influence. Fred is not in charge and he has a chance of being wrong: you pointed out that no-one knows so I think you even contradict yourself.
It's price anchoring - a message to the startups that ask him for money, it sets in advance the expectations for how much money their startup is worth even before they meet.
No. Only if he were the single VC with near market dominance, however he absolutely is not. Fred influences by his words, but he is not setting the market price.
He influences for reasons of his own hidden incentives, but he doesn’t control. He is predicting what other VCs will do.
In this case, the price anchoring is relevant only when a startup walks in the door of Freds office (figuratively speaking) and asks for money. He is anchoring the price not to many people, but to people who come asking him for money.
Climate: Big oil is back as Exxon and Chevron record record profits and plan share buybacks for the next 5 years with their cash firehose. This reflects the reality that just 4% of car production in the US is EV, no matter anyone’s preferences.
Web3 is dead, thank god. Long live blockchain and other exciting cryptographic tech that will create fundamental value.
The VC market I am not part of as an investor or raiser. But now that we are seeing the highest interest rates in most investor’s lifetime, there are many attractive alternatives to startups and startups have become riskier with the cost of borrowing increased. So I predict a wave of failures as private companies aren’t able to raise at their risk level and fail.
I think large tech stocks will go sideways at best, for the next year at least, as the ending of global QE dries up liquidity and that lack of liquidity and high interest rates are reflected in the market overall. PEs of 60 or more are a thing of the past.
I also think that negative net income tech is in for a massive fall because risk is off and strong cash flow is on.
Central banks may not stop raising rates in early 2023 and at the very least QE is over. This is a tectonic global macro shift that is going to result in short and medium term instability and several large organizational and systemic failures around the world in 2023.
>I think these companies, like Apple, Amazon, and possibly Google, will see their stocks come back into favor ahead of everything else in tech. I am hedging on Google because I believe the massive advances in AI/ML that we are seeing right now may be a threat to their core search franchise
I kinda disagree with this! Google has the best AI talent in the market. And, lots of these AI advancement are coming from Google brain themselves (ICRL, ICML, etc). And, some of those languages models are already deployed in Google.
Further, I can see Google as an automotive company (Waymo) as opposed to search engine in the long term.
That list of Russian wishcasting is completely absurd. The UK is going to rejoin the EU and the EU is going to collapse? In 2023? The 4th Reich? Elon Musk who literally cannot be president will become president in a year without an election? Of some random states that joined with Mexico in a civil war?
How can you take any piece of that list as something reasonable when it shares the same origin as some of the dumbest things I’ve seen printed?
It starts off saying here are conservatives guesses for 2023. Then what follows is nothing but conservative. France and a new 4th riche go to war? It has to be satire.
He was possibly drunk leading to exaggerated claims (he’s often drunk), but delusion is definitely required to serve Putin. It is not satire, this is the previous prime minister and president of Russia.
No, it could be saying "here's our humble contribution to the contest for the wildest and most absurd predictions." Which... yeah, if that's the intent, I'd say he did pretty well...
The first tweet casts it in light of an ongoing competition of extreme radical predictions, so I expect it is expected to be taken nonseriously. OTOH, its also not a source that posts casual jokes, there is a serious propaganda purpose in each of the items chosen – like much advertising and propaganda, its not the literal message that is the point, but the ideas it plants below the surface.
It's a... weird list. Why is number 2 the UK rejoining the EU? Even if Labour get into power tomorrow, that's not going to happen. (Even if the _Lib Dems_ somehow get into power tomorrow, it's not going to happen.) That boat has sailed and everyone knows it (and I'm saying this as someone who'd like us to rejoin, but also as someone with, apparently, more understanding of political possibility than him). Number 4, "the formerly existing Ukraine". Riiight. But I thought it never existed, according to Russian propaganda..?
In Number 6 "Poland repartitioned in the process" I'm seeing maaaajor projection. It's not the West that wants to storm in and repartition it though, right?
Number 7, Northern Ireland rejoining the rest of Ireland is... actually kind of plausible. Could totally happen. Few people in Britain would care very much any more, and demographically it's been on the cards for a while. It's a totally reasonable prediction in an otherwise batshit list.
> The Fourth Reich will be created ... War will break out between France and the Fourth Reich
He says what? And then Elon Musk as president of a seceded Texas? And the bloody tech billionaire himself drops in in agreement? It's nothing short of revealing.
Whether i am serious or not doesn't change the facts nor does it changes what the press says about it, i just share the press articles, all of them are from reputable sources and from the West
Let's debate about them, and keep it civil and polite, thanks
Medvedev is a dictatorial, fascist war criminal. How in the hell are the lies and propaganda he tweets interesting? He's just throwing oil on the fire, hoping to divide the West and kill a few more Ukrainians. And you are complicit.
A lot of this seems like conventional wisdom: the economy will experience a mild recession in 2023, which will be best weathered by the biggest companies, biggest coins, and any startups who have found a strong business model.
His 2022 post is worth reading (linked from this post). He tried to be more specific, and it did not IMO pan out very well.
It’s just really hard to predict the future. It’s probably better to think in terms “how fast can I detect and respond to changes” as opposed to “how good are my long-term predictions”.
Regarding b̶l̶o̶c̶k̶c̶h̶a̶i̶n̶ Web3: look at the fundamentals that could go beyond tokens et al:
- Identity/U2F/2FA: it is time to use private keys instead of credit cards, instead of redundant KYC/AML processes, etc. A new level of identity beyond the Googles, Metas, and Apples.
- Custody: it is time to have more methods to handle the custody of your identity and data that goes beyond crypto. For example, mechanisms that takes into account divorce, deaths, kidnapping, and other use cases.
- TSS/multi-party-computation: we need more of this, currently there is no up to date open source fully audited state-of-the-art libraries for this in several programming languages. See [1]
- Data privacy: computing private information without reveling it. More coopetition. Personally talking with big pharma companies and interested on this, the limitation is politics, not technology.
- b̶y̶z̶a̶n̶t̶i̶n̶e̶ ̶f̶a̶u̶l̶t̶ ̶t̶o̶l̶e̶r̶a̶n̶c̶e̶ blockchain technologies for connecting different organizations. A hub for real cooperation purposes.
- Declarative smart contracts to quickly orchestrate processes between organizations.
- Fully backed stable coins to push fintech beyond the power of the banks. Mostly regulated. Banks are slowly opening buggy APIs, we need a good global fintech hub.
It might not be "utility", but I'm really excited for all the exotic synthetic financial instruments popping up across DeFi.
Wall Street keeps pumping out these exotic financial instruments ("CDO! CDO Squared! CDO Cubed!") that you and I don't have access to. I just want to play around with similarly exotic financial instruments with my $5k speculative money portfolio.
What a transparent frame. The limitation is lack of understanding the consequences. What may look like a snazzy solution for a handful of tech entrepreneurs might not be desirable for everyone.
> Declarative smart contracts to quickly orchestrate processes between organizations.
Ah, yet another layer of business logic. One that hardly anyone understands. That'll do wonders for consultants.
> What a transparent frame. The limitation is lack of understanding the consequences. What may look like a snazzy solution for a handful of tech entrepreneurs might not be desirable for everyone.
No, I give you an example: you receive industry information every month that is based on incomplete information but the companies in that industry also wants to know how the industry is going. They are very interested in sharing their information in a private way (e.g. homomorphing encryption) and having final stats as a whole. This need is real.
> Ah, yet another layer of business logic. One that hardly anyone understands. That'll do wonders for consultants.
This is the contrary: removing layers. If you want to create a token you just declare that you want the token instead of writing buggy ERC20 smart contracts. Most use cases are repetitive.
a private key signed cert as an identity or a part of an identity construct can certainly be important in many domains, but isn't that independent of 'web3'? or are you referring to specific 'web3' projects?
He’s talking about web3. This is the idea of soul bound tokens. It can and should be independent of web3, but the problem is that web3 companies have taken in 5-10b of institutional funding, they have zero users and zero PMF, and they need to keep flailing to spend down the money they raised. This you see these weirder and weirder ideas that provide marginal utility in a mostly utility free asset class.
“I believe founders and CEOS and Boards should take the pain of a new valuation (flat, down, whatever) over structure.”
Companies will take whatever deal they must in order to continue operating in 2023. Things got truly unhinged in 2021 and I’m glad that capital is becoming a little more scarce. Pruning off the dead branches in startup land will free up talent for startups with better prospects.
Mohamed bin Salim and SoftBank were a major reason for the over inflation of Silicon Valley since before 2021 and picked overvalued “winners” before the market sorted them out. Now SV needs to deal with that fallout of that and find a new path forward.
I think we need to throw out the overvaluations and look at building longer term value that isn’t just “credit cards but like with a website” this time. We need to get back to inventing and I think tech like Chat GPT is far more of that future than blockchain for con artists.
Everything other than the valuation is “structure”. Stuff like special rights for the investor’s shares that confer a liquidation precedence, board seats, and the ability to block future share sales or an exit they they don’t like. During the boom time, investors would give up rights they normally demand do they could secure a deal.
If you always predict a recession is happening you’re bound to be right. This is the third prediction from Fred in a year I’ve read that has been extremely wrong where common sense was right. Glad he posts them publicly, but even his insider ticket has little value to reality.
I guess the upside on predictions is you only have to get a significant one right to win.
> I think the large caps in web3 (BTC and ETH mainly) will start to attract more interest from investors and should do well in 2023. I am more bullish on ETH personally because it has the best underlying economic model of any web3 asset.
It's bizarre to lump Bitcoin and Ethereum together at this point because the value propositions are so different:
Reading between the lines, I think what the author means by "best economic model" is that censorship-resistant money has a smaller market than tokens.
The problem is that a token economy without censorship resistance will face constant regulatory pressure. Proof-of-stake gurantees that increasing legal pressure applied to exchanges will find an outlet at the protocol level.
All of the people in denial about this are going to wake up to a new reality in which those dreams of decentralized organizations and free token economies are shut down in spades by regulators who see the obvious and have the power to clamp down on it.
Without censorship-resistance, any financial system you try to build ends up looking exactly like the old. And that growing lack of differentiation offers little incentive or reward for the risk involved.
This is going to be an extremely hard lesson for a lot of people, including the author I suspect.
It is bizarre to me as an American, to see a de facto embracing of monopolistic, surveillance capitalism on the part of those who directly profit from it via stocks; spoken as if "we" are carrying on.. There are often winners and losers in market changes, but like gambling and tobacco, some industries are made to create losers. In this case it is freedom of movement, privacy and perhaps even political freedom that are the "losers" and you know what? NO
I feel this is a smallish and optimistic viewpoint.
We hit a technological inflection point near the end of 2022 after 2 decades of relatively horizontal technical progress with slight improvements. That change is AI. Suddenly the idea that AI becoming better at human tasks then humans themselves becomes a realistic prospect. This is what will change not just the next year but humanity for the next century. For the next year we will see rapid progress in AI, exploratory applications and the first heave instances of human resistance against AI.
The only other thing as big as AI is the climate. However the outcome of the climate is already well known. In all probability, the worst case scenario will likely play out but we won't suffer from the brunt of it in the next year. It's an old story and no longer interesting because we already know the bitter ending and we don't have the self control to change it.
As for crypto, stocks, recessions and the economy and stuff like that, I personally think these things aren't too important. These are mediums of economic exchange going through cycles. They are side effects of actual progress, of technology that will fundamentally change things. They are also relatively unpredictable. Mild recession for the next year or stagnation like japan for the next decade. Who knows? It's hard to say. Such predictions in either direction are equally meaningless due to the chaotic nature of it all.
Either way the biggest thing that happened in 2022 is the new progress in AI and I'm surprised the article doesn't mention it. AI is a game changer for the "macro environment" for tech.
We are at the inflection point with AI. The next version of ChatGPT to be introduced in May 2023 will be 10X as the current version. Then the May 2024 version will be another 10X or 100X the current version.
We may need another law such as Moore's law for chips for this to register with people. I humbly suggest that it be called Altman's law.
I saw a copy of "Artificial Intelligence: A Modern Approach" on the shelf yesterday and couldn't help wondering if there would ever be another edition. It has some great, foundational stuff in it -- but the techniques described are about as far from the current state of the art as a Byzantine dromon is from an aircraft carrier. Russell and Norvig would pretty much have to rewrite the book from scratch, and by the time the draft was ready for editing their approach would probably no longer be modern.
I'm calling it now: if AI isn't the biggest news of the next ten years, then the reason will probably be because it got upstaged by World War 3 or something similarly dramatic. And it baffles me how little press the subject gets.
It's an arbitrary number with no exact meaning. Clearly, that number is not based off of any real metric. He is just ironically using quantities to qualitatively express the speed of progress.
On what basis do you say this? Is it anything more than your gut feeling?
How much more training data do you think will be needed to bring about this 10x or 100x improvement? Do you have any expectations as to how it will be obtained?
Also, what's being multiplied by 10 or 100 in this scenario?
It's in theory possible for the technologically to grow this quickly. However, there will be a delay in human adoption because of how large of a paradigm shift it is.
Artists are already using copyright law to attack AI. Once other parts of our economy are hit you could see more vicious attacks and alternative strategies used against AI. It's possible for even laws used to limit AI in the same way tariffs work or we might even see resistance similar to the Butlarian jihad. Who knows?
That's all hypothetical though... Even if none of these resistance scenarios arise, I still think adoption will not happen as fast as technological development.
I actually agree with this and i never said anything against it. The next year is still extremely important.
Here's a better way for me to put it:
chatGPT and stable diffusion didn't change anything about the economy in 2022 and they won't change anything in 2023. However, these two technologies are still inflections points and that is why they are important despite Zero change.
In 2023 we will see much more of these inflection points related to AI. None of these will change the economy in 2023, but they are the first stepping stones of what will change everything in the years to come.
Seems like an edit. I didn't see it when I first wrote my reply. Or maybe I just missed it.
My post is still relevant as the article only briefly says something about AI and it's applicability to search.
I think a lot of people have only read about chatGPT and dismissed it as another AI viral buzz word. If you played with chatGPT in-depth you will know that this thing is not just applicable to search. It's a game-changer.
In fact this whole article is generic enough that it could even be itself generated by AI.
Feels weird that Microsoft isn't mentioned among the big tech companies despite having a relatively mild 2022 downturn, a huge portfolio of profitable products, and being well-positioned to take advantage of a need to host large AI models.
This feels like a very privileged VC tech-centric from inside the bubble view of things, though I am admittedly no expert and left the tech world (for the most part) in 2010 - telecom and IT. There are many things that keep my over-active mind even more over-active and I cannot help but believe that because they are all so intricately and deeply intertwined, their impacts are beginning to be felt and will be increasingly disruptive and result in increasing discontinuities in 2023 and beyond. They are, in no particular order,
- war in Ukraine moving the doomsday clock closer to midnight
- we've likely reached the biophysical limits of earth
- ecological collapse with little real progress at COP15
- climate crisis with little progress of substance at COP27
- peak oil has passed
- the impending energy crisis - we have nothing on the horizon which can replace the energy density of a barrel of oil - and its impacts on shipping/transportation, the input side to industry and manufacturing, culture, society and expectations around quality of life
- problematic demographics (aging population) in many countries and its impacts on growth (as we've come to expect it) and consumption
- the end of the "Order", i.e. Bretton Woods and the unwinding of globalization
- populism, autocracy and authoritarianism, totalitarianism
- financial crises and the bill coming due for the fiat currency free-for-all and the hyperfinancial house of cards in places like China
- increasing discontent, depression and the rise of nihilism in may western countries
- the increase in truthiness and the misrepresentation and misuse of provably factual information
- neoliberalism
- CBDCs and increased government control
- AI
Perhaps normalcy bias is more prevalent than one would expect.
> we have nothing on the horizon which can replace the energy density of a barrel of oil
This is in the vicinity of a good point, but as written it's false. Uranium has oil's energy density beat by a wide margin. And (at least if we're looking at naturally-occurring isotope ratios) thorium is at least 30x more energy dense. (Hydrocarbons are very nice as energy storage, of course, and can be produced in a carbon-neutral way if you throw enough energy at the problem.)
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[ 3.0 ms ] story [ 168 ms ] threadIt's amazing how, after wiring money to a few winners, venture capitalists who make such insane statements can be perceived as smart and worthy of respect. For context, here is the token market cap of ETH:
https://coinmarketcap.com/currencies/ethereum/
The author would like us to believe that the $146 billion dollar market cap for Ethereum is a low point from which the "asset" will "recover." Sorry, but, I don't see $146B worth of value or earnings potential, or whatever, being created by Ethereum. I've done the deep dive, set up my wallets, generated my own tokens, set up my .eth, the works -- after all of this, I came to the same conclusion as all of the naysayers: it's Magic Internet Money propelled by little more than hopes and dreams.
You have to treat these people with a certain kind of detachment to exactitude. If you run into Fred Wilson I suggest nodding along knowingly to every single thing he says.
Here is the very quick back of the envelope calculation:
Current daily fee revenues: 2M USD (slightly above but let's round it)
Current daily ETH issued through staking: 1800 ETH (again, rounded)
2M USD / 1800 ETH = 1100 USD/ETH
In fact, if you plug-in 3 month moving average of blockspace demand and issuance you get the current 1200 USD it's trading at.
HN needs to start waking up to the fact that ETH is a productive asset, there are cash-flows behind it and those accrue to token-holders.
What you fail to understand is that Crypto is huge. $1Bn is a shit-ton-lot of money and the current market cap is $795Bn. Stables tokens alone account for around $100Bn of that. And keep in mind, on a relative basis, this is the worst crypto winter ever. The bottom is probably in or close. I think we’ll see prices rise up again mid-2023.
I doubt the usefulness of pretending that there is not already an ongoing recession, or mucking around with redefining words that are essentially arbitrary but well understood.
Whatever usefulness existed in cryptocurrency, the old vc money destroyed its appeal for me. I want a clean slate
1) web1 and even web2 was largely by/for nerds. These things eventually became mainstream but there was a non-ubiquitousness for the core concepts or at least audience. We now are asymptotically 100% mainstream.
2) web3 is principally based on “money”, or things that involve money in some way. That will always bring grifters, and the fact that some random non-tech non-SV-idealist-coming-from-the-60s-counter-culture-movement person can now seize an opportunity for a dodgy way to make money will brings lots of those people. Then you add in Miami which seems to be a home to a lot of these things, with a culture that reinforces material displays of wealth, and you have a huge force for not good with whatever web3 is supposed to be.
The new name is because too few business types know what the "www" on web sites stands for.
After all the scams of the last few years, I think that in 2023, folks will start approaching these projects more cautiously, only investing when the thing actually delivers some value.
I don’t know what a “valuable” (in terms of what it does, not token value) really means in web3 yet, though it seems like the building blocks are there.
I really want to see a web3/crypto project that has value outside of pure speculation, when we will see that (if ever) is what I’m not sure about
You have a misplaced faith in people. There is absolutely nothing of societal value in Web3, and the fact that the author of the article can claim otherwise with a straight face shows that enough people haven't understood this yet.
Whether you put the source of truth in a centralized database or a distributed ledger controlled by the crowd, the ultimate arbiter is the rule of law. As soon as you accept this, the only correct engineering solution to any problem of tracking ownership is the one that is the fastest and lowest cost (per transaction, to evolve the spec for new requirements including compliance with new laws, to roll back failures, etc.), and that rules out distributed blockchains.
But with "web3" so many projects had insane usage but only because the promise was get-rich-quick. The product itself had no value.
The usual signal was distorted.
90% of helium access points will be installed right next to other helium access points in places that are crowded with early adopters. If there are a lot of them they will interfere with each other in some places, but almost everywhere there will be no service.
If there wasn't network planning as in a cellular network you would need very strong market based mechanisms such as people getting paid 100x as much to put up access points in areas without coverage, being charged to join the network if they are in a place that has too many access points, etc. Even cellular networks have awful economics if you demand 100% coverage, they look cheaper than fiber when you have 70% coverage but somewhere in the 90%'s they become expensive again. Big Telecom wishes it could get telematics hardware in all automobiles to add hundreds of millions of subs but it does not have the desire to make the investment to get sufficient coverage for those things to really work.
People guess, people hope, people pump, people with influence try to make it so, and statistically some will be right because when all possible outcomes are predicted then sure someone will have luckily hit the mark.
I have friends who constantly read financial news and are constantly predicting the future and telling me and I keep saying “no one knows”, and my friends keep updating their predictions.
When VC’s tell you that they predict that seed valuations will be $10M, that’s price anchoring, not prediction.
> Fred Wilson’s predictions are as valuable as yours or mine.
A cynic might say don’t listen to anyone, while an optimist might say try to find people that can spot trends (even if they are not 100% reliable). Perhaps Fred has the market pulse at his fingertips?
Edit: I would strawman paraphrase your comment as “everyone has equal predictive ability” or “everyone has the same predictive ability as a dog”, either of which make your statement look very weak.
> When VC’s tell you [snip] that’s price anchoring, not prediction.
If the outcome is that they have predicted the market, then that is prediction, even if some of it was influence. Fred is not in charge and he has a chance of being wrong: you pointed out that no-one knows so I think you even contradict yourself.
Edit: this relates to George Soros’ Theory of Reflexivity. Can anyone tell me the generic economic term for the concept that sometimes markets self-perpetuate their own facts? https://duckduckgo.com/?q=george+soros+theory+of+reflexivity
It's price anchoring - a message to the startups that ask him for money, it sets in advance the expectations for how much money their startup is worth even before they meet.
https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias)
http://changingminds.org/disciplines/marketing/pricing/price...
He influences for reasons of his own hidden incentives, but he doesn’t control. He is predicting what other VCs will do.
That's not what price anchoring is.
In this case, the price anchoring is relevant only when a startup walks in the door of Freds office (figuratively speaking) and asks for money. He is anchoring the price not to many people, but to people who come asking him for money.
Climate: Big oil is back as Exxon and Chevron record record profits and plan share buybacks for the next 5 years with their cash firehose. This reflects the reality that just 4% of car production in the US is EV, no matter anyone’s preferences.
Web3 is dead, thank god. Long live blockchain and other exciting cryptographic tech that will create fundamental value.
The VC market I am not part of as an investor or raiser. But now that we are seeing the highest interest rates in most investor’s lifetime, there are many attractive alternatives to startups and startups have become riskier with the cost of borrowing increased. So I predict a wave of failures as private companies aren’t able to raise at their risk level and fail.
I think large tech stocks will go sideways at best, for the next year at least, as the ending of global QE dries up liquidity and that lack of liquidity and high interest rates are reflected in the market overall. PEs of 60 or more are a thing of the past.
I also think that negative net income tech is in for a massive fall because risk is off and strong cash flow is on.
Central banks may not stop raising rates in early 2023 and at the very least QE is over. This is a tectonic global macro shift that is going to result in short and medium term instability and several large organizational and systemic failures around the world in 2023.
I kinda disagree with this! Google has the best AI talent in the market. And, lots of these AI advancement are coming from Google brain themselves (ICRL, ICML, etc). And, some of those languages models are already deployed in Google.
Further, I can see Google as an automotive company (Waymo) as opposed to search engine in the long term.
I think the one that's mostly going to be correct is Medvedev one [1], definitely the most interesting and credible one
[1] - https://twitter.com/MedvedevRussiaE/status/16074873384012062...
How can you take any piece of that list as something reasonable when it shares the same origin as some of the dumbest things I’ve seen printed?
No, it starts of with:
On the New Year’s Eve, everybody’s into making predictions
Many come up with futuristic hypotheses, as if competing to single out the wildest, and even the most absurd ones.
Here’s our humble contribution.
What can happen in 2023:
“Conservative” is not mentioned.
The first tweet casts it in light of an ongoing competition of extreme radical predictions, so I expect it is expected to be taken nonseriously. OTOH, its also not a source that posts casual jokes, there is a serious propaganda purpose in each of the items chosen – like much advertising and propaganda, its not the literal message that is the point, but the ideas it plants below the surface.
In Number 6 "Poland repartitioned in the process" I'm seeing maaaajor projection. It's not the West that wants to storm in and repartition it though, right?
Number 7, Northern Ireland rejoining the rest of Ireland is... actually kind of plausible. Could totally happen. Few people in Britain would care very much any more, and demographically it's been on the cards for a while. It's a totally reasonable prediction in an otherwise batshit list.
He says what? And then Elon Musk as president of a seceded Texas? And the bloody tech billionaire himself drops in in agreement? It's nothing short of revealing.
It's known fact that the famous "Franco-German couple" is in big trouble
Another evidence was when Scholz didn't invite his "friend" France for his "business trip" in China ;) [2]
[1] - https://news.ycombinator.com/item?id=33127236
[2] - https://www.bloomberg.com/news/articles/2022-11-03/germany-s...
Let's debate about them, and keep it civil and polite, thanks
His 2022 post is worth reading (linked from this post). He tried to be more specific, and it did not IMO pan out very well.
It’s just really hard to predict the future. It’s probably better to think in terms “how fast can I detect and respond to changes” as opposed to “how good are my long-term predictions”.
- Identity/U2F/2FA: it is time to use private keys instead of credit cards, instead of redundant KYC/AML processes, etc. A new level of identity beyond the Googles, Metas, and Apples.
- Custody: it is time to have more methods to handle the custody of your identity and data that goes beyond crypto. For example, mechanisms that takes into account divorce, deaths, kidnapping, and other use cases.
- TSS/multi-party-computation: we need more of this, currently there is no up to date open source fully audited state-of-the-art libraries for this in several programming languages. See [1]
- Data privacy: computing private information without reveling it. More coopetition. Personally talking with big pharma companies and interested on this, the limitation is politics, not technology.
- b̶y̶z̶a̶n̶t̶i̶n̶e̶ ̶f̶a̶u̶l̶t̶ ̶t̶o̶l̶e̶r̶a̶n̶c̶e̶ blockchain technologies for connecting different organizations. A hub for real cooperation purposes.
- Declarative smart contracts to quickly orchestrate processes between organizations.
- Fully backed stable coins to push fintech beyond the power of the banks. Mostly regulated. Banks are slowly opening buggy APIs, we need a good global fintech hub.
[1] https://github.com/rdragos/awesome-mpc
Wall Street keeps pumping out these exotic financial instruments ("CDO! CDO Squared! CDO Cubed!") that you and I don't have access to. I just want to play around with similarly exotic financial instruments with my $5k speculative money portfolio.
What a transparent frame. The limitation is lack of understanding the consequences. What may look like a snazzy solution for a handful of tech entrepreneurs might not be desirable for everyone.
> Declarative smart contracts to quickly orchestrate processes between organizations.
Ah, yet another layer of business logic. One that hardly anyone understands. That'll do wonders for consultants.
No, I give you an example: you receive industry information every month that is based on incomplete information but the companies in that industry also wants to know how the industry is going. They are very interested in sharing their information in a private way (e.g. homomorphing encryption) and having final stats as a whole. This need is real.
> Ah, yet another layer of business logic. One that hardly anyone understands. That'll do wonders for consultants.
This is the contrary: removing layers. If you want to create a token you just declare that you want the token instead of writing buggy ERC20 smart contracts. Most use cases are repetitive.
Companies will take whatever deal they must in order to continue operating in 2023. Things got truly unhinged in 2021 and I’m glad that capital is becoming a little more scarce. Pruning off the dead branches in startup land will free up talent for startups with better prospects.
I think we need to throw out the overvaluations and look at building longer term value that isn’t just “credit cards but like with a website” this time. We need to get back to inventing and I think tech like Chat GPT is far more of that future than blockchain for con artists.
I guess the upside on predictions is you only have to get a significant one right to win.
It's bizarre to lump Bitcoin and Ethereum together at this point because the value propositions are so different:
- Bitcoin: censorship-resistant money
- Ethereum: tokens (i.e., unregistered securities)
Reading between the lines, I think what the author means by "best economic model" is that censorship-resistant money has a smaller market than tokens.
The problem is that a token economy without censorship resistance will face constant regulatory pressure. Proof-of-stake gurantees that increasing legal pressure applied to exchanges will find an outlet at the protocol level.
All of the people in denial about this are going to wake up to a new reality in which those dreams of decentralized organizations and free token economies are shut down in spades by regulators who see the obvious and have the power to clamp down on it.
Without censorship-resistance, any financial system you try to build ends up looking exactly like the old. And that growing lack of differentiation offers little incentive or reward for the risk involved.
This is going to be an extremely hard lesson for a lot of people, including the author I suspect.
We hit a technological inflection point near the end of 2022 after 2 decades of relatively horizontal technical progress with slight improvements. That change is AI. Suddenly the idea that AI becoming better at human tasks then humans themselves becomes a realistic prospect. This is what will change not just the next year but humanity for the next century. For the next year we will see rapid progress in AI, exploratory applications and the first heave instances of human resistance against AI.
The only other thing as big as AI is the climate. However the outcome of the climate is already well known. In all probability, the worst case scenario will likely play out but we won't suffer from the brunt of it in the next year. It's an old story and no longer interesting because we already know the bitter ending and we don't have the self control to change it.
As for crypto, stocks, recessions and the economy and stuff like that, I personally think these things aren't too important. These are mediums of economic exchange going through cycles. They are side effects of actual progress, of technology that will fundamentally change things. They are also relatively unpredictable. Mild recession for the next year or stagnation like japan for the next decade. Who knows? It's hard to say. Such predictions in either direction are equally meaningless due to the chaotic nature of it all.
Either way the biggest thing that happened in 2022 is the new progress in AI and I'm surprised the article doesn't mention it. AI is a game changer for the "macro environment" for tech.
We may need another law such as Moore's law for chips for this to register with people. I humbly suggest that it be called Altman's law.
I'm calling it now: if AI isn't the biggest news of the next ten years, then the reason will probably be because it got upstaged by World War 3 or something similarly dramatic. And it baffles me how little press the subject gets.
How much more training data do you think will be needed to bring about this 10x or 100x improvement? Do you have any expectations as to how it will be obtained?
Also, what's being multiplied by 10 or 100 in this scenario?
Artists are already using copyright law to attack AI. Once other parts of our economy are hit you could see more vicious attacks and alternative strategies used against AI. It's possible for even laws used to limit AI in the same way tariffs work or we might even see resistance similar to the Butlarian jihad. Who knows?
That's all hypothetical though... Even if none of these resistance scenarios arise, I still think adoption will not happen as fast as technological development.
Here's a better way for me to put it:
chatGPT and stable diffusion didn't change anything about the economy in 2022 and they won't change anything in 2023. However, these two technologies are still inflections points and that is why they are important despite Zero change.
In 2023 we will see much more of these inflection points related to AI. None of these will change the economy in 2023, but they are the first stepping stones of what will change everything in the years to come.
My post is still relevant as the article only briefly says something about AI and it's applicability to search.
I think a lot of people have only read about chatGPT and dismissed it as another AI viral buzz word. If you played with chatGPT in-depth you will know that this thing is not just applicable to search. It's a game-changer.
In fact this whole article is generic enough that it could even be itself generated by AI.
- war in Ukraine moving the doomsday clock closer to midnight - we've likely reached the biophysical limits of earth - ecological collapse with little real progress at COP15 - climate crisis with little progress of substance at COP27 - peak oil has passed - the impending energy crisis - we have nothing on the horizon which can replace the energy density of a barrel of oil - and its impacts on shipping/transportation, the input side to industry and manufacturing, culture, society and expectations around quality of life - problematic demographics (aging population) in many countries and its impacts on growth (as we've come to expect it) and consumption - the end of the "Order", i.e. Bretton Woods and the unwinding of globalization - populism, autocracy and authoritarianism, totalitarianism - financial crises and the bill coming due for the fiat currency free-for-all and the hyperfinancial house of cards in places like China - increasing discontent, depression and the rise of nihilism in may western countries - the increase in truthiness and the misrepresentation and misuse of provably factual information - neoliberalism - CBDCs and increased government control - AI
Perhaps normalcy bias is more prevalent than one would expect.
This is in the vicinity of a good point, but as written it's false. Uranium has oil's energy density beat by a wide margin. And (at least if we're looking at naturally-occurring isotope ratios) thorium is at least 30x more energy dense. (Hydrocarbons are very nice as energy storage, of course, and can be produced in a carbon-neutral way if you throw enough energy at the problem.)