well, the ETH project has many sides, one is technology, another is coin distribution (especially with a proof of stake model). That does not imply a scam, but also is a problem for long-term stability
His attempts in 2013 to get funding for Bitcoin mining using quantum computers (and claims they could get similar benefits by simulating those computers on classical machines) could at best be described as naive and ill informed, less charitably described as idiotic, and reasonably described as a scam.
The problem is that all the proponents of blockchain have conflated technical arguments for decentralisation with lofty political ideas for radical social reengineering and have been working to pump the blockchain assets to give themselves the capital to fight their social agendas. It’s all buried in plain sight. But the credible ideas are running out and the flagrant lack of accountability this time around is kind of no different to Socialism 1.0 or Communism 1.0. I look forward to being cancelled for having such a viewpoint.
Not sure why the "Socialism 1.0" reference when the books these kids read -- and what inspires the thing they're doing -- is primarily Ayn Rand / Jordan Peterson (or if they're really going upmarket, Milton Friedman etc), not Marx or Trotsky or Prouhdon.
It's all about dispensing with social/communal accountability entirely.
Anybody in Bitcoin at this point has low credibility. The innovation space has mostly moved to other chains and projects. What is left are non technical people trying to pump the value of the coin.
Anybody in any crypto token other than Bitcoin at this point has low credibility. Every other chain and project is sacrificing decentralization for short term gain. They’re at best naive and at worst scammers.
Bitcoin is dumb, but it’s honest about its dumbness. The dumb bits are largely forward looking. Web3 is dumb but also fraudulent, because it lies about what it is.
Do you have a tldr? I see its stated technical goal of maintaining a small blockchain, but what’s it for? It has a token so is it meant to be money? Is it a web3 app chain?
The fact that there was an initial presale makes it sound like a private company. Which is a lot different than Bitcoin so I’m not sure the comparison.
You have it backwards. Bitcoin (and related pure decentralized coins) is probably the only thing retaining credibility right now. Everything with a CEO, premine, ICO, web3, defi, is in question.
The question is what retains credibility in this climate, not where the technical innovation is. You mentioned Mina elsewhere. You think Mina has more credibility than Bitcoin right now? Absolutely not.
Vitalik and Ethereum Foundation have siphoned hundreds of millions (billions?) out of the (pre-mined) Ethereum blockchain, which is probably an unregistered security if it weren't for high-roller lobbying agains the SEC, and to what end? Largely a platform for ICO/NFT/web3 failing Ponzi schemes.
If you know of real-world apps on top of Ethereum, that I could use right now on my phone, and is a real thing outside of "wallet thing", "mostly-broken web3 version of existing thing", "earn 30% interest with defi scam", let me know.
I'm reminded of the "prettiest lady of all those ... in this room ... currently eating a kebab" bit.
I don't think the most common use of something being "to make scams or other worthless things" is enough to make that thing "a scam".
I don't know what you mean by "siphoned out of". If you just mean "they sold the tokens", then... that seems like a deliberately misleading way of phrasing it?
To emphasize a generally useful thing. The vast majority of people I know use their phones, not desktops. But ok, my desktop is fine too.
> siphoned
When you become ultra-wealthy from tokens/stock from a product or platform that brings no or very little value to the world, I would call that siphoning to emphasize the hugely lopsided ratio of "wealth I got" / "value the world got". You got rich on hype, not value. You siphoned wealth before there was value, without even knowing if there will ever be value (or knowing there won't be).
> I don't think the most common use of something being "to make scams or other worthless things" is enough to make that thing "a scam".
This is a doozie for me. If you make "tools for scammers" somehow that brings value to the world?
Just because something is overall not good, that doesn't make it a scam. The person doing it has to have some amount of intent to deceive in order for them to be perpetrating a scam, I think.
I'm convinced that Vitalik's intentions are good, even if the net results might not be.
I definitely don't think Vitalik is a scammer, but I find it not-so-ethical to take large amounts of money off the table before you've created value. Vitalik's wealth comes from hype, not from value in the world. He's not centrally responsible for generating the hype, and he's even spoken against it, but then he takes a ton of hype money off the table...
They have managed to concoct a system where people have locked billions in staking while keeping only a tiny fraction of their own Eth staked. Vitalik’s addresses have sold tens of millions while all these users have staked with no way out until the overlords decide to implement it.
Perhaps, but their backing of Helium alone is makes the headline have basis. I mean if you’re reading this on a helium hotspot somewhere then I will gladly stand corrected but if not…
Helium is nothing more than an Airbnb for "cell phone tower" real-estate. It has a viable business model because commercial vendors need pervasive low-data connections in populated areas without using the expensive cell phone network (and SIM management).
The "mining" or whathaveyou is a coolhunting gimmick that accomplished the goal of getting people excited about it.
I don't understand why they didn't have a closed platform and hand people their devices. Instead, there's a "waiting list" and a shortage of equipment. Coverage where I'm at is nearly 100%.
Attach the word "mining" to it, and the dotcom money flows like mana from heaven.
I'd be wary about spending any proceeds from any A16Z crypto funds if I were an LP.. Given all the renewed focus and enforcement, I suspect there will be clawbacks from the obviously fraudulent pump-and-dump schemes they supported. I'm pretty amazed at the gall of Dixon as well, he is/was just aggressively rude to anyone who questioned the utility of any of those companies or coins.
But those LPs in turn will have an excellent case against the fund managers. The 'L' stands for limited, once they have committed their capital to the fund they can't do anything about what the fund does with it, they might register their protest but they'll have to pony up regardless and if they get paid out they might not have sufficient perspective on which $ came out of which investment (this varies from fund to fund, some are very transparent, others less so and funds that re-invest or evergreen funds can be even more complicated). LPs also don't necessarily live in the same jurisdiction as the fund managers or the legal home of the fund.
I've enjoyed reading a YC founder named Liron Shapira's Twitter threads on a16z Crypto's blatant scams. E.g.
- On Helium: Received $365M in investment, convinced regular people to spend $250M buying hotspot nodes in hopes of earning passive income. The result? Helium's total revenue is $6.5k/month. Link: https://twitter.com/liron/status/1551738599254773765?lang=en
Liron is a known grifter who has been trying to find the right thing to complain about, to get online famous, for years. His insane past has been discussed before[1]. He's not somebody you want to take seriously or cite as a source.
Who cares? This isn't engaging with the arguments, but attempting to smear the person presenting them. Whether it is done for engagement or not is besides the point
Many people have engaged with the arguments in other settings and come out ahead. Liron isn't engaging in good faith. I won't rehash them here, they're visible all over Twitter.
Certainly, their relentless fervor for crypto has destroyed the reputation of a16z, though it made them a lot money, and it remains to be seen if there will really be any repercussions for them.
In a country with a functioning regulatory system, the partners would be looking at jail time for their involvement in these scams, but I suspect they'll come out of this just fine.
Crypto currencies are the only part of blockchain/crypto/web3 that's actually not a scam. They do work if you treat them as a means of transmitting money, although they do make many trade-offs to be trustless, private and censorship resistant which means that in practice they are an inferior alternative to fiat currencies & traditional finance if you have the option to use those, so the only legitimate use that remains is either grey area/unlawful transactions or legal transactions in locations where traditional payment rails do not exist or are outdated.
The problem is all the "utility" tokens and other bullshit in the crypto/web3 space. None of that is required to operate a legitimate business in the real world, should there be an actual, sustainable business behind it. But the truth is that there's no business and the whole crypto/blockchain/web3 concept is used as a smokescreen to conceal that fact and be able to make off with the gains of the underlying Ponzi or pump & dump.
> although they do make many trade-offs to be trustless, private and censorship resistant which means that in practice they are an inferior alternative to fiat currencies & traditional finance if you have the option to use those, so the only legitimate use that remains is either grey area/unlawful transactions or legal transactions in locations where traditional payment rails do not exist or are outdated
Is this supposed to be an argument for cryptocurrencies, because this sounds like one that shows why they are a scam.
It doesn't show they are a scam. It shows they are useless to most people because fiat does what most people need, just better.
Crypto has actual use cases, just those use cases usually revolve around not being able to trust your counter-party, access to easy laundering systems or access at all when access to fiat is denied.
This leaves you with the very healthy of set of potential users being those oppressed by nation states, criminals and adult industries and maybe some variations on these that I can't think of right now.
So not a scam, just mostly useless and when it's not useless probably attracts unwanted attention vs fiat physical cash.
>All cryptocurrencies are a scam and any supposed benefits are an illusion. Pot, meet kettle.
That's simply not true. The benefit of Monero[0] in particular is that it lets me buy drugs on DarkNet markets at a significant discount to local, legal cannabis dispensaries.
I've yet to see any other benefits, but that's certainly a benefit.
At a private event with a16z investors, among other VCs, I was told:
1. Crypto is primarily preferred due to early liquidity and being able to dump the bags on someone else. Old school startup models lock up too much capital.
2. Under the table deals mean that privately (kept a secret) some well known VCs have exited coins long before the ICO
This is totally believable and such a disappointment to me. I remember back when Andreessen Horowitz was founded and at the time I thought it was a breath of fresh air among VCs. I even went by their offices and talked with one of their in-house recruiters about some of their portfolio companies. Sad to see them fall so far.
I got into computers because I could help people by making software. Since then "value for value" has done a lot to guide how I spend my time. Seeing them and so many others get sucked into anything that makes money, no matter how poisonous, feels like such a loss.
Carl Icahn called out a16z's dirty dealings almost a decade ago but there was still too much rage and fallout from the financial crisis for him to be taken seriously outside of the realm of finance. VCs were the good guys and the hedge fund managers were the bad guys back then.
To me, I am just appalled at how deeply cynical the whole crypto/web3 thing ended up being. I was always bearish on it but I assumed at least the people investing in it were true believers.
Carl Icahn personally accused Marc Andreesen of cheating eBay shareholders when he was on the Board and they sold Skype in 2009. I don't know or care whether the accusations are true but you can read more about it here.
"The NCSA at the University of Illinois claimed that Andreessen and Bina had stolen Mosaic from the university and demanded the product’s name be changed. They were also told to quit distributing their product.
Andreessen decided that he would not quit offering the software, but he did agree to change the name to Netscape Communications Corporation. The University of Illinois was not completely satisfied until an agreement was reached on December 21, 1994. The University of Illinois received a financial settlement that cost Netscape around $3 million."
Imagine a friend tells you they know a way to get in on a coin pre-ICO! You've heard how valuable that is so you're interested, but apparently you have to have a large amount of capital, so you get some friends to join you. You ain't going to miss out on the golden goose!
They launched a series A in 2019. The Series A was $6million and was joined by Andreessen Horowitz (a16z), Initialized Capital and Polychain Capital, in addition to angel investments from Balaji Srinivasan and Naval Ravikant.
Two private token sale in June and July 2020 for $12m and $42m. Are the VC’s and insiders getting a cut?
Then finally a public ICO in sept 2020 to raise $240 million.
They also had a funding round of $350million in April 22.
Ample time for early VC’s to make money. It’s valuation is $5billion. That’s the same as Coinbase which is a legit org with billions in revenue.
Ava Labs as a company has.. problems. But Avalanche is an actual product working which publishes research and has developed an efficient proof of stake blockchain ecosystem including an EVM-based network.
It's no less of a "legit org" than Uber. Comparing with Uber rather than Coinbase because they've been exposed to have engaged in similar anti-competitive practices which many deem unethical. There's a good chance Coinbase has too, they just haven't had a scandal blow open because of it.
I’m increasingly convinced, and thank god, I’m finding similar minds on the Hill and in D.C. broadly, that anyone in leadership in crypto or web3 is perpetuating a scam or an idiot. The former should be prosecuted. The latter, fined under a deferred prosecution agreement.
> Old school startup models lock up too much capital.
I've gotten in debates here on HN before about this, but a VC's job is literally to multiply capital. Crypto has been extremely good for business (and, more key, for the numbers). I honestly don't see how anyone takes issue with a16z dumping on crypto bros any more than a16z over-funding a startup which, in turn, completely obliterates their competition. Not to mention SPACs that have been doing basically the exact same thing, as well. I have as much sympathy for degenerate crypto gamblers as I did for Citadel Capital.
> don't see how anyone takes issue with a16z dumping on crypto bros any more than a16z over-funding a startup which, in turn, completely obliterates their competition
VCs job is also to maintain a reputation for good investments. Now, founders will rationally devalue investments from a16z lest they be associated with such unsavory company, even if they aren’t crypto-related. Especially if these kinds of party rumors keep going around.
> Now, founders will rationally devalue investments from a16z
No, they won't. Non-profits were gladly taking donations from Pablo Escobar, and you're telling me startups are going to say "no" to early funding rounds because a16z is too "unsavory."
It's overwrought takes like this that fail to see the real issues at play. Many of those projects were all good faith efforts and I haven't seen a shred of evidence that a16z was mass dumping tokens (most articles confuse a16z's first crypto fund, which did well, with the funds that were deployed in 2020/2021).
With all that said, a16z (and other top VC firms) are at or near the top in the list responsible for inflating the crypto bubble.
1. They weren't aligned with their LPs. The economics fundamentally changed for them as their funds 10x'd in size and they started bringing in $100M+ in management fees. They should have been asking themselves if they could responsibly invest anywhere near this amount in a crypto market with very few real users, but they decided to cash the checks instead.
2. They used social media to promote these tokens to retail and lobbied to reduce barriers for more retail investment. They were more than happy to sign off on plans for their portfolio companies to sell what were basically securities in seed companies to retail investors at orders of magnitude inflated prices. Then, they used their own Twitter accounts and podcast appearances to play up a potemkin digital revolution and raise their next fund, all while retail investors took a bath.
3. Due diligence was universally awful. They might have avoided most of the worst frauds, but plenty of investments were in unsustainable mechanisms where the collapse could have easily have been predicted.
People like Adam Neumann, Travis Kalanick and Elizabeth Holmes were being propped up by VCs long before any ponzi schemes adjacent to Web3 appeared.
Venture Capital firms can prop up money-losing economics for years (called "reducing friction"), and then dump the stock on the public (called "an exit"). By the time the public realizes there isn't an amazing business model there, they're the proud new owners of stock. Then they proceed to replace the management and pressure the new managements to extract rents from the ecosystem, endlessly, to justify the expected endless growth in stock prices.
If anything, true utility tokens (ones pegged to the dollar) can eliminate speculative bubbles, and let the network be owned by the participants.
PS: Celsius and FTX and Binance are not in fact decentralized protocols. They're middlemen, the very thing Web3 smart contracts were supposed to eliminate. UniSwap, Aave and other protocols are chugging along just fine, and the smart contracts are NOT capable of rugpulling people. Even Dogecoin and other altcoins aren't. Everything is designed to be owned by the participants, with no central control. What happened was that Ethereum lowered the barrier to creating these smart contracts, so we got a lot of crap just like PHP. But it's actually worse than that -- opportunists created centralized services where you can merely deposit tokens and withdraw them, and that's as far as they get when it comes to "Web3".
It's too bad that people blame "Web3" and decentralized networks for stuff done by centralized players who build shiny interfaces that LARP as a decentralized protocols. It's like blaming all gold when banks get robbed, instead of realizing the problem is the centralized banks storing your money, not the gold itself.
> Venture Capital firms can prop up money-losing economics for years (called "reducing friction"), and then dump the stock on the public (called "an exit")
SPACs come the closest to what you describe. Even there, the burden of evidence and disclosure is markedly higher than anything in crypto.
No, VCs not SPACs. They say “reduce friction” and “fail fast”. They do multiple rounds injecting capital into companies that lose money for years, and sometimes do not ever generate any profits or even any revenue. David Heineier Hansson and thr Basecamp guys for example have railed against this for two decades.
Actually, if that’s all VCs and Wall Street did, then that would be fine for society because they’d basically build useful money-losing businesses that served a ton of people. But some VCs go further. They encourage companies to build a monopoly and extract rents forever. Most of Big Tech ended up this way, and there is a reason many people are not happy. Peter Thiel is open and honest about his opinion that “competition is for losers, build a monopoly”: https://onezero.medium.com/competition-is-for-losers-how-pet...
This has a huge effect on society. Take the Facebook example… Mark Zuckerberg was programming geek who liked Open Source. Microsoft offered him $1 million for a producy he built in High School. He refused, and put it up as open source.
In college, he hacked together projects like Facemash and Facebook using PHP. What people don’t know (and what was left out of the movie) is that Mark Z wanted to create Wirehog, a (gasp!) peer to peer, decentralized file sharing system. I was at the first TechCrunch Disrupt when Sean Parker was interviewed on stage. He proudly recounted how “we put a bullet in that thing”:
We being him and the VCs. You see, Sean Parker once upon a time was ALSO a guy who built a successful product that was by and for the people — Napster. And it also went up against a different industry that liked monopolies — er I’m sorry, intellectual property. They formed associations like MPAA and RIAA that sued Napster and destroyed it. But Parker learned the VC gane after that. He started Plaxo. He discovered Mark Z the way talent scouts discover artists for record labels, and brought Mark together with Peter Thiel. Clarion Capital turned $500K into $5 Billion.
So they took an open source-loving software-hacking geek like the ones you should celebrate in Hacker News, and turned him into a corporate golden boy who runs a monopoly, bullies and buys up the competition. And you are conditioned to support that so that you, too, can get funded by the VCs. Closed databases and recurring revenues are good. But the Open Web with Web3 and open protocols without middlemen — they’re bad because some middlemen — the very phenomenon Web3 smart contracts are supposed to replace, did what they usually do: amassed money and power from millions of people promising instant gratification and then started having their own private ideas about how to use that money and power.
The thing is that when a VC-funded company has an IPO, the shareholders push Facebook to extract rents forever. And the VCs groom them to do so. So if the VCs are good at their job and the company becomes a wall street darling, that essentially means the investors will be extracting rents from both sides of the ecosystem, and encourage monopolistic practices and intellectual property enforcement lest people defect to open source marketplaces and, say, Uber drivers keep more of their money.
It really depends on the VC, but actually on how much control that VC would have. Even Basecamp in 2006 announced they were taking money from Jeff Bezos's VC fund, but see how they justified it: https://signalvnoise.com/archives2/bezos_expeditions_invests...
I'll be honest, we applied to many VCs when we starting out building https://github.com/Qbix/Platform for instance. But it was just too open-source and too general-purpose to be of interest to most VCs. To his credit, Albert Wenger from Union Square Ventures (the same guys who led the Twitter rounds) met with us in 2014 and said he totally OK with disrupting the VC model. He later became a partner in USV. Albert is a rare VC who writes about a post-capitalism world... here is a book he wrote, in which he is giving it away: http://worldaftercapital.org/
I also like USV because even its principal, Fred Wilson, talked for years about crypto leading to cooperatives where the network is owned by the participants: https://avc.com/2016/01/network-equity/
I will reveal the "realpolitik" (i.e. the industry without the romance). VCs often write really cool things and the top ones end up supporting world-changing companies. And many of them are really nice people, in real life, and want to do good, just as many CEOs of large Wall St firms. But the job changes you. Just like a car salesman has to do certain "assholish" things or someone else will make the sale, similarly being a VC makes you do certain things. VCs definitely write a great lot of great things, and on their own those things are awesome. But they're also signals the VC puts out in order to attract "dealflow", so they can be surrounded by "orbiters" of startups the way artists have an entourage or directors have a portfolio of actors.
Most of these startups never make it (think of actors who move to Hollywood and take many extras roles for years) but they are indeed valuable to show the new tech that is being worked on, when need be. The larger VCs ultimately get all the best deal flow, while the smaller VCs attend lots of events and try network their way into deals with the big VCs. The "best deals" are the ones where a company gets heavily funded, attracts a lot of users, and more VCs pile on, followed by Private Equity firms etc. It's a self-fulfilling thing, not too different from DogeCoin or SafeMoon or EverRise -- the only difference is that in the latter, everyone can play VC.
Since 1933, the Securities and Exchange Acts by the US Federal Government established the SEC, and the idea of an "accredited" investor. Crypto made it so that everyone can invest. But to be legal, the crowd would have to through an accredited crowdfunding portal. This is something enabled by the JOBS act, which many people underappreciate.
There are companies (like Rialto Markets and others) that will let you do a whitelabeled crowdfunding on your own site. It's legal and you can sell tokens. There are also other ways to raise money: https://community.intercoin.org/t/how-intercoin-helps-to-rai...
If you want to know my personal stance, here is a video I recorded recently, it's actually for angel investors: dinkumthinkum↗
I think you have probably a point on propping up some businesses but the difference is that these crypto projects are from the outset and their entire lives (from inception to rug-pull) as pump and dump schemes.
1) Many of the projects that failed weren't Web3 at all, such as Celsius, Voyager and FTX. In fact, the very thing that made them fail is that centralized entities took the money and invested it into assets that made them insolvent as soon as the assets lost value. True Web3 is about smart contracts which are designed exactly to prevent middlemen from exercising discretion. Uniswap is solvent and will always be. It's sad that the public conflates the two.
2) Just because someone creates an empty SPAC or shell company or tokens that don't have any utility, doesn't mean the mechanism for creating this stuff is useless. People also created tons of worthless personal websites with <blink> and <marquee> tags in the early days of the Web, and those were pretty worthless also, economically. But the actual technology behind it (HTTP 1 and 2, HTML 1 - 5, CSS, etc.) was very useful and has powered a ton of wealth for the world as soon as responsible businesses built business models on top of it (e.g. e-commerce, software as a service). Similarly, NFTs and so on are just first-generation technology, similar to games like Pong or Space Invaders.
3) In short, I wouldn't say the Web 1.0 is useless because personal home pages (where the PHP language gets its name) were largely useless gaudy things, or Web 2.0 was useless because Friendster and Myspace ultimately failed. If you want to see many examples of applications of Web3 that are useful, just click here: https://intercoin.org/applications
4) And finally, the very people who bought into "yields" and "trading" were essentially participating in zero-sum games where some people (e.g. early investors, or high-speed trading bots) take other people's money (e.g. later investors, or futures traders). It's like going to a casino hoping to beat a poker table, but being the fish.
5) And the entire advertising model over the long term has been in a race to the bottom because it is a zero-sum game too. That's why Google and Facebook (sorry, Alphabet and Meta) are down while, say, Apple and Verizon are not.
They were all good faith efforts? That is an extraordinary claim. How many crypto-scams do we need to see a pattern? I think scam is almost too banal a word; they are complete hucksters taking advantage of naive people (as well as greedy people similar to them). What Axie Infinity brought about in places like the Philippines is just repulsive.
It's just so obvious at this point. I remember Justin Kan's interview[0] about Web3 and gaming, specifically the idea that we'd have NFTs as transferable game assets and instantly thinking "how does this guy not know how dead-in-the-water this idea is?" You'd need collaboration from studios on a level that would test antitrust law in order to make such an idea even remotely realistic. Of course he knows better, but hype machine go brrrrr.
Swan Bitcoin is a service for buying Bitcoin, an asset that they do not control or have any influence over. Not remotely the same thing as pumping and dumping token after token.
Remember when Silicon Valley was about innovation; meritocracy (a person in their garage with a better idea could overcome a corporate behemoth); and a belief we could solve any problem using reason, knowledge, intellect, and creativity (HN is about 'intellectual curiosity'), and that we could build a better world by empowering everyone. A place were someone with an idea could go and live their dreams.
Now it's the the world's leading agent of corruption, mis- and disinformation, lust for power over others (including anti-worker management, anti-democracy and support for authoritarians), megalomania, and post-truth 'thinking'. Investments are in bitcoin, VCs' and founders' massive egos, and even real estate.
The former was where a generation of innovation came from. Where do the leaders and people of SV get the idea that somehow that will continue. It's like they think they sh-t gold.
Chris Dixon rightfully gets a few mentions, but Chris Lyons is another a16z GP that has been involved with funding these very questionable web3 & NFT projects.
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[ 2.4 ms ] story [ 162 ms ] threadPeople are credibly allowed to question your idols even if you don’t like it or disagree. ;)
see e.g. here https://cointelegraph.com/news/64-of-staked-eth-controlled-b....
or https://www.bitcoin.com/get-started/how-was-eth-initially-di...
It's all about dispensing with social/communal accountability entirely.
Anybody in any crypto token other than Bitcoin at this point has low credibility. Every other chain and project is sacrificing decentralization for short term gain. They’re at best naive and at worst scammers.
Everything else is a security, by definition.
Some of which distribute their coins more fairly than bitcoin, and are thus definitely not securities.
The fact that there was an initial presale makes it sound like a private company. Which is a lot different than Bitcoin so I’m not sure the comparison.
The question is what retains credibility in this climate, not where the technical innovation is. You mentioned Mina elsewhere. You think Mina has more credibility than Bitcoin right now? Absolutely not.
If you know of real-world apps on top of Ethereum, that I could use right now on my phone, and is a real thing outside of "wallet thing", "mostly-broken web3 version of existing thing", "earn 30% interest with defi scam", let me know.
I'm reminded of the "prettiest lady of all those ... in this room ... currently eating a kebab" bit.
I don't think the most common use of something being "to make scams or other worthless things" is enough to make that thing "a scam".
I don't know what you mean by "siphoned out of". If you just mean "they sold the tokens", then... that seems like a deliberately misleading way of phrasing it?
To emphasize a generally useful thing. The vast majority of people I know use their phones, not desktops. But ok, my desktop is fine too.
> siphoned
When you become ultra-wealthy from tokens/stock from a product or platform that brings no or very little value to the world, I would call that siphoning to emphasize the hugely lopsided ratio of "wealth I got" / "value the world got". You got rich on hype, not value. You siphoned wealth before there was value, without even knowing if there will ever be value (or knowing there won't be).
> I don't think the most common use of something being "to make scams or other worthless things" is enough to make that thing "a scam".
This is a doozie for me. If you make "tools for scammers" somehow that brings value to the world?
I'm convinced that Vitalik's intentions are good, even if the net results might not be.
These are not the actions of a true believer.
The "mining" or whathaveyou is a coolhunting gimmick that accomplished the goal of getting people excited about it.
I don't understand why they didn't have a closed platform and hand people their devices. Instead, there's a "waiting list" and a shortage of equipment. Coverage where I'm at is nearly 100%.
Attach the word "mining" to it, and the dotcom money flows like mana from heaven.
If A16Z encouraged that pivot or invested after it, the parent comment stands.
- On Helium: Received $365M in investment, convinced regular people to spend $250M buying hotspot nodes in hopes of earning passive income. The result? Helium's total revenue is $6.5k/month. Link: https://twitter.com/liron/status/1551738599254773765?lang=en
- On Axie Infinity: blatant Ponzi scheme disguised as "play-to-earn"https://twitter.com/liron/status/1554941450697179136?lang=en
- On a16z's scams in general: https://twitter.com/liron/status/1565214131942146051?lang=en
Marc Andreesen gives a rambling non-answer to a simple and straightforward question about a web3 use case. It’s genuinely funny.
https://twitter.com/liron/status/1537186589486460928
[1]: https://twitter.com/joshsojoshsoj/status/1554139329643122688
In a country with a functioning regulatory system, the partners would be looking at jail time for their involvement in these scams, but I suspect they'll come out of this just fine.
The problem is all the "utility" tokens and other bullshit in the crypto/web3 space. None of that is required to operate a legitimate business in the real world, should there be an actual, sustainable business behind it. But the truth is that there's no business and the whole crypto/blockchain/web3 concept is used as a smokescreen to conceal that fact and be able to make off with the gains of the underlying Ponzi or pump & dump.
Is this supposed to be an argument for cryptocurrencies, because this sounds like one that shows why they are a scam.
Crypto has actual use cases, just those use cases usually revolve around not being able to trust your counter-party, access to easy laundering systems or access at all when access to fiat is denied.
This leaves you with the very healthy of set of potential users being those oppressed by nation states, criminals and adult industries and maybe some variations on these that I can't think of right now.
So not a scam, just mostly useless and when it's not useless probably attracts unwanted attention vs fiat physical cash.
If currencies are the only part of blockchain that isn’t a scam, they really suck at the thing they’re supposed to be good at.
That's simply not true. The benefit of Monero[0] in particular is that it lets me buy drugs on DarkNet markets at a significant discount to local, legal cannabis dispensaries.
I've yet to see any other benefits, but that's certainly a benefit.
Aside from that, I couldn't agree more.
[0] https://www.getmonero.org/
1. Crypto is primarily preferred due to early liquidity and being able to dump the bags on someone else. Old school startup models lock up too much capital.
2. Under the table deals mean that privately (kept a secret) some well known VCs have exited coins long before the ICO
I got into computers because I could help people by making software. Since then "value for value" has done a lot to guide how I spend my time. Seeing them and so many others get sucked into anything that makes money, no matter how poisonous, feels like such a loss.
To me, I am just appalled at how deeply cynical the whole crypto/web3 thing ended up being. I was always bearish on it but I assumed at least the people investing in it were true believers.
Marc Andreessen: 'False and Misleading Accusations' Made Against Me - WSJ https://blogs.wsj.com/moneybeat/2014/03/03/marc-andreessen-f...
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"The NCSA at the University of Illinois claimed that Andreessen and Bina had stolen Mosaic from the university and demanded the product’s name be changed. They were also told to quit distributing their product.
Andreessen decided that he would not quit offering the software, but he did agree to change the name to Netscape Communications Corporation. The University of Illinois was not completely satisfied until an agreement was reached on December 21, 1994. The University of Illinois received a financial settlement that cost Netscape around $3 million."
Who is Marc Andreessen, Silicon Valley’s Billionaire Kingmaker? [2022] https://history-computer.com/marc-andreessen-complete-biogra...
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I'm sensing a pattern.
My understanding was that until the ICO, the coin isn't available for purchase by the public. Who is providing the exit liquidity in a pre-ICO exit?
Ava Labs is the company, Avalanche is the blockchain, Avax is the token.
https://www.crunchbase.com/organization/ava-labs/
They launched a series A in 2019. The Series A was $6million and was joined by Andreessen Horowitz (a16z), Initialized Capital and Polychain Capital, in addition to angel investments from Balaji Srinivasan and Naval Ravikant.
Two private token sale in June and July 2020 for $12m and $42m. Are the VC’s and insiders getting a cut?
Then finally a public ICO in sept 2020 to raise $240 million.
They also had a funding round of $350million in April 22.
Ample time for early VC’s to make money. It’s valuation is $5billion. That’s the same as Coinbase which is a legit org with billions in revenue.
It's no less of a "legit org" than Uber. Comparing with Uber rather than Coinbase because they've been exposed to have engaged in similar anti-competitive practices which many deem unethical. There's a good chance Coinbase has too, they just haven't had a scandal blow open because of it.
I've gotten in debates here on HN before about this, but a VC's job is literally to multiply capital. Crypto has been extremely good for business (and, more key, for the numbers). I honestly don't see how anyone takes issue with a16z dumping on crypto bros any more than a16z over-funding a startup which, in turn, completely obliterates their competition. Not to mention SPACs that have been doing basically the exact same thing, as well. I have as much sympathy for degenerate crypto gamblers as I did for Citadel Capital.
One of these is securities fraud.
No, they won't. Non-profits were gladly taking donations from Pablo Escobar, and you're telling me startups are going to say "no" to early funding rounds because a16z is too "unsavory."
That's literally everyone's job in investing. You think a pension fund or an ETF serves a different purpose?
Venture Capital's job is to do that by providing capital for risky ventures (it's in the name), not by financing pump and dump schemes.
> Crypto has been extremely good for business
So were subprime mortgages, until the moment they weren't.
Yeah, if you completely ignore risk profiles. VCs have extremely high risk appetites and comparing them to pension funds is in bad faith.
With all that said, a16z (and other top VC firms) are at or near the top in the list responsible for inflating the crypto bubble.
1. They weren't aligned with their LPs. The economics fundamentally changed for them as their funds 10x'd in size and they started bringing in $100M+ in management fees. They should have been asking themselves if they could responsibly invest anywhere near this amount in a crypto market with very few real users, but they decided to cash the checks instead.
2. They used social media to promote these tokens to retail and lobbied to reduce barriers for more retail investment. They were more than happy to sign off on plans for their portfolio companies to sell what were basically securities in seed companies to retail investors at orders of magnitude inflated prices. Then, they used their own Twitter accounts and podcast appearances to play up a potemkin digital revolution and raise their next fund, all while retail investors took a bath.
3. Due diligence was universally awful. They might have avoided most of the worst frauds, but plenty of investments were in unsustainable mechanisms where the collapse could have easily have been predicted.
People like Adam Neumann, Travis Kalanick and Elizabeth Holmes were being propped up by VCs long before any ponzi schemes adjacent to Web3 appeared.
Venture Capital firms can prop up money-losing economics for years (called "reducing friction"), and then dump the stock on the public (called "an exit"). By the time the public realizes there isn't an amazing business model there, they're the proud new owners of stock. Then they proceed to replace the management and pressure the new managements to extract rents from the ecosystem, endlessly, to justify the expected endless growth in stock prices.
If anything, true utility tokens (ones pegged to the dollar) can eliminate speculative bubbles, and let the network be owned by the participants.
PS: Celsius and FTX and Binance are not in fact decentralized protocols. They're middlemen, the very thing Web3 smart contracts were supposed to eliminate. UniSwap, Aave and other protocols are chugging along just fine, and the smart contracts are NOT capable of rugpulling people. Even Dogecoin and other altcoins aren't. Everything is designed to be owned by the participants, with no central control. What happened was that Ethereum lowered the barrier to creating these smart contracts, so we got a lot of crap just like PHP. But it's actually worse than that -- opportunists created centralized services where you can merely deposit tokens and withdraw them, and that's as far as they get when it comes to "Web3".
It's too bad that people blame "Web3" and decentralized networks for stuff done by centralized players who build shiny interfaces that LARP as a decentralized protocols. It's like blaming all gold when banks get robbed, instead of realizing the problem is the centralized banks storing your money, not the gold itself.
SPACs come the closest to what you describe. Even there, the burden of evidence and disclosure is markedly higher than anything in crypto.
Example of a huge fund now deemed worthless by investors, who invested in some of the top Web2 projects (NOT Web3): https://www.forbes.com/sites/alexkonrad/2020/04/05/exclusive...
Actually, if that’s all VCs and Wall Street did, then that would be fine for society because they’d basically build useful money-losing businesses that served a ton of people. But some VCs go further. They encourage companies to build a monopoly and extract rents forever. Most of Big Tech ended up this way, and there is a reason many people are not happy. Peter Thiel is open and honest about his opinion that “competition is for losers, build a monopoly”: https://onezero.medium.com/competition-is-for-losers-how-pet...
This has a huge effect on society. Take the Facebook example… Mark Zuckerberg was programming geek who liked Open Source. Microsoft offered him $1 million for a producy he built in High School. He refused, and put it up as open source.
In college, he hacked together projects like Facemash and Facebook using PHP. What people don’t know (and what was left out of the movie) is that Mark Z wanted to create Wirehog, a (gasp!) peer to peer, decentralized file sharing system. I was at the first TechCrunch Disrupt when Sean Parker was interviewed on stage. He proudly recounted how “we put a bullet in that thing”:
https://techcrunch.com/2010/05/26/wirehog/
We being him and the VCs. You see, Sean Parker once upon a time was ALSO a guy who built a successful product that was by and for the people — Napster. And it also went up against a different industry that liked monopolies — er I’m sorry, intellectual property. They formed associations like MPAA and RIAA that sued Napster and destroyed it. But Parker learned the VC gane after that. He started Plaxo. He discovered Mark Z the way talent scouts discover artists for record labels, and brought Mark together with Peter Thiel. Clarion Capital turned $500K into $5 Billion.
So they took an open source-loving software-hacking geek like the ones you should celebrate in Hacker News, and turned him into a corporate golden boy who runs a monopoly, bullies and buys up the competition. And you are conditioned to support that so that you, too, can get funded by the VCs. Closed databases and recurring revenues are good. But the Open Web with Web3 and open protocols without middlemen — they’re bad because some middlemen — the very phenomenon Web3 smart contracts are supposed to replace, did what they usually do: amassed money and power from millions of people promising instant gratification and then started having their own private ideas about how to use that money and power.
The thing is that when a VC-funded company has an IPO, the shareholders push Facebook to extract rents forever. And the VCs groom them to do so. So if the VCs are good at their job and the company becomes a wall street darling, that essentially means the investors will be extracting rents from both sides of the ecosystem, and encourage monopolistic practices and intellectual property enforcement lest people defect to open source marketplaces and, say, Uber drivers keep more of their money.
And as ...
It really depends on the VC, but actually on how much control that VC would have. Even Basecamp in 2006 announced they were taking money from Jeff Bezos's VC fund, but see how they justified it: https://signalvnoise.com/archives2/bezos_expeditions_invests...
I'll be honest, we applied to many VCs when we starting out building https://github.com/Qbix/Platform for instance. But it was just too open-source and too general-purpose to be of interest to most VCs. To his credit, Albert Wenger from Union Square Ventures (the same guys who led the Twitter rounds) met with us in 2014 and said he totally OK with disrupting the VC model. He later became a partner in USV. Albert is a rare VC who writes about a post-capitalism world... here is a book he wrote, in which he is giving it away: http://worldaftercapital.org/
I also like USV because even its principal, Fred Wilson, talked for years about crypto leading to cooperatives where the network is owned by the participants: https://avc.com/2016/01/network-equity/
I will reveal the "realpolitik" (i.e. the industry without the romance). VCs often write really cool things and the top ones end up supporting world-changing companies. And many of them are really nice people, in real life, and want to do good, just as many CEOs of large Wall St firms. But the job changes you. Just like a car salesman has to do certain "assholish" things or someone else will make the sale, similarly being a VC makes you do certain things. VCs definitely write a great lot of great things, and on their own those things are awesome. But they're also signals the VC puts out in order to attract "dealflow", so they can be surrounded by "orbiters" of startups the way artists have an entourage or directors have a portfolio of actors.
Most of these startups never make it (think of actors who move to Hollywood and take many extras roles for years) but they are indeed valuable to show the new tech that is being worked on, when need be. The larger VCs ultimately get all the best deal flow, while the smaller VCs attend lots of events and try network their way into deals with the big VCs. The "best deals" are the ones where a company gets heavily funded, attracts a lot of users, and more VCs pile on, followed by Private Equity firms etc. It's a self-fulfilling thing, not too different from DogeCoin or SafeMoon or EverRise -- the only difference is that in the latter, everyone can play VC.
Since 1933, the Securities and Exchange Acts by the US Federal Government established the SEC, and the idea of an "accredited" investor. Crypto made it so that everyone can invest. But to be legal, the crowd would have to through an accredited crowdfunding portal. This is something enabled by the JOBS act, which many people underappreciate.
So yes, if I had a choice, I'd definitely prefer crowdfunding, and we do: https://wefunder.com/Qbix
There are companies (like Rialto Markets and others) that will let you do a whitelabeled crowdfunding on your own site. It's legal and you can sell tokens. There are also other ways to raise money: https://community.intercoin.org/t/how-intercoin-helps-to-rai...
If you want to know my personal stance, here is a video I recorded recently, it's actually for angel investors: dinkumthinkum ↗ I think you have probably a point on propping up some businesses but the difference is that these crypto projects are from the outset and their entire lives (from inception to rug-pull) as pump and dump schemes. EGreg ↗ That's true for many crypto projects, but:
1) Many of the projects that failed weren't Web3 at all, such as Celsius, Voyager and FTX. In fact, the very thing that made them fail is that centralized entities took the money and invested it into assets that made them insolvent as soon as the assets lost value. True Web3 is about smart contracts which are designed exactly to prevent middlemen from exercising discretion. Uniswap is solvent and will always be. It's sad that the public conflates the two.
2) Just because someone creates an empty SPAC or shell company or tokens that don't have any utility, doesn't mean the mechanism for creating this stuff is useless. People also created tons of worthless personal websites with <blink> and <marquee> tags in the early days of the Web, and those were pretty worthless also, economically. But the actual technology behind it (HTTP 1 and 2, HTML 1 - 5, CSS, etc.) was very useful and has powered a ton of wealth for the world as soon as responsible businesses built business models on top of it (e.g. e-commerce, software as a service). Similarly, NFTs and so on are just first-generation technology, similar to games like Pong or Space Invaders.
3) In short, I wouldn't say the Web 1.0 is useless because personal home pages (where the PHP language gets its name) were largely useless gaudy things, or Web 2.0 was useless because Friendster and Myspace ultimately failed. If you want to see many examples of applications of Web3 that are useful, just click here: https://intercoin.org/applications
4) And finally, the very people who bought into "yields" and "trading" were essentially participating in zero-sum games where some people (e.g. early investors, or high-speed trading bots) take other people's money (e.g. later investors, or futures traders). It's like going to a casino hoping to beat a poker table, but being the fish.
5) And the entire advertising model over the long term has been in a race to the bottom because it is a zero-sum game too. That's why Google and Facebook (sorry, Alphabet and Meta) are down while, say, Apple and Verizon are not.
Why do you assume their entire investment was just tokens? No other possible way to cash out?
0: https://techcrunch.com/2022/08/08/twitch-founder-justin-kan-...
Now it's the the world's leading agent of corruption, mis- and disinformation, lust for power over others (including anti-worker management, anti-democracy and support for authoritarians), megalomania, and post-truth 'thinking'. Investments are in bitcoin, VCs' and founders' massive egos, and even real estate.
The former was where a generation of innovation came from. Where do the leaders and people of SV get the idea that somehow that will continue. It's like they think they sh-t gold.
Worldcoin worthless
From $55 to $1.6. about as bad as FTX https://coinmarketcap.com/currencies/helium/
Andreessen was right about Facebook, his other investments have been stinkers