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BlockFi files for bankruptcy as FTX fallout spreads

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Re: BlockFi files for bankruptcy as FTX fallout spreads

#501

Post by imtringued »

7e wrote: post #487
alxmng wrote: post #486

Earlier quoted context omitted.

The Fed doesn’t give VCs money.

It prints money, that money flows into institutions and chases returns. Much of it flows to VC, guaranteed. That’s what the Fed was literally created to do.

The fed was created to be an intermediary between banks so all banks form a network that in aggregate cannot be insolvent because if one bank is insolvent, another bank has plenty of money to lend to the insolvent bank. When you withdraw into cash, then you are basically banking with the Fed which means banks borrow from the Fed.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#502

Post by Yizahi »

williamcotton wrote: post #428
Yizahi wrote: post #365

Earlier quoted context omitted.

I have to repeat myself - your "YuGiOh virtual cards" are in no way related to the NFTs. Sure you can require buyer of a card to also buy NFT, you can even pretend that was a single transaction. But really NFT has zero function in this example, it provides zero value, and if you remove it from the system altogether - NOTHING will change. It's like saying that clapping with your hands at the gas station is somehow equ…

If the projection system in the game store requires NFTs that were issued by the creators of Yu-Gi-Oh then you would need these virtual cards to participate, just like how you need virtual Magic cards in MTGO in order to participate, the difference being that in the former it would be some open standard where people could trade, sell, and lend as they see fit.

I'll try again. Company A (Shueisha) creates digital collectible cards.

They store them in their private classic centralised DB (not related to blockchain in any way, because private blockchain is idiotic idea). They are not stored in the public blockchain because that is technically impossible both in current and future chains, due to constraints decided collectively (you can't have even barely working blockchain pretending to be decentralised and also be able to store megabytes of data on chain).

Then company A creates NFTs for these cards. Again, the digital cards are not in any way related or linked or paired with the NFTs. The system storing and managing cards doesn't know about NFTs. NFTs are weakly linked to somewhere on the web, supposedly to the cards, but there is really no requirement for that and what more amazing - no verification to where they are linking.

Now what happens when someone is selling or reselling cards. I will split this into MUST and OPTIONAL sections.

User MUST create an account on the completely proprietary and centralised server of company A, because system storing and managing cards MUST update who owns what in its centralised DB. And technically that's all, nothing else is needed.

What it OPTIONAL is that user can also buy NFT which was initially generated by company A, and which stores an URL pointing to the card hosted on the private company A server. But until company A does the MUST step above, NFTs sale is pointless. Centralised DB does not in any way interact with blockchain with NFTs, and it technically can't.

Some other NFT fans also claim that they allow moving assets between companies or even people. This is simply impossible to do with only blockchain, again, because centralised DB and management systems are required due to technical limitations, and because companies must agree on the cross compatible formats and agree to take revenue cuts, which is a fantasy. And moving assets to the humans is also impossible because NFTs don't transfer any partial or full IP rights, they are technically incapable of doing this. Then again you are dependent on the centralised DBs.

As you can see, NFT is an interesting artificial construct which does literally no useful functionality on it's own. In any proposed system with NFTs, you can cut out NFTs and have exact same functionality remaining.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#503

Post by Melting_Harps »

ummonk wrote: post #478
Melting_Harps wrote: post #245

Earlier quoted context omitted.

> They've raised about a billion dollars of VC - https://www.crunchbase.com/organization/blockfi-inc/investor ... > talked to an employee that left last spring. She said they had literally no idea what they were doing. The founders are just ivy educated 30 year olds So was SBF (MIT) and raised from Sequoia and Blackrok and his GF was a Stanford'ite with a Math degree and is responsible for the largest loss of funds f…

> Maybe now the rest of you vocal sideliners can finally see that is the case and that most of you are part of the problem more than most of us who have built startuprs using this tech without any of those things and did it the hard way outside of the VC/SV Ivy League World. What? Why are we the problem?

> What? Why are we the problem?

This may just be me because I from CA and was inspired to work in tech as kid in the 90s and saw the drastic and detrimental culture changes that have come over the years/decades: many of you keep attributing these scamming events to us when in reality you FAANG/SV/VC insider types likely went to school or worked with them and turned a blind eye to this very obvious behavior that bred this culture; if you worked for or with them you likely even enabled this behavior in order to clout/status chase for a 'disrupter's' reference or network connections for funding. I've seen it far too often, and somehow for calling it out we become 'persona non-grata' in our homes because trnsplants who only came to SV for the money and status rather than make remarkable tools and disrupt legacy gate-keepers 'want to get theirs' all while all playing some odd cosplay to the contrary.

The truth is that the tech that underlies cryptocurrency's like Bitcoin have it's roots in SV and has been advocated by Cypherpunks from the late 80s-90s and many of it's most notable people in this space were around in that time (eg Hal Finney worked for Phil Zimmerman during the Crypto wars and took on the US Government and risked prison). And it's a slap in the face to be told how we're not wanted or just scamming people with our focus and pursuits in tech because of this gross over-generalization that is based on an immense blind spot that who you are talking about is within your side more often than amongst out own--I admit we have had scams but the most notable are due to incompetence and ignorance in dealing with new tech (MTGOX) in real-time rather than an outright desire to scam.

Bad players have existed in Bitcoin, I've seen it plenty of times, but as is the case with the biggest ones like FTX and BlockFi it tends to be from your ilk, not ours.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#504

Post by Thorentis »

jerf wrote: post #116

"We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda" I feel like the term "exposure" was intended as a euphemism, but it is now so thoroughly overused that I am developing a more negative reaction to the term than the words it was intended to hide from. "We had exposure to X" is starting to sound worse to me than "We invested in X and X lost a l…

Yes agree, and I think this is because the more serious the situation, the more euphemisms will be used by the people in the situation to describe it.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#505

Post by Dylan16807 »

halpmeh wrote: post #411
lottin wrote: post #397

Earlier quoted context omitted.

I'm not redefining anything. I'm an economist, and I know the terminology of economics well. Capital can refer to two things, either 'capital' (or 'real capital') or 'financial capital'. The definition that you've posted matches (more less) the definition of financial capital. But, either way, this is not complicated. The fact remains that destroying money doesn't destroy wealth. Mistaking money for real wealth is a…

Ok, so I think we’re in the same page: there is a definition of capital that includes money but is for some reason not applicable to this conversation because you’re an economist and know better. And if you burn your money in your bank account, then you’re less wealthy but that cannot be referred to as destroying [your] wealth or capital.

If you smash your machines, you destroy real capital.

If you burn your money, the financial capital doesn't just go away. It's effectively reallocated to everyone else via deflation. That's why "destroying capital" isn't a good way to describe it.

If you destroy half the machines in the world, evenly distributed, the economy crumbles. If you destroy half the dollars in the world, evenly distributed, nothing really happens.

And back to this case, the VC money wasn't burned at all. It went to paychecks and service providers and customers and scammers. It didn't disappear, it moved.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#506

Post by davidgerard »

Mistletoe wrote: post #296
hardwaregeek wrote: post #175

Earlier quoted context omitted.

Huh what? Do you assume that code just works? Something's always breaking and there's always new features that people want. Editing tweets just barely became a thing. Which, btw, is the exact sort of feature that would be easy peg as trivial, but likely is not when you're running at Twitter scale. Before, a tweet had two states: created or deleted. Now it can have arbitrarily many states and possibly even interleaved…

I’m sorry I just don’t find the ability to edit tweets a groundbreaking new feature that is difficult to implement in 2022.

I thought this was the site for people who realised that things are always much more difficult at scale.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#507

Post by williamcotton »

andreareina wrote: post #482
williamcotton wrote: post #428

Earlier quoted context omitted.

If the projection system in the game store requires NFTs that were issued by the creators of Yu-Gi-Oh then you would need these virtual cards to participate, just like how you need virtual Magic cards in MTGO in order to participate, the difference being that in the former it would be some open standard where people could trade, sell, and lend as they see fit.

How do you verify the entity you think is Konami is actually Konami? If you're only going to going to allow their cards then what's the actual benefit of being on whatever chain instead of using Konami's own database where they can implement all the features desired without the complication of byzantine consensus?

Konami makes this really great projection system that keeps track of game state and projects onto a big table and they give/lease/sell these devices to game stores. The device comes installed with trusted public keys of a certificate authority managed by Konami and will only work with virtual cards issued by Konami. The ownership of those virtual cards is handled by a mechanism not managed by Konami.

This is basically how Yi-Gi-Oh physical cards work. They make official cards and they don’t manage the ownership of those cards.

The advantage for Konami is that they don’t need to build much of any infrastructure for a market for trading or selling virtual cards. The advantage for players is they don’t have to rely on Konami for these ownership related features and can buy, sell, lend as they see fit.

The MTGO marketplace is really awful but it’s the only choice that MTG players have if they want to buy, sell or trade virtual MTG cards.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#508

Post by KSteffensen »

Wyoming23 wrote: post #495
btown wrote: post #224

Earlier quoted context omitted.

I once heard that a well-known gig economy company would open up new cities by giving employees essentially-unlimited credit cards and telling them to buy whatever they thought was needed, with no controls or multi-person approvals. It'll be interesting to see how VC changes in the modern environment - will they still be all-in on founders willing to unsustainably burn money just to incrementally boost the probabilit…

I don't get what the issue is here. Option A- you task some employees with buying office furniture and equipment and then waste everyone's time by having some extra meetings and emails and bureaucracy where someone asks "is that a good price for 50 desks? Did you get multiple quotes?" and the employee says "yes" and then they approve the expense. Option B- the same employees make the same decisions, but without the e…

Well, yeah as long as you trust the employees and they know what they are doing, sure. Otherwise, those 50 desks are going to be expensive.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#509

Post by halpmeh »

Dylan16807 wrote: post #505
halpmeh wrote: post #411

Earlier quoted context omitted.

Ok, so I think we’re in the same page: there is a definition of capital that includes money but is for some reason not applicable to this conversation because you’re an economist and know better. And if you burn your money in your bank account, then you’re less wealthy but that cannot be referred to as destroying [your] wealth or capital.

If you smash your machines, you destroy real capital. If you burn your money, the financial capital doesn't just go away. It's effectively reallocated to everyone else via deflation. That's why "destroying capital" isn't a good way to describe it. If you destroy half the machines in the world, evenly distributed, the economy crumbles. If you destroy half the dollars in the world, evenly distributed, nothing really ha…

You’re conflating the money supply with money. The inherent value of the money supply is constant. That’s why you could halve it uniformly without impacting much. But that also necessarily means that each unit of currency does in fact have value. So if you invest it in scams, you can call that destroying wealth.

Also worth nothing that we’re not really talking about money. We’re talking about equity in companies with the statement that billions of capital was destroyed by investing in BlockFi.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#510

Post by seanhunter »

seanhunter wrote: post #496
bjelkeman-again wrote: post #462

Earlier quoted context omitted.

So where is the due diligence that the VCs talk so much about, especially in the case with FTX, which supposedly didn’t have any appropriate financial management?

Having been through due diligence with several top VC funds (Softbank Vision Fund and others) I would say that due diligence generally focusses in on a few key areas which are crucial to the upside and risk factors in the specific business. For example, is the financial model broadly accurate (ie there’s nothing in the finances that would cause the investment hypothesis not to work out), if they’re a software or saas…

The TLDR of the above which I never actually state is you should never think because X investor is in a situation that you don't need to do your own diligence/research. You should always do your own research and satisfy yourself before putting your own money at risk.
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