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Why I have zero faith in crypto venture capitalists

bennettftomlin.com

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Re: Why I have zero faith in crypto venture capitalists

#161

Post by xwolfi »

DethNinja wrote: post #78
IAmGraydon wrote: post #76

Everyone wants to talk about the future of crypto in terms of how it can be used. Not enough people are talking about the fact that a single breakthrough in computing could undo the encryption that these currencies are reliant upon, instantly driving the value to zero. This is a vulnerability that does not have an analogue in any other currencies, securities or stores of wealth. Because of that, crypto is and will be…

I don’t get this argument especially here in the hackernews; 1. If they can crack the cryptocurrencies then it means that they can easily crack crypto of online banking systems as well, entire world would crash regardless of whichever asset you hold. 2. There are already quantum resistant crypto algorithms, crypto currencies can easily switch to them once it is clear that current crypto algorithms can be cracked. It…

Well hacking a bank doesn't give legal value to your transfer order, a simple employee could revert by calling the target bank on the phone under threat of pursuit if no reversal.

Bank account are not protected by cryptography, they're protected by law. What you want is bitcoin to have the same, not say that since a banks' https website could be hacked, let's do nothing about the main weakness of crypto.

But anyway the point is moot: it's certain developers would upgrade the network with time as new events unfold.

Re: Why I have zero faith in crypto venture capitalists

#162

Post by mech422 »

meepmorp wrote: post #152
OliverGilan wrote: post #136

Earlier quoted context omitted.

OP was talking about real world use case. Why does crypto have to be more beneficial than credit cards to count as a real world use case? There are people in the US who cannot get a credit card easily.

It's reasonable to ask just how useful a use case is. Credit cards seem, on balance, to be demonstrably better than crypto for payments; to my mind, by a very large margin. Crypto brings nothing for me as an upside, and is a bigger hassle otherwise.

>>It's reasonable to ask just how useful

It's totally reasonable to ask how useful something is for you. However, other people might have other answers to that question. For instance, if existing solutions suited everyone - why are zelle and venmo so popular? Hell, I zelle money between MY OWN accounts at different banks just cause its faster, cheaper and easier then the alternative ACH/Wire transfers.

Edit: Hmm - if I could zelle to my brokerage account I probably wouldn't have missed out on that AMAT I'm salty about. :-P

Re: Why I have zero faith in crypto venture capitalists

#163

Post by xwolfi »

ashtonkem wrote: post #84
IAmGraydon wrote: post #76

Everyone wants to talk about the future of crypto in terms of how it can be used. Not enough people are talking about the fact that a single breakthrough in computing could undo the encryption that these currencies are reliant upon, instantly driving the value to zero. This is a vulnerability that does not have an analogue in any other currencies, securities or stores of wealth. Because of that, crypto is and will be…

I’m extremely bearish on Crypto, but I don’t think this is a fair criticism of it. If someone manages to break the crypto underpinning say, Bitcoin, then the crash in Bitcoin prices would be the least of our problems as a society. The sudden, catastrophic collapse of all online commerce would probably be a bigger problem, as would the immediate halting of electronic interbank communication.

I mean we survived before online commerce, I remember it vividly even. Can bitcoin survive without crypto ?

There was even a time, believe it or not, where electricity didn't exist and people/society still kinda worked...

When classical crypto is reverse (when, not if), then we'll simply have all our past secrets revealed. What you want is gradual increase in complexity so that the decyphered past only impact dead people.

Crypto currency will ofc do that too, don't forget bitcoin can change everything, even its 21M limit, as long as the majority of the network follows.

Re: Why I have zero faith in crypto venture capitalists

#164

Post by sanderjd »

BobbyJo wrote: post #155
sanderjd wrote: post #123

Earlier quoted context omitted.

These are all great criticisms, but I struggle to agree with you that they make these projects "scams". By way of analogy, I remember the ruby on rails really struggled with scalability for a long time, and it was a big problem that lots of people, both proponents and opponents, talked about a lot. Nonetheless it turned out to be quite useful and definitely not a scam. I saw similar dynamics in both AngularJS and Rea…

I think making promises and taking money from people based on promises you very likely can't fulfill is enough to label something as a scam, and that seems to be the case with all of the points mentioned above.

Is this also true of all startups that take funding and then fail? That would be one reasonable definition of "scam" I think, but personally I think it is more useful to have different terminology for speculative high risk ventures that make a good faith effort but fail vs. malicious schemes designed only to take money and run. I think there are lots of both things in this cryptocurrency space, but I think it's reductive to throw your hands up and say they're all the same.

Re: Why I have zero faith in crypto venture capitalists

#165

Post by sanderjd »

applepple wrote: post #130
sanderjd wrote: post #123

Earlier quoted context omitted.

These are all great criticisms, but I struggle to agree with you that they make these projects "scams". By way of analogy, I remember the ruby on rails really struggled with scalability for a long time, and it was a big problem that lots of people, both proponents and opponents, talked about a lot. Nonetheless it turned out to be quite useful and definitely not a scam. I saw similar dynamics in both AngularJS and Rea…

Maybe not completely, but they all profit from having an element of deception. They are drawing attention away from better projects by hoarding all the top spots on all the exchanges and ranking websites. They are destroying the industry and hurting people IMO.

It is not clear to me where the "deception" is, even if the rest of what you said is right. The things mentioned in this thread are common knowledge and widely discussed.

Re: Why I have zero faith in crypto venture capitalists

#166

Post by Animats »

The same author also has an article on Tether.[1] Tether remains scary. Tether has a market cap of US $62 billion. They're approaching the market cap of General Motors, and are up there with big mutual funds. And nobody has any idea where the money is being stored.

The "commercial paper" story does not hold water. If Tether really had that much commercial paper, Tether would be the 7th largest buyer of it. Since commercial paper is short-term, a few months at most, they'd have to have a busy trading desk rolling over their commercial paper.

They don't. The big players in commercial paper are not seeing any Tether activity.[2] Uh oh.

Their "commercial paper" is probably just notes from other crypto companies. Or their own crypto company.

[1] https://bennettftomlin.com/2021/06/10/how-big-is-tether/

[2] https://www.ft.com/content/342966af-98dc-4b48-b997-38c008042...

Re: Why I have zero faith in crypto venture capitalists

#168

Post by slg »

mech422 wrote: post #160
slg wrote: post #156

Earlier quoted context omitted.

I'm not sure how you think they differ. They are exactly what I am talking about. They had a real investment at the heart of them. The problem in 2008 was that the investments were bad. People were given mortgages that exceeded their ability to pay them back. But that is still a real investment with the intrinsic value of the real estate properties that were foreclosed on.

The mortgages were known to be essentially valueless, packaged up and resold anyway.. that's not what I'd consider having a 'real investment' at the heart of them. And the value of the real estate didn't cover the losses on the loans, prompting bailouts.

The mortgages didn't have positive value, but they had the actual homes as collateral which provided intrinsic value. A mortgage goes under and you have a house to short sell and recoup your losses. A cryptocurrency goes bust and you have nothing. It is the difference between losing 20% of your investment and losing 100% of your investment.

Re: Why I have zero faith in crypto venture capitalists

#169

Post by smnplk »

rvz wrote: post #6

For example look at the real price history of a VC funded token called "Internet Computer" [0] by selecting "ALL" on Coinbase. Out of no where on launch, it was listed on Coinbase and Binance already with the top 10 coins of the largest market capitalisations. Only VCs and angel investors with such connections to these exchanges could have made such a listing like that possible. After that, then came the VC dump with…

Dfinity is a typical example of shady behavior in crypto space. Private VCs got in on 0.02$/token, then presale was 4 $/token and then on launch day there was probably lots of wash trading to lure the suckers into buying it at 300 $ - 650 $ /token.... A classic premeditated pump & dump. Nothing unusual, many crypto projects have done it and exchanges are in on it. Welcome to crypto 2.0. This is how it's done now. I think the projects has some merit, but the way that funding is done is just pure exploitation on unregulated markets. I'm wondering what crypto 3.0 will bring when the next bull cycle emerges.

Re: Why I have zero faith in crypto venture capitalists

#170

Post by xur17 »

crazygringo wrote: post #119
hanklazard wrote: post #91

Earlier quoted context omitted.

Agreed on the FDIC (although not everyone banks in the US) part but “speed” is not an area where traditional banks beat the right crypto solutions. My wife and I just had a major fiasco trying to transfer mortgage payments from one major bank to another. Our credit score was damaged severely. I’ll spare you the details but the diagnosis was eventually determined to be “not enough time for clearance” as in I need to h…

Cash is instant. Venmo is instant. You can pay for goods with a credit card and know it was approved instantly. In the very rare case you need to make a domestic wire transfer, yes it's currently slow, but that's not a technological problem, it's a political/institutional one. Plenty of countries have instant bank transfers as well. AND -- instant bank transfers should be coming to the US in 2023, when FedACH is supp…

Venmo isn't instant in the same way that USDC is though. When a USDC transaction settles, I know the money is mine, when a venmo transfer settles, or an ach transfer settles, there is an opportunity for the money to be clawed back for quite a bit of time [0]. We can argue if this is a good or a bad feature, but it does mean that the transfer really isn't instant as I don't have guarantees behind the money being mine.

Wire transfers are a bit better in this regard (my understanding is that "clawbacks" are quite difficult / impossible), but they tend to be expensive for consumers, and take a few hours domestically, days internationally. My employer regularly has to deal with overseas wire transfers, we would hands down use USDC instead if it were an option.

To me the fundamental difference between crypto and legacy finance is that my crypto is mine. I can move it when and how I want. With legacy finance, I am effectively asking a custodian to move the funds for me, and I'm tied to whatever antiquated system they use.

[0] https://twitter.com/bweidlich/status/1403084816665354241

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