Why I have zero faith in crypto venture capitalists • Hacker News Board

Re: Why I have zero faith in crypto venture capitalists

#201

Post by arcticbull » Sun, Jun 13, 2021, 9:34 PM UTC

lottin wrote: post #53

borrowcheckfml wrote: post #44

Earlier quoted context omitted.

And crypto projects that are derivatives on real world assets, like fiat currencies (stablecoins) or stocks (synthetic tokens), have equivalent backing. If the project were to dissolve, there would be assets backing that. Not suggesting this is the case here, but I keep seeing this worrisome trend where people are stuck in the Bitcoin and ICO world from 5 years ago and think nothing has changed and they don't really…

A startup equity consists of the startup's net assets, so the owners have a claim on these assets. In the case of these "governance rights" what assets do the holders have a claim on?

Governance tokens are just a glorified twitter poll.

Re: Why I have zero faith in crypto venture capitalists

#202

Post by arcticbull » Sun, Jun 13, 2021, 9:35 PM UTC

theK wrote: post #187

IAmGraydon wrote: post #43

Earlier quoted context omitted.

> Investors rarely care about dividends. This one statement reveals that you have zero idea what you’re talking about and are just presenting yourself as knowledgeable. Why do that?

I can see this being true in the stocks world. A lot of companies have IPOed without a plan for dividend payouts because their main business plan is investment in expansion. People who jumped onto amazon and tesla may have made fortunes but have gotten exactly 0 dividends.

Yet. Companies pay dividends when they no longer believe that they can provide a better ROI by investing it in themselves. Like AAPL. All it signals is there remains a growth story to be had.

However, any money the company invests in itself raises the intrinsic and shareholder value of outstanding equity, just like share buybacks, and dividends.

Re: Why I have zero faith in crypto venture capitalists

#203

Post by arcticbull » Sun, Jun 13, 2021, 9:37 PM UTC

valuearb wrote: post #74

borrowcheckfml wrote: post #29

Earlier quoted context omitted.

I think it's arguable what real investments are. How "real" is the stock price of Gamestop? Aren't most prices just driven by imaginary narratives? Investors rarely care about dividends. There are also DeFi projects that are based what you call "real investments" such as stablecoins, synthetic assets for stocks and commodities, etc. When the backing/staking mechanism for these works as intended, they are just as real…

The GME stock price is a derivative. GME stock is a valid contract with a proportional ownership share of all GME tangible and intangible assets. What crypto has the rights to any tangible assets? Even stablecoins are unaudited.

Stablecoins do not offer claim on the backing assets anyways, if and when they exist.

Re: Why I have zero faith in crypto venture capitalists

#204

Post by arcticbull » Sun, Jun 13, 2021, 9:48 PM UTC

sanderjd wrote: post #184

sanderjd wrote: post #164

Earlier quoted context omitted.

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 reduc…

Debating myself a bit: the reason startups tend to attract fewer scams is that only accredited investors can invest in them. There is definitely something to be said for that!

Generally you're only going to get decent money from bigger names (or at least one leading the round) - and a bad reputation will make it quite unlikely you'll get to play again. This helps avoid many straight-up scams like Dentacoin (lol).

Then, your future rounds of investment are conditional on demonstrated success. Your A can be a bridge round based on traction or a materialized idea. However, your B is generally based on hard numbers.

ICOs tend to get series F/G money up front on a hope and a prayer.

Circle CI raised $100M in a Series F. Check out this whose-who of token failure that all raised the same amount or much more on day 1 (https://decrypt.co/53950/the-10-biggest-icos-heres-where-the...).

Re: Why I have zero faith in crypto venture capitalists

#205

Post by mech422 » Sun, Jun 13, 2021, 9:51 PM UTC

loceng wrote: post #192

mech422 wrote: post #137

Earlier quoted context omitted.

What strawman would that be? BTW - I agree Bitcoin has issues (speed/cost being the 2 biggest). It was literally the first generation coin. Other coins are trying to solve those problems. Personally I like Cardano/ADA for that reason - its trying to fix some of the issues with first gen. coins. Also, if you think you can get people/businesses to pay their fair share...I think your dreaming. I really hope you can, but…

Just one method of collecting more tax money and it's happening: "Biden Wants to Hire 87,000 Additional IRS Agents to Go After Wealthy Tax Dodgers" - https://www.reddit.com/r/politics/comments/nibk03/biden_want... "Biden's $80 billion plan to beef up IRS audits may target wealthy small business owners" - https://www.cnbc.com/2021/05/05/bidens-80-billion-plan-to-be...

That sounded great until the 'wealthy small business owners' part..

So the mega rich get off again...

Aannd of course, govt's are already trying to carve out provisions for their local pet industries in the G7 15% corporate tax talks..

Re: Why I have zero faith in crypto venture capitalists

#206

Post by arcticbull » Sun, Jun 13, 2021, 9:56 PM UTC

zild3d wrote: post #154

barkingcat wrote: post #54

Earlier quoted context omitted.

It's like how many dictatorships have the word "Democratic" in their official country name.

and of course the "united" states

That's an interesting one because when it began, it was much closer to the 'loosely affiliated states' but over time, it has become more tight-knit under regulatory and leadership frameworks. That's not to say there isn't a bunch of internal disagreements. IMO.

Re: Why I have zero faith in crypto venture capitalists

#207

Post by meepmorp » Sun, Jun 13, 2021, 9:58 PM UTC

mech422 wrote: post #162

meepmorp wrote: post #152

Earlier quoted context omitted.

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…

My focus was payments (newegg was the original example), and I was comparing credit cards to crypto.

But let me ask: why use zelle to move money between accounts? Why not crypto? Or let's say you're sending money to a friend to split a check or something; would you use crypto vs any of the other "cash" transfer mechanisms?

I don't think that existing financial systems can't and shouldn't be replaced with something better, but so far cryptocurrency ain't it. I should also say that I'm not particularly susceptible to the ideological arguments on its behalf, which seem to be a big bonus for many. Maybe it's just not for me.

Re: Why I have zero faith in crypto venture capitalists

#208

Post by arcticbull » Sun, Jun 13, 2021, 10:00 PM UTC

xur17 wrote: post #181

throwaaskjdfh wrote: post #100

Earlier quoted context omitted.

I agree; cryptocurrencies are a scam. But in general they're not Ponzis, with some exceptions e.g. the situation the parent poster describes where VC investors get "early coins" which are sold to later buyers.

To be clear, you're saying that you believe that every last cryptocurrency is a scam with no exclusions? To me it seems absurd that none are non-scams, and makes me think you're just making baseless claims.

It's been 14 years and if the whole space disappeared overnight what would change? The news cycle would be less entertaining I guess. So much so China was able to nuke the whole space from orbit and what? Crickets.

Re: Why I have zero faith in crypto venture capitalists

#209

Post by arcticbull » Sun, Jun 13, 2021, 10:04 PM UTC

indigochill wrote: post #20

giansegato wrote: post #3

The VC model has always flirted with being a Ponzi scheme, but ultimately some startups _do_ make money somewhat consistently, so the model is risky but fair to retail investors. But a crypto project is not a traditional scalable company. It does not make money as platforms traditionally do. It's open source and distributed. I truly cannot understand how it differs from a huge Ponzi scheme.

In theory, a crypto project could provide value (not money, they're different things) to its users. For instance, there are experiments with distributed games where assets are NFTs. In theory, this provides the basis for independent games sharing unique assets among themselves. In practice, nobody's doing this (even those game devs who are minting assets as NFTs are keeping the assets to one game, making the whole ex…

An NFT is simply a signed URL to an image. That the assets are NFTs are meaningless, because (a) they're only relevant in the context of that game and (b) there's no guarantee the hosting will remain (c) they don't come with a license to use or display the asset. No other game developer could create a game leveraging these NFT assets without being on the receiving end of a DMCA claim.

[edit] Just try and leverage some NBA Top Shots on your own website and let me know how that goes.

> But the point being I do believe theoretically there are "legitimate" applications where the decentralization of assets is useful.

It's been 14 years, it's not still early, there's just no "there" there.

Re: Why I have zero faith in crypto venture capitalists

#210

Post by mike00632 » Sun, Jun 13, 2021, 10:05 PM UTC

applepple wrote: post #126

colesantiago wrote: post #107

Earlier quoted context omitted.

So Stellar, Cardano and XRP are all scams? > Polkadot: They claim everywhere to have 'Parachains'. The reality is that this feature doesn't exist yet. So it's a scam because it doesn't exist yet and it's planned on the roadmap? That's like saying Ethereum 2.0 is a scam because it doesn't exist yet. It's extremely easy to call projects scams when you're not the one doing the work.

>> So Stellar, Cardano and XRP are all scams? When Stellar started, they were all about 'Quorums'; trying to imply that this was the secret sauce which would allow it to scale unlike any other blockchain. I initially thought that quorums were like separate shards but after asking around years ago, I found out that it was not the case; all transactions pass through all nodes; exactly the same as a plain old blockchain…

What's funny is I think that Ripple is the only one of the bunch who had legal action taken against them.

https://www.sec.gov/news/press-release/2020-338

Ripple likening themselves to other cryptocurrencies when they are centralized is scammy in my book. There is a reason that video game currencies or Magic Cards aren't listed on exchanges.