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Why I have zero faith in crypto venture capitalists

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Re: Why I have zero faith in crypto venture capitalists

#81

Post by applepple »

cinntaile wrote: post #65
applepple wrote: post #61

Earlier quoted context omitted.

The vast majority of top projects are essentially scams and the real projects are not in the rankings. Even promising projects seem to turn into scams once they get into the top 200 or so. It's as if some wealthy investors buy up a lot tokens from top projects and then threaten the founders to crash the price unless they stop development and start wasting time. I've worked in the blockchain industry for several years…

Don't go and claim the vast majority of top projects are essentially scams, that's just spreading false information.

Name any major project and I can tell you why it's a scam.

Bitcoin: Uses the electricity of a country to process 2 transactions per second. Layer 2 solutions such as Lightning Network have some significant drawbacks which make them unpractical and vulnerable to multiple attacks. They've been trying and talking it up for years - No results.

Ethereum: Doesn't scale. The entire ecosystem (including all ERC20 tokens) together cannot process more than 30 transactions per second. New ERC20 tokens have to pay the same HUGE (e.g. $20 per transaction) fees as the mainchain; all tokens slow each other down (compete for resources from each other and drive up each other's transaction fees). They said that sharding was essentially ready years ago but now they've basically canceled it (or 'put it on the backburner' as they like to call it) in favor of extremely complex and vulnerable layer-2 ZK-Rollups solutions which are completely unproven (we don't know what will happen when many projects start adopting rollups; expensive on-chain interactions still need to happen).

Polkadot: They claim everywhere to have 'Parachains'. The reality is that this feature doesn't exist yet. The way it's designed is extremely complex and the scalability benefits are limited because there can only be a limited number of parachains.

Also, one thing which almost all the projects have in common is that they're mostly targeted at developers... Yet as a developer, there is almost always a MASSIVE amount of friction involved in setting up and integrating the blockchains with other systems. For example, Ethereum requires minimum 300GB of disk space to run a node (you need to run a node to do any serious integration testing). Also, the Ethereum node doesn't even provide a basic search feature; you need to use CENTRALIZED third-party services in order to search the blockchain data (that's because the node writes to a file instead of a proper database)... OMG. I could go on and on and on. There is just so much money behind these projects that the entire community will constantly twist the facts and present a severely distorted view of reality.

There is no limit to the amount of deception and self-deception when there is money involved.

Re: Why I have zero faith in crypto venture capitalists

#82

Post by smt88 »

throwaaskjdfh wrote: post #13
borrowcheckfml wrote: post #10

Earlier quoted context omitted.

I agree with you, but looking at what comes out of Silicon Valley these days, there is a fine line between "ponzi scheme" (in the broad sense) and "re-invest everything in growth and hope to get acquired". I'd push back that many traditional startups, most of which end up never being profitable but still exit in one way or another due to hype and investor relationships, are just as close to pump and dump schemes as m…

Cryptocurrencies, DeFi, and retail trading are all areas where more skilled traders take money from less skilled traders. These venues can be distinguished from a Ponzi scheme because the participants are traders in a market, not investors in a company or managed financial product.

I agree with you generally and consider stock-picking to be gambling.

But retail traders can use the markets to make bets on overall economic growth. Buying a stake in hundreds or thousands of public companies is a clear bet, and you actually do own something in a legal sense.

With crypto trading, it's unclear what your bet is -- other than the continuation of the Ponzi scheme. You don't own anything, and the coin has no value as soon as people stop believing in it.

If retail investors understood that nature of crypto, I'd be fine with them gambling on it. But most of them are tricked into believing there is underlying value in the coin when there actually isn't (see also: NFTs).

Re: Why I have zero faith in crypto venture capitalists

#83

Post by redisman »

barkingcat wrote: post #54
ericbarrett wrote: post #30

Earlier quoted context omitted.

I’ve always considered unregulated advertising claims to be a reflection of the weakness of the product: A food with “Quality” in the brand name is almost always the low-shelf cheap version. “Comfort” in a motel means you’ll have a cheap bed and noisy, rattling air conditioning. Etc. The unbridled crypto space is chock full of these signals.

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

Wait so you’re saying the coin “safeMoon” is neither safe or going to the moon?

Re: Why I have zero faith in crypto venture capitalists

#84

Post by ashtonkem »

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.

Re: Why I have zero faith in crypto venture capitalists

#85

Post by ganafagol »

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…

There is still no value over a trusted third party, keeping all this in a central database. These games you are talking about just agree on this third party and that's it.

And they already do that. The third party is states backing traditional banking systems.

Re: Why I have zero faith in crypto venture capitalists

#86

Post by intuitionist »

wyck wrote: post #42
steveBK123 wrote: post #19

I find crypto super interesting and have dipped my toes in with some small real money just to force myself to try out different products. That said, so far, almost 10 years in, there really are not a lot of real world use cases. Sure there are glorified POCs of things that could potentially lead in the direction of real world use cases. But most of these products/tokens are just extremely meta. Tokens you get paid/pa…

This opinion is really common, I used to have it but what changed my mind was realizing there are not really any "real world" use cases. I look at crypto as actual money, with the same definition: "money is a verifiable record that is generally accepted". Money in of itself does not have any "real world" use cases, money is money. Money facilitates economic velocity and growth in the same way crypto does, except cryp…

Money classically has three use cases: a unit of account (I have X dollars in my bank account, Y dollars in my 401(k), etc.); a medium of exchange (I trade my labor for dollars and trade those dollars for rent, food, etc.); and a store of value (I save up for a house, car, engagement ring in dollars because I expect them to be fairly stable).

Nobody in the real economy uses crypto as a unit of account. Most tokens are too volatile to be very useful as media of exchange, and this use case has traditionally been limited to goods (drugs) and services (hitmen) you can’t legally buy in the dollar system. “Store of value” is in the eye of the beholder, of course, but generally speaking you don’t want your store of value to be something that can depreciate 40% against the dollar in two days.

Re: Why I have zero faith in crypto venture capitalists

#87

Post by specialist »

vmception wrote: post #60
borrowcheckfml wrote: post #10

Earlier quoted context omitted.

I agree with you, but looking at what comes out of Silicon Valley these days, there is a fine line between "ponzi scheme" (in the broad sense) and "re-invest everything in growth and hope to get acquired". I'd push back that many traditional startups, most of which end up never being profitable but still exit in one way or another due to hype and investor relationships, are just as close to pump and dump schemes as m…

The reality is that we need a new term than ponzi scheme to determine if we are willing to respect a financial model or not The state (us government) has made it clear that there is no distinction it can stand behind anymore sometimes earlier investors get paid out by newer investors whether it’s a high yield investment program, a poorly run hedge fund, or the entire corporate bond market, or social security, or herb…

> need a new term than ponzi scheme

"Fraud" works for me.

All nascent markets are wildcat melees. https://en.wikipedia.org/wiki/Wildcatter

Useful markets are eventually regulated. To save the market from itself, to calm down the townsfolk brandishing pitchforks and torches, to assert central control over a proven grift.

Time will tell if all these crypto kittens prove useful for more than fraud.

Re: Why I have zero faith in crypto venture capitalists

#88

Post by MomoXenosaga »

ralusek wrote: post #21
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.

I think why people treat them differently comes down to informed consent. With a true Ponzi scheme, the managing investor makes you believe that they're doing something that they're not. You think you're investing in some underlying asset, but you're just buying out they previous wave of investors. With crypto/VC/normal stocks all having many characteristics in common with Ponzi schemes, at least the game is relative…

I challenge the notion that people who invest in crypto "understand the system". There is no regulation in this market to protect the fools from themselves and it shows.

Re: Why I have zero faith in crypto venture capitalists

#89

Post by danuker »

valuearb wrote: post #68
danuker wrote: post #62

Earlier quoted context omitted.

> It's effectively just one. To make illegal transactions. Your perspective is limited. Check out my general intro [1] and other articles [2]. TL;DR: at least one legitimate use case is to keep up with inflation. [1] - https://danuker.go.ro/intro-to-cryptocurrencies.html [2] - https://danuker.go.ro/tag/cryptocurrencies.html

Yet BTC is trailing inflation by over 30% the last month alone?

Admittedly, there is high volatility due to demand. But as more get-rich-quick people get bored of it, that should stabilize.

Re: Why I have zero faith in crypto venture capitalists

#90

Post by xwolfi »

treis wrote: post #59
steveBK123 wrote: post #19

I find crypto super interesting and have dipped my toes in with some small real money just to force myself to try out different products. That said, so far, almost 10 years in, there really are not a lot of real world use cases. Sure there are glorified POCs of things that could potentially lead in the direction of real world use cases. But most of these products/tokens are just extremely meta. Tokens you get paid/pa…

> there really are not a lot of real world use cases. It's effectively just one. To make illegal transactions. That's a long list of things: drugs, hiding wealth, evading currency controls, extortion, and so on. Otherwise, existing currency and transfer mechanisms are more or less available and convenient.

I dislike crypto too, but let's give them the benefit of the doubt: it's also presented/sold as a sort of easy stock, pure of anything other than an inflation prevention.

It's as electronic as a stock, as purely abstract as a piece of gold, as resistant to inflation (theoretically) as anything having an intrinsic value that won't depend on currency.

Ofc, criminal transactions are also supposed to be eased but you know what, I think a bank made entirely to dodge annoying regulators will have a bit more success than an amateurish exchange: they'll give all your info, and therefore all your public transactions at the first little threat, while a big bank like Credit Suisse, would try to leverage lobbying power at first.

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