Where the y-axis = Utility To User, the Traditional Network Effect can track all the way to the upper end of the scale, and tracks perfectly with the Overall Utility, as an ideal outcome of course.
But with the Token Network Effect, no matter how much of a boost there can be at the beginning, the ultimate Overall Utility is about halfway as high by comparison.
By design you're building for mediocrity.
One of the "secrets" when I was implementing exponential growth strategies was to "prosper better overall, by persuasively giving the customers more of their money's worth".
Interesting how that tradition compares to "persuasively give the customers more of our money than it's worth, since our current product isn't really worth money to begin with".
Its negligent for an analysis to not mention that
Third pivot's a charm.
To figure out how they are doing, the first thing I would look at is a chart of Helium's usage growth.
And Yahoo and SGI were both behemoths, and look at them now. If you had stake in these companies and cashed out in time, you'd consider it also a great investment.
> To figure out how they are doing, the first thing I would look at is a chart of Helium's usage growth.
No one cares about Helium, and even fewer people cares about LoRa. I'd guess a good chunk of the nodes are run by people trying to make money out of it (I know personally people that invested in this), not by people interested in maintaining a network or that actually have any clue about LoRa. Me, as a hobby electronics tinkerer, I do care about LoRa (so, I'm one of those fewer people), but I don't care about Helium, because it adds nothing of relevancy to it. Yes, increasing coverage is good, but not only the LoRa market is quite narrow, any other provider can do the same without too much hassle. And there is no actual real money in it(beyond the hobby space) and never will be. No company is going to build products on a super-duper-easy-to-disrupt public network, when alternatives are available.
Google was founded in August 1998 and they they hired their first sales guy in May 1999. AdWords launched in October 2000 but before that time they had revenue from backend search deals where they powered other sites search engines for a fee, like Netscape which launched in June 1999.
So it's not really the case that Google had no revenue for years. They were able to generate revenue very fast by selling their tech to other companies.
[0] https://www.cnbc.com/2019/10/08/what-a-1000-dollar-investmen...
[1] https://www.sec.gov/Archives/edgar/data/1288776/000119312505...
The contrast with Helium is glaring: statistically nobody uses it and if it shutdown overnight nobody outside of cryptocurrency speculators would notice.
Example - local taxi app (Bolt) wouldn't even let me register. I'm guessing their SMS gateway doesn't support new number ranges I've got assigned. Engineers don't give a fuck to enable my mobility. I've spent weeks trying to get on.
Cellular is power hungry, and Wi-fi is range limited.
Long range low bandwidth, that is both cheap in power and money to use, is really useful.
Cellular is a pain in the arse, expensive to miniaturise, difficult to power longterm.
https://docs.helium.com/blockchain/proof-of-coverage/
It has nowhere close to the density for this to work, and there's nothing to stop the Beaconer and Witness from being the same person.
If the goal is to enable renting out of WiFi, then the sensible thing is to make a system that automates payment in ETH/USDT/USDC/DAI/BTC/etc... Or to put it another way, use the money cryptocurrency that exists and works already. But no, that was never the point of this. The point of Helium is to mint and dump the shitcoin.
I find the concept of tokenization as a better way to redistribute equity.
I think about the tokens as money with superpowers which can act like equity , API keys and loyalty card too.
Think of tokens as a 100x version of managing equity table in a company.
Crypto is at a low point right now. If you time it right, it's like reporting that investing in the stock market is bad after the '08 recession.
It relies entirely on someone else coming along later and paying more. It’s not a productive asset in any meaningful way.
Yes, just like any part of the economy. Scarcity and/or productivity is why someone pays: either something, or more for it.
If it's BTC, the theory is it will be scarce, like gold.
If it is one of the other crypto coins, it has to be productive like e.g. this app enabling sharing internet with others.
But assessing the success of a web3 product by the ability of selling a specific product is akin to assessing the success of a country by its ability to sell passports.
The cost to offset the operations should come from the activity in the economy it encompasses -- these should not be assessed as traditional companies.
This is what you are investing in when you buy a stock. The numbers-go-up of the stock market is both directly (through stock buybacks) and indirectly (through expectations of future dividends) a consequence of this productive activity, not just greater fools.
What doesn't work is their token. Instead of having that they could have used a whitelist of acceptable payment... eg. ETH, USDT, USDC, DAI, WBTC, BTC...
But no, they had to have their own shitcoin of course, because if they used a cryptocurrency with actual value they wouldn't be able to give themselves a bunch of it to dump on the suckers.
The crypto down rounds are going to be hilarious.
Note to investors: if you’re investing in crypto projects, carefully consider the ponzinomics and the vesting schedule. You want your unlocks to happen in the middle of the bullrun when exit liquidity is ample.
And also remember that whatever you might think of as “normal” volume will crash 90%. And when you think it has stabilized, it will crash 90% more.
The number of investors who bought the top is hilarious. But then, this is also a field where risk management is treated like a sin.
Crypto projects are tough to value. Their sheer global scale means that they can ramp up revenue and even profits extremely fast. StepN, a move-to-earn app reportedly made $120M in profit in its first year of operation. That might not be sustainable, but what business wouldn't give an arm and a leg to make $120M profits in just one year of operation?
Imo, crypto projects should be valued on 2-3x multiples at max.
Agreed, web3 was a joke... but the same thing can be said about most of disruptive tech like ride-sharing or food delivery, and even FAANGS are experiencing immense markdowns after the immense amount of liquidity poured into the stock market these 2 years.
Being critical of the nature of this system also requires self-awareness; otherwise it's just projecting.
How would you build a decentralized, cross-chain asset exchange without a blockchain?
I agree there are far too many superfluous tokens. But there are plenty of real projects that are based on blockchain.
Sure, and all web2.0 tech can be built without AWS or docker. But in many cases, they give you a powerful advantage.
Same with blockchain. What now is happening in web3.0 is not that different from the dot com bubble. But it busted, and then a ton of new profitable companies appeared.
Blockchain tech will for sure have many legit use cases, same with tokens and tokenomics.
Will most of the current crypto companies go bust? Probably.
Does this mean that blockchain and tokens are crap? No.
That’s optimistic. Best case is orderly resolution and/or fire sales to Wall Street. Worst case: retail investors lose money while executives and senior employees see prosecution.
Maybe everyone just doesn't know where the volume is?
And pay the people who own nodes a percentage of the $ earned thru the traffic flow of their node.
The payment just uses crypto because the ecosystem is a nice fit. Everybody knows what miners are and that they make money.
The problem is that you need the entire network in place before people can build on it. So they have been subsidizing the miners. And it's a race of how much money can you raise and payout vs how much is a network like that is worth.
And right now everybody has cellular and cable and fiber and no one really needs another system. Most of the use cases (LOTS of sensor data) aren't really worth that much money.
Personally, I think the government should subsidize something like this to allow it to get off the ground. Earthquake data, climate data, traffic data, etc. Essentially public use.
If you’re not familiar with it, what a Helium hotspot does is allow compatible IOT devices to share your Internet connection.
I suspect that allowing random third parties to use your Internet connection it’s explicitly forbidden by the terms of service of most ISPs, especially when you are being monetarily compensated/rewarded for such sharing.
Excerpt from ToS: “Customers may not retransmit the Service or make the Service available to anyone outside the premises (i.e. Wi-Fi or other methods of networking).”
I suspect that most people don't read the terms of service.
Except that an ISP will just suspend your account, and if you object they'll be the ones that go "OK, sue me".
I think these terms are pretty hard to enforce and not sure how your ISP would differentiate traffic.
Actually I would be interested in understanding better the choice made by Helium and the current and future use of LoRaWAN. When I first heard about Helium some years ago I wondered why they focused on this protocol compared to WiFi or cellular network technology. Which kind of devices are supposed to connect to Helium ? I suppose it is IoT devices, but most of them actually work perfectly fine with good old cellular networks
I wouldn't touch the stuff now.
The ability for regular people to invest in crypto back then made the ponzi-like architecture of it worth the risk.
Now the VCs are trying to push their agendas, and it's blatantly obvious it's vapor.
I can dump sensors anywhere in the city and they should just work.
But
When I last looked, it was really convoluted to buy data, you had to either buy them off a miner, which sounded dodgy, or mine the tokens yourself. I just wanted to buy $25 worth of data transfer and have done with it, but I couldn't figure out a way to do it at the time
yet.
FTFY. Personally, I'd love to relay my home weather station readings over LoRa - then many other things too, if it's cheap enough! (say my TPMS - why not? Then I can retroactively track my car to cross correlate where I went shopping)
Helium business model that's paying for the deployment of a worldwide network on a free-to-use band is brilliant: it will replicate Wifi except with a worldwide coverage + full control of the network.
Wifi may at first have seemed equally useless, but the network effects from the ubiquity of it's presence and the unification of standards have replaced so many things I've only heard of in tech history books like DECT
Why would that make any sense?
Marketing plays a big part in how much revenue comes in to a startup. The product also plays a big part, but if the product does what people need it to do, it becomes a marketing task to accelerate growth to justify the investments.
Startups are a balancing act, especially when there are multiple stakeholders involved. I'm not sure these crypto offerings offer anything "product wise" that is useful to getting things done, other than making more money.
Slight of hand models are tricky to evaluate.
With Helium, they need people providing Internet to other people. Helium's "offering" drops to being an exchange from the marketplace (which must be grown) to the user base (which must also be grown). This "burning the candle at both ends" approach requires many multiples of capital influx to achieve, and even then if the business model is not sound (we all already have Internet) it will fail.
When Helium says things like: “The Helium Hotspot is a small hardware device that creates a large wireless network for devices that use Helium's network. Think of it like a Wi-Fi router, but for devices sending small amounts of data over long ranges.”
Is the $6k/month revenue from sending data through a “Helium Hotspot” or something else?
Relevant Silicon Valley clip.
I’ve really enjoyed watching the market reprice a lot of the names he drops as goals in that clip.
And an important follow up question: do they have enough dry powder to keep sustaining these things?
But a16z has such a strong brand in general tech and is so great at PR, I don't see them slowing down anytime soon. They're making way too much money.
So now with 900k hotspots installed Helium is pushing aside the lorawan network with less mining payouts in hopes/dreams people will flock to buying 5G cbrs implementations costing over $3k per site. Not sure what customers or applications will use this network, something helium still has to signup customers to create value. The network like 5G has range limitations, so you'll have to spend more to go further. If I recall amazon has a competitive cbrs product also. All I know is it's no simple plug/play.
Early adopters really made a lot of $$ with Helium but it's been decline since late last year. It's truly one of the simplest miners to deploy in 5 minutes, but to get value you need a good antenna setup. I'm sure the Helium creators have a huge stash of HNT coins and not really worried.
To the extent anyone engaged with this project and walked away with real live American dollars they came from either VC investors, or greater fool token investors.
That's the whole point of the article. Ostensibly the project exists to provide a valuable service, that's what is supposed to create the rewards. But that ain't real.
Zoom in, click a cell, click a node, click "30D" and you'll see the amount of HNT and how much that is worth at the current market rate. I didn't see any $6,500 nodes.
I've been thinking about building an IoT device for my mailbox, so I can get a notification when we get a letter. It could be fun to build something that uses the Helium network. Maybe solar powered, and using a weight sensor or something. (I probably don't need Helium for this but it would be fun to try it out.)
The people purchasing these hot spots, who find their bankruptcy claims against Helium being inhibited by intentional breach of contract.
> not like a packet that's a result of sharing/reselling suddenly "weighs" more
It does due to peering arrangements. Data transfer having value is also Helium’s claimed value added. It’s awkward to claim it costs nothing to implement but has value that can be sustainably charged.
Private funds can do whatever they want I suppose, but I wonder if there's a term for VCs that spend government-scale funds on things that look like long-term losers. Crypto and 'web3' are just the latest examples of this, and they're coming after a decade of equally uninspiring ideas like social networks, food delivery, Uber, Airbnb and WeWork.
And defense spending is less than 10% of overall government spending in the US when you include state and local spending.
I'm speaking in terms of things like government equity stakes in a fledgling, or failing industry, the same kind of direct invrstment a VC would take on. The numbers are much smaller at that level because it's politically risky.
Today if I don't put my tv or my fridge on my home wifi, they can't call home unless they had a phone modem - I hope that doesn't make financial sense (I just realized I was hoping they only spy on you with wifi). I can put my own streaming device on the tv with a defined privacy policy. I don't want my tv showing me ads, and it doesn't, and that's one reason I'm using a 3rd party streaming device. Because I'm paying them there's a much higher chance it will only do what they say. If this ever got popular, your tv would have a direct connection to broadcast outside of your control what you are watching. I don't want devices doing more corporate surveillance things not in my control.
The problem now is that network access is becoming a bottleneck. Many devices have the hardware they need to connect to networks, but don't provide the UI to enable Wi-Fi or Bluetooth pairing, nor do they provide any compelling incentive for users to connect to their own devices.
Networks like Amazon Sidewalk and maybe Helium are one answer to this problem. The manufacturers can make very inexpensive deals with the network operator, reflecting the fact that their devices don't actually need very much bandwidth. My personal theory is that networks like Apple's FindMy (AirTags) will also compete in this arena.
I realize that's an unfair comparison but I think there are many many people who want to throw shade at crypto because a majority of it is rotten and has weighed down on the positive attributes.
https://www.npr.org/2022/07/22/1113115868/little-house-on-th...
A house that mines crypto ... or the reality, a house with a tiny crypto miner in a corner of the house.
They're doing some pretty amazing stuff as is, but Sidewalk/Tile/AirTags/YoSmart are doing it without crypto, and with small enough bandwidth to work via mobile.
I'd much rather have a centralized but selfhostable system, where you choose what network(s) to be a part of, and payments or lack thereof is up to them. They'd have a real chance of building a very large network if they had hardware partners.
Ideally, this stuff should be "too cheap to meter" anyway, and could even be ad supported, at least for very low bandwidth best effort stuff.
There is so much talk and focus on miners, but they need more cheap, easy to use, and functional sensors.
It presumably connects to the actual Internet at some point, yes? Presumably via each (or some) nodes' residential ISP hookups. Otherwise it'd be a glamorized intranet.
Extremely lofty visions that only loosely adhere to both reality and the practical applications of cryptocurrencies are typical for crypto companies.
> Personally, I think the government should subsidize something like this to allow it to get off the ground. Earthquake data, climate data, traffic data, etc. Essentially public use.
The government would probably get much more bang for its buck by funding something like NYC Mesh[1]. They also have an actual peering agreement.
Yes, that's how it currently works.
The #1 model to make it work is ride on top of the cellular network which already offers wide (but not that wide) coverage. The #2 model is to have a plan and do the engineering to figure out where you need to put up towers. Even then it is really hard to get universal coverage.
Don't the people buying the LoRa gateways just connect them their router, which is being provided bandwidth by phone and cable companies? Or alternately LTE, which is also being run by phone companies?
If the miner could pay each household for that coverage, it's a splendid idea - being able to grab information wirelessly.
It essentially opens up digital eyes into the real world.
Literally the exact opposite of what web3 is. You're arguing for a _public good_, but web3's entire premise only makes sense when the opposite happens: everything is privatized, everything is monetized.
THIS is the world that web3 makers envision: https://www.newyorker.com/humor/daily-shouts/l-p-d-libertari...
And while morally, we can perhaps say that we've progressed as a species to a point that nobody should go hungry, any attempts to do so are necessarily going to rely on that food market to create food, with publicly funded purchases. In general, markets can be really good at solving certain problems.
Now, my comment is not a defense of trying to creating scarcity or monopolies where they don't exist - eg NFTs, Nestle buying up aquifers, copyright, etc. Nor is it a defense of creating "market efficiency" out of things that would be personal capital goods, where market inefficiency allowed for wealth to remain distributed (eg Uber, AirBNB).
Personally, I would say that wireless Internet access is (regrettably) a scarce good and thus attempts to make the market more democratized and efficient are a good thing. This is not the all-too-common converse of someone trying to take something that is already democratized and trying to make a market out of it.
I'm not exactly sure where your definition of 'web3' and crypto overlap, but there are many future public use cases for crypto. Banking the unbanked, protection against hyperinflation, etc. Maybe 10+ years away, but it will happen.
1. https://s3.documentcloud.org/documents/217115/20110719-schwa...
> However, this is only part of the picture. Data Credits are used when onboarding a hotspot, asserting a location, and processing a payment. Onboarding hotspots, in particular, is intensive from a Data Credit perspective. Since Helium is onboarding so many new hotspots, this skews results, suggesting greater customer activity than is actually present. Data from The Decentralized Wireless Alliance removes these three uses, demonstrating the size of the Helium economy’s customer demand. By this measure, DC usage was just $6,561 in June.
> Nova Labs’ Internet of Things network is one of crypto’s greatest achievements.
On the other hand, since neither Helium not The Things Industries owns their gateways (run by the community) and operates in an unlicensed spectrum (much less likely to discover and fine those who disrupt communications due to negligence or even on purpose), one might opt to simply use TTN (even less promises on network quality than TheThingsIndustries) or NB-IoT.
There are great use-cases for LoRaWAN, though Helium comes with more drawbacks than advantages for most.
It's in a photo attached to the first tweet: https://readthegeneralist.com/briefing/helium
> Data Credits are used when onboarding a hotspot, asserting a location, and processing a payment. Onboarding hotspots, in particular, is intensive from a Data Credit perspective. Since Helium is onboarding so many new hotspots, this skews results, suggesting greater customer activity than is actually present. Data from The Decentralized Wireless Alliance removes these three uses, demonstrating the size of the Helium economy’s customer demand. By this measure, DC usage was just $6,561 in June.
The problem I see with helium is much more of a commercial one; the big customers will need much better established network operators who can commit to operating such systems for decades.
The money is there, but equally for customers investing in the wrong platform is risky too- eg this happened with the UK’s first generation smart meters, where many became ‘dumb’ again due to lack of interoperability between operators. It’s still being having at a cost of several tens of million of pounds. The solution which is also relevant to Helium by way of contrast was to set up a ‘Smart Data Communications Company’ as a regulated utility, and have that operate and develop the relevant networks. It generated around £430M in 2021 revenue as a non-profit.
I can only guess Helium’s strategy is to subsidise it’s infrastructure until someone (really multiple someone’s) like ConEd can be convinced to use it but there are an awful lot of steps along the way I don’t understand their plan for.
You're right that there are some IoT applications where a cellular connection makes sense. If you need to know when a vending machine needs restocking, spending $5/month on a SIM card is good business.
But some things have more marginal benefits. A city might like to know which streetlights are working and which aren't. If they can get that functionality for $5 per light with no ongoing costs, that's worth it. But if it's an ongoing $5/light/month? It's probably not worth that much - after all, they get fault reports from citizens for free.
Whether Helium can support the latter use case usefully I have no idea. And it's not clear to me why they need a blockchain, or whether it's good business sense to target people too miserly to use a cellular connection. But there's certainly use cases out there for connections that are cheaper than cellular connections.
You’re complaining about VCs pushing vapor while simultaneously admitting you participated in pumping “ponzi-like” schemes on regular people?
You do realize those 7 figure returns you made were a direct wealth transfer from later-stage victims of the ponzi to you?
I’m astonished you’re claiming moral superiority over VCs while sitting on wealth you took from thousands of poor people in places like Vietnam, India, Brazil, Nigeria, etc. (whom were all later stage investors in these crypto schemes).
A lot of people think crypto are plain useless but that is just wrong in practice. They are de facto actual "currency", which is already a lot especially for people in third world countries whose national currencies have gone down relatively to the dollar (venezuela, lebanon, turkey). Any of these people have been better off investing in crypto than in their local banks. It's diversification.
VCs are in there for entirely different reasons, and 'later stage investors' are always at risk of having their hair cut if what they invest in isn't worth what they paid for it, after all, they too were trying to take money from later day suckers.
I never paid a cent for any bitcoin, but I did pay about $100 to my electricity company to mine some just for the heck of it (and ended up giving it all away).
That would be true if there is no value in what was sold but taking ETH that he bought for $7, in 2019 when he sold it was about $250 and is now about $1500 so people buying ETH then would have done just fine. Ponzi schemes are cons that collapse, not open source assets that go up for years and years.
BUT... that does not mean that the technology is fundamentally BS. It just means that it happens to be extraordinarily susceptible to the kinds of abuses we are seeing.
This year, Ethereum will become Proof-of-Stake based, and "Layer 2" solutions will be emerging which greatly reduce transactions costs, and sharding will be emerging that will GREATLY reduce transaction costs. It's a real technology with a real future. And to transact with Eth you'll need to own Eth, providing non-ponzi motivation to buy, and it will be a deflationary currency (i.e. there will be less of it over time rather than more). IFF the tech is successful, its price may still go up by a LOT. I don't know that it will be successful, but I've been following its development closely and I think this is a very competent team making good decisions.
I'm bullish on Ethereum long-term. Once it's converted to PoS, it will have by far the largest market cap of any PoS chain, and the security of a PoS chain is ultimately based on its market cap (and how decentralized it is, something the Ethereum world is very aware of). So, it should be the most secure PoS chain, as well as having at least as much high-quality technical development going on as any other when you include the Layer 2 teams.
But it will take a few years for many of the practical potentialities to start to be manifested in the real world. It needs Layer 2 and sharding before it will happen. In between now and then, the price of Eth is anyone's guess. I don't think anything, in particular, should be read into any short-term price trends. Instead, the question should be whether the fundamental technology is moving forward toward its goals, and whether another technology emerges in the meantime that has the same potential benefits but somehow does them better.
There are plenty of real projects based on blockchain, where if you take the blockchain out or just replace it with tech we've had for 40+ years, nothing of value is lost.
That's the real blockchain problem.
I suppose ISPs could try to make an example of a few customers. But I think that would be horrible PR as well as very difficult to prove.
How would they distinguish traffic that’s authorized and unauthorized? As their customer, how much do you think I can authorize? Can I grant my guests access? Can my smart lightbulbs access?
Also, you can't do that if people don't cooperate, while it may be in your interest (ex: to track customers across the city)
As for the weather station, it involves you having a home internet - many people just have cellphones. A device that would ask for wifi passwords etc or require bluetooth pairing or worse would be complicated. Something that works worldwide with no setup would be a hit!
It's very easy to not perceive an opportunity which doesn't apply to you - in this case if you have say LTE in your car + on every device + at home.
R.I.P Aaron Swartz
The damage is already done. Either our laws were broken, and there will be more misery. Or our laws were not and they'll need to be revised. Even if justified, misery is misery. It's a worse outcome than customers getting their money back and nobody going to jail.
To you maybe. But it does to me, and apparently also to a16z :)
> You're never going to see a huge amount of traffic on it.
And I don't need lots of traffic!
If we talk about say the TPMS information for 4 tires once per hour, that's not a lot of bytes.
The value is in being able to send 24/7 with a very wide coverage, and no per-network setup (like asking for Wifi passwords- I pay for LTE just to avoid the hassle)
What they realized is that they could extract returns way earlier than the traditional exits of IPO or acquisition. They told at least one of these companies they didn't care if they ever made money. I'd be willing to bet my 1 BTC that A16Z knowingly participated in "scams", knowing that they would never get in trouble because they can operate in the gray zone and get away with it. They only believe in it because they can get the greenbacks out.
You're misinformed. Which is honestly fair, lots of disinfo on both sides of this fence.
If you invest in a company you can be investing in a productive asset that will produce more than you put in. You get a cut, but society does as well, and everyone is better off. With crypto, you're getting your money from the person you offload the crypto to. You're richer, they're poorer. They can try to offload it to someone else, but eventually someone will be left holding the bag. Things that can't go on forever, won't.
Even in the highly unlikely best case scenario where these assets stabilize at high prices, you're expanding the monetary base and getting your money by inflicting price inflation on the rest of society (the amount of products isn't increased, but the amount of currency trying to get those products will be).
If they are marketed as temporary, volatile, risky currencies, then sure, they are not a scam.
The whole crypto industry reeks of sensationalism and trapping gullible idiots who are fed dreams of "returns".
What would make a market melt up illegitimate? Traditionally I was taught that pump and dump and painting the tape are illegitimate market behaviors. Otherwise is a mania illegitimate or isn’t it just a natural market phenomenon?
When I say 'fraud' I don't mean juicing the numbers or asking forgiveness instead or permission. I'm not talking about things that will receive a slap on the wrist or a fine from a regulator. There is a great deal of organized crime that is the backbone of the industry. A lot of people will deserve to go to prison when the music stops.
- Greed. Its absurdly easy to make a ton of money very fast in crypto. As long as that's possible, money will keep pouring into the system.
- Gambling. The global gambling industry is half a trillion every year. Even if you think crypto has no fundamentals and is akin to gambling, it still represents a massive market. Opening a 50x long on a random shitcoin might be the same as yoloing in $10,000 at the roulette table. If the latter can happen sustainably, the former can as well.
- Principles. Crypto/web3/blockchain - whatever you might call it - will continue to attract people at the edge cases simply because of the principles and narratives behind it. Self-sovreignity, privacy, ownership - these are ideas worth pursuing.
If "web2" hadn't shut off its own users from any semblance of ownership in the platforms, or had done more for privacy, web3 would have died in 2017. But because they didn't, web3 will continue to find users simply because of the "privacy + self-ownership" narrative.
More than anything else, I see the massive amounts of money flowing into web3 as a failure of the web2 platforms. If Facebook wasn't such a scummy company, and if Google wasn't tracking everything I do so maliciously, I would have completely ignored web3 as an idea.
This was an easy-money phenomenon. We have another rates announcement today. I expect crypto to respond like the clockwork leveraged risk asset it models.
> global gambling industry is half a trillion every year
This is a good analogy. It’s one I hear in legislative and regulatory halls in the U.S. and Europe, the money centres crypto depends on for its legal demand.
The VCs largely have downside protection. Retail with get screwed but it’s a risk asset; they always get screwed late cycle and we have resolution mechanisms for that. Crypto company employees, however, stand to be boned.
It’s unclear where the legal risk winds up. My bet is the first layer that has not been talking to lawyers so far. That includes dumb executives and naïve employees working for savvy ones.
At least right now mainly be doing something illegal e.g. scamming, rug pulling, insider trading.
SEC and other regulators may be late to the party but are starting to put people in jail for this fast and easy money.
Honestly nobody cares about these things. This is just a narrative that was grafted onto Web3 after the fact.
What are you talking about?
Not at all. It's easy for one person to make a lot of money _at the expense of another_. It's a less than zero sum game, though, so each net transaction _cost_ people money todal.
> Self-sovreignity, privacy, ownership - these are ideas worth pursuing.
The ability to evade government regulations and scrutiny is crime.
The underlying idea is that you don't like the laws on financial disclosure, so you want to "get around" them.
As an honest citizen, I see the desire to evade the securities laws as literally criminal intent, which it legally is.
What is the advantage? Apart from evading securities regulation that is. In 99.99% of cases the only advantage is pointless hype
When?
What's that you say? Those technologies have legit cases from almost day 1, it just took the technology a bit to catch up?
That's just like crypto tech.
Ah, it isn't, you say? Blockchain has the tech but the list of legit and popular use cases only it can solve is almost 0 and we haven't really found new ones in almost 14 years?
The Blockchain does have problems it can solve, they just got solved by Web2 first. Sorry.
I had to difficult time replying to pembrook because their reply was so venomous that I felt out of breath by just how far off the mark pembrook was to how it was for me in 2017.
Crypto in 2017 really felt like the beginning of something big and amazing, like we were going to change the world's currency, solve reputation, etc.
Me personally, I've been weathered by the constant fraud. I still 'believe' in it, like I did in 2017, but I don't invest in it.
Once I looked at how the prices rose and the at didn’t support the Eth use case, I thought the architecture was stupid or at worst built purposely to have unnecessary scarcity to drive prices up.
I'm not going to be crying any tears for them. If you got into this from a business perspective you have zero excuse for pretending that you are not also partially to blame for the outcome. They'll be lucky if they avoid jail time in some cases.
“Announcement effects appear somewhat ambiguous for the [British] stock market” [1].
For the last year, it’s largely been high P/E tech stocks that have reacted viciously to rates announcements. The rest of the market is less sensitive to small changes in rates (jargon: duration). And/or it’s better at pricing it in ex ante.
[1] https://www.sciencedirect.com/science/article/abs/pii/S10575...
The blockchain design makes it even easier to mine peoples’ activity and prevents retroactive privacy improvements but, more importantly, the underlying problem is that people like not spending money. Various people have tried micropayments on the web but ads have less friction and don’t bother a sufficiently large group of people enough to pay more than advertisers, not to mention the precedent suggesting that sites will display ads to even paying customers.
Similarly, content hosting has the same failed promise. Blockchains are too inefficient to store the content, which is why all of the “web3” services are so commonly dependent on normal web companies. NFT pirates trying to steal artists’ work are routinely halted by takedown requests to Google, AWS, etc. There are services like IPFS which try to provide less centralized hosting but they’re expensive and have the same issues with most of the actual hosting being on ISPs who are legally required to honor things like DMCA or other illegal content requests.
You're describing DRM. It doesn't exist for blockchain either - famously I can copy/paste NFTs all day long. And it's not clear whether most NFTs even provide any copyrights for the content they link to so you still don't even "own" the content in the legal sense.
Shady securities in the past offered that kind of short-term unsustainable returns too. That’s why it was heavily regulated. This iteration of the same concept should be as well. It’s good news that SEC is now inspecting all of Coinbase’s listings as potential security offerings — better late than never.
Nobody wants to use these move-to-earn, play-to-earn and whatever-else token flywheels if there isn’t a market attached where you can dump the tokens. And those markets aren’t attractive unless the tokens are essentially securities.
Not bad. But nothing compared to the $1T in threeseed dollars I earned last year.
Did they actually, or did they make a bunch of Solana, which is now worth about 20% of what it was when they launched?
$120M in profit-profit? Or $120M in revenues dumping tokens on retail booked as profit?
StepN is literally a classic ponzi scheme. You buy in by paying out earlier investors in the hope that a greater fool will in turn buy you out.
The FitnessFi space has so much potential but StepN has new competition in the space which they are already starting with better ponzinomics and in web3 projects are community driven and StepN community will ape to the next one.
No it wouldn't. The actual usage has a negligible impact on the expenses for infrastructure. Most people barely use any bandwidth anyway. Even on 1 Gbit/s lines the average bandwidth used is in the single digit Mbit/s. And the usage basically doesn't differ if they have a 100Mbit/s or 10Gbit/s connection. Also those countries where data caps are still a thing are generally those with the worst Internet.
Netflix and YouTube show us that many people want more bandwidth.
There would be no data caps if paying for bandwidth consumed.
Both don't require a lot of bandwidth and you have caches for their content.
You can buy additional data if you've used your included data. That's basically the same.
How?
That doesn't seem to work in any industry that is close to being a utility. Just look at toll roads.
I first heard this line eight years ago and so far this hasn't happened.
If you are unbanked, it's because you have little money, and you want to put it into something stable and something where you are protected - in other words, the exact opposite of cryptocurrencies.
> protection against hyperinflation,
In 2022, cryptocurrencies have experienced over 100% inflation. Your one bitcoin today will buy less than half the goods and services it would have half a year ago.
Cryptocurrencies are almost as old as the smartphone. You can't keep promising something useful and never delivering, forever.
I’m generally pretty bearish on crypto and the current state of web3, so I’m not here to evangelize for it.
But comparing crypto to a smartphone is arbitrary, and the nature of one does not help us understand the acceptable timeframe for development of the other.
When I see the “it’s existed for X time and isn’t popular yet so it must not be viable”, a follow up question immediately comes to mind.
What is a reasonable amount of time for an emerging technology like this to develop? The modern web took decades to evolve into what it is today (for better or worse).
Depending on who you talk to, web3’s goals are just as lofty, and a similar time horizon doesn’t seem unreasonable.
With that said, the space still struggles to articulate the real problems it will solve, and time and time again it’s just a solution to those problems, and not necessarily the best one.
All of this to say - I’m a web3 skeptic, but we need a better measure of health than the passage of time, or we need a better definition of what an acceptable amount of time actually looks like.
Suggestion: it depends on the harm it causes in the meantime.
If an emerging technology isn’t living up to its promise and the downside is the creators wasting their time, let it go on indefinitely. Maybe they’re having fun. As long as no one is getting hurt, it’s a hobby.
If the emerging technology is solving nothing and actively creating new problems, allowing bad actors to consistently hurt others with little to no consequences, and accelerating our demise so a handful of egoistic maniacs can see a number go up in their bank accounts, perhaps it’s time to stop. Put an end to it even sooner if the biggest proponents repeatedly lie and make promises which fail to materialise year after year.
However much it needs to prove itself, I guess; cryptocurrencies have not proven themselves, I want to add 'yet', but they've had over a decade now and they're STILL suffering from extremely high value variability, energy costs, and scams / crime. That's not a basis to keep building on. And every attempt at moving away from those negatives has failed or ended up being a scam itself.
>In 2022, cryptocurrencies have experienced over 100% inflation.
To be fair, my ignorant self assumed that for much of its timeline, Crypto fought hyperinflation by hyperdeflation. It is intentional design point of most Crypto to increase its value. This deflationary philosophy I assume goes immediately counter pretence of Crypto as currency - if my 1 token will be worth a significant X multiplier at timescale Y, I have zero incentive to exchange it for goods and services and full incentive to hoard it with assumption it'll be worth more tomorrow.
I mean in theory Tether and other stablecoins try to fulfill that promise, but these are dodgy in their own rights - and they have no protections either, as the SafeMoon thing from a while back showed.
As long as there’s a chump willing to buy the idea of getting rich quick, there will be a weasel selling them a bridge. These days it’s a receipt for a picture of a bridge where they own neither the bridge nor the picture, but you do get an immaterial useless receipt. Pass it on to the next dope, and try to not be scammed again and get your receipt stolen.
Volatility is not great but it is not hyperinflation, where your money never comes back.
>promising something useful and never delivering, forever.
Forever is a long time. Still lots of progress to be made. Cardano and Lightning Network on top of Bitcoin are my top picks right now.
It won't happen.
I think you're overestimating how hard this is to fix, and the utility that the Blockchain is providing in something like Uniswap.
For example, when designing a google docs clone with collaboration, the naïve way to implement that would be to have all the users' computers be sending messages like "insert character 'a' at position 43", etc. The problem with this approach is that it makes the order of events very relevant - you'll get a different result depending on the order you process the messages. The trick is to give each character a unique ID, and then send a messages like "add a character `a` after the character with id 29239810", and then the order is irrelevant.
It happens that not every problem can be expressed in this order-independent way. In general, the ones that can are those that can be expressed in monotonic logic. For some problems, there's no way not to care about the order of events.
If you're unlucky enough to have one of those problems where you have to care about the order of events, you need some degree of coordination between all the nodes in your network to make sure they agree on the order of events. For a high-security project like uniswap, you also want the additional guarantee that the order of old events that the network agrees on is unlikely to change - it's bad if an event that happened yesterday gets reordered or dropped.
Additionally, we're talking about something decentralized here, so we don't want to assume that everyone on the network is honest. If there's a way that a dishonest person can easily stop the network, or cause honest nodes to get out of sync, or cause the order of old events to change, that's really bad.
It turns out that all the good ways to do that look a lot like a blockchain. I'd be eager for you to prove me wrong here.
You need to fight your biases.
If I bought a bitcoin at $100 and sold it at $1,000 - who lost money trading with me? The person I bought it from because they could have kept it and made the money I made? No - they were happy to realise their own returns. The person I sold it to? Assuming they still have it, they hold something valued substantially above $1,000 and are quite happy.
The only way for this to be zero sum is if bitcoin has zero value. But bitcoin has at least some utility so now the market is just arguing over how much - and that value changes as bitcoin becomes more accepted / useful.
You make it sound like the market is two participants - me and the guy I took 300k from.
In reality, the market is broad as well as deep. You can lose $10 on one project, make $20 on another, and come out with $10 profit overall. Someone else can reverse that trade and come out with $10 profit as well.
Its a casino, but one with extremely good odds for players if you time it right.
The thought process for VCs investing in crypto is simple: they get a huge discount on the tokens in the raise that they can turn around and dump on retail a few months later for huge returns. Instead of waiting 10+ years for a traditional exit, they can get liquidity in a few months.
As Chamath admitted on the podcast, even when they're on a vesting schedule they can sell the claims to future vesting prior to actually receiving the tokens.
I'm despondent about the overall crypto situation, please forgive me for my cynicism, because I'm genuinely concerned about how many times people can exclaim the king is naked the cupboard is bare the promises aren't merely empty but never had meaning, and yet the socialized penny just won't drop.
This FT article [0] goes some way to describing how vulnerable young and low income people are to false investment scheming. What's needed (very rapidly) is to reveal the full extent of behavioural and technical engineering used in exploitation, instead of blaming the phenomenon on concocted reductio ad infortunium.
[0] Financial Times article "Generation Moonshot": https://archive.ph/3d4DW
Edit,: added for clarity, "...from which...the simulacra.."; corrected "onto" as "on" and thereafter revised with clearer unchanged meaning the rest of final sentence. (and Ed2 sp ip.); E3 people instead of folk ,(mobile sorry) E4 added, "scheming" after "false investment" for clarity.
Lots of smaller projects are priced below VC prices. For example, CowSwap is at like 12c when private rounds were at 15c.
VC buying - aka VC selling to greater fool LPs, with purported guarantees trails a wake of retail that fuels their vig.
I know nothing concrete about crypto n.b. but I think I can recognize the structured avarice. If my precis is all that's happening I'd convict this kind of VC instantly.
How do you know what the VCs paid? These are private transactions. Sometimes they invest in equity in the business at the published round price, but get tokens for almost free on the side.
The multiple investment rounds followed by eventual IPO is typically just a legal ponzi scheme.
Businesses make money from customers. Ponzis shuffle around capital from late investors to early investors
Just think about it, if these data point of selling claims get be bought to on-chain then I am sure people and next set of companies will not borrow some such investors.
because of this particular reason I feel DeFi will replace traditional finance first before any other form of crypto companies takes.
A recent IMF admitted that DeFi is 10x efficient than TradFi.I am sure once DeFi get a bit regulated and has better risk management principal embedded into code the system will become more efficient
I also see the recent housing crackdown and loss of money for common people playing an important role of smart contract lead world for the financial safety of the larger population. People are losing trust way faster than they are able to change systems
Do you have the source for this?
Oh, yeah? Here's the document: https://www.imf.org/en/Publications/fintech-notes/Issues/202...
Where does it say that?
It doesn't say that, because it isn't true.
You continue to reinforce the idea that cryptocurrency advocates deliberately make up false statements.
For example you need to have locked $400 of some token for a "loan" of $100. How is this efficient?
It's like a lawyer getting into crypto, they do contracts for the companies, they're not buying tokens for themselves.
I'd hazard a guess that it's something along the lines of "throw shit against the wall and see if anything sticks," or less cynically "run it up the flagpole and see if anyone salutes."
Isn't that pretty much the modus operandi of VCs? Invest in a bunch of speculative ventures and hopefully make all of it (and much, much more) back if/when one or more becomes profitable?
Some VCs, some even with legendary reputations, are going to ruin said reputations from the scams they're pushing. In 10 years much of the sheen of Silicon Valley will have worn off. Tech will be as beloved as banking.
If you live in a place with only one or two ISPs and they only charge a flat rate per month for capped usage, you never get more bandwidth. The system is working as designed.
The entire value of the Bitcoin you mined came from later stage “investors” in Bitcoin.
is this good? well, ordering mob hits on some darknet site via BTC is obviously bad, whereas ordering magic mushrooms is much better than funding street gangs.
meanwhile burning down the planet just to calculate hashes endlessly? obviously bad.
Cryptocurrencies do not share this property. They are zero-sum, which is a hallmark of a Ponzi scheme.
And how exactly did these mined coins become USD ?
Frankly, I have lost all respect for all those VCs who invested in crypto companies.
The only way the current crop of investors can make money is by getting even more newer investors (ie greater fools). Eventually such a scheme will fail because of the same reason that ponzi schemes fail.
Compare this to something like apple which has an additional cash in (ie the company's profits). So the apple investors can make money without needing more investors.
In fact most of the devs I know that started pre-2017 deeply care about these things. Many were around in the OWS groups back in the day, they transformed via bitcoin and now mostly work on eth projects. The cool thing is most of those people who were in it for political reason (rather than the newer investors looking to make quick money, and new devs looking for decent paid job) have made enough money to spend the rest of their lives working on this stuff regardless of it making them any richer.
I think we can outwork and outlast the cynics and keep building the things we think are cool. they hype will come and go, the fraudsters will sweep in during mania and con people regardless of our warnings, the authoritarians will try get the state to make it illegal, the google employees will keep complaining that its not innovative. we'll keep on working towards what we think is right.
It's been 13 years and 0 use cases better solved by crypto than any classical system.
But by all means, I'm sure OP will deliver - let's just wait.
Sure it is probably not even 1% of projects by number and there are plenty of frauds/scams (which are oviously illegal without any new laws) and even more just really terrible ideas (whatever happened to caveat emptor?), but there absolutely is a sizeable core of projects, founders, devs, and researchers that cares deeply about privacy, freedom from coprorate/government surveillance and control, open source and open protocols, and building a very different online, digital future than the one we are currently headed for.
I think that's worth the effort. Even if that might fail, and even with the collateral damage from scams and fraud (which, again, are already illegal). We accepted cars despite the deaths and injuries and pollution (which we also deal with legally and try to minimise without destroying the benefits of having cars), and they reshaped our society. I expect crypto and privacy tech. to do the same in time. It may even take as long.
The builders do
If you’re in the tech field and aren’t worried about privacy, the. I don’t even know what to tell you.
It will collapse. It is simply masked to some extent by the fact that industrial civilization is a generational Ponzi scheme.
To be clear, I personally feel that the next generation of the Internet needs a full reboot. Web3 is the web in name only, and the ideals that crypto bros extol have been hijacked to further these currencies.
But until some separation between web3 and “the future of the open web” is clearly created, the current problems with the web3 space will continue to proliferate.
And if so, hasn't market effectively spoken against it? We CAN have independent self owned systems now ; populace just doesn't give a damn - you need to be on social network to be seen or heard :-(
You are 100% correct. It is time to End The Fed.
Even if as a thought exercise we equate the two, responding to criticism with “but other systems also have problems” doesn’t absolve you:
— Chief, we caught the murderer!
— What about the thief that escaped last month?
— You’re right chief, I’ll let the murderer go.
Your argument is wildly wrong because you cannot add negative numbers and make a positive. You simply invent random transactions to come up with a desired outcome, and refuse to look at the big picture.
The whole cryptomarket is a negative sum game, because of the costs of electricity, bandwidth and personnel. For every dollar that goes into the whole cryptocurrency market to buy a coin, less than a dollar comes out, because some of that money is buying mining rigs and generator plants.
This is certain because there is a law of conservation of money in this case. Cryptocurrency neither creates nor destroys fiat currency, so the inputs and outputs have to net equal less than zero.
Why don't you try to come up with some sequence of actual transactions in a "toy" market with a small enough number of participants that you can work through it by hand, not forgetting to take out money from the pot for electricity, network, and personnel? You'll soon see that this network net destroys money - it doesn't create it.
If you don't believe it, I'll write you a math proof, but TBH if you don't understand the explanation above, you'll understand the math proof even less.
A market of one token that was initially worth nothing 1 year ago but the market now sees has value - let's say $100 - because it has some genuine utility - various companies have said they will accept it as payment for a variety of different products.
If you add all the cashflows for trading on this token over the year, $100 has been made. In fact the only way for these cashflows to sum to zero is for the token to be worth zero.
Where did that value come from? It came from the increased utility of the token.
(Unless you are making a fortune on Wall Street)
The trick is knowing when to get out. And for that, simply managing your greed is enough.
More competition.
Wall St "smart money" is still, comparatively speaking, clueless in cryptocurrency world.
For the efficiency part. To be fair, traditional finance as an industry operates as a super inefficient, regulatory-captured pyramid scheme. Shouldn’t be too hard to beat.
They're dense. They don't get it at all.
The "super inefficient, regulatory-captured" part is a feature, not a bug. We want transactions to be reasonably slow and checked by a human somewhere along the way. We want a myriad legal protections.
"pyramid scheme", that's rich, coming from cryptocurrency companies.
With all the large firms (crashing daily) that provided impossible ~19% returns still trying to attract new investors, there's just no defense of the 'industry'.
Thank you Captain Hindsight.
The problem is that as you said, when the rubber meets the road, the customers don't value privacy - and at the end of the day they're the ones paying.
All the major platforms were built without ownership and without privacy, and this didn't hurt them in the slightest from being some of the most valuable companies in human history. I'm not saying I like it either, btw.
if just making them on-chain improves the provability that an asset is not getting leverage multiple time in an ecosystem
This is not the same as a cryptocurrency which relies solely on later investors to create returns for earlier investors. There are no non-investor participants from which profits can be derived, period. Cryptocurrencies are in aggregate either zero-sum (best case, PoS) or massively negative-sum (worst case, PoW, especially Bitcoin).
This represents a pretty fundamental misunderstanding of, well, investing.
--
[1] https://videocardz.com/newz/nvidia-reportedly-wants-to-cut-t...
The point is that when there's liquidity smoewhere (on an exchange), any security have "de facto" act as a "money", or at least a "saving account", because there's always at all an actual value defined by the market. whether it's stock, crypto etc... It doesn't have in practive to be tied to a central bank / governement. Even historically, currencies have existed well before someone tried to regulate them
Did you miss the last 47 threads where people discussed the real world goods and services they purchase with cryptocurrency?
No you don't.
> And if you find a service that lets you buy food with crypto, eventually they will need to pay their suppliers with 'real' money.
No they don't.