Dumb questions: Why does "web3" need venture capital. Why are VC (like this author) pushing for web3.
Someone suggested it is because they have invested heavily in ETH mining.
Someone suggested it is because they have invested heavily in ETH mining.
Web3 is just the latest excuse to keep the game of musical chairs going and preserve the chimera of use-value for cryptocurrencies since very few people want to use them to actually transact.
https://cointelegraph.com/news/eth2-devs-put-out-call-to-com...
With PoS the consensus chooses if they want to give up power and you can only gain decentralization if they choose to give it up.
A new institutional investor just needs to start hoarding that easily accessible liquidity and the biggest players in the space will need to give up their share or risk the price of the currency dropping to zero because it’s too hard to transact in it and therefore it’s no longer profitable to tie up 32 ETH and run validators.
"Actually both systems give power to those who are already wealthy" isn't the argument for democratization and decentralizations crypto believers apparently think it is.
As to why VCs would invest in it: it's currently dodging most regulations that apply to financial transactions (money laundering, pyramid schemes, pump & dump schemes, etc) much like loot boxes dodge most gambling regulations (and it turns out selling gambling to kids is extremely profitable). This makes the market uniquely profitable to invest in right now with promises of extreme ROI as long as it remains unregulated.
"Humanitarian" campaigns to normalize tracking public records and qualifications on the blockchain in technologically underdeveloped countries also produce a high amount of technological lock-in while increasing the capabilities of automated decision making on the blockchain without having to bother with externalities. For example, if one's ability to use an NFT on social media hinges on demonstrating ownership of that NFT, copyright law becomes a tangential consideration much like systems like ContentID make it harder to claim fair use rights because the ContentID claim is not based in copyright law but in the terms of service.
Additionally a lot of the more vocal tech VCs are libertarians bordering on anarcho-capitalism (i.e. free market maximalists who think humanity's survival and progress hinges on a few Great Men rather than the unsophisticated masses). The greater Web3 ecosystem is trying to solve cooperation with people you actively distrust and represents every interaction as a financial transaction. This is extremely appealing to them. Their problem with capitalism isn't that it inevitably leads to a massive wealth disparity (because after all, some people are "just better") but that the government gets in the way. This makes the promise of decentralization (even if it defers to consensus between the already wealthy) ideologically appealing to them.
Based on my conversations with web3 believers, they would generally agree with most of what I said but object to the language I'm using because it doesn't sound very flattering.
Libertarianism may have changed in character, or perhaps more in how it is characterized in media, but it used to be that libertarians believed in lots of little people acting freely and that states and the large corporations they are mutually supported by are the opposite of what they want.
Hopefully it is because the little people have largely left the relatively pointless large media spaces online and does not represent a genuine change in how the majority of libertarians, who used to not be terribly wealthy if they were wealthy at all, think.
The latter generally believe some people are inherently superior (though they will not always make a point of where this comes from) and that everyone therefore deserves their lot in life because those at the bottom either are inherently inferior (and thus undeserving) or failed to activate their potential (and thus undeserving).
The former generally believe we don't stand on the shoulders of giants so much as on the shoulders of billions and billions of people no worse or better than us. Some individuals may have genuine innate talent making them better at one thing or another without trying but while that may make their opinion on those matters more qualified it doesn't justify any claim to power as societal decisions (such as allocation of resources) should be reached by gaining consent from everyone affected.
Without regulation, markets naturally tend towards centralization and thus a significant power imbalance. Heck, if you were to fully abolish the public commons and the state, you would inevitably reinvent feudalism as the owners of the largest corporations would need to hire private militias to subdue their workers and defend their property claims against competitors, customers and colonies. This is why many right-wing libertarians still want a public police and military and why libertarian socialists generally don't want markets as a political instrument even if they may be favorable towards coops as an intermediate step or for the production of commodity goods.
There's no reason why a business trying to use "web3" wouldn't need to raise a round. Every business that wants to grow more quickly than the founders can manage alone needs some sort of capital to pay people to help. One way to do that is by giving up a bit of equity in return for money.
I definitely don't think web3 should be 'stopped' on moral grounds. Maybe it should on environment grounds, or on the grounds of how annoying web3 evangelists are, but stopping it to protect people from investing in something silly is not a good idea. Let people learn from their mistakes (or maybe I'll learn to be less cynical when NFTs turn out to be the next BTC, which I also regret not buying, or Amazon stock that I didn't buy, or Apple, or Pixar, or MSFT... this is a long list.)
VCs own ETH from the presale not from investing in mining.