Why Web3 won't make the world more equal
stearsng.com
stearsng.com
Why would this one be any different? The pitch that it will be is just snake-oil from prospective winners.
Are there that many HN readers who are subscribed to "Stears Business"?
Or are people just upvoting based off the title w/o reading the article?
HN median has an anti-crypto bias, headlines that align with that are more likely to get reflexively upvoted.
Is it one that trusts a few select governmental entities over zero-trust solutions? I'd think the latter but continuously get shown the former.
Is it one that prefers to keep the same broken solutions over at least trying something new? Same thing.
I don't know if it's an age thing, industry thing, or what, but the reaction to crypto on this site seems much more tainted by its branding, obvious scam projects, and perhaps by the idea of fundamental change, than by any of the actual fundamentals of Web3/Crypto itself.
Utopian claims about crypto are a hard sell to people who understand that technology is not a magic bullet.
This is pretty unusual.
It also means there’s a lot of variety of ideas and opinions, but generally a unifying thread of curiosity.
Still, the median view is often lame or mediocre, especially on some topics. Unfortunately crypto is one of them. There’s still interesting stuff sometimes, but it’s often drowned out.
And this:
> zero-trust solutions
vs.
> obvious scam projects
might be the source of cognitive dissonance people who are into this stuff might need to grapple with before they start throwing shade at people who are skeptical. And yes I'm aware that zero-trust here has a technical meaning that's not related to people scamming with it, but if you want to convince people that this is worth something your idea of trust needs to evolve beyond a dry technical reading.
Also, if I need to prove any credentials back in the early-ish days I burnt out a radeon video card mining a bunch of currencies up to the first rollout of ethereum. I think there's some interesting ideas in the tech (demonstrating that zero-trust consensus protocols could exist at scale at all is super interesting), but what it's become is an environmental and financial disaster zone and I'm not interested in that anymore.
Certainly this one. It is being upvoted based on the title alone and the comments here prove that they have read as far as the title and directly commented here.
If one actually reads the article and beyond the title even with the partially paywalled content, they would know that it is based on a strawman argument.
That said, I think if you conflate the two and try to bring all kinds of decentralization under the cryptocurrency/web3 umbrella, all you'll ever do is cause damage to any real efforts at decentralization.
Most of the internet is built on decentralization to some degree or another. Until cryptocurrency, most of those things did so by taking advantage of a lack of scarcity rather than trying to invent new ways to create haves and have-nots.
There are way too many of those scams. See r/metaverse-blockchain for a few new ones every day. Most of them selling "land" don't actually have a working virtual world, but are selling anyway. Many of those future virtual worlds were supposed to go live by Q1 2022. It's now Q2 2022.
Report them to the SEC if they sell to Americans. If you're selling something that doesn't exist yet, you're buying an investment contract, which is supposed to be registered as a public securities offering. The SEC brings the hammer down on about two "cyber" scams per month. They're still working through the Initial Coin Offering backlog from 2018-2019.
If all you had to do was say this thing will be more valuable in the future then half the commerce in the US would count as an investment contract.
If you're offering to build something with someone else's money and you sell it to them as something that will grow in value over time, that is exactly selling someone an investment.
And the fact that it sometimes happens without triggering regulatory oversight doesn't mean it's not in that category, it just means sometimes people casually break the law (which is true anyways).
The gold might not even be in bar form yet, just a pile of gold ore dust. Ferarri is definitely not just building cars willy nilly. Real estate is 100% not considered a security. Yes it is regulated but so is the Banana industry, doesn't mean they are investments.
>And the fact that it sometimes happens without triggering regulatory oversight doesn't mean it's not in that category
Happy to be proven wrong if you provide the relevant SEC guidance but I highly doubt investments are categorized in the way you suggest. To be clear I despise NFTs and think most of the crypto space is fraudulent but I think you've created a strawman here.
- selling someone "virtual land" that doesn't exist yet, and won't until and unless they obtain sufficient investment to build it (my understanding of the original thing),
- someone commissioning you to build a dresser for them (what you initially said -- this is not a security, I agree, hence...),
- you selling someone a promise of a dresser that will increase in value if they pay you to build it (my proposed change to your scenario to align it more closely to the original thing -- this is indeed, deliberately, a strawman intended to align your argument with the thing we're actually talking about),
- buying gold that already exists, whatever form it's in, assuming the person you're buying it from already has it and doesn't have to mine it (the strawman to again align this with the original thing would be that they have to mine it -- I'm pretty sure this would be considered an investment into a mining operation),
- buying an expensive car that is, bar some minor customizations, like every other car of the same model in existence and that the company has already invested in building,
- real estate (just completely different from all of these, but my point was just that it's not a standard purchase and has its own structure around it. That said, there are real estate-related securities so...)
Anyways, Animats seems more familiar with the specific legalities of this so I'll leave that to them. I never claimed to have a perfect understanding of US securities law, I just found your counter-example disingenuous.
1. Investment of Money (anything of value)
2. Common Enterprise
3. Reasonable Expectation of Profits Derived from Efforts of Others
If all are true, it's a security for US regulatory purposes. If offered to US persons, you have to go through the ordinary IPO process, with a prospectus issued under penalty of perjury and SEC registration.
Nonfungible tokens were an attempt to get around this. If each one is different, and valued separately, there's no "common enterprise". This works for Bored Ape Yacht Club. Land in a virtual world, not so much. Fractional ownership of NFTs, definitely common enterprise.
Nonfungible implies illiquid - there's no market price. Each item sells on its own, like Beanie Babies on eBay. You put your item up for sale and wait. Maybe a buyer comes along. Maybe not. NFT buyers have discovered this the hard way. Most resale attempts on OpenSea are stalled at minimum bid/asking price not reached. The minters of the tokens do great, since minting is cheap. Buyers (the suckers), not so much.
People like you helping people like us help ourselves - Processed World
[1] https://www.sec.gov/corpfin/framework-investment-contract-an...
The latter group will outnumber the former group 20 to one. I expect them to reject the whole thing once the initial speculative sugar rush wears off.
I'm not saying Web3 is enough of an advantage to matter, but the fact that some people are currently incapable of using it doesn't mean it will be that way forever.
I'm constantly shocked that this isn't held up as one of the biggest flaws. This is a technology that's meant to be "the future" which is incompatible with how regular humans actually work.
Unless you force everyone to use the system, very few people will bother.
Let's make something people actually want to use before being worried for web3 literacy.
The standard these days seems to be "install a browser extension on your daily driver desktop and let it manage your wallet". I know people are going to say "Metamask supports x hardware" or "actually no, I still recommend..." but that doesn't take away from what's been the recent norm.
The problems all started because of Ethereum. The scams, hacks and rug-pulls across, ICOs, NFTs, Tokens, DAOs, DeFi and now you have web3.
Put all of that together and you have tons of things that can go wrong and duck-taped that are not designed to work together which causes security issues and millions of dollars worth of losses. Now it is not just about payments, it's now complex dApps that are riddled with smart contract vulnerabilities.
Even when the team already pre-mined their bags from the start, it was compromised as a project; everyone relying on and trusting a team and individual. The moment that the DAO hack happened, the chain was forked and the people at the top orchestrated it.
When it goes to proof-of-stake, it will be even more centralized and no different to the other cryptocurrency projects out there.
The idea that early adopters somehow are demographically equivalent to the entire population of future adopters is ridiculous.
Technology is becoming more sophisticated so capitalizing on it to generate value requires knowledge. That knowledge requires time and freedom to acquire. Building a business is becoming easier. It still doesn't change that building a business is risky and only wealthy people can take those kinds of risks. These statements can apply to ANY technology created today. ML, Crypto, etc.
> One of the few tragedies of global innovation is that the poor can remain poor. They might be better off than where they were yesterday, but relative to other winners, they are still poor.
> In the long run, the true financial winners of a new internet built on Web3 will be those who are able to acquire or own key assets and infrastructure (capital)—and unfortunately, like the real world, capital isn’t evenly distributed across the world.
My personal crazy theory is that there is organic and synthetic inequality. Organic being caused by natural factors and projected as a Gaussian distribution significantly smothered down by factors such as altruicity and compassion. An example for a naturally inequal society would be 60-s US, heyday Venice or some early classic republics. Still unequal, but nowhere near banana republic level. Quite the opposite it is the minimal level of inequality sustainable with current human psyche in mind.
There is also the synthetic inequality caused by artificial state-driven (coercion) factors with examples being Feudal lords, the Soviet nomenklatura, today's Fed cronies and so on.
Some of the upper echelon tax rate increases that have been proposed recently and panned as catastrophic for the wealthy don't even compare to the rates they were paying back then. And pushing to reinstate those kinds of tax rates would be political suicide because everyone believes they'll be a millionaire in the next 5 years.
0: https://www.forbes.com/sites/niallmccarthy/2021/04/26/taxing...
A side effect of this phenomenon is that this is the period when the American elites underwent a great transformation and became significantly more pragmatic than idealistic.
And honestly the monetary response from the government that we are seeing over the past 15 years is just a consequence of that - people (especially the wealthy, but what is the direction of the correlation?) learned how to dodge taxes, so gov took out the heavy artillery. So from the wealthy being (still enterprenural and crafty) tax dodgers we went to the cronies we have today.
(the other problems all have to do with things like it being impossible to tell where revenues are on the laffer curve without actually changing rates, and the fact that conservatives largely assume the laffer curve is a parabolic one where somehow a zero tax rate is infinite revenue. Those things make it an essentially impossible-to-use policy tool in practice)
https://taxfoundation.org/short-history-government-taxing-an...
Laws and mass compliance are really two different things. An example would be when new EU countries introduced those UUID's to each receipt while "lowering" taxes, resulting gov spending to gdp going actually up significantly.
I'm not sure what part of my post you're disagreeing with. What can you do and how does this graph of historical data show it?