Web3: A VC-funded gig economy of securities fraud
davidgerard.co.uk
davidgerard.co.uk
Relative to other speculative manias in history, crypto is a mechanism for mania and speculation. You can't trade tulips on tulips. But you can trade crypto on crypto.
For example, in the British railway mania of the 1840s, many patterns occurred similar to today's crypto frenzy, such as stock exchanges created expressly for the purpose of trading railway stocks and publications to talk about and advertise railway stocks. But railways lack crypto's reflexivity because you can't trade railway stocks on railways. Crypto mechanizes its own speculative mania.
But what's the other side here? Does it even exist? I think it does exist. In my view, a balanced discussion of the pros and cons of crypto often seems to elude the HN community.
HN is a community of technologists, right? So what's the actual technology here? At the root of crypto are two technologies, 1) programmatic public chains that are inexpensive to run and 2) zero-knowledge proofs.
By combining public chains and zero-knowledge proofs, we get an inherently global market, with p2p transactions that scale to all of humanity, where you can send money digitally, similar to handing a $20 bill to a friend. And the transfers can include rigid, sophisticated logic that offers the potential to reduce transaction costs for many kinds of routine economic activity.
So, while it's fair to say that most crypto tokens are effectively trash and crypto mechanizes scams and speculation, it's also unfair to omit discussion of the fundamental innovation, and those who do so will end up on the wrong side of history.
No. It eludes the crypto community. For every well-researched article pointing out flaws, there are exactly zero articles addressing any points in those articles. There's no end to "just join the discords and read up" though.
> At the root of crypto are two technologies, 1) programmatic public chains that are inexpensive to run
Those chains are extremely expensive to run as evidenced by the absolutely dominant one.
> 2) zero-knowledge proofs.
These are not at the "root fo crypto". This is something tacked on to try and solve the 0.00001% of crypto's problems.
> By combining public chains and zero-knowledge proofs, we get an inherently global market, with p2p transactions that scale to all of humanity
No, no we don't.
> it's also unfair to omit discussion of the fundamental innovation, and those who do so will end up on the wrong side of history.
The proof is in the pudding as it were. There's literally nothing in this "fundamental innovation" that can't be done better, faster, cheaper, and on a bigger scale with literally anything else.
- Blockchains are distributed immutable ledgers, and there are very few (if any) useful applications for them
- "programmatic chains" are the worlds slowest, most ineffecient and expensive VM that gets exploited every day because even people programming it don't understand the rules they are writing
No, please stop with this fallacy. I don't know where people get this idea besides from marketing hype. There is no innovation in cryptocurrency. It's perfectly fair to also disregard any claims of innovation, because they're not true. I'll go into the specifics here.
>1) programmatic public chains that are inexpensive to run
The innovation you're taking about here is a database server, blockchains not necessary. AWS and Azure are also an "inexpensive programmable and public" server except you can put anything you want on it, it doesn't have to take the form of an immutable ledger. Blockchains are just strictly worse than everything else.
>2) zero-knowledge proofs.
Also has nothing to do with blockchains, zero knowledge proofs are useful for other purposes besides cryptocurrency, and were invented long before it.
>By combining public chains and zero-knowledge proofs, we get an inherently global market, with p2p transactions that scale to all of humanity, where you can send money digitally, similar to handing a $20 bill to a friend.
No, you don't. By combining those things you might get some structure that would theoretically allow you to do that, but that's only a small portion of building a scalable financial platform. There are still a ton of other services you have to build, which have to exist anyway for any form of online finance regardless of whether you use a blockchain or not. Blockchains are also not "p2p" in any way, by definition they require middlemen to run the chain.
I'm growing tired of reading these comments about cryptocurrency where basically everything is wrong, it's exhausting to deal with the torrent of misleading statements. That should tip any technologist off that something is seriously wrong there. I can't even blame you for making them, the marketing hype is just out of control and is confusing everybody.
And everyone else has to trust them.
With Bitcoin, you are user and "manager" of the server at the same time.
You don't need to trust anyone. And no one needs to trust you.
No single party needs to keep track of transactions and be the source of truth.
That was not possible before and it is the innovation behind blockchain and bitcoin.
I didn't miss that. Someone also has to manage the servers running the blockchain.
>With Bitcoin, you are user and "manager" of the server at the same time.
I'm sorry what, no you aren't. At minimum, an external group of miners are managing the servers. You're paying them transaction fees to run the network, and you have to trust them not to attack the network, through a 51% attack or through something else. That doesn't even get into all the other parties you have to interact with and trust to do any kind of real business on a blockchain.
>No single party needs to keep track of transactions and be the source of truth.
Except there is a single party, that party is the miners. You could tell me that your point is how this party is loosely connected, but so are a lot of cloud businesses.
>That was not possible before and it is the innovation behind blockchain and bitcoin.
No, it was possible to create distributed systems and consensus algorithms long before blockchains. That isn't an innovation at all.
What other technology makes use of an immutable ledger, like you said?
Shared Merkle tree ledgers are the technology that actually exists, and has done since the 1990s. It turns out to have very few applications.
https://blog.dshr.org/2022/02/ee380-talk.html - a talk by David Rosenthal, who made a few things using shared Merkle tree ledgers in the 1990s and early 2000s.
The rest of the "technology" is vague promises and get-rich-quick schemes, using technology as the excuse. e.g., you're talking about a "global market" using ZKPs, but no such thing exists - you're stating a "blockchain could" as a "blockchain does". When "could" is a word that means "doesn't."
If you consider gas fees as a cost for running the chain, they absolutely are not inexpensive to run. They may well be the most expensive ledger on earth. Writing the numbers down on-per-page in a book made of gold leaf would probably be cheaper.
But it does surprise that so many technologists are falling into this trap (disregarding the innovation because of the plethora of junk it enables). The value of permission-less platforms and protocols should no be assessed absent of curation. Google, email spam filtering, wikipedia, the web abounds with examples and without curation we would be in a sea of shit.
The answer is either nothing at all, or paradoxically it's some vague sense of optimism involving "faith" "belief" and "trust". It should surprise no one that web3 fundamentally can't deliver on any of its promises.
I don't think I'll ever hook up a wallet to my smartphone in order to use tap-to-pay in some hypothetical future, but I really do believe that crypto can be great at hopping traditional regulatory fences.
If I come across some desirable service offered on the web by a guy in Namibia, they're much more likely to get money from me if they accept something that I can easily acquire and send. I don't even know what Namibia's currency is, but they can list a price in BTC/ETH/DOGE and I can easily make my own judgements on whether it's worth it for me.
Basically the people that should have known better were happy to promote garbage to those who don't know better.
The same thing happened again in 2008 with mortgage derivatives and now I think we're headed for round 3 with crypto.
Even if we ignore the equipment and operational cost, for example the energy cost of mining (dump it on a third party for example), you can't still claim that it is inexpensive to run. At least not without some serious numbers backing up the claim.
Let's say, you tokenized the ownership of your home but a bad actor from the other side of the globe stole the token.
A standard certificate of ownership can still be brought to court in case of fraud, but a token cannot. I mean, you still can bring it to court, have the judge decide in your favor, but the chain is immutable and neither you or the court officials can do anything to revert that. So you'll end-up with a token that does not represent the reality - and that's why standard, traditional certificates exist and are trusted: they represent the rule of the law, something an immutable decentralized chain can't do.
Another example is just what is happening to Russia and its oligarchs. Traditional banks can be forced by the rule of the law to impose sanctions; crypto cannot. So they're just evading those sanctions in plain sight by using crypto. You may side with Russia on the current affairs, but this also applies to terrorist groups, gangs, you name it.
And it goes on and on... if you're a victim of a phishing attack like the one happened recently at OpenSea[1], but instead of signing with your wallet you filled your credit card data into a shady field, you can still contest the purchase with your bank and have your money back. Even if you authorized a one-way money transfer from your bank account, in some countries you can still contest it and eventually have your money back.[2] None of this is available for the victims of the NFT phishing scam.
So, while the technology sure has interesting points, the current use-cases are far from optimal. Society developed trust and trust-chains for a reason. If you're a going to implement this in blockchain, then you'll have to build a non-decentralized* approach from the ground up, that most of the crypto community will bash you for.
* To be fair, many consider the proof-of-stake to be a non-decentralized approach departing from the vision of S. Nakamoto. And some will even argue that the current proof-of-work mining concentration is already centralized.[3]
[1] https://cointelegraph.com/news/opensea-phishing-scandal-reve...
[2] https://www-poder360-com-br.translate.goog/justica/globo-gan...
[3] https://www.technologyreview.com/2022/03/04/1046636/ethereum...
Unless the token is being used to control some kind of elaborate--and likely magical--boobytrap (to enforce that the owner of the token is the only person who can even step foot on the property), the government would just say that old token was no longer authoritative and that some new token is... which is no different from how a standard title or deed also can't be blindly trusted (as it may have been revoked by the government). And yet, forging your sheets of paper or invalid transfer signatures on the real sheet of paper (how classic titles and deeds work, as in when I signed over ownership of a car once) is way easier than forging this blockchain record, and so this actually still provides a ton of benefit by avoiding cases that might have to go to court in the first place.
Even easier is just signing the document using any other digital signature scheme, such as one operated directly by the title office. Blockchains do not benefit this scenario at all, in fact they just make it worse by making it more convoluted.
So why do we need blockchain in the first place? Just upload a digitally-signed file to a conventional file repository. In the end, you're trusting a third party, centralized peer, not the chain, to hold the de facto truth.
> And yet, forging your sheets of paper or invalid transfer signatures on the real sheet of paper (how classic titles and deeds work, as in when I signed over ownership of a car once) is way easier than forging this blockchain record
You don't need blockchain to have a better replacement than paper. Digital signatures in a centralized repository can do it faster, cheaper and with reversibility as a feature.
That's within a whisker of saying that the entire legal system is subservient to blockchain, and not the other way around.
If so it would appear to be the death-knell for all those use-cases for any official/governmental process to use blockchain... ?
Basically if you recognize that coal is poisoning people for no societal benefit, then it can carry on via momentum for a while, insiders can prop it up for longer than it should, but eventually it'll get crushed and you don't want to be holding the bag when it does.
As far as I can tell, that applies to most crypto. I'm sure there's cool uses, but mostly it seems a way for people to make money from the people who will be caught out when it shuts down.
So the obvious question is, how do you do a 'big short' on this?
The problem with coal is that its externalities are not properly priced in, making it look quite a bit cheaper than it actually is. Much of its cost is being placed on a hidden credit card with an unknown interest rate. If all externalities were priced in coal would probably not be competitive except in places with few other good energy options and in roles where it's hard to replace like bulk virgin steel production.
Crypto has few real value-creating uses outside the original core use cases of easier international wire transfer, some utility in areas without functional banking, black/grey market commerce, and hobbyists/techno-nerds who use it because its cool. Those use cases are real but they are also the use cases that existed in 2008-2009 when Bitcoin launched.
Web3, ICOs, and DeFi all seem to be almost 100% gambling and scams. Every few months I go looking for systems and use cases for crypto other than the original ones mentioned above and all I find is gambling and scams.
I don't think crypto will go to zero, but I think its actual value is very far below its current price. FOMO marketing for various forms of web3 and token shonk is getting increasingly shrill and desperate, which is not a good sign. If I had any of this stuff I'd sell.
Of course remember: it's very hard to call the top of these things. They almost always go higher than anyone expects. Sub-prime mortgages kept going far beyond what anyone thought possible. Regardless, you don't want to be a bag holder when it eventually does crash.
The best way to win in a casino is not to play. The second best, if you've played, is to quit while you are up and ignore the fact that there is a chance it might go higher. Here's some good old fashioned Native American financial advice on this topic:
https://www.youtube.com/watch?v=KXbDB3uEltY
You aren't special. Someone will win big in the casino, but it won't (statistically) be you.
The current implementations are often broken. Downstream sales can skirt the royalty. But that is, like many problems with crypto, a solvable engineering problem.
I call this primary-sale royalty a "good" idea because it seems like an obvious, almost intuitive way to benefit original artists. And it also just clears out mountains of regulation and royalty regime that currently track, enforce and account for royalties, and do a terrible job of it.
The problem is, you can use the same mechanism for anything, such that rich people can bake in an "I continue to get richer" royalty whenever they sell their property.
Both the good and bad side of this mechanism are just one thing you can do with programmable money. Does anybody think it's the only one -- the only new mechanism worth developing?
This is the problem with everything in crypto. There's so much scamming, crime, gambling, and other bullshit that legitimate artists have become wary of the entire ecosystem.
Do you want to live in a bad neighborhood? Same principle works in markets. When a market or market venue gains a reputation for being full of crap, legitimate players don't want to be associated with it. It doesn't matter how brilliant it is.
One of the problems with cryptocurrency is that it's a product of technical people who think everything is a technical problem. A lot of it is technically brilliant, but they overlook the social, political, and economic angle.
I often argue that Bitcoin was actually hacked very quickly. It wasn't hacked by targeting the cryptographic algorithms or the software but via social engineering. It was hacked by targeting people with scams and schemes. As with other security systems the humans are often the least secure part of the system. People are much easier to target than algorithms and code unless the latter has some serious zero-day or is just grossly insecure by design.
Financial interactions are entirely within the realm of voluntarily interactions, and those that are not are already considered fraud, and prohibited.
The HN crowd seems to hold a generally negative view on cyptocurrencies and web3 and view it as a bit of scam with no proper use case except to leave someone holding the bag
At the same time there's seems to be a lot of anecdotal evidence that a lot of developers are now flocking to these crypto companies, enough that I think its fair to assume its likely true.
Does anybody have any insight as to why this is the case? Is somebody missing something?
Add the many scams going on in the web3 space and it's easy to see why most people don't like it.
As a developer who started to turn into crypto recently:
I live in a corrupted country with a corrupted government that has too much power and has no good intentions for its people.
I can easily get crypto tokens or some other form of compensation for doing some work for a crypto company, which usually pays much better than regular work, while exploring new ways of thinking about how money and economy works in the first place.
As a developer I feel enthusiastic about everything crypto can offer, and learning more about Solidity development and inter-chain communications and new scalable layers just excite me even more.
There is not a single reason for me to not love crypto.
It's all about demographics.
Maybe. I hear this a lot too. But as a counterpoint, I happen to live in the USA, and have a pretty good life. I know a LOT of people who have good lives in this relatively uncorrupted society who are going into web3. And who are funded by very well off people in said country.
I'm not saying that web3 can't help people in bad countries. It's that I don't think that's the end goal of a lot of this enthusiasm. Because I don't think those people were trying to help out people in your country before crypto existed (not verified, but I think this is a reasonable belief).
I live in Australia, and was interested in buying a privacy oriented cryptocurrency the other day. It was an interesting thing to realise that the government can't stop me in the usual way (regulatory pressure on the exchange to not let me trade) because I can buy ETH then swap that on some shady foreign exchange for what I actually want. Nothing illegal going on there as far as I'm aware, but unless they send in thugs to cut my internet connection there isn't a lot the government can do to control my actions without spending serious money on actually sending people to make me do things I don't want to. It is a nice change of pace from most assets.
Eventually there someone is going to figure out zero-knowledge proofs enough that the tax office can't prove who owns anything or if a capital gain was made. That is going to be an extremely interesting development.
The only way to stop getting caught in schemes is to be educated about how crypto and economics work in the first place.
I'm not talking about EVM-bytecode level or keccak256 implementations of course, but a general understanding of what is what.
Crypto is not going to work in the sense the original authors envisioned it. It is trying to solve social problems with very poor technology. Social problems you want to be solving differently to be successful
Your example makes sense in countries like Canada ( till 2021 ). Who knows when US or Germany or other west country will start to play against their citizens like in Canada?
I think probably faster than later because it goes into comunist like states direction where country want to run every citizen life ... like it happened in Poland after II-WW
Governments have plenty of rubber hoses, and guns.
The idea that non-technical people with no infosec / netsec / tradecraft knowledge could use any form of crypto within a regime that banned it aggressively without placing themselves in massive jeopardy is the height of looney tunes techno-utopianism. Keep in mind that these are usually nations that lack little things like habeas corpus, due process of law, or in some cases any rule of law whatsoever. If the government doesn't like what you are doing they disappear or kill you.
Wars are economically unfeasible. Didn't stop governments from waging them.
BitTorrent is 20 years old, and today you can still download any movie you want from it. Why hasn't any company or government being able to stop it?
The crackdown on pirating + streaming together really killed the scene at a point where it's no longer an inconvenience for the market actors.
I would say the same is happening with crypto where KYC and AML rules will progressively apply so that you will still have crypto but the "freedom" or lawless use will be so inconvenient that it won't be a problem for governments and financial actors. It just take time for those rules to be set, but there's really not so many complicated things about it.
The belief that code would beat laws is absurd, in the end you live in a physical world. Sure you could try to have an underground crypto that nobody can use officially but would that really be useful?
With BitTorrent, you at least have an IP address, which is easier to link with a real person.
I'm not talking just popular movies; I was getting Battlebots episodes from Rarbg earlier this year, in 1080p, pretty much as soon as they aired in the US.
In the strictest sense: Yes, with enough coercion, a small blockchain could be influenced. However, from a practical standpoint, it simply makes much more sense for said government to follow the FATF's recommendations & implement a CBDC, no blockchains required.
In fact, combined with AML/KYC, said government wouldn't need to bother with dissidents, as they can simply wipe the balances of anyone they deem a threat towards national security.
Your government may decide to crack down on crypto, making it difficult to convert to your local currency (as many countries do with USD).
The crypto world in the US may very well be a bubble that will burst at some point.
And as web3 progresses, the line between the Internet and cryptocurrencies will blur even more, making it hard to define laws around crypto without banning access to the Internet in the first place, which will make their job even harder, which is good in terms of taking power back from authoritarian goverments.
Crypto is at least transparent and fully auditable. Loans stay solvent as they are over collateralized and automatically liquidated when they become close to under collateralization. As a result, the crypto space has and will go through many mini bubbles that resolve themselves very quickly.
Crypto and blockchain are fundamentally transformative technologies. The U.S. government will make moves to co-opt it, via stable coin regulation, but they won't be able to fully control the space. It is truly international in scope, and runs on math and cryptography. They can scarcely ban seed phrases, or blockchain in general, as it is fundamentally a form of speech.
Crypto companies are overfunded by VCs and offer amazing packages, more than FAANG in many cases, plus the token upside. Who doesn't want to make a quick buck?
Also, it's pretty interesting technology that can be fun to work with. Even if it's useless, it scratches the itch of working on something deeply technical instead of the boring old web technologies.
Let he who is without sin throw the first stone.
The fully remote salaries I've seen recently for Web3 jobs almost makes me want to make the switch.
Just to be clear I don't really have a side. I'm just curious since I'm not really at the front lines of this stuff
However offering £150K + sign on bonus is enough for a lot of people (maybe even me) to overlook these issues and jump in for short term gain and the possibility of massive long term gains.
If they paid the same as a traditional startup the equation would be different and I think you would see less people making the switch.
you’ll find a lot of developers who feel there is plenty of interesting work in blockchains and crypto. one example is zero knowledge research and how it applies to crypto (zk rollups, zkEVM, privacy-preserving attestations and financial proofs, etc).
This absolutely does not mirror my experience. Most Web3 companies, even VC funded, can't offer even close to FAANG.
Do you have an example of such company?
But yes I feel that 250k+ salaries are outliers, most of these companies are just smart enough to hire remote-first, and 150k or even 100k takes you pretty far if you hire outside the US.
That's why the claim above that big tech employees would be jumping ship to web3 opportunities sounds far-fetched, even anecdotally my friends making 2-3-400k at "web2" companies are definitely not going anywhere near web3.
Web3 is about writing, deploying and auditing smart contracts, or writing L1/L2s, and writing platform-specific SDKs.
They have potentially no limit on the ceiling for token valuation while a similar company on public market will depend on fundamentals for its valuation.
If you are on a web3 rocketship, the chances of you cashing out is much higher than otherwise similar web2 startup.
Similarly, you also have more control over the direction of the company via DAO voting. You can protect your bags from getting diluted.
This is the comment that made me sign up for an account: Thanks for doing that, danuker ;)
In the most strictest sense: Yes, it is impossible to store all transactional data on just one computer, just like it would inevitably be impossible for one server/database to host an entire company's data.
The conventional way of doing this would be to shard the database so that it could be spread out amongst multiple servers, simple enough. This can't be done directly in a trustless system, however: Additional checks, data structures, & procedures need to be created so that it can be allowed to do so.
At a high level overview, data availability sampling [0][1] is required to make the attempt possible. When combined with Verkle trees [2][3] (Merkle trees + zk proofs) however, further improvements towards the number of possible shards could be made, increasing the storage capacity of the entire network even further.
[0] https://hackmd.io/@vbuterin/sharding_proposal#:~:text=ELI5%3... [1] https://near.org/papers/nightshade/#state-validity-and-data-...
[2] https://dankradfeist.de/ethereum/2021/06/18/pcs-multiproofs.... [3] https://vitalik.ca/general/2021/06/18/verkle.html
The challenge of decentralized scaling - https://ethereum.org/en/upgrades/vision/
Not everyone cares about the moral high ground. Statistically, about 5% of the population don't. So then web3.0 is extremely high pay + downside you don't care about.
? Yes, money.
This is not a dichotomy.
Most people are not ideological and don't care about meta issues.
Even those with opinions can be convinced quickly of something else with a huge paycheque.
Because Crypto is not directly fraudulent, and you can talk about it superficially as being beneficial, well, people will participate.
Money is a great motivator.
There was likely a similar group of people bitching in 1999. The dotcom bubble did happen, and yet dot coms also happened.
The point is that to see the upside, you need to evaluate what new capabilities the tech offers, whether they're interesting, and who is doing the real work (if it exists).
They were also going to change the world (I'm not sure if they specified for the better).
For instance, I believe crypto "dividends" or "yields" are a zero-sum game, diluting the limited savings of have-nots to enrich the haves. For example ETH staking, where to avoid middlemen, you have to stake 32 ETH.
But I believe cryptocurrency as an asset is well worth it, for the competition it provides to national currencies. If these decide to overinflate, crypto provides you with a relatively-uninflated asset (though its value also depends to an extent on the liquidity of national currencies, as well as fickle bandwagon effects).
Then again, given enough pay, I might consider helping some "entrepreneur" of the zero-sum variety.
end goal would be more usage of decentralized staking pools, see Rocket Pool. this way, the ‘middleman’ is a set of smart contracts; the validators (who only require 16ETH) take a slightly higher fee than stakers (who can stake as low as 0.01ETH), for their services rendered (burden of additional maintenance, technical expertise and risk involved with running a validator).
But I do feel that centralized staking (CEX, Lido) poses a risk to the network.
Given their volatilities, cryptocurrencies are neither inflation hedges nor currencies. Somebody with a bunch of USD trying to hedge inflation will buy gold or real estate before they buy cryptocurrencies.
I'm interviewing right now at a large-ish cryptocurrency company. I'm currently an exhausted L6 at a FAANG.
The promise of fewer working hours and no on-call rota is very attractive to me, as well as the ability to start with Go f/time[1] on mostly greenfield[2] projects.
[1] Team I am on has agreed long before I joined to use nothing but Java.
[2] I'm also tired, after decades in the industry, of mostly maintaining existing products. The chance to create new stuff from scratch is very attractive.
> At the same time there's seems to be a lot of anecdotal evidence that a lot of developers are now flocking to these crypto companies, enough that I think its fair to assume its likely true.
People build plenty of things for companies without necessarily being wide eyed believers in some honourable quest.
For me, there are a few key things
1. Obviously pay.
My family are the most important thing here, and people pay me money to write code & solve problems for them. Money can be exchanged for goods and services.
2. It's an interesting space.
You've got a global database with row level security for modifications and stored procedures. Everyone uses key based security. On top, the database is slow, those stored procedures have very strict limits and computations need to be heavily optimised. Everything is public. There are now multiple linked databases with different tradeoffs. How do you mix those? How do you ensure safety, security, validity? How do you do off-chain computation and get the results back on chain?
3. It's new.
Do you know what happens if I come up with a great new technical idea in most development? It's either a bad idea for reasons others have discovered already or someone has already implemented it better than I could. It often requires very deep expertise to do something truly new. On the crypto side, I've come up with things that are (as far as I can tell) brand new. I find building to be more fun than configuring, and you need to build new things in this space.
4. It's changing fast.
There are things you can do now you couldn't do 6 months ago, a year ago, two years ago. The space is very active.
I don't know if it'll be the foundation of everything in 10 years, a distant memory of "oh yeah people tried that didn't they" or if I'll be like COBOL programmers fixing legacy weird systems from an ill fated project. All I know is it's _fun_ and _hard_ and people pay me to do it.
For a community that builds so many things just to see if they can, I find it quite surprising that so many coders aren't even curious.
There are legitimate criticisms of cryptocurrency but the attitude here is more of a hardened loathing punctuated with a minority of more open minded people.
From an ecologic point of view, this makes sense. The amount of electric power used by the Bitcoin network tends towards the amount of electric power one can buy with the block reward and fees. While the Bitcoin price was in the single digits, this was not an issue, since even with the higher block reward back then, the amount of electricity one could buy with it was low. Once the Bitcoin price started climbing higher and higher, however, the total amount of power used by Bitcoin miners became significant.
The utility of Bitcoin is the same no matter its price; but its negative environmental cost is proportional to its price. It's natural that the attitude to it becomes negative once its downsides (proportional to its price) increase while its upsides stay the same (though one could argue that its upsides also have reduced with higher prices).
I don't know that I understand the point you're making. The fundamentals of Bitcoin haven't changed, and it is worse than a tulip bubble.
Maybe this will happen with crypto stuff. Maybe not. I've been very wrong on cryptos growth since the early days.
But, people have business ideas and want them built. I'm building those while solving new interesting problems. Does that really sound so bad as a job?
I'm not talking about my specific client work because I don't want anything to come across as shilling.
I mean the technologies that define this space, e.g. blockchains, ERC20 tokens, NFTs, and so on. I mean that in your comment, you didn't try to claim that these technologies were worth anything in themselves, just that there is a demand for them.
> But, people have business ideas and want them built. I'm building those while solving new interesting problems. Does that really sound so bad as a job?
No, but then you're also not in disagreement with people who find these technologies to be mostly a dead-end, since you just ignore how relevant these technologies are, you abstract away from the business requirements defined by somebody else.
> I mean that in your comment, you didn't try to claim that these technologies were worth anything in themselves,
What's the value "in itself" of postgres? The value comes from what you can build with it, what problems you can solve.
> just that there is a demand for them.
Because people want to build things and those are solutions to problems they face. That's why there's demand for them.
> No, but then you're also not in disagreement with people who find these technologies to be mostly a dead-end,
Again you're reading into things I've not written. Not knowing the long term future of this doesn't mean I agree it's mostly useless.
> since you just ignore how relevant these technologies are
Relevant in what way? To whom? They're certainly relevant if you want to integrate with any other projects in the area.
>you abstract away from the business requirements defined by somebody else.
The business requirements are defined by the business, yes.
I can feel this building to a statement about how you can use other technology to solve any particular problem, so I'll come in front of that and say yes - you can always build things using other tools, blockchains aren't magic they're just code.
I have been running a business with payments in micro transactions on Algorand for a few months. It's not something that would be remotely possible without cryptocurrency.
It's true that there are a lot of scams and nonsense, but I know for a fact that there are real artists using smart contracts to sell their art frictionlessly and engage with their community in ways that are again, impossible without this technology.
But to go back to the original point, writing this kind of thing on HN, there is a real chance the comment will be downvoted quite a lot.
Why would you assume that, though?
I've never seen an actual statistic on this. I mean, I'm sure there's greater than zero, but never solid evidence for "a lot".
It's to the point where the increasing anecdotes and ongoing absence of any harder numbers leads me to think it's negligible.
Back here in the world, crypto on a dev CV is a red flag.
In the end, that means the whole Web 3.0 and crypto complaints boil down to a simple question:
Should our government protect (idiots|naive investors) from getting scammed?
I'd argue yes, to make society more peaceful and more stable. But one could also argue that this is just the financial survival of the fittest and, hence, a natural rule that suckers get taken advantage of.
Anyone I know personally who makes NFT or his interested in it is doing it for speculation, not to make art per se.
> But one could also argue that this is just the financial survival of the fittest and, hence, a natural rule that suckers get taken advantage of.
In the nation where you have to put "Caution - Hot" on coffee-to-go cups to avoid being sued, I think the answer to that is self-evident.
Hate to be that guy but McDonald's got sued over the hot coffee because they continued to serve coffee well above safe temperatures long after valid saftey concerns had been raised. The poor woman recieved 3rd degree burns (something that shouldn't be possible from a spilled beverage). She was publicly vilified for the massive settlement awarded to her when she only asked for reasonable medical costs.
Also the "Caution - Hot" warning wouldn't have prevented her from being able to sue for negligence. From the data America isn't nearly as litigious as many media stories make out. In fact after this minor court case it actually became harder to sue companies in America and arguably resulted in may corporations to be less concerned about their affect on the common good.
While the answer for me is yes I also dislike the framing of this.
We live in a society that (the US even more than Europe)
1. Over centuries has moved towards more and more privatisation of what used to be commons (land, water, ways, now software), thus forcing people to engage in either business or crime to survive - unless you are born rich
2. Has grown more and more complex to navigate,sometimes by necessity but often via rent seeking (Intuit and taxes) requiring you to spend quite a lot of mental capacity and time to manage it - unless you are rich enough to pay someone to do the work for you
3. Does not really adequately give you the training and time required to acquire these skills - unless you are rich in money enough to afford college and possibly additional training, or have rich/self sacrificing enough parents to navigate college, learn how to separate good free sources from bad free sources etc. (not even bringing in systemic handicaps like lead paint or other cognitively impairing pollution in low income areas)
4. Has grown a hundreds of billion dollar industry around manipulating people, with useful information ever more difficult to distinguish from "sponsored posts" etc. - reinforcing the above 3 points. The swamp of influencers feeding parasocial relationships to monetize as part of that that is especially normalized throughout all of life and entertainment - unless you can afford paying for "high quality" media that doesn't feature them (in cash or in time searching for gems)
and we blame individuals for getting scammed?
All of the above boil down to "if you are already privileged, you can avoid getting scammed" and most of the moralistic arguments people use (greed, stupidity, impulsive,lazy...) are "fuck the poor" in disguise: fuck the poor for having poor impulse control (nevermind lead paint, unresolved trauma because there was no therapist money, not having the time to learn that impulse control before being thrust into work...), fuck the poor for their greed (never mind the fact that high risk games might be the only chance for meaningful social mobility if they work and the whole culture valorizes taking risks and having vision), fuck the poor for being stupid (education costs money, even if the internet gives you info for free you need to sift, sort, learn), fuck the poor for being lazy (nevermind that being poor is expensive due to lack of economizing opportunities and after just breaking even you might already have done a whole day of work).
We are putting up a well oiled, highly funded (sometimes state subsidised) machine of professional nudging, manipulation and technically legal scams against Joe Plumber or Joe Programmer who is just trying to do the right thing and hustle on top of his normal job. I'm not sure we should blame Joe for statistically not being on top in that game
I got a kick out of that
I think this article misses for the forest for the trees, or weeds, or looses sight of the depth of this activity for a few VCs. That activity just gets worse ha.
I think its up to the consumers to be more pragmatic in what they buy. VC involvement is not clout, but there is a heavy incentive to assume it is because non-VC involvement is also ripe for quicker disaster. When you try to bring this up in communities, people crowd you out. If you had previously said something nice about a project but noticed these conflicts of interest people will just say "don't FUD your own bags", meaning only say positive things to keep the interest high so that the exit liquidity remains for you too.
Interestingly, I wonder if this how the 1920s were. I like how in the equities market it is possible to be a holder and take a critical position to bring people to highlight an issue and improve on it, but most don't or wouldn't do that either for the same reason: "don't FUD your own bags"
Also see here: https://startupsandecon.substack.com/p/you-dont-own-web3-a-c...
The web3 crypto VC playbook is that they pretend to care about it up to the minute they use retail and the exchanges as a liquidity event to exit and make a killing out of them.
It is a rigged game which they can never lose. All thanks to and started by the Ethereum ecosystem since the first ICO.
I mean, pets.com? Seriously? It's a bubble waiting to be burst (and it did in 2001) so the Web is morally depraved and the government should come in and make sure only millionaires can invest in them. Makes total sense.
But on “web3” nobody wants to just build useful or interesting stuff. Instead everybody is looking to sell you their useless thing as an amazing investment. And that’s why it’s both morally obnoxious and tends to run afoul of securities laws.
But those aren't the projects that you hear about.
It is disingenuous of you to recognize the possibility on the web in 1999 but then characterize people building on web3 as not wanting to build useful or interesting stuff.
1. People who genuinely care about the games, about building narratives together, playing together, etc. This is a growing minority.
2. People who have come from the Play-to-Earn world who care about extracting as much monetary value as possible from the game economies by playing the game. These are the people who put the rules under as much scrutiny as possible.
3. People who have come from the crypto finance world who are looking for "alpha" from the game economies. They typically try and attain their gains by performing arbitrage on the game's ERC20 token(s).
For most blockchain game communities, early on, the communities are mostly populated by people of types (2) and (3). Type (1) groups in the community build organically over time, whereas type (2) and (3) members of the community come and go. This flow of (2)s and (3)s is actually important in building the core group of (1)s.
It feels like the kind of marketing you are talking about is necessary in order to build sustainable game communities for blockchain games. But good projects do have a growing number of members of type (1) who do derive essential (as opposed to economic) value from the underlying games themselves.
In general, though, the tools that blockchain projects use to organize and build up their communities will probably become useful beyond the scams (in the form of DAO tooling). It will take time for this to play out.
Disclaimer : These are not the kind of tools I build. Wasn't trying to shill myself there. My company will move in this direction eventually, but that is not what we do at the moment. This is just my sincere belief.
A lot of stuff on the Web sucks (always has), but importantly, there was always a sizeable proportion that didn't (Wikipedia, etc.). Cryptocurrencies are so bad at doing what they originally set out to do (function as currencies in at least some of the ways that currencies are useful), that anything in the space is almost universally exhibiting the problems I mentioned above.
I had the thought a few months ago that crypto is just a meme, a potent viral marketing scheme for the modern era. The gig economy notion of the article resonates strongly with me.
The problem isn't that the SEC is slow. It's that it's slow and gives out speeding tickets.
I wonder if the programmers working on them realise this ?
https://news.ycombinator.com/item?id=30268807
"Ask HN: Does Anyone else working in a crypto company feel this is all a scam?"
So crypto people divide into four categories:
Ideological fool
Greedy fool
Ideological competent
Greedy competent
As far as I know, Web3 is defined as all technologies that try to decentralize the Web.
Your frontend code stays almost the same. It just gets delivered via IPFS, or Arweave.
You still call APIs, they just happen to be gateways to (potentially/actually) decentralized technology.
Not all projects are like that, and many have actual real practical uses; public DLT and ZK Proofs are absolutely massive. Some teams and organizations are actually using them properly, they're just still building.
HN: Give the market 4 months, if you still think "all of crypto is a scam" then either everyone failed; or you were pretty set in your ways anyways :)
During the 2017 ICO boom, people who were selling their tokens were saying the exact same thing as you: “Now that we have all this investment and smart people in this space, the real-world use cases are just around the corner.”
The billions that flowed into crypto in 2017-18 created nothing except a stream of SEC investigations and fines. The “builders” were grifters. Why is this time different?
Anyway, good luck. I hope your roadmap to profitability is something else than “We’ll dump our tokens to retail” or “We’ll do enterprise consulting and sell proof-of-concept projects to hapless corporate middle managers who are very excited about capital-B Blockchain”
Either way, 4 months smells of bullshit. It will take at least 5 years for the good parts to float to the top.
In the mean time, I suggest to anyone else building things on blockchains to shut out the haters (you're already committed) and keep on building. Make sure you can survive at least one crash.
I agree on a 5 year horizon before it becomes "obvious" that some web3 projects have succeeded. Obviously if you see a crypto project that's cool and interesting, don't just check that it was audited - read the whitepaper and the audit report.
My hunch is that a16z founders don't like it, and that they are bit jealous of Chris Dixon about it (their crypto guy), but would never even consider turning away from all that money.
There's probably a lot of 'but we want to invest in real tech' whining going on and FYI I suggest that there's legitimacy to this.
Crypto is a form of economic populism, a mostly net-zero value creating activity distracting a lot of people's time and energy away from things that would be more beneficial, but without the giant upside.
You can be a doctor, help save lives, do surgery on 30 people a year ... OR ... you can be a Crypto Billinaire Elon Musk TV Dragon CEO Baller with 1 Billion Twitter Followers And Own The Basketball Team!
It's a bit perverse. FYI there are probably real opportunities in crypto but they are limited.
I have learned not to be surprised about anything to do with web3, but if there's the slightest error in here they will rip him apart in the British courts.
(Though that might produce enough heat to bring about an investigation, at least.)
the token itself doesn't do anything, but it may carry the illusion of hope in some form...until it doesn't.
So what?
two wrongs don't make a right. also if you did read the article then you will know that an IPO is regualted whereas a web3 token sale is not.
Most projects are very careful about the criteria under which they allow US nationals to purchase tokens (many going so far as to not sell tokens to people that come from US IPs).
* As fast as the SEC can manage.
How does Web3 work? Well, it’s nothing to do with any technology.
I don't know whether the space has converged on a single common definition, but it seems pretty clear that web3 refers to web apps that interact with decentralized services, eg smart contracts on Ethereum or IPFS storage. Other than that, they're not vastly different from other web apps, at least for a front-end developer. It's a few npm packages that handle the blockchain interactions, learning the basics of those should be doable within a few weeks (learning how to write safe smart contracts might take longer, but that's sort of a spearate role).
What that technology is being used for, and whether you consider that a libertarian utopia or a scam-riddled fraud, is a separate question. But from the technical perspective it's pretty clear what counts as web3 and what doesn't, and the difference is not just marketing.
"Securities fraud" here characterizes offering members of the public investment contracts without the approval of a centralized regulatory gatekeeper - something which typically requires a company to have annual revenue exceeding $100 million. That is of course not actually "fraud" under any reasonable definition of the term. It's regulatory-speak, to mislead the public and make these restrictions sound reasonable.
And yet all of the specific details are presented with decent context and are easily verifiable, something I'm sure you are very much in favour of.
If it's damming and objectively true, maybe the problem is not that the words are being said.
On another note, the ease at which VCs have inserted themselves into, and have been accepted as part of, the crypto scene and supposed future is both amusing and scary to me. They might not be a Govt entity, but they also play by a set of less formal rules that do not benefit anyone but the closed group they choose said rules to benefit.
That doesn't detract from the fact that the headline, which is the only part of the article many will read, is inflammatory and misleading.
>>They might not be a Govt entity, but they also play by a set of less formal rules that do not benefit anyone but the closed group they choose said rules to be edit.
VCs took center stage in the crypto space because the SEC entered it and prohibited programmatic crowdsales whereby the public could participate in initial funding rounds.
There is literally no other legal avenue by which people can raise funds for cryptocurrency projects, and those methods being explored as possible alternatives, like NFT sales, are already being eyed by the SEC with a mind to ban them. And if Congress gives the SEC the power to do so, they will.
Ethereum, had it conducted its capital raising after 2018, would have had to rely on venture capital firms, instead of a public crowdsale like it conducted in 2014 that provided it with wide distribution of token holders.
The fact that what's being sold are numbers generated on a computer is not the most relevant factor, and does not not warrant a different treatment than say titles of Florida swamp land.
https://www.tandfonline.com/doi/abs/10.1080/13571516.2021.19...
The idea that we ought to impose blanket restrictions on millions of people, and thereby sacrifice their liberty, in the name of safety, is fundamentally misguided in my opinion, and certain goes against the core principles of liberal society. Liberal democracies have to find more rights-respecting ways to combat financial crime.
Yes we know preemptively restricting financial interaction reduces some forms of financial harm, but what kind of damage does it do to society, when the only business entities capable of directly soliciting the public for capital, are those with revenues of over $100 million a year? What does that do to income inequality?
I don't like people promising the moon to hype up speculative investments, but there are non-government solutions to this, like reputation markets.
In fact we saw these non-government solutions working already: token investors in 2018, at the end of the brief period of reprieve from SEC restrictions, between 2016 and 2018, were unrecognizable from those that were giving a website with a white paper $40 million worth of cryptocurrency in 2016. This transformation occurred completely independently from any regulatory action. The collective intelligence of the market increased from hard-won lessons in the need to do due diligence, and the emergence of numerous sites for rating token sales (mind you, there was still a lot of room improvement in the curation market when the token sale experiment was shut down by the SEC. One promising avenue was Vitalik Buterin's proposal for DAICOs: https://ethresear.ch/t/explanation-of-daicos/465 which the market did not survive long enough to test).
Regulations can obviously address some of these problems too, but any restriction on how consenting parties choose to interact is going to have massive unintended consequences, and in my estimation the unintended consequences do much more harm than what's alleviated by the regulations.
Also worth mentioning is that the regulations that the SEC imposed on token sales went far beyond prohibiting issuers from promising big gains. They micromanaged how offerings were conducted, with inflexible cookie cutter rules that inhibit innovation and make the entire market dependent on a centralized gatekeeper, which is a monopolistic and fragile situation prone to systemic failures. One significant effect of this was that they eliminated the entire retail market's access to the early stage venture capital market.
It's obvious to me that a free society should not tolerate this level of control being exerted on how people engage in voluntary interactions with other consenting adults.
>>The fact that what's being sold are numbers generated on a computer is not the most relevant factor, and does not not warrant a different treatment than say titles of Florida swamp land.
The fact that an investment offer required having a title to a swamp in the 1930s made it so it was less evident how illiberal laws that the SEC enforces stifle society. Now that any one with a computer can create digital art and offer it up as an investment on a programmatic contract system makes it clear that the laws passed in the 1930s, if maintained, are going to require increasingly draconian intrusions into private interaction to enforce. Similar to how if we as a society tried to continue enforcing obscenity laws into the internet age: effective enforcement would have required prohibiting public access to strong encryption, and heavy handed treatment of those found flouting the law, to make an example out of them for every one else.
Except that's not what these markets are. Often this isn't a pair of equals trading assets, but an entity with excess resources and knowledge trading with an individual whose resources are far more limited.
It seems like a repeating pattern in libertarian ideology to hand wave away differences in power/information as irrelevant when two "consenting adults" are transacting. But we don't think of many other interactions in society like this. In particular, power/information differences are a huge deal when talking about whether a sexual interaction is transgressive. Indeed, that's why the concept of "age of consent" exists for sexual interaction. Likewise there is a lot of disclosure required for "informed consent" when a doctor performs surgery on a patient.
Why are efforts to equalize the information imbalance in financial markets different and somehow unnecessary?
I don't want you to forcibly prevent large coalitions of people, like companies, from making any offer they want to me. By doing so, you are violating my right to free association, and assuming you know better than me what's best for me. I am not a child.
I am able to draw upon the knowledge of millions of people, not least of all the companies that are the competitors of the soliciting company, and have just as much resources with which to counter-act any disinformation the soliciting company may publish, so I am not at any disadvantage versus any particular company.
Public knowledge, like Wikipedia, or the reputations attached to particular products or companies, is a product of millions of minds, finding and filtering out information to produce an accurate picture of the world that can easily be digested by a typical person. It's a spontaneous bottom-up process that trumps anything that could be created by centralized committee.
That's why Apple, despite being worth $2.8 trillion, is only able to convince individuals to buy its products by providing a product that is superior in quality. Individuals can draw upon the collective wisdom of society, and get a reliable indication of the real quality of Apple products. Massive companies, when they began floundering in delivering quality, have lost market share, for the same reason. See the rise of Japanese automakers versus American ones.
>> Indeed, that's why the concept of "age of consent" exists for sexual interaction.
Age of consent has nothing to do with "power/information differences". It has to do with the ability to provide genuine consent, which children, psychologically undeveloped as they are, are generally incapable of.
The ability to consent is why we allow adults to vote, and have sex, for and with whoever they want, respectively. By your logic, adults would need guardians in elections, filtering their candidate choice, to protect them from political entities with "excess resources and knowledge" manipulating them.
What you're advocating is a total rejection of a core principle of liberal democracy, which is that an individual is capable of making their own choices for their interests.
And what you advocate would be dystopian. Now that any one with a computer can create digital art and offer it up as an investment on a programmatic contract systemm, it is clear that the laws passed in the 1930s, if maintained, are going to require increasingly draconian intrusions into private interaction to enforce.
Similar to how if we as a society tried to continue enforcing obscenity laws into the internet age: effective enforcement would have required prohibiting public access to strong encryption, and heavy handed treatment of those found flouting the law, to make an example out of them for every one else.
Dead wrong.
It's called having a conscience.
But people finally funding the arts... digital goods with provenance and attribution... all with easily accessible secondary markets, complete with game-changing royalty fees.
What's not to like? These rants are seriously getting old.
The community.
People in crypto are delusional that it can somehow save the world from itself, at least they believe this in the bear market, and of course as soon as the bull market comes they flip ideology and rotate into fiat.
The Cryptosphere is a sess pit, full of scammers wanting to get rich quick. They will pump money into NFT platforms, not because they care about "funding the arts", but because they want to jump on the next hype train so they can flip some meaningless and hideous procedurally generated art by some 14 year old kid who wrote a script.
But were you on the internet in the early 90s? Do you remember the type of jpegs that got shared around on IRC, pretty much making their way to your hard drives whether you wanted to see them or not?
Yet here we are, having a highly civilized debate on the free, powered by a series of magic tubes. This is just the start and decentralization does have tangible advantages.
Every community will always have bad actors, it's unfair to judge the entire community because of them
> hideous procedurally generated art by some 14 year old kid who wrote a script
That's unnecessarily condescending. Don't let your anger toward crypto spill over on the computer generated art scene. If my 14 year old wrote scripts, let alone made procedurally generated art, I would be extremely impressed and proud.
100% this. A basket of deplorables.
a) it's working, at least for now, and it certainly wasn't before (music label owner here, friends with many professional artists)
b) decentralization really does have a few important use case advantages — one can use the asset all across the internet while exhibiting provenance, etc.
Does this include the people whose art is simply downloaded off Deviantart to be sold by a third party as an NFT? Doesn't sound like it's working to me, especially if you consider these things aren't even used enough to be relevant.
But on the subject of piracy, it is still pretty rampant even on major platforms like YouTube, to this day — but less so than when they started out. Very fair to expect a similar trend here.