Crypto Fund III(a16z.com)
a16z.com
Crypto Fund III
https://a16z.com/2021/06/24/crypto-fund-iii/
86 comments
The 90's dot com gold rush is the rhyme to the crypto gold rush. Lots of talk about ecommerce, revolutionary tech, etc. The 2000's saw the sobered outcomes: ads, ads, ads. All the apps were just conduits to adtech - very wide marketing funnels. Nearly all the actual services had been demonstrated before in a non-monetized, pre-Web context.
A16Z is correct in saying that the dot com boom had a major build-out aspect. It needed broadband deployment and intensive consumer marketing. Cryptocurrency has so far demonstrated itself to be more like a bottom-feeder on hardware resources; hardware not being used for something obviously more valuable gets repurposed into mining of some kind, and energy negative uses have so far been accommodated through various kinds of theft of either the energy itself(in industrialized mining) or the compute time(in malware). In this light, the tendency towards specialized compute is not shown to be universal, but part of a set of interlocking arms races - securing systems and energy resources better, finding proofs of work with broader applicability across different kinds of hardware, and creating demand for hardware that is more efficient at those proofs that exist.
Cryptocurrency in application is likely to be a one-note phenomenon in the same way that the internet boom became an ad boom - the same services with a little speculative cherry on top. It has a big inherent application simply by being decentralized and tradeable. It can be worse on other dimensions and still succeed by being really good at that one thing, financializing the world in greater degrees, and pushing the arms race forward.
A16Z is correct in saying that the dot com boom had a major build-out aspect. It needed broadband deployment and intensive consumer marketing. Cryptocurrency has so far demonstrated itself to be more like a bottom-feeder on hardware resources; hardware not being used for something obviously more valuable gets repurposed into mining of some kind, and energy negative uses have so far been accommodated through various kinds of theft of either the energy itself(in industrialized mining) or the compute time(in malware). In this light, the tendency towards specialized compute is not shown to be universal, but part of a set of interlocking arms races - securing systems and energy resources better, finding proofs of work with broader applicability across different kinds of hardware, and creating demand for hardware that is more efficient at those proofs that exist.
Cryptocurrency in application is likely to be a one-note phenomenon in the same way that the internet boom became an ad boom - the same services with a little speculative cherry on top. It has a big inherent application simply by being decentralized and tradeable. It can be worse on other dimensions and still succeed by being really good at that one thing, financializing the world in greater degrees, and pushing the arms race forward.
I agree with most of what you've said, but some cryptocurrencies use proof-of-work systems (like RandomX) that truly are ASIC/FPGA/GPU-proof by design.
Starting to invest in crypto projects and companies during the onset of a bear market (below 200D MA, after death cross) is a smart move. This seems like a good time to embark on crypto projects, even if we have an upcoming winter.
The coolest thing would be if a16z crypto believed in open access as well, and allowed all accredited investors (due to legislation, unfortunately) to contribute a modest amount.
The coolest thing would be if a16z crypto believed in open access as well, and allowed all accredited investors (due to legislation, unfortunately) to contribute a modest amount.
They could to some degree if they also publicly disclosed investments in decentralized incubators/funds (if they made them).
If we can talk semantics for just one second, it feels like its been ages since the word "blockchain" was coopted from being a technical term into a hype inducing buzzword.
So, it's nice to see someone gently set down the word and use another phrase. In this case "crypto network".
So, it's nice to see someone gently set down the word and use another phrase. In this case "crypto network".
> We believe that the next wave of computing innovation will be driven by crypto. We are radically optimistic about crypto’s potential to restore trust and enable new kinds of governance where communities collectively make important decisions about how networks evolve, what behaviors are permitted, and how economic benefits are distributed. That’s why today we’re pleased to announce a new $2.2 billion fund to continue investing in crypto networks and the founders and teams building in this space. This represents the beginning of an exciting new chapter for the a16z crypto team.
Can somehow explain to me exactly how crypto will do this without intermediaries? If there must be intermediaries then why do you need crypto?
- How can crypto "restore trust"?
- How can it enable "new kinds of governance" - unless "new" means Plutocracy?
- How can any economic benefits be distributed when by definition cryptocurrency holders are accountable to no one (something like a redistribution of funds would eventually require either an intermediary in which all holders are beholden to, or voting, however in either case that's the exact scenario you're in if you hold fiat in a democratic country so I'm not really getting it).
Can somehow explain to me exactly how crypto will do this without intermediaries? If there must be intermediaries then why do you need crypto?
- How can crypto "restore trust"?
- How can it enable "new kinds of governance" - unless "new" means Plutocracy?
- How can any economic benefits be distributed when by definition cryptocurrency holders are accountable to no one (something like a redistribution of funds would eventually require either an intermediary in which all holders are beholden to, or voting, however in either case that's the exact scenario you're in if you hold fiat in a democratic country so I'm not really getting it).
They're planning to swap intermediaries, because in doing so the VCs can capture enormous value from the old guard. Meet the new boss, same as the old boss. Instead of Jamie Dimon, it'll just be the next Zuckerberg (and when you propose a contentious theory about an emergent pandemic, they'll merely censor your ability to pay your bills, buy things and feed your family).
It's worth noting though, that just because there are intermediaries, that obviously doesn't mean they're all the same. It doesn't mean their attributes are the same. One intermediary can be superior (or worse) than another. All successful, large scale approaches to crypto will always require intermediaries. DeFi is a fantasy, identical to the fantasy of decentralized Internet services in general from the past 10-20 years (real DeFi will languish for exactly the same reasons; the reasons for which the evangelists never seem to understand, because their emotional buy-in clouds their judgment).
Part of that script by A16Z is entirely fake of course. They're inserting rather comical wokeness into it (communities, collectively, economic redistribution, har har), because you have to do that with all corporate PR now. Their goal is merely to establish the next banking & finance kingpins and to mint as many billions of dollars as they can in the process.
It's worth noting though, that just because there are intermediaries, that obviously doesn't mean they're all the same. It doesn't mean their attributes are the same. One intermediary can be superior (or worse) than another. All successful, large scale approaches to crypto will always require intermediaries. DeFi is a fantasy, identical to the fantasy of decentralized Internet services in general from the past 10-20 years (real DeFi will languish for exactly the same reasons; the reasons for which the evangelists never seem to understand, because their emotional buy-in clouds their judgment).
Part of that script by A16Z is entirely fake of course. They're inserting rather comical wokeness into it (communities, collectively, economic redistribution, har har), because you have to do that with all corporate PR now. Their goal is merely to establish the next banking & finance kingpins and to mint as many billions of dollars as they can in the process.
Seriously, nobody would invest if that wasn’t 100% true.
> How can crypto "restore trust"?
Crypto can be held and transacted in a secure and trust less way. I can store my $ in the bank which is secure but requires trust, or I can store my $ under my bed which I trust but isn't secure.
> How can it enable "new kinds of governance"
New crypto has introduced the idea of a governance token, if you hold one of these governance tokens it gives you a vote on the policies of the token. This is similar to how you have a vote in the building society if you hold funds at that building society, much more democratic than more traditional banks.
> How can any economic benefits be distributed when by definition cryptocurrency holders are accountable to no one
Holders are accountable to the economics of the token in the same way that the government is accountable to the economics of the country. If token holders do dumb stuff that devalues their token no one will buy it and their token will be worthless in the same was as a government just printing money makes the money worth less.
Crypto can be held and transacted in a secure and trust less way. I can store my $ in the bank which is secure but requires trust, or I can store my $ under my bed which I trust but isn't secure.
> How can it enable "new kinds of governance"
New crypto has introduced the idea of a governance token, if you hold one of these governance tokens it gives you a vote on the policies of the token. This is similar to how you have a vote in the building society if you hold funds at that building society, much more democratic than more traditional banks.
> How can any economic benefits be distributed when by definition cryptocurrency holders are accountable to no one
Holders are accountable to the economics of the token in the same way that the government is accountable to the economics of the country. If token holders do dumb stuff that devalues their token no one will buy it and their token will be worthless in the same was as a government just printing money makes the money worth less.
They're likely making vague references to "CBDC's" or Central Bank Digital Currencies[0]. Networks like Chia that focus on less power consumption will likely be used to facilitate these networks, there's already been significant ESG movement since any new developments will be mandated to have a limited environmental impact.
[0] - https://www.investopedia.com/terms/c/central-bank-digital-cu...
[0] - https://www.investopedia.com/terms/c/central-bank-digital-cu...
> How can crypto "restore trust"?
Finance is incredibly opaque with a lot of rent-seekers taking a cut of transactions, and firms doing semi-illegal things but realizing that the chance of them getting caught is slim and the fine is generally less than the profits they'll make.
Decentralized Finance (DeFi) is almost completely transparent - all major smart contracts are open source and all transactions are made in public. Which gives people a lot more trust in the system as they can see what is going on.
> How can it enable "new kinds of governance" - unless "new" means Plutocracy?
Have a look at Decentralized Autonomous Organizations (DAO's). People hold tokens in the protocol, and then anyone can suggest changes as a Git Diff. The token holders vote on the change and if it's approved it gets merged into the protocol. Pretty cool democratic way to make changes to decentralized software without anyone getting special privileges.
> How can any economic benefits be distributed when by definition cryptocurrency holders are accountable to no one?
I assume they're talking about DeFi not caring about your nationality / sex / skin color / power. Everyone is on an equal participation playing field, and nobody is locked out from participating.
Finance is incredibly opaque with a lot of rent-seekers taking a cut of transactions, and firms doing semi-illegal things but realizing that the chance of them getting caught is slim and the fine is generally less than the profits they'll make.
Decentralized Finance (DeFi) is almost completely transparent - all major smart contracts are open source and all transactions are made in public. Which gives people a lot more trust in the system as they can see what is going on.
> How can it enable "new kinds of governance" - unless "new" means Plutocracy?
Have a look at Decentralized Autonomous Organizations (DAO's). People hold tokens in the protocol, and then anyone can suggest changes as a Git Diff. The token holders vote on the change and if it's approved it gets merged into the protocol. Pretty cool democratic way to make changes to decentralized software without anyone getting special privileges.
> How can any economic benefits be distributed when by definition cryptocurrency holders are accountable to no one?
I assume they're talking about DeFi not caring about your nationality / sex / skin color / power. Everyone is on an equal participation playing field, and nobody is locked out from participating.
> Finance is incredibly opaque with a lot of rent-seekers taking a cut of transactions, and firms doing semi-illegal things but realizing that the chance of them getting caught is slim and the fine is generally less than the profits they'll make.
> Decentralized Finance (DeFi) is almost completely transparent - all major smart contracts are open source and all transactions are made in public. Which gives people a lot more trust in the system as they can see what is going on.
You have yet to explain how crypto will prevent these semi-illegal things from occurring. Like you said "the fine is generally less than the profits they'll make." Also, cryptocurrencies are not inherently transparent, and said transparency can also be used for oppression.
In any case, code is not perfect and smart contracts cannot override reality. I see little to be gained. Ultimately you either need existing government to uphold the true intent of a smart contract or subject laypeople to understand highly complicated smart contract code to know whether what they're getting into is legit.
> Have a look at Decentralized Autonomous Organizations (DAO's). People hold tokens in the protocol, and then anyone can suggest changes as a Git Diff. The token holders vote on the change and if it's approved it gets merged into the protocol. Pretty cool democratic way to make changes to decentralized software without anyone getting special privileges.
This is not democratic - you're describing a plutocracy. Is that what you want?
> I assume they're talking about DeFi not caring about your nationality / sex / skin color / power. Everyone is on an equal participation playing field, and nobody is locked out from participating.
This is not true, those who held crypto earlier will have more weight.
> Decentralized Finance (DeFi) is almost completely transparent - all major smart contracts are open source and all transactions are made in public. Which gives people a lot more trust in the system as they can see what is going on.
You have yet to explain how crypto will prevent these semi-illegal things from occurring. Like you said "the fine is generally less than the profits they'll make." Also, cryptocurrencies are not inherently transparent, and said transparency can also be used for oppression.
In any case, code is not perfect and smart contracts cannot override reality. I see little to be gained. Ultimately you either need existing government to uphold the true intent of a smart contract or subject laypeople to understand highly complicated smart contract code to know whether what they're getting into is legit.
> Have a look at Decentralized Autonomous Organizations (DAO's). People hold tokens in the protocol, and then anyone can suggest changes as a Git Diff. The token holders vote on the change and if it's approved it gets merged into the protocol. Pretty cool democratic way to make changes to decentralized software without anyone getting special privileges.
This is not democratic - you're describing a plutocracy. Is that what you want?
> I assume they're talking about DeFi not caring about your nationality / sex / skin color / power. Everyone is on an equal participation playing field, and nobody is locked out from participating.
This is not true, those who held crypto earlier will have more weight.
> This is not democratic - you're describing a plutocracy.
You don't know what a plutocracy is. Anyone who holds a token can vote they don't need to be wealthy. Poor voters can pool their votes to get a majority bigger than wealthy voters if wanted, this type of governance is called a democracy.
> Ultimately you either need existing government to uphold the true intent of a smart contract or subject laypeople to understand highly complicated smart contract code to know whether what they're getting into is legit.
By this logic paper contracts are also worthless because they also require a government to uphold and a lawyer to know whether what you are getting into is legit.
Obviously having these paper contracts in a standardised way thats public is a gain to society, when we do that we call them smart contracts.
> This is not true, those who held crypto earlier will have more weight.
This is not true, early investors will have more crypto, this is the reward for investing early, the risk is that your millions of doge are worthless. This is just standard economics and investing.
I am sorry if you thought crypto currency was going to bring about the communist utopia but its just a better form of capitalism, which is a good thing if you live in a capitalist country.
You don't know what a plutocracy is. Anyone who holds a token can vote they don't need to be wealthy. Poor voters can pool their votes to get a majority bigger than wealthy voters if wanted, this type of governance is called a democracy.
> Ultimately you either need existing government to uphold the true intent of a smart contract or subject laypeople to understand highly complicated smart contract code to know whether what they're getting into is legit.
By this logic paper contracts are also worthless because they also require a government to uphold and a lawyer to know whether what you are getting into is legit.
Obviously having these paper contracts in a standardised way thats public is a gain to society, when we do that we call them smart contracts.
> This is not true, those who held crypto earlier will have more weight.
This is not true, early investors will have more crypto, this is the reward for investing early, the risk is that your millions of doge are worthless. This is just standard economics and investing.
I am sorry if you thought crypto currency was going to bring about the communist utopia but its just a better form of capitalism, which is a good thing if you live in a capitalist country.
> You don't know what a plutocracy is. Anyone who holds a token can vote they don't need to be wealthy. Poor voters can pool their votes to get a majority bigger than wealthy voters if wanted, this type of governance is called a democracy.
How do you receive tokens? One person, one token? No? Then it's not a democracy. Give me a break.
> By this logic paper contracts are also worthless because they also require a government to uphold and a lawyer to know whether what you are getting into is legit.
> Obviously having these paper contracts in a standardised way thats public is a gain to society, when we do that we call them smart contracts.
Oh god - smart contracts are not the same thing as "standardised paper contracts." Existing contracts are not worthless because it's the intent that matters, not what the actual contract says, unlike a smart contract.
> This is not true, early investors will have more crypto, this is the reward for investing early, the risk is that your millions of doge are worthless. This is just standard economics and investing.
There's no risk because you can simply mint more coins for free. The people who created the currency took no risk in holding.
> I am sorry if you thought crypto currency was going to bring about the communist utopia but its just a better form of capitalism, which is a good thing if you live in a capitalist country.
lol, ok.
How do you receive tokens? One person, one token? No? Then it's not a democracy. Give me a break.
> By this logic paper contracts are also worthless because they also require a government to uphold and a lawyer to know whether what you are getting into is legit.
> Obviously having these paper contracts in a standardised way thats public is a gain to society, when we do that we call them smart contracts.
Oh god - smart contracts are not the same thing as "standardised paper contracts." Existing contracts are not worthless because it's the intent that matters, not what the actual contract says, unlike a smart contract.
> This is not true, early investors will have more crypto, this is the reward for investing early, the risk is that your millions of doge are worthless. This is just standard economics and investing.
There's no risk because you can simply mint more coins for free. The people who created the currency took no risk in holding.
> I am sorry if you thought crypto currency was going to bring about the communist utopia but its just a better form of capitalism, which is a good thing if you live in a capitalist country.
lol, ok.
> How do you receive tokens? One person, one token? No? Then it's not a democracy. Give me a break.
You can have more than one vote in a democracy look at the American electoral system as an example or any business.
> because it's the intent that matters, not what the actual contract says, unlike a smart contract.
If you sign a contract you are bound to it not some undecided interpretation of it thats why you need a lawyer to write it. You don't understand how our legal system works.
> There's no risk because you can simply mint more coins for free
There is no crypto currency where I can just print more coins. Can you please tell me how I can print create more bitcoin for free? VERY interested in this alchemy you speak of.
You can have more than one vote in a democracy look at the American electoral system as an example or any business.
> because it's the intent that matters, not what the actual contract says, unlike a smart contract.
If you sign a contract you are bound to it not some undecided interpretation of it thats why you need a lawyer to write it. You don't understand how our legal system works.
> There's no risk because you can simply mint more coins for free
There is no crypto currency where I can just print more coins. Can you please tell me how I can print create more bitcoin for free? VERY interested in this alchemy you speak of.
"This is not true, those who held crypto earlier will have more weight."
I think this is a really important and interesting point. The late majority and the laggards and the uneducated poor will be essentially shut out. They will likely never understand crypto on any meaningful level, and that might actually be a reason for them to cling to what they know for dear life.
I think this is a really important and interesting point. The late majority and the laggards and the uneducated poor will be essentially shut out. They will likely never understand crypto on any meaningful level, and that might actually be a reason for them to cling to what they know for dear life.
> Decentralized Finance (DeFi) is almost completely transparent - all major smart contracts are open source and all transactions are made in public. Which gives people a lot more trust in the system as they can see what is going on.
Yet we have an almost endless list of people being cheated out of their money (countless stories of people/exchanges losing their private keys, pump and dump schemes left and right, not to mention the lawsuits against Tether)
Yet we have an almost endless list of people being cheated out of their money (countless stories of people/exchanges losing their private keys, pump and dump schemes left and right, not to mention the lawsuits against Tether)
> Decentralized Finance (DeFi) is almost completely transparent - all major smart contracts are open source and all transactions are made in public.
I think this is a very important point, but it's also missing some of the picture.
DeFi could potentially make instituting things like a wealth tax much easier. If the crypto network is set up for it, all transactions are seen by everyone.
However I think any individual coin with widespread adoption will soon move away from this sort of complete transparency. Lightning networks will decrease the visibility into the transaction stream. And these sorts of networks end up acting like banks on their own, as more centralized points of power and knowledge.
And though it seems like there's no shadowy governing board like the Fed in the crypto world, these governance structures are still there, just even less visible than the Fed. Who decides the conflicts between the miners and the holders of the Bitcoin software network? It was not long ago that there were big fights about this, and because the governance is not public, the entire debate was extremely paranoid and conspiratorial.
Strcturelessness of governance does not mean that there is no governance, that there is no hierarchy in who decides the basic rules of the crypto network, it's just means that fewer people understand how power flows when making decisions and changes to the networks.
I think this is a very important point, but it's also missing some of the picture.
DeFi could potentially make instituting things like a wealth tax much easier. If the crypto network is set up for it, all transactions are seen by everyone.
However I think any individual coin with widespread adoption will soon move away from this sort of complete transparency. Lightning networks will decrease the visibility into the transaction stream. And these sorts of networks end up acting like banks on their own, as more centralized points of power and knowledge.
And though it seems like there's no shadowy governing board like the Fed in the crypto world, these governance structures are still there, just even less visible than the Fed. Who decides the conflicts between the miners and the holders of the Bitcoin software network? It was not long ago that there were big fights about this, and because the governance is not public, the entire debate was extremely paranoid and conspiratorial.
Strcturelessness of governance does not mean that there is no governance, that there is no hierarchy in who decides the basic rules of the crypto network, it's just means that fewer people understand how power flows when making decisions and changes to the networks.
Because (at least originially) the goal of cryptocurrencies were to combat the double spending problem, providing an alternative to fractional-reserve banking.
you need crypto because crypto even with intermediaries is different than traditional fiat with intermediaries
how so?
crypto provides more privacy even though as you can see with some of the latest ransomware attacks where they retrieve the ransom back not completely private, pseudo-anonymous. The wallet privacy is why FinCEN is trying to introduce new rules around unhosted wallets.
https://www.coindesk.com/fincens-wallet-rule-aimed-to-close-...
https://www.coindesk.com/fincens-wallet-rule-aimed-to-close-...
> How can crypto "restore trust"?
For people with very poor understandings of economics, and have drunk deep from the sacred texts of Zerohedge, that have been standing on a wooden box on the street corner for the past decade preaching about the evils of the coming wave of inflation, as the Fed struggles mightily to be able to even get inflation up to the 2% target, much less above it for any period of time, crypto is the savior to get us away from fiat money.
For people with very poor understandings of economics, and have drunk deep from the sacred texts of Zerohedge, that have been standing on a wooden box on the street corner for the past decade preaching about the evils of the coming wave of inflation, as the Fed struggles mightily to be able to even get inflation up to the 2% target, much less above it for any period of time, crypto is the savior to get us away from fiat money.
Please don't post in the bombastic flamewar style to HN. It just leads to predictable, shitty threads.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
Thanks for the check, dang, it's part of what keeps this site on track.
ZH is largely critical of crypto
Maybe I just shouldn’t read Hacker News anymore.
At a minimum, it's good to skip comments with a header that starts with "epistasis X minutes ago..."
I would instead recommend something like this masterpiece from Yakov Feygin, The Delationary Bloc:
https://phenomenalworld.org/analysis/deflation-inflation
I would instead recommend something like this masterpiece from Yakov Feygin, The Delationary Bloc:
https://phenomenalworld.org/analysis/deflation-inflation
We should all ask ourself this question more often ;)
> the Fed struggles mightily to be able to even get inflation up to the 2% target, much less above it for any period of time
Congress solved their problem I guess.
Congress solved their problem I guess.
Yes but so is any asset. Gold, property, etc.
Whenever this question comes up in crypto/blockchain enthusiast circles there are usually two answers.
- read this $blockchain_book - just wait, these things take time
I have never once heard specifics that are even close to convincing
- read this $blockchain_book - just wait, these things take time
I have never once heard specifics that are even close to convincing
> We believe that the next wave of computing innovation will be driven by crypto.
There’s actually another less obvious interpretation of this, which is that the creation of cryptocurrencies is funding the development and deployment of new technologies, some of which may be useful beyond cryptocurrencies.
There are a number of academic research labs that have been funded in part or in whole by cryptocurrencies, and which exist to pump out new cryptography, distributed systems architectures, etc.
For example, zk-SNARKS got a huge boost in use by cryptocurrencies the past decade, and there’s been an explosion of derivatives and advancements funded by the cryptocurrency industry since.
Beyond the hype and buzzwords, that’s at least one lasting and tangible benefit of this industry.
There’s actually another less obvious interpretation of this, which is that the creation of cryptocurrencies is funding the development and deployment of new technologies, some of which may be useful beyond cryptocurrencies.
There are a number of academic research labs that have been funded in part or in whole by cryptocurrencies, and which exist to pump out new cryptography, distributed systems architectures, etc.
For example, zk-SNARKS got a huge boost in use by cryptocurrencies the past decade, and there’s been an explosion of derivatives and advancements funded by the cryptocurrency industry since.
Beyond the hype and buzzwords, that’s at least one lasting and tangible benefit of this industry.
Except for the leveraged Binance futures "tokens" that basically didn't function properly and all tanked without any real legal repercussions for Binance[0].
Unfortunately all of the competent exchanges with assets similar to these (let's be honest here... only FTX) aren't available for use in the USA in their full capacity.
[0] - https://www.theblockcrypto.com/post/49898/how-a-misleading-t...
Unfortunately all of the competent exchanges with assets similar to these (let's be honest here... only FTX) aren't available for use in the USA in their full capacity.
[0] - https://www.theblockcrypto.com/post/49898/how-a-misleading-t...
Did you respond to the right post? I don't see how anything you wrote is relevant to my post. You're talking about trading, I was talking about R&D.
Does this inherently tie A16z to try and destabilize or cast shade at traditional financial markets for the gains of their own funds?
There is an inherent conflict in that they provide returns to their LPs in USD $ while underwriting crypto service companies which partially/wholly rely on the value of crypto to increase over time to increase adoption of services.
The other argument is that it isn't a zero sum game and that both can succeed - however I don't buy that in the long run unless crypto et al. remains an alternative to finance companies. Maybe they split market share and A16z is just diversifying its portfolio of exposure.
There is an inherent conflict in that they provide returns to their LPs in USD $ while underwriting crypto service companies which partially/wholly rely on the value of crypto to increase over time to increase adoption of services.
The other argument is that it isn't a zero sum game and that both can succeed - however I don't buy that in the long run unless crypto et al. remains an alternative to finance companies. Maybe they split market share and A16z is just diversifying its portfolio of exposure.
A16Z: "It's time to build"
Also A16Z: "We're raising (another) crypto fund"
Also A16Z: "We're raising (another) crypto fund"
Also - is this A16z betting on all the surrounding companies of crypto assets? If so - it is not too dissimilar from all the landlords/property holders in San Francisco making money in the gold rush while the miners did not.
I am amazed at the level of exegesis directed at what is effectively a marketing communication. They are "talking their book" and not making unbiased pronouncements on the future...
The value proposition for decentralized, hard money assets and related tech is bear not bull case, about the broader world and economy around us.
It's funny how the attitude between a16z and those generally commenting about crypto in the comments here are opposites.
[deleted]
Human civilization wont use paper money forever nor will people be satisfied with third parties like banks just updating spreadsheets on their behalf forever; there has to be a solution and cryptocurrency is appearing to fill that
Power is decentralizing rapidly with the spread of information and the units of account we use for exchange will need to reflect that
Power is decentralizing rapidly with the spread of information and the units of account we use for exchange will need to reflect that
Most of the money is already digital, some countries are almost done with paper money, crypto-currencies bring nothing new here.
Unless you want to get rid of debt and credit creation, we'll need intermediaries. You can already do P2P lending and funding if that's your thing... you'll realize it's risky and a lot more expensive than using banks.
Unless you want to get rid of debt and credit creation, we'll need intermediaries. You can already do P2P lending and funding if that's your thing... you'll realize it's risky and a lot more expensive than using banks.
Thanks for your response.
I certainly disagree with your conclusion. The main reason for the invention of bitcoin specifically was to avoid the risk of using banks and intermediaries.
I certainly disagree with your conclusion. The main reason for the invention of bitcoin specifically was to avoid the risk of using banks and intermediaries.
In the future I would expect Intermediaries will be smart contracts that lend your crypto on your behalf. Distributed reputational systems take care of the trust aspect. This could cost less than existing traditional lending systems.
Of course A16Z is enthusiastic about the creation of a financial system not subject to democratic oversight.
Our current financial system has, at best, only a veneer of democratic oversight, evidenced by decades of deregulation and the inability of the government to sensibly reregulate it after the GFC.
The banking system pretty much owns politicians cradle-to-grave - you need massive political donations to get elected, then lobbyists have super-access to politicians while in office, then politicians are offered lucrative revolving door jobs and board seats on leaving office.
The banking system pretty much owns politicians cradle-to-grave - you need massive political donations to get elected, then lobbyists have super-access to politicians while in office, then politicians are offered lucrative revolving door jobs and board seats on leaving office.
Agree. crypto will not fix any of that.
A lot of people are excited about that. For good reason too. The very idea that two people exchanging private value should be subject to “democratic oversight” is a totalitarian nightmare.
To me that's a surprising premise and an even bigger surprise in the conclusion. What makes you think A16Z wants to create a financial system without democratic oversight?
…and entirely opt-in.
I know I am!
Move the hands on the crypto doomsday clock a bit closer to midnight I suppose. Douglas Adams tried to warn us: "[to] revalue the leaf, we are about to embark on a massive defoliation campaign, and ...er, burn down all the forests." https://benoitessiambre.com/specter.html
The article you linked has a poor understanding of what cryptocurrencies are. First, understand that cryptocurrencies are not just money or currencies. Crypto-assets are programmable and allow many different applications, it's not just limited to purchasing transactions. Realize that there may be many different types of crypto-assets. Some will allow voting & governance, some will have price-stabilizing incentives built in, some will be inflating and mimc fiat, while others will be programmed to mimic gold, some will be interest bearing, some will be non-fungible, some will be a mixture of various properties and incentives.
The term "cryptocurrencies" is really misleading.
The term "cryptocurrencies" is really misleading.
I don’t understand the analogy you are trying to make.
Yeah, the “defoliation” analogy seems the opposite to what is actually happening. The creation of many cryptocurrencies is akin to money supply inflation, not deflation.
Well as long as the ecosystem is constantly creating new tokens in proportion to the growing economy sure, things should be fine. A deflationary coin becoming mainstream and dominant is what should raise red flags. I don't see a lot of crypto people working to prevent it from happening.
Note that the main insight of this blog post, that recessions are caused by a society-wide preference for hoarding money rather than goods, is an insight that dates back to Karl Marx in the early 19th c. Earlier economic theorists had thought that recessions characterized by a general lack of demand were impossible in capitalism because every exchange supposedly involves items of equal value, but that fails to account for the asymmetric demand for money, due to its liquidity (and therefore relative lack of demand for goods/services).
yeah, it's liquidity and network effects from people using it as an intermediate asset in every other transactions (instead of bartering directly). I didn't know Marx saw it that way. My inspiration comes from market monetarists of the Milton Friedman tradition.
There's a lot of good stuff in Marx, whatever people say (and downvote). Whether or not you agree with the solutions he proposes.
Crypto has evolved far beyond buying and holding digital gold. Decentralized Finance is here and it's about replacing the slow, opaque existing financial system with open, transparent, internet-native protocols. Not to mention DAO's, NFT's etc. This is what a16z is so excited about.
Has it, really, though? What percentage of worldwide crypto traffic represents paying for goods and services (or doing some kind of meaningful product interaction for non-financial applications) and how much of it is just trading?
This is kind of like being on the internet in 1996 and asking what percentage of the internet is used for e-commerce and how much of it is just hobbyists making their "under construction" Geocities websites.
We are still in very early stages. What most likely will happen is that crypto will start to become the "backend" of the financial systems and the regular people will be using it without even knowing it, similar to the way they use Linux powered phones now. Crypto has applications beyond finance too, some things that may end up being disrupted are art and DNS (for example)
We are still in very early stages. What most likely will happen is that crypto will start to become the "backend" of the financial systems and the regular people will be using it without even knowing it, similar to the way they use Linux powered phones now. Crypto has applications beyond finance too, some things that may end up being disrupted are art and DNS (for example)
> We are still in very early stages.
Bitcoin is 12 years old. Comparing cryptocurrencies to the early days of internet and the web is beyond ridiculous. There's still zero evidence of what will most likely happen, except for more of what we've seen so far: speculation, extortion, money laundering.
Bitcoin is 12 years old. Comparing cryptocurrencies to the early days of internet and the web is beyond ridiculous. There's still zero evidence of what will most likely happen, except for more of what we've seen so far: speculation, extortion, money laundering.
Did I say bitcoin? Forget about bitcoin! It's going to be a tiny part of crypto in the future. Bitcoin is 12 years old, but that's the reason why things haven't progressed as much in the last decade. We're slowly getting over speculation & wild-west phaze and moving to the next phase, and discovering many new uses along the way, which I've listed in my parent post.
Why I say it's still early?
Currently most of the projects are infrastructure and protocol development - kind of like when the internet was still developing. We're still on something like HTTP 1.0 and HTML 2.0 when it comes to crypto. The internet wasn't built in a single decade. It took multiple decades to get to where it is now, this is exactly the same thing playing out now. The amount of building and development is only intensifying.
I'd urge you to take a look at what a16a has been investing in https://a16z.com/crypto/
Why I say it's still early?
Currently most of the projects are infrastructure and protocol development - kind of like when the internet was still developing. We're still on something like HTTP 1.0 and HTML 2.0 when it comes to crypto. The internet wasn't built in a single decade. It took multiple decades to get to where it is now, this is exactly the same thing playing out now. The amount of building and development is only intensifying.
I'd urge you to take a look at what a16a has been investing in https://a16z.com/crypto/
> We're still on something like HTTP 1.0 and HTML 2.0 when it comes to crypto.
I agree, and even though avalanche (one of a16z investments in ava-labs works on this) seems to have solved the consensus problem, I have yet to see an l1 tackle the state growth issues similarly.
I think it will require some novel ways of information compression, mapping and/or storage/revival, and I suspect at least one l1 way will be related to the the DAG approach with avalanche however with the relationship between prior blocks (if you consider a block a matrix related to it block size limit at max) a series of transformations such that block x_n = sum of block transformations from 0 to n (this will be heavily reliant upon group theory) so instead of storing blocks themselves, you store the transformation matrices mapped to the hashes (sacrificing some compute for less storage).
[0] https://thecontrol.co/state-growth-a-look-at-the-problem-and...
I agree, and even though avalanche (one of a16z investments in ava-labs works on this) seems to have solved the consensus problem, I have yet to see an l1 tackle the state growth issues similarly.
I think it will require some novel ways of information compression, mapping and/or storage/revival, and I suspect at least one l1 way will be related to the the DAG approach with avalanche however with the relationship between prior blocks (if you consider a block a matrix related to it block size limit at max) a series of transformations such that block x_n = sum of block transformations from 0 to n (this will be heavily reliant upon group theory) so instead of storing blocks themselves, you store the transformation matrices mapped to the hashes (sacrificing some compute for less storage).
[0] https://thecontrol.co/state-growth-a-look-at-the-problem-and...
Bitcoin != DeFi. If you don't know that, why even comment?
Or someone wakes up and fixes the current fiat system. People thought of solutions 80 years ago.
We can't even know the exact total amount of USD in circulation and we cannot verify ourselves how much is being printed unless we trust the few people in power. I think if we fixed that, we would already be making great strides!
On the blockchain, these trivial questions are resolved with a simple database query.
On the blockchain, these trivial questions are resolved with a simple database query.
Could you point me to a defi project that lets me borrow some crypto even if I have none in the first place?
if you are a (lending) business in an emerging market (and make near $500k in loans now), you can reach out to https://goldfinch.finance/
if you are run crypto trading company you can reach out to https://truefi.io/ and https://www.maple.finance/
https://www.l2p.finance/ is seeking to aggregate all the uncollateralized lending platforms in defi now.
if you are run crypto trading company you can reach out to https://truefi.io/ and https://www.maple.finance/
https://www.l2p.finance/ is seeking to aggregate all the uncollateralized lending platforms in defi now.
I kinda like NFT's actually, they're not dangerous to the economy like crypto tokens used as currencies. They're more like digitally autographed pieces, a nice way to reward artists. They do seem to sometimes be weirdly overpriced for autographs though. De-Fi is dangerous nonsense.
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I'm a nobody who has been "investing" in and around the crypto ecosystem officially since the date on this gpg sig. Just saying thanks. Long before these markets existed and trust was difficult to define, reputation on internet relay chat was where this ecosystem was birthed.
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Hi Tim,
I'm a nobody who has been "investing" in and around the crypto ecosystem officially since the date on this gpg sig. Just saying thanks. Long before these markets existed and trust was difficult to define, reputation on internet relay chat was where this ecosystem was birthed.
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First, make USD a fiat currency in 1971. Then, print a lot of money during the last 50 years.
Now, when non-banking US corporations debt is more than 50% of GDP govt needs a direction where to move in the future to somehow legitimize endless money printing/cheap debt or at least make it look more plausible. More people surveillance/control will not the hurt the government either.
One such way may be a "digital dollar", and in that case the government might need new "bankers" and new "credit card" companies. It is wise taking a risk to invest in this technology today. Who knows, maybe tomorrow you will end up an owner of a digital mint.
Crypto is an area of startups that HN collectively is wholly ignorant of because of a rabid and devoted group that despises anything related to blockchain and crypto. It has driven crypto enthusiasts away from commenting, allowing the downvote brigade to take over. There are deep-pocketed investors, talented developers, and very intelligent people in this space (but you won't find them commenting here).
Because we do not see the value. I was into crypto really early and I was slowly more and more disgusted what it supported in society. Constant exit scams, criminals using it evade the law, etc.
And on the other side, you had to be so freaking careful to actually use the thing yourself without losing all your money. Hardware wallets, backup passwords, whatever. It's not cool to worry about whether or not you still have your hundreds of thousands of dollars or not. It's not fun trying to figure out if you can trust Coinbase or if they're the next MtGox. And besides, if you're trusting one of these players anyway then what is the point? Wasn't this supposed to be about privacy and getting away from centralized banking in the first place?
I just don't see any upside. I made my 200x return or whatever it was and I'm out. If I start to see actual products solving real problems that honest citizens in non-sanctioned countries have, I'll revaluate my position.
And on the other side, you had to be so freaking careful to actually use the thing yourself without losing all your money. Hardware wallets, backup passwords, whatever. It's not cool to worry about whether or not you still have your hundreds of thousands of dollars or not. It's not fun trying to figure out if you can trust Coinbase or if they're the next MtGox. And besides, if you're trusting one of these players anyway then what is the point? Wasn't this supposed to be about privacy and getting away from centralized banking in the first place?
I just don't see any upside. I made my 200x return or whatever it was and I'm out. If I start to see actual products solving real problems that honest citizens in non-sanctioned countries have, I'll revaluate my position.
"non-sanctioned countries"? The majority of citizens living in sanctioned countries are honest and have their country sanctioned against their will, but cannot say anything against their government. Why should they get punished for something that's due to their plight? They deserve freedom like all human beings.
Anyway, I think the real danger is if our societies move to 100% cashless. Crypto provides a good counterbalance where we get to retain the benefits of cash while going electronic - if you're looking for any benefit, I think this is it.
Anyway, I think the real danger is if our societies move to 100% cashless. Crypto provides a good counterbalance where we get to retain the benefits of cash while going electronic - if you're looking for any benefit, I think this is it.
They do deserve freedom in a broader sense, yes, but the world is unfortunate and sanctions are how we discourage war. Most of the time sanctions are targeted to individuals or corporations, but there are cases where it is country-wide.
> sanctions are how we discourage war
Sanctions are war. Although I'm not sure it's working. North Korea has been going for many decades and sanctions have not managed to do anything except stimulate urgency and motivation for them to continue the hegemony.
Anyway, in the cause sanctioning individuals such as criminals, then I have no problem with that. However, I think these should be under the control of decentralized systems where there's less opportunity to abuse, co-opt and involve the general consensus of the entire society rather than a few powerful individuals. We have to make sure that such tools are never turned around and used against us. Crypto gives us some hope to guard against that, as we transition to a cashless society.
Sanctions are war. Although I'm not sure it's working. North Korea has been going for many decades and sanctions have not managed to do anything except stimulate urgency and motivation for them to continue the hegemony.
Anyway, in the cause sanctioning individuals such as criminals, then I have no problem with that. However, I think these should be under the control of decentralized systems where there's less opportunity to abuse, co-opt and involve the general consensus of the entire society rather than a few powerful individuals. We have to make sure that such tools are never turned around and used against us. Crypto gives us some hope to guard against that, as we transition to a cashless society.
I'm pretty sure they don't work. Citizens don't care why you are making their lives worse, they just know that you are making it worse. The authoritarian leader just needs to make some concessions and he has secured his voter base (assuming he pretends such a thing exists).
Wow, wish I made 200x return!
Most cryptocurrencies are just a fallback for the actual financial system. It's basically electronic money for black markets. Evading government control is pretty much it's raison d'etre. The idea that you "invest" into this is only possible if you either keep recruiting members like a pyramid scheme or you bet on the collapse of the financial system.
These two positions aren't healthy. Even if the latter turns out to be true in the end, I would rather see a patch to the centralized financial system.
These two positions aren't healthy. Even if the latter turns out to be true in the end, I would rather see a patch to the centralized financial system.
[deleted]
I've got some mod points to burn, so let them bring it on!
> We believe that the next wave of computing innovation will be driven by crypto.
But then they also say that [0]:
> Crypto is purely a software movement and doesn’t depend on a hardware buildout, in contrast to, say, the internet, which required laying cables and building cell towers
That doesn't make any sense, though. Crypto heavily depends on specialised hardware (ASICs, GPUs, SSDs, ...) and existing network infrastructure (have fun trying to establish crypto in underdeveloped countries).
I get that products are just based on software and that infrastructure is provided by 3rd parties, but so far very little has come out of crypto in terms of "innovation in computing".
Just a random pick of their investments, ARwave [1], reveals actual regression, not innovation:
> The maintainers of the network are able to filter and screen the transaction in whichever manner they choose, checking against known illicit material, scanning the data with computer vision software, et cetera.
So basically "store data forever, decentralized, no more 404s, no stealth edits, blah", but also "we decide what's actually going to be stored and reserve the right to censor your data however we see fit".
Honestly, I don't see the innovation in that. Most of the other investments are either NFT market places or crypto-based trading platforms. Again, not really an innovation in computing.
Maybe I'm just too illiterate when it comes to decoding marketing speak.
[0] https://a16z.com/crypto/#vertical-landing-investment-thesis
[1] https://www.arweave.org/technology#papers
[2] https://www.diem.com/en-us/