She also said the money movements on the blockchain facilitated by BlockFi were done manually by blockfi employees. The software was a facade and wasnt trusted for large sums of money

Only halfway. Don't the GPs have skin in the game?

... Although given how frequently the Ontario Teachers' Pension fund has made the 'Pension funds invests into an incredibly dumb startup' news cycle, I suppose grifters, thieves, and conmen might consider them to be an easy mark.

This would be between 5 and 10% or so.

Yes, commonly [1]. At the portfolio level, VC is about as risky as buyout [2].

[1] https://www.thebusinessofvc.com/blog/lp-universe?format=amp

[2] https://timesofe.com/vc-fund-returns-are-more-skewed-than-yo...

example: https://reason.org/commentary/with-interest-rates-low-us-pen...

(You can imagine batshit pension funds that invest directly in crypto/defi stuff; that's extremely problematic.)

Give us your money to invest in this new, fresh face that's going to change the world.

If you're an old face - why haven't you changed the world already?

The story isn't as catchy.

It has nothing to do with what makes sense. For a large subset of VC (obviously not all) - it's more about what you believe you can sell to others than what you believe is actually going to succeed.

Maybe hire earlier, as soon as an adult is needed to set up proper structure, processes and operations. If a company screws this up, e.g. when inexperienced founders hire former COOs and senior VPs from big names for those big names only, things can turn south pretty well.

[1] seems ridiculously low BTW, that's a line manager or extremely skilled software engineer at a FAANG, VPs make multiple millions per year.

[2] and anyone running a crypto startup should.

It'll be interesting to see how VC changes in the modern environment - will they still be all-in on founders willing to unsustainably burn money just to incrementally boost the probability of growth, or will they begin looking more for experienced operating teams who reach and maintain profitability (or a rapid path to get there at all times)?

That's pretty documented in the history of Uber :-)

Turns out unsurprisingly, if your revenue is negative and you multiply it by 1000000 it's really negative.

Wild Ride: Inside Uber's Quest for World Domination is mostly a summary of the headlines involving the company rather than a tell-all but it's accurate enough if you want to familiarize yourself with the subject.

I don't believe anyone has written a book about the technology team specifically which is sad because they actually made some really great technology, especially in the monitoring space, and I would love to hear the story of how that came to be.

I don't expect anything to change because it never does.

From some previous experience, outside of crypto - which was DIFFERENT™ - this already started changing in 2019 or so. Softbank was one of the most infamous players, and when they started to pull back, so did some others.

Not that there aren't still some "huh"-inducing things - like the new thing from the WeWork guy - but it seems a bit saner-paced on the ground, and now even crypto will get its reckoning.

Option A- you task some employees with buying office furniture and equipment and then waste everyone's time by having some extra meetings and emails and bureaucracy where someone asks "is that a good price for 50 desks? Did you get multiple quotes?" and the employee says "yes" and then they approve the expense.

Option B- the same employees make the same decisions, but without the extra meetings and emails and paperwork.

Being more efficient, giving employees more autonomy and focusing on what actually matters is why startups displace incumbents. These are good things.

It's much, much harder to make millions at the poker table than it is to get a degree from an Ivy.

There have been 141 people that have made over a million in 2022 from poker (https://pokerdb.thehendonmob.com/ranking/7339/2) and that doesn't count all of their losses, staking, etc.

The eight Ivies collectively graduate roughly 75,000 people a year.

So I'm not really sure what information the statistic that there are about 140 Poker millionaires in a year vs 75k Ivy grads conveys.

Poker is played competitively both online and in the casinos of every country all over the world 24/7. There are a phenomenal number of players compared to Ivy league students.

Unlike the lottery, it is also largely considered to be a game of skill based on a combination of statistics and social manipulation.

GP is generally implying that because the ratio of players to successful players is so small for a game so widespread that is is very difficult and requires a huge amount of skill to make a significant amount of money playing poker.

If you do truly think it's no different to the lottery, I'm interested in your explanation as to why these people (a) come from the background they do (a high schooler with decent maths can tell you why the lottery is -EV) and (b) go on to the careers they go on to.

Poker isn't particularly luck-based, especially if you play a large number of hands, as eventually everyone sees the same cards on average.

Also, poker doesn't have legacy admissions - the people that win at poker consistently always deserve their status.

Zac would never use software to cheat online. That doesn't sound like something Zac Prince would do whatsoever. Not the Zac Prince I know who has always been above board in all aspects of his life. No drugs in the office. No extramarital affairs also in the office. Nothing of the sort. Classy guy all around, Zac Prince.

BlockFi is just incompetence without the SBF-like malice.

BlockFi is just your typical blockchain company, a complete waste of money if not a scam, see FTX, Terra, BitConnect, MtGox and so on. An exception to the rule would be a company that's not a complete disaster run by ignorant, arrogant scammers.

> talked to an employee that left last spring. She said they had literally no idea what they were doing. The founders are just ivy educated 30 year olds

So was SBF (MIT) and raised from Sequoia and Blackrok and his GF was a Stanford'ite with a Math degree and is responsible for the largest loss of funds from that cluster**.

Can we finally admit the biggest scammers in this space are those from Ivy League, and connections with traditional VC without out a clue of what they are doing or how this tech actually works; as a fintech boot strapped founder and with over a decade in the Bitcoin community its been fairly obvious for at least 7 years since Blythe Masters and all her cronies from traditional finance got involved this was the case.

Maybe now the rest of you vocal sideliners can finally see that is the case and most of you are part of the problem more than most of us who have built startuprs using this tech without any of those things and did it the hard way outside of the VC/SV Ivy League World.

What? Why are we the problem?

This may just be me because I from CA and was inspired to work in tech as kid in the 90s and saw the drastic and detrimental culture changes that have come over the years/decades: many of you keep attributing these scamming events to us when in reality you FAANG/SV/VC insider types likely went to school or worked with them and turned a blind eye to this very obvious behavior that bred this culture; if you worked for or with them you likely even enabled this behavior in order to clout/status chase for a 'disrupter's' reference or network connections for funding. I've seen it far too often, and somehow for calling it out we become 'persona non-grata' in our homes because trnsplants who only came to SV for the money and status rather than make remarkable tools and disrupt legacy gate-keepers 'want to get theirs' all while all playing some odd cosplay to the contrary.

The truth is that the tech that underlies cryptocurrency's like Bitcoin have it's roots in SV and has been advocated by Cypherpunks from the late 80s-90s and many of it's most notable people in this space were around in that time (eg Hal Finney worked for Phil Zimmerman during the Crypto wars and took on the US Government and risked prison). And it's a slap in the face to be told how we're not wanted or just scamming people with our focus and pursuits in tech because of this gross over-generalization that is based on an immense blind spot that who you are talking about is within your side more often than amongst out own--I admit we have had scams but the most notable are due to incompetence and ignorance in dealing with new tech (MTGOX) in real-time rather than an outright desire to scam.

Bad players have existed in Bitcoin, I've seen it plenty of times, but as is the case with the biggest ones like FTX and BlockFi it tends to be from your ilk, not ours.

But it's more fun when other's help drive the point further for me!

I would also include conbase (not a typo) ties to Goldman Sacs and YC, but unless you've seen its horrible descent over the years you wont know why they should be included.

I guess I have to quote myself here, and re-emphasize that they are all part of the same group of insiders:

>>Can we finally admit the biggest scammers in this space are those from Ivy League, and connections with SV insiders traditional VC/Banking/Finance without out a clue of what they are doing or how this tech actually works

I worked at a megacorp pushing 'blockchian not bitcoin' BS and it was only because they realized they couldn't co-op it and instead ran with alts that ended up getting investigated by the SEC.

Let me makes this very clear: I've been on both sides of this equation and I can assure you even though we didn't have much if any money on the BTC side until very recently (most traditional and VC money went to these insiders) those of us that built companies had to knew how this tech worked and often had to built the infrastructure from the ground up.

I personally couldn't even code until I got into BTC despite having several opportunities to do so, because this space demands that you do since it moves so fast and the pace of innovation requires you to know how it all works otherwise you get left behind. And because of this it becomes very clear who knows what they're talking about and who doesn't when you start to hear the merits of a 'private blockchain' and realize what they're describing is essentially just a SQL database with different branding but totally not that bitcoin thing or why the Byzantine General's problem was thought to be unsolvable by Computer Science prior to Bitcoin, let alone how the mempool works or what a UTXO is.

Leadership decided it was useful to have as something to prove we knew had great tech. But really wanted to do manual sales of other services. They were only looking at next quarter profits. Not seizing the industry.

Finally left in disgust. They gradually faded as manual wasn’t scalable. Was years before I saw comparable competitors.

1) some people are rich and want to get richer

2) Ivy educated VCs invest money for group (1) in start-up companies, while paying themselves handsomely with that same pool of money

3) Ivy educated kids start companies using money from group (2), while paying themselves handsomely with that same pool of money

4) sometimes, through a combo of hard work, skill and luck, things work out and everyone makes more money than was spent

5) sometimes, because they are mostly, actually a bunch of yahoos and/or scammers, things don't work out and group (1) loses their money

There are some oversimplifications here, but in general, this seems to be the way.

As a naive and younger outsider I always thought these people were all very competent. Clearly there is something very different going on here.

This. I’m getting annoyed with my jQuery/Spring app with ~million of revenue that I can’t get sexy for employees nor for funding; sometimes I want to throw away ethics and say we’re building “a blockchain of solar-powered AI european-central-bank ledgers”. It would be so much easier. Nah, we’re just storied field data in 7 tables, and customers love it.

But the tide is turning. I have a friend who mentioned the blockchain on his funding papers and he can’t even get an office in my city (France). I’m happy the tide finally turns for the blockchain, to value it for what it’s worth: A good idea for 1% of the present usecases, and bad idea for everything else. Even though not being able to sign an office lease for insurance reasons is quite comical.

The graph of investment in software starts high with greenfield projects, drops over time to an all-time low as optimizations take hold, and as the software continues existing will rise to the greenfield (or more) levels of cost. The interesting thing to me is what substantiates the rises; for instance, in greenfield experimentation and iteration is what costs the most. In old software it's usually the employees.

I'd love to actually document this sometime.

But there is always this HN comment with, no matter how much you pay, they put exclamation marks about how little the compensations are in France and how 35hrs is too long or having to be in office a few days a week is the bane of their existence. I’m always wondering whether we’re unionized here, it looks like a systematic complaint, no matter the conditions.

Well, I don’t know, create your own company I guess.

This model of yours suggests that rich people played with fire and rich people got burned.

Is that what is happening? That doesn't seem to be a complete model.

On that basis, the FTX thing is kind of baffling because the financial controls would seem to be core to the thesis. Having read some of the things sequoia said about their original meetings with SBF it seems they were dazzled by him personally and allowed their greed to overcome basic prudence.

[1] So for example for SVF I had to go through all the transitive dependencies of all our software (which for JS and python is generally a lot), check the licenses and actually track down authors of a few packages in the node ecosystem and ask the authors to explicitly license their software so we knew we had a right to “depend” on it.

Here’s a true story: a friend and former startup coworker got verbal agreement on funding a startup. His business pitch consisted only of a list of names of people he’d worked with in the past who could execute well.

The Fed has been on a money-printing spree since 2008 [0]. The idea was that it would create jobs and stimulate economic activity. In reality, it lowered the bar for things considered investable, so the Ivy-educated VCs were trying to tap into that stream of cheap money, while paying themselves handsomely. Either get acquired (using cheap debt that will also be used to pay the acquiring execs) or IPOed (using the excess money from the public). Profitability was out of question for at least a decade.

[0] https://tradingeconomics.com/united-states/money-supply-m0

These crypto companies are primarily capitalized by VC and selling crypto.

Alternative "assets" like crypto gained more credence when rates were low. Bond returns in such a regime were not attractive, equity markets rallied to elevated levels, and there was little incentive for debt issuers to use free cash to pay down debt that could be rolled out into perpetuity.

The Fed essentially held the cost of money near zero and that had far-reaching effects.

As investors flow into the equity market, stock prices are bid up to the point at which expected returns for stocks also become unattractive. At this point, the logical next move for global, institutional investors is to move to more risky investment options such as private equity and venture capital. This is exactly what we’ve seen."

Other quick links:

http://jibe-net.com/journals/jibe/Vol_8_No_2_December_2020/1...

https://www.taylorfrancis.com/chapters/edit/10.4324/97810031...

Isn’t true for 80% of white collar industries?

As you may notice, this also describes the tech VC bubble of the last decade, too. However, where normal tech has already found its use cases and does real things for real people in the real economy, downside is a little more capped. If you want to be generous to crypto, it's currently tech in 2000, where almost everyone has a total nonsense business model, but that a lot of the vague ideas will eventually find some variant with product-market fit. If you want to be less generous, it's all a house of cards.

EDIT: I'll also add that, of course, thinking very carefully about which narrative is true here and being right is the stuff fortunes and careers are made of. The people that weren't dissuaded by the tech crash in 2000 profited handsomely by thinking carefully for themselves about what was actually true and what information was actually latent in the financial crash. Of course, the tulip true believers in 1638 didn't fare nearly as well.

For all the problems with gig economy companies, they're not crypto. Uber fell from its high, but it's still facilitating rides and deliveries.

Ironic, given that the narrative during its rise was that the "Best and Brightest" were working in crypto and everyone else was fighting over the "B" level people.

I’m intrigued by crypto but merely because I’m a nerd. I don’t care about crypto when it comes to my day to day life.

Now.. the question remains as to whether it would be the same, if it tech was not made so accessible ( some people would be forced to learn since the bar was high ). I mostly think that battle is already lost.

Thunderbird[0] has pretty good (see what I did there?) PGP integration[1]. The UI is decent and there is discoverability support with various key servers as well.

But that would require folks to break their addiction to web-based email and use an actual email client. As such, I won't hold my breath.

[0] https://www.thunderbird.net/

[1] https://support.mozilla.org/en-US/kb/openpgp-thunderbird-how...

Since the major collapses were by organizations which had a monopoly on creating their own currencies ("tokens") you could call them 'central banks'. Note I am not defending cryptocurrencies -- I am pointing out that you calling something 'gibberish' when people do have an understanding of the meaning is not productive.

This is pretty well established, almost to the point that it doesn't need to be said.

These institutions can also screw you over by massively inflating the crypto bubble and then crashing spectacularly, tanking your value and poisoning the public perception of cryptocurrency.

The 'point' of cryptocurrency may well be to avoid dependence on centralized institutions, but the effect of cryptocurrency has been to enable all this nonsense. At this point in time you can't say "well it's not crypto's fault!" because it absolutely is. You don't just look at intent when assessing outcomes.

How can one tell that with a straight-face when the poster-boys of crypto (like Coinbase, FTX, ConsenSys, Circle, Uniswap, Binance etc) depend on centralized actors like VCs and Stock Exchanges?

The blockchain, being a public ledger, ensures that transactions are accurately recorded and can be publicly verified as such.

But it’s been centuries since the actual accurate recording of transactions has been an issue. The real problems are far removed from this. When was the last time you heard about people complaining that they paid off their Visa but it did not credit them for the payment?

Meanwhile, real problems that people do face, such as a vendor not providing you the goods or services that you paid for, are still a problem with blockchain.

The fundamental problem with cryptocurrencies are that they add a whole lot of complexity to solve a problem which is a trivial issue in practice at best, without providing any tools to solve the actual problems people face and in many cases making it harder to find solutions for those problems.

Not just still a problem. Far worse off a problem. Chargebacks exist for credit cards and most bank transactions including wired funds. Send the crypto the wrong way at the wrong time or to the wrong place? Poof. Bye bye money.

https://medium.com/@qroshan/block-chain-solving-imaginary-pr...

This problem is not trivial, and as far as I can see crypto is the only scalable solution to it outside of legislation that isn't ever going to happen.

What about the privacy implications of having nearly every payment on the planet go through 2 megacorporations?

And I can see the response now, while every crypto transaction is public, it's a lot harder to tie identities to wallet addresses than it is to tie a name to a credit card number.

That's a silly claim. Ethereum forked because of a hack and enough people wanting to undo it. Tether regularly freezes funds (https://www.coindesk.com/business/2022/11/10/tether-freezes-...). Ownership of a cryptocurrency can be made a crime. Developers can be sanctioned and arrested.

Tether is centralized and a scam (and arguably a scam because it is centralized) and irrelevant to the discussion. Anyone can make any token they want and run it according to whoever's rules; this logic would indict the entire internet based on the existence of badly moderated websites.

And cryptography can be made a crime as well. Meanwhile, in the world we inhabit today rather than infinite hypothetical ones, no such thing is happening outside of totalitarian governments, and despite their effort, not one single crypto currency transaction has ever been successfully censored.

The two diverging lines were very much unequal.

> Tether is centralized and a scam (and arguably a scam because it is centralized) and irrelevant to the discussion.

Arguing Tether is irrelevant to the crypto space is absurd. (I agree it's a scam. That's a major problem for the whole ecosystem.)

> And cryptography can be made a crime as well.

Correct. You can censor cryptography. https://en.wikipedia.org/wiki/Export_of_cryptography_from_th...

What is your point? Surely you aren't arguing that the governance of one specific token in the broader crypto ecosystem invalidates the general uncensorability of crypto transactions? Because that would be pretty fucking disingenuous as a false equivalence.

Being able to use money electronically without a 3rd party is something that wasn't possible before. Anyone wanting to cut a credit card out of their deal or choose a currency other than their what their country mandates can now do that.

And at the bottom of it all, one of the first dominos to tumble, was a company called 3 Arrows Capital, which promised to generate revenue by buying crypto-dickbutt NFTS... and then went on the run. I'm not even kidding.

They lost borrowed funds in a ponzi scheme called Luna. I get that you wanted to poke at nfts, but the last remark may make someone think this is how it actually went down.

Yes, I'm sure that Terra/Luna was a big part of it, and you're right that it's worth calling out, it may even have been the single biggest factor. But it wasn't the only way 3AC squandered invested funds.

Perhaps Terra/Luna should be called out as the first domino to fall, it was indeed spectacular. If it was a ponzi it was a complex one with extra steps, an algorithmic stablecoin that was metastable at best, and IIRC a lending protocol that charged less for loans than it paid for deposits. All sorts of crazy.

But 3AC still invested in dickbutt...

I can't see how much they paid for it, it was a transfer. Maybe someone sent it to them as a joke, who knows.

In any case, it was around the time they were created, so easily it 20x to today's price.

I guess they should have invested more in cryptodickbutts.

Look it up if you don't believe me.

Bitcoins scalability issue should have killed off al notions that it could ever gain widespread usage as an alternative to traditional currency for regular payments and after that it became yet another speculative derivative without any real backing in real world assets.

It was never actually going to replace fiat currencies for most people and the industry is absolutely dominated by exotic financial instruments(mostly of the ponzi variant), run by a mixture of fools and scammers.

There is probably scenario's where a temporary blockchain can solve some synchronization issues but the idea that a single static blockchain will replace traditional dynamic structures for organizing the economy is basically not viable.

That's a good point. If nothing else, the stupid money caused more practical exploration of ZKP and other exotic math constructs than we'd seen in decades previously.

I'd like to see more "toy" exploration of this stuff as the money drains out. That's where interesting things are going to come from, for a while. Time for a zero-knowledge app to select lunch destinations, a dating matcher that doesn't leak before the reveal, secret agent spy communicators for kids...

Lightning is not viable, because it requires "watchtowers" to check for early state commit attacks. Not everyone will be able to run such a server.

But, for instance, Bitcoin Cash has larger blocks (the reason for the first fork of Bitcoin). However, in spite of its technical advantages, adoption severely lagged compared to Bitcoin. I wonder why that is.

Security isn't/wasn't the concern, the trade-offs exist to ensure verifiability in the most trustless way possible (low hardware and bandwidth requirements). This enables a decentralized system which is open to any participant and keeps miners accountable. If running a node is limited to miners and exchanges and requires a renting a server rack there is just no point.

> Lightning is not viable, because it requires "watchtowers" to check for early state commit attacks

This is inaccurate. LN has shortcomings currently but this isn't one. Without watchtowers your peer in a channel can force close one it while you are offline by publishing an outdated state on-chain, but if at any point before the end of the grace period (usually ~2 weeks) you are online and produce a more recent state you get the whole balance of this channel back (this is how dishonest peers are punished). This is one channel mechanism (Poon-Dryja), another mechanism (Eltoo) which doesn't require as much monitoring/penalties will eventually come but depends on changes to Bitcoin protocol which are still pending.

Secondly theses optional watchtowers which automate this process minimize trust a lot as they can only publish the most updated state IF and ONLY IF the counterparty in your channel published their outdated state. So they have no real custody of your funds.

Lastly solutions like local federations (Fedi to name one) can address your concern of people not being able to run servers, if the users aren't content with the public offers of existing watchtowers.

> But, for instance, Bitcoin Cash has larger blocks (the reason for the first fork of Bitcoin). However, in spite of its technical advantages, adoption severely lagged compared to Bitcoin. I wonder why that is.

Because having larger blocks is not a technical advantage if your goals are the principles mentioned in the first paragraph. If you intent to compromise on these then just build a centralized database, it will be more efficient and at least you won't lie to people pretending that your system is open/decentralized (like Bcash supporters do).

I can not thank you enough. I was under a wrong impression, and you have provided me with easy-to-search-for terms where I can get more info.

I see now there is a larger-than-I-thought grace period (which I thought was ~3 days) as well as penalty for fraud attempts.

2 weeks is a reasonable time to be away, like going on vacation.

When I tell you my lemonade stand is worth a billion, and you believe it for a while, and then you realize it isn’t really, no value was destroyed.

I'm just saying because it's the truth.

We don't do real "fractional reserves," we don't have "gold" etc. Our money is backed up by "America, with the guns, is good for this made up money," which I believe is generally true, and not a terrible system.

Or maybe it is just not useful, and acts as a distraction. Getting into another 'why fiat backed by the USA works while monopoly money from the boardgame (or cryptocurrencies) does not' is pointless because no one who makes that argument really cares about the difference, they just want to point out that 'everything is made up'.

- one of the main advantages of crypto is lack of centralized regulation, which is also why no one stopped FTX from having back doors to loot the vault

- if one can print their own coins at will (like FTT), its value is at the whim of the printer

- inflation is not necessarily a bad thing. It can be used responsibly.

- a credit card has almost no risk and can crank out transactions as much as necessary

- fiat is accepted all over the place whereas crypto as a transactional currency is more similar to trading gold and cowhides

We have seen how many bad actors control USA fiat and are deemed "too big to fail". That is a failed system and we have seen its ugly face plenty of times. Much of crypto challenges that. How successful it is so far is up for debate.

"Everything is made up" is probably one of the more important arguments to be made, and we'd all be better off if it was taken more seriously. It's difficult to reckon with and it's noisy, but that doesn't make it any less true or valuable.

I think it's especially important when trying to figure out regulation, taxes, and broadly how we deal with rich people in the world.

The belief that money is concrete and real helps cement unworthy powerful people. It's good to chip away at it.

We, somehow, collectively decided to have it this way. It is not a law of nature!

Really, video games and thinking about video game design helped me get it. Because it's a design, and not something like science or nature. It's not that real or unexpected consequences don't happen -- of course they do. But it's exactly like what happens in game dev, because someone tweaks rules.

Like a cult brainwashing, they have attached their identities to those worthless pictures and now are trapped in greedy stupidity.

I mean, buying a $1M ape NFT with real money makes no sense - but if you were Sam Bankman-Fried and you had an unlimited supply of coins you knew to be worthless, you're just swapping something worthless for something maybe-worthless, which is much easier to explain.

So, the NFT did really cost Y dollars and if it's trading at Z, you have lost Y-Z dollars

No, I don't collect that crap :)

I think the biggest problem with crypto is that it was way overhyped for anything outside of having fun online.

It's like meme stocks. It's fun to waste $50 playing some silly online game! It's not fun to waste $50k gambling on something that you think will change the global financial systems.

I also think there's plenty of room for fungible tokens that represent ownership over digital content, eg, buying 4% of the rights to the future profits from the monetization of a digital video, as opposed to the patronage system of platforms like Twitch or Patreon. If we truly are reliving the existing financial system shouldn't we expect to reinvent a marketplace for intellectual property?

It's like saying that clapping with your hands at the gas station is somehow equivalent to the purchasing fuel. Sure, BP for example, can demand all fuel buyers to clap their hands once and claim that hand clap = fuel. But really it's just a dumb addition to the real transaction which does nothing.

NFTs are such hand clap when buying digital (or real) objects. The only difference is that they are served with metric ton of technical and pseudo-technical jargon, to the point when even some people in IT are starting to have doubts. But then you think about NFTs again and the mist of bullshit dissipates leaving only bare facts.

This is basically how Yi-Gi-Oh physical cards work. They make official cards and they don’t manage the ownership of those cards.

The advantage for Konami is that they don’t need to build much of any infrastructure for a market for trading or selling virtual cards. The advantage for players is they don’t have to rely on Konami for these ownership related features and can buy, sell, lend as they see fit.

The MTGO marketplace is really awful but it’s the only choice that MTG players have if they want to buy, sell or trade virtual MTG cards.

They store them in their private classic centralised DB (not related to blockchain in any way, because private blockchain is idiotic idea). They are not stored in the public blockchain because that is technically impossible both in current and future chains, due to constraints decided collectively (you can't have even barely working blockchain pretending to be decentralised and also be able to store megabytes of data on chain).

Then company A creates NFTs for these cards. Again, the digital cards are not in any way related or linked or paired with the NFTs. The system storing and managing cards doesn't know about NFTs. NFTs are weakly linked to somewhere on the web, supposedly to the cards, but there is really no requirement for that and what more amazing - no verification to where they are linking.

Now what happens when someone is selling or reselling cards. I will split this into MUST and OPTIONAL sections.

User MUST create an account on the completely proprietary and centralised server of company A, because system storing and managing cards MUST update who owns what in its centralised DB. And technically that's all, nothing else is needed.

What it OPTIONAL is that user can also buy NFT which was initially generated by company A, and which stores an URL pointing to the card hosted on the private company A server. But until company A does the MUST step above, NFTs sale is pointless. Centralised DB does not in any way interact with blockchain with NFTs, and it technically can't.

Some other NFT fans also claim that they allow moving assets between companies or even people. This is simply impossible to do with only blockchain, again, because centralised DB and management systems are required due to technical limitations, and because companies must agree on the cross compatible formats and agree to take revenue cuts, which is a fantasy. And moving assets to the humans is also impossible because NFTs don't transfer any partial or full IP rights, they are technically incapable of doing this. Then again you are dependent on the centralised DBs.

As you can see, NFT is an interesting artificial construct which does literally no useful functionality on it's own. In any proposed system with NFTs, you can cut out NFTs and have exact same functionality remaining.

https://github.com/williamcotton/openpublish

So let's imagine that instead it is a non-fungible token. The only difference between a fungible asset and a non-fungible asset is that a fungible asset can be split up into parts and owned by multiple parties. A non-fungible digital asset has only one owner at a time.

> They store them in their private classic centralised DB (not related to blockchain in any way, because private blockchain is idiotic idea). They are not stored in the public blockchain because that is technically impossible both in current and future chains, due to constraints decided collectively (you can't have even barely working blockchain pretending to be decentralised and also be able to store megabytes of data on chain).

You don't need to store anything in the blockchain other than the cryptographic hash of the digital item in question. In fact, you can take the cryptographic hash of many different digital messages and then take the cryptographic hash of those combination of cryptographic hashes and store that data in the blockchain, along with data related to ownership.

> Then company A creates NFTs for these cards. Again, the digital cards are not in any way related or linked or paired with the NFTs. The system storing and managing cards doesn't know about NFTs. NFTs are weakly linked to somewhere on the web, supposedly to the cards, but there is really no requirement for that and what more amazing - no verification to where they are linking.

This is incorrect. Let's say I'm Shueisha. I create a physical device that I install in game stores that comes pre-installed with valid public keys for digital cards issued by Shueisha. Then I issue a number of non-fungible digital assets that are signed with one of the private keys paired with the public keys stored on the physical device in the game stores. This physical device will only work with digital assets that were originally issued by Shueisha, say a virtual pack of 15 virtual cards. These virtual cards are non-fungible tokens on a decentralized blockchain similar to Open Publish.

When someone purchases a pack of digital cards they provide their own public key and Shueisha publishes their own signed transaction that transfers ownership to this person. The physical device in the game store is connected to the internet and can see the valid and confirmed transactions. The physical device in the game store ignores all assets that did not originate from Shueisha but will honor ownership of all future transactions of digital cards that did originate from Shueisha. The physical device in the game store also connects to a database run by Shueisha that when given the cryptographic hash (or the hash-of-hash and the hash) of a digital card will return the details about the card... link to the URL for the digital art, the flavor text, card rules, etc.

> Now what happens when someone is selling or reselling cards. I will split this into MUST and OPTIONAL sections.

All that needs to be written to the blockchain is the cryptographic hash and the recipient signed by the original owner. So when you buy a pack of digital cards from Shueisha they write a transaction to the blockchain signed by one of their private keys that says they are transferring ownership to your public key. The public key pairs for Shueisha, again, are stored in the physical device in the game store. If you bring a device with your private key to the game store then the physical device will let you use any cards that are shown to be owned by your matching public key.

> User MUST create an account on the completely proprietary and centralised server of company A, because system storing and managing cards MUST update who owns what in its centralised DB. And technically that's all, nothing else is needed.

The only need for a centralized database is for all of the meta information about the card... the art, the name, game details, etc. The only need for a decentralized database is in determining the cards owned by the gamer as proven by their private key on some device.

> What it OPTIONAL is that user can also buy NFT which was initially generated by company A, and which stores an URL pointing to the card hosted on the private company A server. But until company A does the MUST step above, NFTs sale is pointless. Centralised DB does not in any way interact with blockchain with NFTs, and it technically can't.

This is incorrect. In the system I am describing the decentralized data stored on the blockchain is only the cryptographic hash of the digital asset. The meta data is stored on a centralized DB owned and operated by Shueisha. This is just like how I can't scribble on a Yu-Gi-Oh card to make it say whatever I want (at least for tournament play) but I can indeed buy and sell and trade Yu-Gi-Oh cards without the involvement of anyone else.

I see you are still making the same error as others - "These virtual cards are non-fungible tokens on a decentralized blockchain similar to Open Publish."

Cards are not tokens, and cards are not on the blockchain. Cards are digital assets, but they can't fit inside a token, they can't fit in the blockchain (for a reasonable price with a reasonable blockchain performance and decentralisation).

You have complicated my example, but it is essentially the same - your physical device is the centralised DB now (or you are using two centrlised DBs - device memory and some corporate cloud server together). Assets (cards) are stored inside it. To access them you need a key. In your example key is the token, but at this point - that's not really mandatory, we have many other ways to sell and store keys. But it's an option, yes.

What you have described is just another way to access assets stored in a centralised way and authenticate yourself as a person having access to them.

And you don't "own" your assets (cards), unless of course there is some agreement, likely on the web site or with purchase of that physical device saying that IP rights are transferred to you Name Surname. You are renting your cards based on the good will of Shueisha, and when you say sell cards - that just means Shueisha gratiously allows transferring of some record in their DB from one of their registered users to another. Just as an example - let's say Shueisha uses Tezos bc, user A is a registered customer of Shueicha and "owns" a digital card from them. Can he sell it to whatever random person with a Tezos wallet? Well, no. Unless Shueisha makes allowance for that, but that would be dumb because it will expose asset to everyone (same as today's NFT pictures work).

Everything is stored on Shueisha servers or DRM'ed devices from them. Everything is managed by Shueisha directly or indirectly via coding some physical device which will do it. Tokens are used to access stuff, but they either insecure, or you will need to have additional parallel authentication with card storage to access them.

NFTs are just layers of technical comlications not really adding anything of substance. They make look like it's easy to buy and sell digital stuff, so very popular for speculation, but in reality they are crippled by inability to actually store medium being sold and to transfer any IP rights by itself, without centralised services.

> As a result creating and destroying money doesn't create or destroy wealth.

I'll give you a MacBook, which is a durable good you can use to produce goods and services, if you go to the bank, withdraw all of your money, and then set it on fire. This is a good deal for you. Your wealth will not change from setting the money on fire, as destroying money does not destroy wealth, and you will have a capital good that will increase the amount of wealth you have.

So you're worse off because your share of the wealth is smaller... if only we had a way to describe that. Perhaps you could say that you're less wealthy and by burning your money, you've destroyed your capital?

Look, I get what you're trying to say. The value of each currency unit is roughly the total amount of economic value divided by the number of units of currency. So the sum of all the units in currency doesn't change as you add to or subtract from the money supply. The piece you're missing, though, is that the VCs didn't create the money they invested in BlockFi. The money came from investors and partners. So in a very real sense the capital of those investors and partners was destroyed.

> wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing.

So yes, if you redefine the word capital to fit whatever you like, then sure, I agree with you.

Resource. Noun. a stock or supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively.

Even if the commonly accepted definition of "resource" didn't explicitly state that money is a resource, the ability to acquire resources is itself a resource.

"I will give the bearer of this piece of paper my car."

Do I have created a new car? No. The piece of paper is still a piece of paper, and there aren't any more cars in the economy than there were before. And likewise, if I proceed to destroy the piece of paper no cars will be destroyed in the process.

When we talked about burning money you said: "[burning your money], however, rather screw with being able to get some of those resources allocated to you." If you burn your "car IOU", does that screw with your ability to have resources allocated to you? No it doesn't. So you can see that your car IOU is not an appropriate analogy to money.

Just being perfectly honest here, I think your position has been shown to be logically inconsistent in multiple ways.

1. We started this discussion by talking about whether or not investment in BlockFi represented a destruction of capital. You said it didn't because money invested is not capital. You then later admitted that there are definitions of capital that include money. I would consider this an uncharitable reading of the initial point regarding investment in BlockFi. If there is a valid definition of the word "capital" in which the original point is true, that it is charitable to assume that was the intended definition.

2. You agree that burning money in your bank account would make you less wealthy, but somehow disagree that you cannot consider this destroying your wealth. That's inconsistent.

3. The "car IOU" analogy has an obvious flaw in that burning it does not reduce your wealth as was the case in the burning money example. Despite this absolutely crucial difference, you maintain it is somehow valid with an explanation of the difference.

If you burn your money, the financial capital doesn't just go away. It's effectively reallocated to everyone else via deflation. That's why "destroying capital" isn't a good way to describe it.

If you destroy half the machines in the world, evenly distributed, the economy crumbles. If you destroy half the dollars in the world, evenly distributed, nothing really happens.

And back to this case, the VC money wasn't burned at all. It went to paychecks and service providers and customers and scammers. It didn't disappear, it moved.

Also worth nothing that we’re not really talking about money. We’re talking about equity in companies with the statement that billions of capital was destroyed by investing in BlockFi.

I don't dispute that. But the value of each unit can be complicated.

> So if you invest it in scams, you can call that destroying wealth.

Colloquially I might say that, but the wealth isn't actually destroyed, it went to the scammers.

The fact was destroyed. The assets were not destroyed; they went to other people.

Capital doesn't have a double meaning like that. Capital is the latter. Capital was not destroyed here.

> wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing.

There is even a bank called "Capital One." Originally, Capital One's only product was credit cards, i.e. providing monetary loans. It feels like this entire thread has been arguing about what people "feel" capital should be. In the case of BlockFi, capital has very much been destroyed. Company equity going to 0 is the ultimate capital destruction.

The status was destroyed, the assets were not destroyed.

Take my last post and replace the word "capital" with "money", and I would say that version is just as true.

You can destroy money, but that's a totally different topic. The money that was invested in this exchange didn't get destroyed. It went to other people.

Remember that the original post wasn't talking about 'wealth'. You can't come in and say "capital=money=wealth, and investor wealth was destroyed, therefore investor capital was destroyed". That's like saying "nothing is better than happiness, and a sandwich is better than nothing, so a sandwich is better than happiness". The meaning of "nothing" changes halfway through, like the meaning of "wealth" changes halfway through.

Whether "capital" includes or excludes "money" is a distraction that doesn't really matter.

We as a society accept large scale fraud all the time and normalize it.

All the US banking crises since the 1920s have involved some form of deregulation.[1]

[1] https://en.wikipedia.org/wiki/List_of_banking_crises

Am I crazy? Are we not describing 2 identical problems and classifying 1 of them as fraud?

The soundness of loans in a deregulated environment is no better than the soundness of a self-invented currency.

Few of the crypto clowns publish their balance sheet. FTX, we now known, didn't even have a balance sheet.

[1] https://www.wallstreetmojo.com/banks-balance-sheet/

1) Regulatory oversight. 2) Relative transparency.

Legit differences between Crypto exchanges and traditional finance. Keep em' coming, I'm learning :)

The reply to that was to explain that regulation was the key to maintaining a stable banking system.

You then ignore all that an conflate unregulated banking and regulated banking as equal.

I hope you understand that this makes your argument dishonest, and that you attempt to avoid this in the future.

I understand that the level of fraud committed specifically by FTX goes far beyond simply misleading lenders and regulators about their collateral which consisted mostly of their own crypto. In general, however, this seems to be the root of the issue and the systemic problem across all centralized crypto exchanges.

From the start and well prior to this conversation I have had the belief that Crypto "scams" like this bear a striking resemblance to the world of traditional finance and specifically the securities market and MBS.

I'm not trying to argue in bad faith or use any kind of argumentative tactic or fallacy (at least not intentionally).

This is not to say the space shouldn't be regulated, but all regulation on the soundness of loans suffers from this. e.g bank leverage limits rest on the same type of assumptions about the value and liquidity of different types of collateral. And if those assumptions are wrong they will fail no matter how solid the regulatory model says the bank is.

For the uninitiated: https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...

If I gave you dollars in return for magic beans that turned out to be imaginary, that value is destroyed.

Bless the cryptocurrency community, involuntary Robin Hoods that sucker in both users and VC to redistribute it all when it inevitably fails

Impressive to see that both VC money AND customer money is burnt at immense ammounts. How can these founders sleep at night?

Twitter ran one of the world's largest social media networks with around 7000 people; what in the world is Kraken doing with ~3400[1]?

[1]: https://www.linkedin.com/company/krakenfx

What do (did) 7000 people do at Twitter? I hate to ask the question because it aligns me with Elon whom I despise right now. But what do all the employees do at tech companies? I thought the beauty of tech and why the valuations were so high is that it scales quite easily since it is all code. What do 32,500 employees at Uber do?

Do you have a source that shows that a substantial percent of Kraken's headcount is customer service? They've tried recruiting me a handful of times, and each time they highlighted their voracious appetite for engineering talent (and corresponding rapid growth of their engineering teams).

As I said: Twitter was one of the largest social media networks on the planet, one that ran its own datacenters and independent ad business (along with moderation teams, service teams, etc.). I'm not particularly interested in defending a headcount of 7000 people; only that it makes far more sense to me than roughly half that number at a cryptocurrency firm.

If you view Twitter as a 'service for posting 140 characters', they don't need 7000 employees.

If you view it as a 'service for supporting five billion dollars worth of ad spend across the entire world', with all the proprietary software, ads front-ends, ads back-ends and reporting services, weird one-off partner integrations, ads account management, sales, advertiser support, moderation and compliance, legal compliance... Well, all that quickly adds up to a lot of headcount.

You don't think that matters, but it has a real impact on your bottom line. Companies are stopping advertising now, not because Musk took over, but because they can't support for advertising (probably because they were sacked).

It was one of the worlds largest social media platforms!

Couple that with the reality that Twitter needs at LEAST twice as many people to function than it currently has, even after Musk sent everyone packing. How do I know this? Because the remaining people need to work at least twice as much to make up for the people that left.

And this of course ignores all the things that have failed since he took over. The current people are NOT keeping Twitter at 100%. It's already failing.

I didn’t express an opinion on that, and actually believe the opposite of what you just hastily attributed to me. My point is that, when gauging whether 7000 is a reasonable figure, it’s not enough to vomit a laundry list of work that the company needs to do — because that kind of argument would apply equally well to justifying 3500, 7000, 14000, or a million. To justify a specific figure, you need more rigor than hand waving about general work categories. The parent didn’t.

I am not going to tell you that their right size is 3500, or 1500, or 7000, or 14000, because I don't know what it is. But I will say that it's very likely to be measured in the thousands. [1]

[1] Although you can always try to shrink the business... A Twitter that doesn't work, and has no revenue could probably be ran by ~0 employees.

Don't be pedantic. It's worthless.

> My point is that, when gauging whether 7000 is a reasonable figure

Evidence shows you need 7324 people, exactly.

What's done in house, what's done elsewhere? What "bus factor" do you want your engineering teams to have? What events have left scars on the organization? What prejudices and preferences does the executive leadership have? How does the company handle the fiefdom builders who hire just to make their org size increase? How does the company handle attrition?

It's not like there's one "correct" staffing for a large company. There's hundreds of factors, some large some small, that add up over time. The company has goals to reach and problems to solve as each of those decisions are made, and those evolve as the company evolves.

What are Twitter's goals pre-buyout? Are those the same as Twitter's goals post-buyout? What are the decisions the company makes in pursuing those goals, in each of those contexts?

Analyzing all the decisions that brought Twitter or any other company to a specific count of employees is an extensive undertaking, and would require extraordinary memory and honesty of a huge number of people. And you'll still have a giant pile of decisions that could have gone either way depending on slight changes in conditions.

No, I was replying to a comment that was attempting to justify ~7000 as a reasonable figure for what Twitter’s app needs to do.

Don’t take my word for it! Read the thread history if you don’t believe me!

Let's look at the comment you were replying to:

>If you view Twitter as a 'service for posting 140 characters', they don't need 7000 employees.

>If you view it as a 'service for supporting five billion dollars worth of ad spend across the entire world', with all the proprietary software, ads front-ends, ads back-ends and reporting services, weird one-off partner integrations, ads account management, sales, advertiser support, moderation and compliance, legal compliance... Well, all that quickly adds up to a lot of headcount.

You characterize this comment as justifying ~7000 as a reasonable figure "for what Twitter's app needs to do." The comment makes an important distinction between what you might need to run the most essential aspects of a thing that allows Twitter-like social media interactions to occur versus an enterprise that leverages those social media interactions as one part of a larger system. It says outright that you wouldn't likely need 7k just for the essential "let people make tweets" aspect.

TBH you appear to be the one with comprehension issues in this thread.

Go ahead and make a Twitter clone this weekend. There are plenty of tutorials. Then let's assume you go viral and now your little service needs to scale. Then the email and issues start to come in. Now you have to balance fixing bugs and tending to customer support. Oh, are you going to outsource all cloud services or hire a 200k+ a year SRE to scale it out? One wont be enough you will soon find out. Did yo do your research on compliance? Are you sure your app is legal in every country it serves? Pretty soon you have a team whose salaries + benefits are costing you several million dollars a year. And you only have 10 people.

I could go on and on. Yes, creating a twitter clone is trivial. Scaling it and tending to real customers is a completely different story.

https://companiesmarketcap.com/facebook/revenue/

Twitter runs its own infrastructure too. That takes a bunch of people. Computers don't just run themselves and they certainly don't provision themselves.

Traffic is likely super spiky too because of how Twitter reacts to current events. That probably requires cutting edge load balancing and real time code.

Not to mention all of the work getting everything translated and accessible to the entire globe. And of course moderating a site with millions of people so that literal civil wars do not start. And keeping in contact with various governments who probably contract each other and themselves on a regular basis. These are problems that are not as scalable as writing a bunch of code. You need real, physical people to handle these issues.

And now setting up a creator economy and their Clubhouse competitor.

ex: You could store every tweet compressed in S3 with a bitmap for which are deleted (a bit that can be cached forever). That assumes you aren't going to ever have to update the object in S3. Once you have to update it that entire design is horrible, you'll need something completely different.

Consider that there are thousands of tweets per second with significant fan out for reads. There's search, relationship data (did you @ someone? did your edit remove that @?), business analytics, and more.

Also has the benefit that retweets and likes point to the old version, which is how it should be.

Oh and of course you now have a linked list structure you have to traverse every time you want to resolve a tweet. Cool.

It's almost like this is hard.

Another big part of it is simply admin, for twitter a lot of that is babysitting the moderation algorithms as their customers(who is not the people tweeting) can be pretty sensitive about what kind of content they are associated with.

Then there is defensive research i.e. any big company in a particular space wants to have prototypes and technology ready to compete with anything their competitors might come out with especially if they expect a growth in overall sector revenue.

For uber they are also a de-facto employer for a lot of drivers and a provider of real world services so they need the full range of hr and customer support services that those kind of services and driver numbers would require had it not been a tech company.

Kraken is one of the OG cryptocurrencies exchange. Maybe the oldest still around. They're in the business since 2013 or so.

Since then the Crypsy, Quadriga, Mt Gox, FTX, etc. have all come and gone (with their customers' money) but Kraken is still there. If they are on a scam, it's a really long con: a decade and a half of a con?

They're not "Binance big" but they do nearly as much volume as Coinbase, so 3 400 employees doesn't feel that surprising.

I don't think BlockFi did anywhere near the volume of trades Kraken is doing. As I understand it BlockFi was some kind of a "fire and forget" thing where you'd loan your crypto and get some yield in return. So very little things actually happening there compared to Kraken.

Yes, 900 employees was insanely huge for BlockFi. But I don't think 3 400 employees for Kraken looks that crazy.

> If they are on a scam, it's a really long con: a decade and a half of a con?

How is 9 years "a decade and a half"?

But yup, I got my math really wrong there!

Destruction of value or destruction of paper wealth? I'm pretty cynical of the whole crypto* space, mainly because I think the people making any money in it are themselves cynical and predatory.

I suppose that billion dollars of investment was actual cash lost.

* Using the new definition, not cryptography, which is what the term really means and will again soon.

Those people could have been doing useful things. And it sounds like their activities were worse than nonsense, they actually destroyed money they were given.

https://news.ycombinator.com/item?id=11589410

(edit) going back... a there appears to be a period of fairly consistent one liner hot takes that may have been received poorly.

I don't see any other replies hypothesizing this in terms that rhyme with the dot com "bust" of 2000.

In late 90s, in addition to whatever product-market-fit from their "blue ocean strategies", the dot coms generally invested in and bought services from each other.

Wall St didn't look at where the dollars came from or went to the second or third step, they treated every company as if its revenue came from the customer marketplace.

Instead, a given VC dollar (or customer dollar) would get spent from that tech firm to its providers, who would give it to their providers, and then their providers, in turn. This way, the same single dollar would show up across a dozen balance sheets, each at 14x growing to 40x and eventually 100x multiples. So the 1 dollar instead of being, say, $40 of "value" for the one firm that got the dollar in from outside the ecosystem, that dollar would show up 12 x 40x or $480 of imagined uncorrelated "value".

By 1999, the public companies had caught on to where they could just give cash from public markets to dot com providers to turn around and purchase the public company's goods or services at a discount ( "strategic relationships"), with their own dollars then driving a 40x - 100x market value boost, generating more public dollars they could use to create more "customers".

Even if all these companies had legitimate products, when you looked under the hood, relatively few dollars were coming in from outside the private and public markets revenue multiple game. If some of these folks misstepped, and folks started having to unwind expected revenues, and in turn unwind their own spend, and letting the air out happens faster than they can keep their footing .... boom, you have a bust.

Today there are multiple sites tracing the actual flow of digital "currency" and seeing the same loops happening, where every agent in the loop is nominally valued as if generating revenue from outside, when instead, they're lock step in a circular flow.

Any interruption and ... dot com Y2K 2.0.

So less value destruction, more a glitch in the illusion big enough for non-experts to notice absence of outside value.

Your example has been happening too.

This isn't just crypto, this is a fundamental strategy for most VC funds. The most valuable VC funds select portfolio companies based on whether they will succeed at selling to each other. This shows a growth multiple that is used to position the company for raising funding from the next sucker VC. That VC then "introduces" their portfolio company to their other portfolio companies, in continuum, until exit. Eventually the public market understands that the growth multiple is a house of cards and the stock tanks. But the VC is happy because they took their exit, the government is happy because these companies collectively employ hundreds of thousands if not millions of people who pay above-average tax rates, and even institutional investors are happy so long as the stocks tank individually and not in concert, making little difference to their overall portfolio. So the practice continues.