Look into SoRare’s volume. They raised over $500m. Volume is now lower than it was way back in 2020.
The crypto down rounds are going to be hilarious.
Note to investors: if you’re investing in crypto projects, carefully consider the ponzinomics and the vesting schedule. You want your unlocks to happen in the middle of the bullrun when exit liquidity is ample.
And also remember that whatever you might think of as “normal”
volume will crash 90%. And when you think it has stabilized, it will crash 90% more.
The number of investors who bought the top is hilarious. But then, this is also a field where risk management is treated like a sin.
Every single one of these web3 companies is going bust. They could all be built without tokens or a blockchain if they wanted to. There are only two things propping up the entire crypto economy, VC funding and fraud. Once the VC money leaves the ecosystem the dominoes will fall.
Yet some VCs are still plowing into web3. There was an article today about how Moellis was getting into Web3 companies. I'm genuinely curious what their thought process is. I tend to be in the camp that web3 is just a bunch of hot air seeing how cryptos been around for quite a while now with few use cases, but I also give benefit of the doubt there could be something there given the nature of tech.
> I'm genuinely curious what their thought process is.
The thought process for VCs investing in crypto is simple: they get a huge discount on the tokens in the raise that they can turn around and dump on retail a few months later for huge returns. Instead of waiting 10+ years for a traditional exit, they can get liquidity in a few months.
As Chamath admitted on the podcast, even when they're on a vesting schedule they can sell the claims to future vesting prior to actually receiving the tokens.
That’s my understanding as well after listening to Crypto Critics and Griftonomics podcasts. Highly recommend both although so much stuff is way over my head. I wish there was a beginner’s version :)
I'd like to recommend a shelf of great to read erudite and intelligible financial history and financial social history and technicality, from which you'd recognize the simulacra, but it wouldn't help very much because this crypto game strips out everything fundamental economic and human from their imaginary systems and leaves solely a caricature of a carcass.
I'm despondent about the overall crypto situation, please forgive me for my cynicism, because I'm genuinely concerned about how many times people can exclaim the king is naked the cupboard is bare the promises aren't merely empty but never had meaning, and yet the socialized penny just won't drop.
This FT article [0] goes some way to describing how vulnerable young and low income people are to false investment scheming. What's needed (very rapidly) is to reveal the full extent of behavioural and technical engineering used in exploitation, instead of blaming the phenomenon on concocted reductio ad infortunium.
Edit,: added for clarity, "...from which...the simulacra.."; corrected "onto" as "on" and thereafter revised with clearer unchanged meaning the rest of final sentence. (and Ed2 sp ip.); E3 people instead of folk ,(mobile sorry) E4 added, "scheming" after "false investment" for clarity.
The discounts are getting smaller and smaller as the valuations go up. A new chain, Aptos, is raising at 2B valuation. Optimism, an ETH Layer2 raised at 1B valuation. Until like last week, it had a circulating marketcap of 100m.
Lots of smaller projects are priced below VC prices. For example, CowSwap is at like 12c when private rounds were at 15c.
I'm guessing that the VC premium pays for privileges like lock up and preferred terms.
VC buying - aka VC selling to greater fool LPs, with purported guarantees trails a wake of retail that fuels their vig.
I know nothing concrete about crypto n.b. but I think I can recognize the structured avarice. If my precis is all that's happening I'd convict this kind of VC instantly.
> Lots of smaller projects are priced below VC prices.
How do you know what the VCs paid? These are private transactions. Sometimes they invest in equity in the business at the published round price, but get tokens for almost free on the side.
Uber makes revenue from customers. Not all investments are good investments but the fact remains that businesses have non-investor participants from which the goal is, in the full course of time, to extract profits. While specific equities may be bad investments, equities in aggregate are positive-sum because investors aim to extract profit from non-investor participants. They may fail! But that doesn't change the goal.
This is not the same as a cryptocurrency which relies solely on later investors to create returns for earlier investors. There are no non-investor participants from which profits can be derived, period. Cryptocurrencies are in aggregate either zero-sum (best case, PoS) or massively negative-sum (worst case, PoW, especially Bitcoin).
This represents a pretty fundamental misunderstanding of, well, investing.
Even PoS is negative sum; developing and hosting nodes isn't free, to say nothing of human capital wasted on attention diverted toward a rube goldberg ponzi lottery in any capacity, right down to this hastily composed reply to your post.
I think the next set of companies will become more smarter in their vesting terms.
Just think about it, if these data point of selling claims get be bought to on-chain then I am sure people and next set of companies will not borrow some such investors.
because of this particular reason I feel DeFi will replace traditional finance first before any other form of crypto companies takes.
A recent IMF admitted that DeFi is 10x efficient than TradFi.I am sure once DeFi get a bit regulated and has better risk management principal embedded into code the system will become more efficient
I also see the recent housing crackdown and loss of money for common people playing an important role of smart contract lead world for the financial safety of the larger population. People are losing trust way faster than they are able to change systems
> A recent IMF admitted that DeFi is 10x efficient than TradFi.I am sure once DeFi get a bit regulated and has better risk management principal embedded into code the system will become more efficient
For the efficiency part. To be fair, traditional finance as an industry operates as a super inefficient, regulatory-captured pyramid scheme. Shouldn’t be too hard to beat.
> For the efficiency part. To be fair, traditional finance as an industry operates as a super inefficient, regulatory-captured pyramid scheme. Shouldn’t be too hard to beat.
They're dense. They don't get it at all.
The "super inefficient, regulatory-captured" part is a feature, not a bug. We want transactions to be reasonably slow and checked by a human somewhere along the way. We want a myriad legal protections.
"pyramid scheme", that's rich, coming from cryptocurrency companies.
All the naive investors who keep making investments in crypto will lose their money, like they have on current round of failing crypto 'banks'. It's both the fact that existing finance is hard to access for poor people, and it's got a lot of regulation that can protect them, and it can cost more, and there are still terrible legal investments (payday loans). But it provides way more protection than defi, which provides none.
With all the large firms (crashing daily) that provided impossible ~19% returns still trying to attract new investors, there's just no defense of the 'industry'.
You can trade Bitcoin on an exchange that never handles Bitcoin. Synthetic securities can always be constructed regardless of how the original securities are represented. In this sense blockchain isn't much better than og paper shares
Moelis advise on M&A though. They get fees from companies doing steps with each other, which they do in both good times and bad (aka restructuring). I didn't think it meant Moelis was investing in those companies.
It's like a lawyer getting into crypto, they do contracts for the companies, they're not buying tokens for themselves.
It seems that they also bet on the hypetrain lasting longer. They are now trying to cancel some of their TSMC orders. [1] They'll probably end up with a juicy profit overall anyway, but perhaps the more clear shovel sellers here are foundries like TSMC and Samsung.
>Yet some VCs are still plowing into web3. There was an article today about how Moellis was getting into Web3 companies. I'm genuinely curious what their thought process is.
I'd hazard a guess that it's something along the lines of "throw shit against the wall and see if anything sticks," or less cynically "run it up the flagpole and see if anyone salutes."
Isn't that pretty much the modus operandi of VCs? Invest in a bunch of speculative ventures and hopefully make all of it (and much, much more) back if/when one or more becomes profitable?
Some VCs, some even with legendary reputations, are going to ruin said reputations from the scams they're pushing. In 10 years much of the sheen of Silicon Valley will have worn off. Tech will be as beloved as banking.
The older protocols that were built in the depth of 2018-19 bear markets will survive. Many of them are also doing wonderfully well in terms of revenue. COMP, MKR, AAVE, CRV all make a ton in revenue and have a well-defined product-market fit.
Crypto projects are tough to value. Their sheer global scale means that they can ramp up revenue and even profits extremely fast. StepN, a move-to-earn app reportedly made $120M in profit in its first year of operation. That might not be sustainable, but what business wouldn't give an arm and a leg to make $120M profits in just one year of operation?
Imo, crypto projects should be valued on 2-3x multiples at max.
> “StepN, a move-to-earn app reportedly made $120M in profit in its first year of operation. That might not be sustainable, but what business wouldn't give an arm and a leg to make $120M profits in just one year of operation?”
Shady securities in the past offered that kind of short-term unsustainable returns too. That’s why it was heavily regulated. This iteration of the same concept should be as well. It’s good news that SEC is now inspecting all of Coinbase’s listings as potential security offerings — better late than never.
Nobody wants to use these move-to-earn, play-to-earn and whatever-else token flywheels if there isn’t a market attached where you can dump the tokens. And those markets aren’t attractive unless the tokens are essentially securities.
Ethereum is a casino, DeFi provides financing for players, and all other crypto tokens are games in the casino. It's all dependant on degenerate players gambling on these ponzi tokens. There's no other purpose for Ethereum or DeFi.
I do use StepN and should be noted that the $120 million was from the first quarter and the project has less than a year online. But that quarter GST and the sneakers were at ATH before the crash and people "invested" more than $1K for a pair of sneakers, earning were $30 dollars a day with a single common shoe and you could reach your ROI in 30 days. The numbers are different now as GST has crashed 98% and people who invested a lot in the first quarter have their ROI in years.
The FitnessFi space has so much potential but StepN has new competition in the space which they are already starting with better ponzinomics and in web3 projects are community driven and StepN community will ape to the next one.
The problem with any -Fi project (GameFi, FitFi, etc.) is always that the tokeonomics get derailed by speculators. In-game economics become unsustainable when outside investors who have no real interest in the game itself start pouring in money. Suddenly prices that might have made for a sustainable year long run become too expensive, pricing out real users.
The way I see it "Move To Earn" is a new web3 business model StepN gets the credit. It is an Australian star-up who has earn $120 million in the first quarter and pivoted their tokenomics each month. The shoes of StepN as company have not been easy to fill in by the team.
> There are only two things propping up the entire crypto economy, VC funding and fraud. Once the VC money leaves the ecosystem the dominoes will fall.
Agreed, web3 was a joke... but the same thing can be said about most of disruptive tech like ride-sharing or food delivery, and even FAANGS are experiencing immense markdowns after the immense amount of liquidity poured into the stock market these 2 years.
Being critical of the nature of this system also requires self-awareness; otherwise it's just projecting.
I've done my due diligence, there is no future in web3. I don't disparage early VCs who invested in blockchain startups because it is their job to put money into companies that could be revolutionary. However, the revolution has failed to materialize. While it may not be obvious to all it should become clearer in the coming months.
When I say 'fraud' I don't mean juicing the numbers or asking forgiveness instead or permission. I'm not talking about things that will receive a slap on the wrist or a fine from a regulator. There is a great deal of organized crime that is the backbone of the industry. A lot of people will deserve to go to prison when the music stops.
web3 is going to thrive whether you like it or not. Primarily because of three reasons:
- Greed. Its absurdly easy to make a ton of money very fast in crypto. As long as that's possible, money will keep pouring into the system.
- Gambling. The global gambling industry is half a trillion every year. Even if you think crypto has no fundamentals and is akin to gambling, it still represents a massive market. Opening a 50x long on a random shitcoin might be the same as yoloing in $10,000 at the roulette table. If the latter can happen sustainably, the former can as well.
- Principles. Crypto/web3/blockchain - whatever you might call it - will continue to attract people at the edge cases simply because of the principles and narratives behind it. Self-sovreignity, privacy, ownership - these are ideas worth pursuing.
If "web2" hadn't shut off its own users from any semblance of ownership in the platforms, or had done more for privacy, web3 would have died in 2017. But because they didn't, web3 will continue to find users simply because of the "privacy + self-ownership" narrative.
More than anything else, I see the massive amounts of money flowing into web3 as a failure of the web2 platforms. If Facebook wasn't such a scummy company, and if Google wasn't tracking everything I do so maliciously, I would have completely ignored web3 as an idea.
> long as that's possible, money will keep pouring into the system
This was an easy-money phenomenon. We have another rates announcement today. I expect crypto to respond like the clockwork leveraged risk asset it models.
> global gambling industry is half a trillion every year
This is a good analogy. It’s one I hear in legislative and regulatory halls in the U.S. and Europe, the money centres crypto depends on for its legal demand.
The VCs largely have downside protection. Retail with get screwed but it’s a risk asset; they always get screwed late cycle and we have resolution mechanisms for that. Crypto company employees, however, stand to be boned.
It’s unclear where the legal risk winds up. My bet is the first layer that has not been talking to lawyers so far. That includes dumb executives and naïve employees working for savvy ones.
> Crypto company employees, however, stand to be boned.
I'm not going to be crying any tears for them. If you got into this from a business perspective you have zero excuse for pretending that you are not also partially to blame for the outcome. They'll be lucky if they avoid jail time in some cases.
> Would stock markets be jumpy after rates announcement?
“Announcement effects appear somewhat ambiguous for the [British] stock market” [1].
For the last year, it’s largely been high P/E tech stocks that have reacted viciously to rates announcements. The rest of the market is less sensitive to small changes in rates (jargon: duration). And/or it’s better at pricing it in ex ante.
Is it zero sum though? Finance in general isn't - it allows people to invest and manage risk.
If I bought a bitcoin at $100 and sold it at $1,000 - who lost money trading with me? The person I bought it from because they could have kept it and made the money I made? No - they were happy to realise their own returns. The person I sold it to? Assuming they still have it, they hold something valued substantially above $1,000 and are quite happy.
The only way for this to be zero sum is if bitcoin has zero value. But bitcoin has at least some utility so now the market is just arguing over how much - and that value changes as bitcoin becomes more accepted / useful.
Cash flow analysis allows us to sidestep thinking about utility and price by drawing a circle around Bitcoin and calculating cash in minus cash out. The only cash in is new investors and the cash out is miners+old investors selling.
The only way the current crop of investors can make money is by getting even more newer investors (ie greater fools). Eventually such a scheme will fail because of the same reason that ponzi schemes fail.
Compare this to something like apple which has an additional cash in (ie the company's profits). So the apple investors can make money without needing more investors.
Correction: for me to get 300k, many people had to aggregate 300k of losses across many different projects.
You make it sound like the market is two participants - me and the guy I took 300k from.
In reality, the market is broad as well as deep. You can lose $10 on one project, make $20 on another, and come out with $10 profit overall. Someone else can reverse that trade and come out with $10 profit as well.
Mathematician here - one who has been paid to write successful option models for Wall Street, for example.
Your argument is wildly wrong because you cannot add negative numbers and make a positive. You simply invent random transactions to come up with a desired outcome, and refuse to look at the big picture.
The whole cryptomarket is a negative sum game, because of the costs of electricity, bandwidth and personnel. For every dollar that goes into the whole cryptocurrency market to buy a coin, less than a dollar comes out, because some of that money is buying mining rigs and generator plants.
This is certain because there is a law of conservation of money in this case. Cryptocurrency neither creates nor destroys fiat currency, so the inputs and outputs have to net equal less than zero.
Why don't you try to come up with some sequence of actual transactions in a "toy" market with a small enough number of participants that you can work through it by hand, not forgetting to take out money from the pot for electricity, network, and personnel? You'll soon see that this network net destroys money - it doesn't create it.
If you don't believe it, I'll write you a math proof, but TBH if you don't understand the explanation above, you'll understand the math proof even less.
A market of one token that was initially worth nothing 1 year ago but the market now sees has value - let's say $100 - because it has some genuine utility - various companies have said they will accept it as payment for a variety of different products.
If you add all the cashflows for trading on this token over the year, $100 has been made. In fact the only way for these cashflows to sum to zero is for the token to be worth zero.
Where did that value come from? It came from the increased utility of the token.
Correct. But overall if you net out the cash flows, the crypto market does not create any new wealth (as opposed to the stock market). Old investors benefit by getting more new investors who themselves are always on the lookout for even greater fools.
As I understand it, either you're good at timing the market or you got lucky. If you got lucky, there's no reason to be so cocky. If you are good at timing the market why aren't you making a fortune on Wall Street?
There's no need to time the market when the market is flooded with cash. You didn't need to be smart or even lucky to make money on practically anything in late 2020-mid 2021.
The trick is knowing when to get out. And for that, simply managing your greed is enough.
You should advertise on youtube then ;-) Lately it seems every youtube video I watch has endless steams of scammy "How do I invest to get good returns". "You should invest with fred johnson crypto, I made 100k off a 10k investment in 1 week".
> If "web2" hadn't shut off its own users from any semblance of ownership in the platforms, or had done more for privacy, web3 would have died in 2017.
Honestly nobody cares about these things. This is just a narrative that was grafted onto Web3 after the fact.
I care about these things and i've been in crypto since before gavin coined web3.
In fact most of the devs I know that started pre-2017 deeply care about these things. Many were around in the OWS groups back in the day, they transformed via bitcoin and now mostly work on eth projects. The cool thing is most of those people who were in it for political reason (rather than the newer investors looking to make quick money, and new devs looking for decent paid job) have made enough money to spend the rest of their lives working on this stuff regardless of it making them any richer.
I think we can outwork and outlast the cynics and keep building the things we think are cool. they hype will come and go, the fraudsters will sweep in during mania and con people regardless of our warnings, the authoritarians will try get the state to make it illegal, the google employees will keep complaining that its not innovative. we'll keep on working towards what we think is right.
Almost everyone I've met in crypto cares about these things.
Sure it is probably not even 1% of projects by number and there are plenty of frauds/scams (which are oviously illegal without any new laws) and even more just really terrible ideas (whatever happened to caveat emptor?), but there absolutely is a sizeable core of projects, founders, devs, and researchers that cares deeply about privacy, freedom from coprorate/government surveillance and control, open source and open protocols, and building a very different online, digital future than the one we are currently headed for.
I think that's worth the effort. Even if that might fail, and even with the collateral damage from scams and fraud (which, again, are already illegal). We accepted cars despite the deaths and injuries and pollution (which we also deal with legally and try to minimise without destroying the benefits of having cars), and they reshaped our society. I expect crypto and privacy tech. to do the same in time. It may even take as long.
Most blockchain tech is a disaster for privacy because it puts all your transactions on a public ledger for all to see. At least with web2 you can delete stuff you've posted.
It also doesn't mean the solution to every problem is to start an MLM scheme around unregistered securities. Kind of a false dichotomy here. Sounds like the answer is to start services that cost human dollars that don't sell data - and definitely don't publish data on a public immutable pseudonymous ledger for all to see.
The problem is that as you said, when the rubber meets the road, the customers don't value privacy - and at the end of the day they're the ones paying.
All the major platforms were built without ownership and without privacy, and this didn't hurt them in the slightest from being some of the most valuable companies in human history. I'm not saying I like it either, btw.
That’s not web2.0 but rather a couple of companies. Nothing prevents anyone else from doing different things with their web applications, and more importantly there’s no indication that magical thinking about blockchains will somehow prevent that business model from continuing.
The blockchain design makes it even easier to mine peoples’ activity and prevents retroactive privacy improvements but, more importantly, the underlying problem is that people like not spending money. Various people have tried micropayments on the web but ads have less friction and don’t bother a sufficiently large group of people enough to pay more than advertisers, not to mention the precedent suggesting that sites will display ads to even paying customers.
Similarly, content hosting has the same failed promise. Blockchains are too inefficient to store the content, which is why all of the “web3” services are so commonly dependent on normal web companies. NFT pirates trying to steal artists’ work are routinely halted by takedown requests to Google, AWS, etc. There are services like IPFS which try to provide less centralized hosting but they’re expensive and have the same issues with most of the actual hosting being on ISPs who are legally required to honor things like DMCA or other illegal content requests.
> Do you have any say whatsoever how your data and content are used by, say, Facebook?
You're describing DRM. It doesn't exist for blockchain either - famously I can copy/paste NFTs all day long. And it's not clear whether most NFTs even provide any copyrights for the content they link to so you still don't even "own" the content in the legal sense.
> Its absurdly easy to make a ton of money very fast in crypto.
Not at all. It's easy for one person to make a lot of money _at the expense of another_. It's a less than zero sum game, though, so each net transaction _cost_ people money todal.
> Self-sovreignity, privacy, ownership - these are ideas worth pursuing.
The ability to evade government regulations and scrutiny is crime.
The underlying idea is that you don't like the laws on financial disclosure, so you want to "get around" them.
As an honest citizen, I see the desire to evade the securities laws as literally criminal intent, which it legally is.
> But there are plenty of real projects that are based on blockchain.
There are plenty of real projects based on blockchain, where if you take the blockchain out or just replace it with tech we've had for 40+ years, nothing of value is lost.
>> They could all be built without tokens or a blockchain if they wanted to
Sure, and all web2.0 tech can be built without AWS or docker. But in many cases, they give you a powerful advantage.
Same with blockchain. What now is happening in web3.0 is not that different from the dot com bubble. But it busted, and then a ton of new profitable companies appeared.
Blockchain tech will for sure have many legit use cases, same with tokens and tokenomics.
Will most of the current crypto companies go bust? Probably.
Does this mean that blockchain and tokens are crap? No.
Well, it will only take as long as for web 1.0 and web 2.0 to find legit use cases.
What's that you say? Those technologies have legit cases from almost day 1, it just took the technology a bit to catch up?
That's just like crypto tech.
Ah, it isn't, you say? Blockchain has the tech but the list of legit and popular use cases only it can solve is almost 0 and we haven't really found new ones in almost 14 years?
I think you've basically defeated your own arguement. These Web3 principles of decentralization are not new, and fully possible to implement with Web2. Bittorrent, DNS, Napster, PeerTube, Matrix, Mastodon... all of them are Web2 software that use the smart principles of Web3 without adopting asinine smart contracts or self-sabotaging governance concepts.
The Blockchain does have problems it can solve, they just got solved by Web2 first. Sorry.
It shouldn't be done, Uniswap solves a problem that cryptocurrency made for itself. Otherwise, Forex trading has been a thing for decades. Failing that, I might be pedantic enough to suggest that it is possible. "The Blockchain" is just a single permutation of many data structures that could handle such a workload. Hell, you could even use PGP signing to replace a Blockchain altogether, designing a peering system that works similar to proof-of-stake, but without the append-only database or mechanical transaction signing. There are hundreds of such theoretical systems that would have no problem handling this, and I think it's pretty silly to assume it "can't be done". Bittorrent navigated a similar problem space without using a Blockchain. IPFS tackled a bigger problem space than cryptocurrency, and implemented things better than a Blockchain would have. By rejecting a Blockchain, IPFS was able to add sophisticated features like versioning, pinning, high-performance DNS resolution and peering that actually scales.
I think you're overestimating how hard this is to fix, and the utility that the Blockchain is providing in something like Uniswap.
You're not wrong that what IPFS and BitTorrent have done is impressive. I'm not a zealot, and I'll be the first to admit that there are lots of things that don't need a blockchain, including things like a hypothetical decentralized Google Docs. But the difference is that those tasks can be solved using clever tricks that make it so you don't need to be too concerned with the order of events.
For example, when designing a google docs clone with collaboration, the naïve way to implement that would be to have all the users' computers be sending messages like "insert character 'a' at position 43", etc. The problem with this approach is that it makes the order of events very relevant - you'll get a different result depending on the order you process the messages. The trick is to give each character a unique ID, and then send a messages like "add a character `a` after the character with id 29239810", and then the order is irrelevant.
It happens that not every problem can be expressed in this order-independent way. In general, the ones that can are those that can be expressed in monotonic logic. For some problems, there's no way not to care about the order of events.
If you're unlucky enough to have one of those problems where you have to care about the order of events, you need some degree of coordination between all the nodes in your network to make sure they agree on the order of events. For a high-security project like uniswap, you also want the additional guarantee that the order of old events that the network agrees on is unlikely to change - it's bad if an event that happened yesterday gets reordered or dropped.
Additionally, we're talking about something decentralized here, so we don't want to assume that everyone on the network is honest. If there's a way that a dishonest person can easily stop the network, or cause honest nodes to get out of sync, or cause the order of old events to change, that's really bad.
It turns out that all the good ways to do that look a lot like a blockchain. I'd be eager for you to prove me wrong here.
That’s optimistic. Best case is orderly resolution and/or fire sales to Wall Street. Worst case: retail investors lose money while executives and senior employees see prosecution.
> Why is worst case a bad outcome? It's all a scam and if people invest in it or propagate it, they shouldn't expect anything else
The damage is already done. Either our laws were broken, and there will be more misery. Or our laws were not and they'll need to be revised. Even if justified, misery is misery. It's a worse outcome than customers getting their money back and nobody going to jail.
I'm not sure. The value turned out to be less than investors imagined and so they are going to lose money, there is no way they get their money back.
As for those that caused it, if it's a ponzi scheme, as many said before, why would prosecution be a bad outcome?
I don’t follow crypto space that up close, but my understanding is, it’s mostly GME holders trying to make GameStop to look better on paper? Generating 2M isn’t hard if you have a few thousand people trading back and forth.
Helium isn't your typical crypto company. Their vision is actually very lofty - build a distributed low data wireless network completely independent of phone providers and cable companies.
And pay the people who own nodes a percentage of the $ earned thru the traffic flow of their node.
The payment just uses crypto because the ecosystem is a nice fit. Everybody knows what miners are and that they make money.
The problem is that you need the entire network in place before people can build on it. So they have been subsidizing the miners. And it's a race of how much money can you raise and payout vs how much is a network like that is worth.
And right now everybody has cellular and cable and fiber and no one really needs another system. Most of the use cases (LOTS of sensor data) aren't really worth that much money.
Personally, I think the government should subsidize something like this to allow it to get off the ground. Earthquake data, climate data, traffic data, etc. Essentially public use.
> Their vision is actually very lofty - build a distributed low data wireless network completely independent of phone providers and cable companies.
It presumably connects to the actual Internet at some point, yes? Presumably via each (or some) nodes' residential ISP hookups. Otherwise it'd be a glamorized intranet.
Extremely lofty visions that only loosely adhere to both reality and the practical applications of cryptocurrencies are typical for crypto companies.
> Personally, I think the government should subsidize something like this to allow it to get off the ground. Earthquake data, climate data, traffic data, etc. Essentially public use.
The government would probably get much more bang for its buck by funding something like NYC Mesh[1]. They also have an actual peering agreement.
>It presumably connects to the actual Internet at some point, yes? Presumably via each (or some) nodes' residential ISP hookups. Otherwise it'd be a glamorized intranet.
Right, so it's "independent" from ISPs and cable companies in the sense that it's a semiparasitical entity that resells your Internet subscription to strangers.
The community-run-hotspot model is 100% wrong for this because IoT nodes for sensing things like earthquakes and climate are more widely spread out than people who want to run hotspots.
The #1 model to make it work is ride on top of the cellular network which already offers wide (but not that wide) coverage. The #2 model is to have a plan and do the engineering to figure out where you need to put up towers. Even then it is really hard to get universal coverage.
> build a distributed low data wireless network completely independent of phone providers and cable companies.
Don't the people buying the LoRa gateways just connect them their router, which is being provided bandwidth by phone and cable companies? Or alternately LTE, which is also being run by phone companies?
There are already a handful of Lorawan companies that have built out networks or partnered with telcos. They have raised money from places like Comcast. They will probably exit back to places like Comcast. Governments are often their customers. And they are way too boring for a16z.
>Personally, I think the government should subsidize something like this to allow it to get off the ground. Earthquake data, climate data, traffic data, etc. Essentially public use.
Literally the exact opposite of what web3 is. You're arguing for a _public good_, but web3's entire premise only makes sense when the opposite happens: everything is privatized, everything is monetized.
When it comes to buying food, "everything is privatized, everything is monetized". And yet with robust competition, the market for food essentially works. It's worst problem seems to be price discrimination "sales", but those are around a factor of two, which may seem high but is actually pretty reasonable compared to non-competative markets.
And while morally, we can perhaps say that we've progressed as a species to a point that nobody should go hungry, any attempts to do so are necessarily going to rely on that food market to create food, with publicly funded purchases. In general, markets can be really good at solving certain problems.
Now, my comment is not a defense of trying to creating scarcity or monopolies where they don't exist - eg NFTs, Nestle buying up aquifers, copyright, etc. Nor is it a defense of creating "market efficiency" out of things that would be personal capital goods, where market inefficiency allowed for wealth to remain distributed (eg Uber, AirBNB).
Personally, I would say that wireless Internet access is (regrettably) a scarce good and thus attempts to make the market more democratized and efficient are a good thing. This is not the all-too-common converse of someone trying to take something that is already democratized and trying to make a market out of it.
Crypto is the payment method for this service. It's not an essential element, and there is much more to it.
I'm not exactly sure where your definition of 'web3' and crypto overlap, but there are many future public use cases for crypto. Banking the unbanked, protection against hyperinflation, etc. Maybe 10+ years away, but it will happen.
I first heard this line eight years ago and so far this hasn't happened.
If you are unbanked, it's because you have little money, and you want to put it into something stable and something where you are protected - in other words, the exact opposite of cryptocurrencies.
> protection against hyperinflation,
In 2022, cryptocurrencies have experienced over 100% inflation. Your one bitcoin today will buy less than half the goods and services it would have half a year ago.
Cryptocurrencies are almost as old as the smartphone. You can't keep promising something useful and never delivering, forever.
> Cryptocurrencies are almost as old as the smartphone. You can't keep promising something useful and never delivering, forever.
I’m generally pretty bearish on crypto and the current state of web3, so I’m not here to evangelize for it.
But comparing crypto to a smartphone is arbitrary, and the nature of one does not help us understand the acceptable timeframe for development of the other.
When I see the “it’s existed for X time and isn’t popular yet so it must not be viable”, a follow up question immediately comes to mind.
What is a reasonable amount of time for an emerging technology like this to develop? The modern web took decades to evolve into what it is today (for better or worse).
Depending on who you talk to, web3’s goals are just as lofty, and a similar time horizon doesn’t seem unreasonable.
With that said, the space still struggles to articulate the real problems it will solve, and time and time again it’s just a solution to those problems, and not necessarily the best one.
All of this to say - I’m a web3 skeptic, but we need a better measure of health than the passage of time, or we need a better definition of what an acceptable amount of time actually looks like.
> What is a reasonable amount of time for an emerging technology like this to develop?
Suggestion: it depends on the harm it causes in the meantime.
If an emerging technology isn’t living up to its promise and the downside is the creators wasting their time, let it go on indefinitely. Maybe they’re having fun. As long as no one is getting hurt, it’s a hobby.
If the emerging technology is solving nothing and actively creating new problems, allowing bad actors to consistently hurt others with little to no consequences, and accelerating our demise so a handful of egoistic maniacs can see a number go up in their bank accounts, perhaps it’s time to stop. Put an end to it even sooner if the biggest proponents repeatedly lie and make promises which fail to materialise year after year.
I think this is an interesting way to look at it, and probably a good one. But it focuses only on the crypto side of web3, which to me is the least interesting part.
To be clear, I personally feel that the next generation of the Internet needs a full reboot. Web3 is the web in name only, and the ideals that crypto bros extol have been hijacked to further these currencies.
But until some separation between web3 and “the future of the open web” is clearly created, the current problems with the web3 space will continue to proliferate.
What IS web3 then? if we take Crypto out, isn't Web 3 basically Web 1? Instead of monolithic social networks of Web 2, We go back to independent self ownership of Web 1 when anybody could run a email or Web server as first class citizen?
And if so, hasn't market effectively spoken against it? We CAN have independent self owned systems now ; populace just doesn't give a damn - you need to be on social network to be seen or heard :-(
> creating new problems, allowing bad actors to consistently hurt others with little to no consequences, and accelerating our demise so a handful of egoistic maniacs can see a number go up in their bank accounts
> What is a reasonable amount of time for an emerging technology like this to develop?
However much it needs to prove itself, I guess; cryptocurrencies have not proven themselves, I want to add 'yet', but they've had over a decade now and they're STILL suffering from extremely high value variability, energy costs, and scams / crime. That's not a basis to keep building on. And every attempt at moving away from those negatives has failed or ended up being a scam itself.
>In 2022, cryptocurrencies have experienced over 100% inflation.
To be fair, my ignorant self assumed that for much of its timeline, Crypto fought hyperinflation by hyperdeflation. It is intentional design point of most Crypto to increase its value. This deflationary philosophy I assume goes immediately counter pretence of Crypto as currency - if my 1 token will be worth a significant X multiplier at timescale Y, I have zero incentive to exchange it for goods and services and full incentive to hoard it with assumption it'll be worth more tomorrow.
Exactly; I don't understand why people are still trying to defend cryptoCURRENCY as a currency.
I mean in theory Tether and other stablecoins try to fulfill that promise, but these are dodgy in their own rights - and they have no protections either, as the SafeMoon thing from a while back showed.
> You can't keep promising something useful and never delivering, forever.
As long as there’s a chump willing to buy the idea of getting rich quick, there will be a weasel selling them a bridge. These days it’s a receipt for a picture of a bridge where they own neither the bridge nor the picture, but you do get an immaterial useless receipt. Pass it on to the next dope, and try to not be scammed again and get your receipt stolen.
The unbanked don't have much in the way of assets. Hyperinflation doesn't impact your savings if you have no savings. They get by using pre-loaded debit cards instead of bank accounts and credit cards. Cryptocurrency doesn't solve anything for them.
I looked into getting a Helium hotspot, but when I looked at my ISP‘s terms of service, the Helium use case is explicitly forbidden (I use Frontier Internet in Florida.)
If you’re not familiar with it, what a Helium hotspot does is allow compatible IOT devices to share your Internet connection.
I suspect that allowing random third parties to use your Internet connection it’s explicitly forbidden by the terms of service of most ISPs, especially when you are being monetarily compensated/rewarded for such sharing.
Excerpt from ToS:
“Customers may not retransmit the Service or make the Service available to anyone outside the
premises (i.e. Wi-Fi or other methods of networking).”
The same thing happened with AirBnB and Uber and they are still around. Most people disregard the terms and conditions. ToS exist because of (and for) lawyers.
Unauthorized access of their network could be be prosecuted as felony. Those are rules to access their network. Like or not, people do get prosecuted for violating these terms.[1]
I guess the difference is the size of entity you are breaking the terms and conditions with and the impact that breaking such terms and conditions will have on their business model.
I have long thought that ISPs should charge by bandwidth used. It would incentivize improving infrastructure. Any ISP that would charge by bandwidth used would want their customers reselling bandwidth.
No it wouldn't. The actual usage has a negligible impact on the expenses for infrastructure. Most people barely use any bandwidth anyway. Even on 1 Gbit/s lines the average bandwidth used is in the single digit Mbit/s. And the usage basically doesn't differ if they have a 100Mbit/s or 10Gbit/s connection. Also those countries where data caps are still a thing are generally those with the worst Internet.
I work for an ISP in Switzerland. If you download a game you use 1Gbit/s+ for a few minutes instead of an hour or two. The average bandwidth used stays the same.
Both don't require a lot of bandwidth and you have caches for their content.
You can buy additional data if you've used your included data. That's basically the same.
Paying for bandwidth used is exactly what I am talking about. In less developed places, 1Gbit/s is simply unavailable and usage is capped. There is no economic incentive to build better infrastructure for applications that do require a lot of bandwidth (e.g., Netflix).
The utility from which I buy electricity charges me per kWh consumed. They earn more revenue when I use more electricity. If they charged a flat $100 per month like my ISP, they would, like my ISP, cap my usage.
That’s a chicken and egg situation. The costs are fixed because they have no incentive to build more infrastructure.
If you live in a place with only one or two ISPs and they only charge a flat rate per month for capped usage, you never get more bandwidth. The system is working as designed.
I think you could argue that Helium is not making "the Service" itself available, since it's not providing an actual Internet connection as a Wi-Fi network would. The only thing using "the Service" itself is the Helium hotspot that is within your premises.
Reposting an analysis I did 6 months ago, where their numbers did not make any sense to me compared to any other LoRaWAN deployment; and probably impossible - bound by physics - to ever generate enough revenue to pay their gateway operators at their data cost / gateway rewards: https://news.ycombinator.com/item?id=29944979
This thread lacks factual information : no source for the $6.5k/month revenue, and no source for the LoRaWAN market analysis supposedly demonstrating it is a "fake, overblown use case"
Actually I would be interested in understanding better the choice made by Helium and the current and future use of LoRaWAN. When I first heard about Helium some years ago I wondered why they focused on this protocol compared to WiFi or cellular network technology. Which kind of devices are supposed to connect to Helium ? I suppose it is IoT devices, but most of them actually work perfectly fine with good old cellular networks
> Helium’s economy looks moderate or small, depending on how you parse the numbers. According to Token Terminal, Helium’s revenue in June totaled $2.6 million. That’s down from the April high of $5.5 million but a 73% improvement over the same period a year earlier. In 2020, Helium’s June revenue was below $200,000. Eddy Lazzarin, the head of protocol design at a16z, noted that when his firm first invested in Helium, “the last ninety days had something like $600.” It has come a long way since then.
> However, this is only part of the picture. Data Credits are used when onboarding a hotspot, asserting a location, and processing a payment. Onboarding hotspots, in particular, is intensive from a Data Credit perspective. Since Helium is onboarding so many new hotspots, this skews results, suggesting greater customer activity than is actually present. Data from The Decentralized Wireless Alliance removes these three uses, demonstrating the size of the Helium economy’s customer demand. By this measure, DC usage was just $6,561 in June.
LoRaWAN generally can use less energy than cellular networks, running off batteries for e.g. 7 years, where cellular would run out within 1-2. This is somewhat mitigated by NB-IoT, which was not available in most markets just two years ago. International LoRaWAN providers such as TheThingsIndustries and Helium can have advantages if you have a low, low data transmission interval and don't care about the (supposed) guarantees a traditional mobile carrier SLA would give you.
On the other hand, since neither Helium not The Things Industries owns their gateways (run by the community) and operates in an unlicensed spectrum (much less likely to discover and fine those who disrupt communications due to negligence or even on purpose), one might opt to simply use TTN (even less promises on network quality than TheThingsIndustries) or NB-IoT.
There are great use-cases for LoRaWAN, though Helium comes with more drawbacks than advantages for most.
IoT is a real market. But I have no idea why anyone investing in probably rather big of a system wouldn't pick a reliable proven partner with support and guarantees that they can actually make it work.
> Data Credits are used when onboarding a hotspot, asserting a location, and processing a payment. Onboarding hotspots, in particular, is intensive from a Data Credit perspective. Since Helium is onboarding so many new hotspots, this skews results, suggesting greater customer activity than is actually present. Data from The Decentralized Wireless Alliance removes these three uses, demonstrating the size of the Helium economy’s customer demand. By this measure, DC usage was just $6,561 in June.
This kind of technology is intended for sensor networks- think water meters, pipeline monitoring, EV chargers and the like.
The problem I see with helium is much more of a commercial one; the big customers will need much better established network operators who can commit to operating such systems for decades.
The money is there, but equally for customers investing in the wrong platform is risky too- eg this happened with the UK’s first generation smart meters, where many became ‘dumb’ again due to lack of interoperability between operators. It’s still being having at a cost of several tens of million of pounds. The solution which is also relevant to Helium by way of contrast was to set up a ‘Smart Data Communications Company’ as a regulated utility, and have that operate and develop the relevant networks. It generated around £430M in 2021 revenue as a non-profit.
I can only guess Helium’s strategy is to subsidise it’s infrastructure until someone (really multiple someone’s) like ConEd can be convinced to use it but there are an awful lot of steps along the way I don’t understand their plan for.
> Which kind of devices are supposed to connect to Helium ? I suppose it is IoT devices, but most of them actually work perfectly fine with good old cellular networks
You're right that there are some IoT applications where a cellular connection makes sense. If you need to know when a vending machine needs restocking, spending $5/month on a SIM card is good business.
But some things have more marginal benefits. A city might like to know which streetlights are working and which aren't. If they can get that functionality for $5 per light with no ongoing costs, that's worth it. But if it's an ongoing $5/light/month? It's probably not worth that much - after all, they get fault reports from citizens for free.
Whether Helium can support the latter use case usefully I have no idea. And it's not clear to me why they need a blockchain, or whether it's good business sense to target people too miserly to use a cellular connection. But there's certainly use cases out there for connections that are cheaper than cellular connections.
Exactly the reverse. Most IOT sensors suffer because of cost, battery, and engineering complexity for a cell based connection. Helium solves all three - even more important now that 3G is being phased out making thousands of IOT sensors obsolete
I bought ETH when it was $7 back in 2017 and participated in literally every single investment I could until about 2019, resulting in 7 figure returns.
I wouldn't touch the stuff now.
The ability for regular people to invest in crypto back then made the ponzi-like architecture of it worth the risk.
Now the VCs are trying to push their agendas, and it's blatantly obvious it's vapor.
You’re complaining about VCs pushing vapor while simultaneously admitting you participated in pumping “ponzi-like” schemes on regular people?
You do realize those 7 figure returns you made were a direct wealth transfer from later-stage victims of the ponzi to you?
I’m astonished you’re claiming moral superiority over VCs while sitting on wealth you took from thousands of poor people in places like Vietnam, India, Brazil, Nigeria, etc. (whom were all later stage investors in these crypto schemes).
Early investors were excited by the technology, not the promise of quick gains and speculation, like VC nowadays.. that probably where his "superiori moral", provided he meant it that way which I doubt, are.
A lot of people think crypto are plain useless but that is just wrong in practice. They are de facto actual "currency", which is already a lot especially for people in third world countries whose national currencies have gone down relatively to the dollar (venezuela, lebanon, turkey). Any of these people have been better off investing in crypto than in their local banks. It's diversification.
I had to difficult time replying to pembrook because their reply was so venomous that I felt out of breath by just how far off the mark pembrook was to how it was for me in 2017.
Crypto in 2017 really felt like the beginning of something big and amazing, like we were going to change the world's currency, solve reputation, etc.
Me personally, I've been weathered by the constant fraud. I still 'believe' in it, like I did in 2017, but I don't invest in it.
Seemed like vapor in 2017 to me. I felt bad like it was scamming people who were dumb out of their money.
Once I looked at how the prices rose and the at didn’t support the Eth use case, I thought the architecture was stupid or at worst built purposely to have unnecessary scarcity to drive prices up.
The case I heard for buying into ETH from people when it was starting had nothing to do with the technology and everything to do with having already missed the BTC rocketship
Not sure about Ether, but there are plenty of people that 'bought in' to the Bitcoin idea and mined some coins early on without 'taking wealth from others'.
VCs are in there for entirely different reasons, and 'later stage investors' are always at risk of having their hair cut if what they invest in isn't worth what they paid for it, after all, they too were trying to take money from later day suckers.
I never paid a cent for any bitcoin, but I did pay about $100 to my electricity company to mine some just for the heck of it (and ended up giving it all away).
Wealth is not a zero sum thing. Are they getting USD (or drugs, or whatever) for their BTC? yes. obviously.
is this good? well, ordering mob hits on some darknet site via BTC is obviously bad, whereas ordering magic mushrooms is much better than funding street gangs.
meanwhile burning down the planet just to calculate hashes endlessly? obviously bad.
That's not true. Cryptocurrencies provide value by enabling you to make transactions, and as their usage increases, so does their usability for doing transactions, and so does their value.
That's why currency is not normally treated as an investment. Meanwhile investments like equities have the property that the thing being owned actually makes stuff. Bitcoin seems to be the worst of both worlds.
Nah. With ‘real’ currencies, goods and services are available in that currency. I can happily go about my business and transaction entirely in euros if I’m in the EU.
So what about gold ? I'm waiting for your vlog where you go buy a starbuck with a pound of physical gold and they give you change.
The point is that when there's liquidity smoewhere (on an exchange), any security have "de facto" act as a "money", or at least a "saving account", because there's always at all an actual value defined by the market. whether it's stock, crypto etc... It doesn't have in practive to be tied to a central bank / governement. Even historically, currencies have existed well before someone tried to regulate them
"Entirely" is the keyword.. there are certainly a lot of things you can buy with crypto, but at some point you need to convert it to a 'real' currency to pay for food or gas or server costs or whatever. And if you find a service that lets you buy food with crypto, eventually they will need to pay their suppliers with 'real' money. Everyone needs to keep track of the btc/USD (or whatever coin) exchange rate to ensure there are enough 'real' dollars or euros or whatever at the end of the day. It's a super hard thing to bootstrap a currency, much easier with the force of the state, I doubt there will ever be a truly competitive crypto.
In “real” currency labor is compensated by wages, resulting in a net increase of collective wealth. Building a house generates a net increase in wealth overall; there is “more there” than there was before.
Cryptocurrencies do not share this property. They are zero-sum, which is a hallmark of a Ponzi scheme.
But selling those coins is taking wealth from the people buying it, and the problem is that there are plenty of buyers who don't really understand what they're buying - and sure, they share the blame for getting in over their heads, but so do the people who are doing the selling.
>7 figure returns you made were a direct wealth transfer from later-stage victims of the ponzi to you?
That would be true if there is no value in what was sold but taking ETH that he bought for $7, in 2019 when he sold it was about $250 and is now about $1500 so people buying ETH then would have done just fine. Ponzi schemes are cons that collapse, not open source assets that go up for years and years.
Are you trying to say that ehtereum is a ponzi scheme? Do you think Bitcoin is also one? Don't get me wrong, there are alot of scams in the Crypto szene (like in any scene with a lot of money and not much regulation) but there are also legit, interesting projects. And to be clear; Ethereum is of course not a ponzi-scheme.
They're speculative assets bubbles (hence the enormous price swings). People refer to them as Ponzi schemes because a speculative asset bubble is similar, though the two aren't technically the same thing. But neither are good for the economy, with everyone making money by leaving someone worse off.
If you invest in a company you can be investing in a productive asset that will produce more than you put in. You get a cut, but society does as well, and everyone is better off. With crypto, you're getting your money from the person you offload the crypto to. You're richer, they're poorer. They can try to offload it to someone else, but eventually someone will be left holding the bag. Things that can't go on forever, won't.
Even in the highly unlikely best case scenario where these assets stabilize at high prices, you're expanding the monetary base and getting your money by inflicting price inflation on the rest of society (the amount of products isn't increased, but the amount of currency trying to get those products will be).
It’s an interesting question that for me I can’t give an answer because it has be thinking what does “legitimate” mean in the context of a market.
What would make a market melt up illegitimate? Traditionally I was taught that pump and dump and painting the tape are illegitimate market behaviors. Otherwise is a mania illegitimate or isn’t it just a natural market phenomenon?
Like most other new technologies, crypto is going through a hype-and-bust cycle, but greatly exaggerated because of the possibility of crazy ponzi-like speculation, and for people who know nothing about what it really is to get highly involved financially, seeming to make wild profits before the inevitable popping of the speculative bubble. Most new technologies don't have remotely the same degree of opportunities for utter craziness.
BUT... that does not mean that the technology is fundamentally BS. It just means that it happens to be extraordinarily susceptible to the kinds of abuses we are seeing.
This year, Ethereum will become Proof-of-Stake based, and "Layer 2" solutions will be emerging which greatly reduce transactions costs, and sharding will be emerging that will GREATLY reduce transaction costs. It's a real technology with a real future. And to transact with Eth you'll need to own Eth, providing non-ponzi motivation to buy, and it will be a deflationary currency (i.e. there will be less of it over time rather than more). IFF the tech is successful, its price may still go up by a LOT. I don't know that it will be successful, but I've been following its development closely and I think this is a very competent team making good decisions.
I'm bullish on Ethereum long-term. Once it's converted to PoS, it will have by far the largest market cap of any PoS chain, and the security of a PoS chain is ultimately based on its market cap (and how decentralized it is, something the Ethereum world is very aware of). So, it should be the most secure PoS chain, as well as having at least as much high-quality technical development going on as any other when you include the Layer 2 teams.
But it will take a few years for many of the practical potentialities to start to be manifested in the real world. It needs Layer 2 and sharding before it will happen. In between now and then, the price of Eth is anyone's guess. I don't think anything, in particular, should be read into any short-term price trends. Instead, the question should be whether the fundamental technology is moving forward toward its goals, and whether another technology emerges in the meantime that has the same potential benefits but somehow does them better.
The problem with Helium is that there's virtually no demand for LoRa protocol's super-low datarates. Cellular is a different story. There are already 3rd-party cellular towers operators who profitably provide data service to handsets on behalf of the big network providers. Tokenomics could work for cellular with carriers providing demand-side token consumption. However, cellular wasn't Helium's initial target, and watching them migrate to multi-band / multi-protocol has been a bit cringey.
Where I am, Helium is would be the cheapest way to get data from a-b without draining batteries.
I can dump sensors anywhere in the city and they should just work.
But
When I last looked, it was really convoluted to buy data, you had to either buy them off a miner, which sounded dodgy, or mine the tokens yourself. I just wanted to buy $25 worth of data transfer and have done with it, but I couldn't figure out a way to do it at the time
> The problem with Helium is that there's virtually no demand for LoRa protocol's super-low datarates
yet.
FTFY. Personally, I'd love to relay my home weather station readings over LoRa - then many other things too, if it's cheap enough! (say my TPMS - why not? Then I can retroactively track my car to cross correlate where I went shopping)
Helium business model that's paying for the deployment of a worldwide network on a free-to-use band is brilliant: it will replicate Wifi except with a worldwide coverage + full control of the network.
Wifi may at first have seemed equally useless, but the network effects from the ubiquity of it's presence and the unification of standards have replaced so many things I've only heard of in tech history books like DECT
That makes no sense. LORAWAN is very, very limited by airtime, which is why the data rates are so abysmally low. You're never going to see a huge amount of traffic on it.
To you maybe. But it does to me, and apparently also to a16z :)
> You're never going to see a huge amount of traffic on it.
And I don't need lots of traffic!
If we talk about say the TPMS information for 4 tires once per hour, that's not a lot of bytes.
The value is in being able to send 24/7 with a very wide coverage, and no per-network setup (like asking for Wifi passwords- I pay for LTE just to avoid the hassle)
What they realized is that they could extract returns way earlier than the traditional exits of IPO or acquisition. They told at least one of these companies they didn't care if they ever made money. I'd be willing to bet my 1 BTC that A16Z knowingly participated in "scams", knowing that they would never get in trouble because they can operate in the gray zone and get away with it. They only believe in it because they can get the greenbacks out.
If your car never leaves your driveway, or the reach of your home wifi, sure! That's not the case for most people though.
Also, you can't do that if people don't cooperate, while it may be in your interest (ex: to track customers across the city)
As for the weather station, it involves you having a home internet - many people just have cellphones. A device that would ask for wifi passwords etc or require bluetooth pairing or worse would be complicated. Something that works worldwide with no setup would be a hit!
It's very easy to not perceive an opportunity which doesn't apply to you - in this case if you have say LTE in your car + on every device + at home.
I remember, after Loggly raised ~4.2M, our revenues hit $7,500 after about 4-6 months. At the time, I thought the effort to build what we had built, code-wise, could be done by 1-2 people in maybe a couple of years.
Marketing plays a big part in how much revenue comes in to a startup. The product also plays a big part, but if the product does what people need it to do, it becomes a marketing task to accelerate growth to justify the investments.
Startups are a balancing act, especially when there are multiple stakeholders involved. I'm not sure these crypto offerings offer anything "product wise" that is useful to getting things done, other than making more money.
Slight of hand models are tricky to evaluate.
With Helium, they need people providing Internet to other people. Helium's "offering" drops to being an exchange from the marketplace (which must be grown) to the user base (which must also be grown). This "burning the candle at both ends" approach requires many multiples of capital influx to achieve, and even then if the business model is not sound (we all already have Internet) it will fail.
Unrelated to cryptocurrency stuff, this is such a great comment everyone going to work for a startup should internalize. The core work building a product is relatively easy to accomplish with time. The bulk of fundraising and spend is about marketing.
Is the $6k/mo revenue from people using the Wi-Fi hotspots, like how someone might pay for an Xfinity hotspot if they aren’t a Comcast customer? Please forgive the ignorance.
Sorry to be blunt, these have nothing to do with Wi-Fi hotspots, they don't have the same use cases, they don't use the same protocol and it's as far removed from Xfinity and Comcast as possible.
I don’t mind the bluntness but I think my analogy threw you off.
When Helium says things like: “The Helium Hotspot is a small hardware device that creates a large wireless network for devices that use Helium's network. Think of it like a Wi-Fi router, but for devices sending small amounts of data over long ranges.”
Is the $6k/month revenue from sending data through a “Helium Hotspot” or something else?
A16Z is obviously well known, but are they respected? I naïvely assumed that they would have access to enough expertise and deal flow to avoid the most absurd losers, but a few examples in the last few months have made me question that.
And an important follow up question: do they have enough dry powder to keep sustaining these things?
a16z is an odd fund. They've made a ton of money in crypto investing in projects, pumping them, and then dumping on retail. Most crypto insiders view them as completely toxic and won't touch projects they've backed.
But a16z has such a strong brand in general tech and is so great at PR, I don't see them slowing down anytime soon. They're making way too much money.
The passive income for hotspot owners prior to Aug, 2021 was very real, many cases thousands per month for a single hotspot. The HNT coin price was much higher also hitting near $50 creating this incredible hope of easy money and for the early players who could get a hotspot they banked. Then Helium halved the coin in Aug/21 and it's been a downward spiral of HNT prices and software updates. The people who made $$ were the hotspot hardware manufacturers at $400 a pop with a lead time of 8-12 months to get one when the hype really started in Mar, 2021. For most today buying a hotspot would take 6-8 months ROI, but HNT prices really dictate that.
So now with 900k hotspots installed Helium is pushing aside the lorawan network with less mining payouts in hopes/dreams people will flock to buying 5G cbrs implementations costing over $3k per site. Not sure what customers or applications will use this network, something helium still has to signup customers to create value. The network like 5G has range limitations, so you'll have to spend more to go further. If I recall amazon has a competitive cbrs product also. All I know is it's no simple plug/play.
Early adopters really made a lot of $$ with Helium but it's been decline since late last year. It's truly one of the simplest miners to deploy in 5 minutes, but to get value you need a good antenna setup. I'm sure the Helium creators have a huge stash of HNT coins and not really worried.
To the extent anyone engaged with this project and walked away with real live American dollars they came from either VC investors, or greater fool token investors.
That's the whole point of the article. Ostensibly the project exists to provide a valuable service, that's what is supposed to create the rewards. But that ain't real.
Zoom in, click a cell, click a node, click "30D" and you'll see the amount of HNT and how much that is worth at the current market rate. I didn't see any $6,500 nodes.
Right, and the tweet thread explains that the 2m number is inflated by the hotspots that are being activated (activating hotspots is expensive, but the activation fees are one-time)
I've had a Linxdot hotspot running in my house for the last few days. Apparently it's earned me 0.08 HNT so far (about $0.70 USD.)
I've been thinking about building an IoT device for my mailbox, so I can get a notification when we get a letter. It could be fun to build something that uses the Helium network. Maybe solar powered, and using a weight sensor or something. (I probably don't need Helium for this but it would be fun to try it out.)
The people purchasing these hot spots, who find their bankruptcy claims against Helium being inhibited by intentional breach of contract.
> not like a packet that's a result of sharing/reselling suddenly "weighs" more
It does due to peering arrangements. Data transfer having value is also Helium’s claimed value added. It’s awkward to claim it costs nothing to implement but has value that can be sustainably charged.
People running the hotspots should care, they could get prosecuted for unauthorized access of their ISPs network. Sharing you connection is not authorized. Don't like it, lobby to change the law but what they are doing is explicitly illegal.
I suppose ISPs could try to make an example of a few customers. But I think that would be horrible PR as well as very difficult to prove.
How would they distinguish traffic that’s authorized and unauthorized? As their customer, how much do you think I can authorize? Can I grant my guests access? Can my smart lightbulbs access?
The conventional wisdom suggests that governments should not be in the business of 'picking winners' when it comes to subsidizing industries.
Private funds can do whatever they want I suppose, but I wonder if there's a term for VCs that spend government-scale funds on things that look like long-term losers. Crypto and 'web3' are just the latest examples of this, and they're coming after a decade of equally uninspiring ideas like social networks, food delivery, Uber, Airbnb and WeWork.
Defense and the arms industry is not a government "investment" in the normal sense, it's more of an infrastructure thing that doesn't directly contribute to national wealth but serves other non-economic purposes.
I'm speaking in terms of things like government equity stakes in a fledgling, or failing industry, the same kind of direct invrstment a VC would take on. The numbers are much smaller at that level because it's politically risky.
And too many people expecting rents to fund their lifestyle. The core problem is not enough people actually doing. Those that are doing don't see the excessive availability of investment cash as a problem.
Deregulation is like flat power structures. Ultimately it just means that you don't know who the new regulators are. I can't help but wonder the difference between valuing the ideas of unfettered capitalism and the realities.
I will build you an $80k ARR business, I just need a $365mn down payment. If you want a business that loses $100mn a year, that will cost you a lot more - probably in the region of a $5bn down payment.
Of course this view is ridiculous. It is like looking at one hand of black jack in a casino : "you mean you spent millions of dollars building a casino and you let that player win!" Sadly though we only get to see the non-portfolio view of VC firms performance, the case-by-case view, when really the success of the fund (and the casino) is about the distribution of performances. Having said that, my offer still stands. I will build any member of this community a firm with a globally recognized brand name, that loses $100mn a year for $5bn down now. I will even throw in some jail time for securities fraud too.
There is the basic use case of getting something like weather sensors broadcasting conditions over time. That could be useful. The way I think this will be used if it ever got market traction is to spy on you.
Today if I don't put my tv or my fridge on my home wifi, they can't call home unless they had a phone modem - I hope that doesn't make financial sense (I just realized I was hoping they only spy on you with wifi). I can put my own streaming device on the tv with a defined privacy policy. I don't want my tv showing me ads, and it doesn't, and that's one reason I'm using a 3rd party streaming device. Because I'm paying them there's a much higher chance it will only do what they say. If this ever got popular, your tv would have a direct connection to broadcast outside of your control what you are watching. I don't want devices doing more corporate surveillance things not in my control.
To be fair to these industries there can be more to it as well: construction operations may require inventory management for a fleet of power tools. Some IoT devices can potentially provide useful services via regular software upgrade, etc. But yes: it's mostly going to be spying and feature upsells.
The problem now is that network access is becoming a bottleneck. Many devices have the hardware they need to connect to networks, but don't provide the UI to enable Wi-Fi or Bluetooth pairing, nor do they provide any compelling incentive for users to connect to their own devices.
Networks like Amazon Sidewalk and maybe Helium are one answer to this problem. The manufacturers can make very inexpensive deals with the network operator, reflecting the fact that their devices don't actually need very much bandwidth. My personal theory is that networks like Apple's FindMy (AirTags) will also compete in this arena.
"On average, they spent $400-800 to buy a hotspot. They were expecting $100/month,". These expectations were soooo unrealistic! To have 100% return every 8 months is beyond crazy.
Soooo for every $4700 you get $1 ARR or if you assume that ARR is for 10 years not-discounted $470 for $1 ARR/10 years. I mean how much of those investment dollars came from early crypto investments in the first place (i.e. low cost) and are just gettin recycled is the real question.
I realize that's an unfair comparison but I think there are many many people who want to throw shade at crypto because a majority of it is rotten and has weighed down on the positive attributes.
Helium would be so cool if it wasn't crypto-based and used BT instead of LoRa, and was more focused on being local-first.
They're doing some pretty amazing stuff as is, but Sidewalk/Tile/AirTags/YoSmart are doing it without crypto, and with small enough bandwidth to work via mobile.
I'd much rather have a centralized but selfhostable system, where you choose what network(s) to be a part of, and payments or lack thereof is up to them. They'd have a real chance of building a very large network if they had hardware partners.
Ideally, this stuff should be "too cheap to meter" anyway, and could even be ad supported, at least for very low bandwidth best effort stuff.
Which is in fact, an awesome project, aside from being LoRaWan centric, and requiring registration of devices, as opposed to something like how AirTags work.
Building a market for bandwidth as a commodity was the last major initiative that Enron started. Didn’t go well for them, and I can’t see this going well for Helium.
I may be one of the rare ones, but I'm late to the game, and am trying to set up a bunch of sensors. The biggest problem I have is that I can't get my sensors to work.
There is so much talk and focus on miners, but they need more cheap, easy to use, and functional sensors.
Every time the so-called web3 is mentioned on HN, it's immediately obvious what it is and why nobody should touch it, in spite of very vocal fans and people with vested interest. It's just another fad just like NFTs - with big hype and no real substance.
Regardless of the crypto-ness or VC-ness of the plan, from a business standpoint, in the graph of Traditional Network Effect vs. Token Network Effect, his problem is obvious.
Where the y-axis = Utility To User, the Traditional Network Effect can track all the way to the upper end of the scale, and tracks perfectly with the Overall Utility, as an ideal outcome of course.
But with the Token Network Effect, no matter how much of a boost there can be at the beginning, the ultimate Overall Utility is about halfway as high by comparison.
By design you're building for mediocrity.
One of the "secrets" when I was implementing exponential growth strategies was to "prosper better overall, by persuasively giving the customers more of their money's worth".
Interesting how that tradition compares to "persuasively give the customers more of our money than it's worth, since our current product isn't really worth money to begin with".
> Google had no revenue for years. But turned out to be one of the best investments of all time.
And Yahoo and SGI were both behemoths, and look at them now. If you had stake in these companies and cashed out in time, you'd consider it also a great investment.
> To figure out how they are doing, the first thing I would look at is a chart of Helium's usage growth.
No one cares about Helium, and even fewer people cares about LoRa. I'd guess a good chunk of the nodes are run by people trying to make money out of it (I know personally people that invested in this), not by people interested in maintaining a network or that actually have any clue about LoRa. Me, as a hobby electronics tinkerer, I do care about LoRa (so, I'm one of those fewer people), but I don't care about Helium, because it adds nothing of relevancy to it. Yes, increasing coverage is good, but not only the LoRa market is quite narrow, any other provider can do the same without too much hassle. And there is no actual real money in it(beyond the hobby space) and never will be. No company is going to build products on a super-duper-easy-to-disrupt public network, when alternatives are available.
Google was founded in August 1998 and they they hired their first sales guy in May 1999. AdWords launched in October 2000 but before that time they had revenue from backend search deals where they powered other sites search engines for a fee, like Netscape which launched in June 1999.
So it's not really the case that Google had no revenue for years. They were able to generate revenue very fast by selling their tech to other companies.
"Years" is stretching it. Google was founded in 1998. In 1999, their revenues were $200,000 [0]. In 2000, it was $19M. And in 2001, it hit $86M in revenues and and profits of $7M [1].
Also, they had huge adoption numbers in a field with obvious monetization paths: companies like Altavista and Yahoo were selling more revenue than their earliest figures and there was no reason to think Google wasn’t going to capture that along with the users.
The contrast with Helium is glaring: statistically nobody uses it and if it shutdown overnight nobody outside of cryptocurrency speculators would notice.
On the other hand, giving away 365M as cash gifts could probably drive incredible usage growth numbers. Not to say that’s what they are doing but it also isn’t the whole picture.
Since when did due diligence on companies become "well one time Google made no money so obviously that means this company will be Google-sized because they make no money too!"
Agree. The amount of spectrum they use for their application is so small (15 MHz?) that there is really no good use-case that can not be addressed by cellular or Wi-Fi. Helium is just a toy project with good marketing. It is really a scam.
FWIW I'd love to move away from "you must have a cell number to do ANYTHING in life". It's super inconvenient if you move between countries.
Example - local taxi app (Bolt) wouldn't even let me register. I'm guessing their SMS gateway doesn't support new number ranges I've got assigned. Engineers don't give a fuck to enable my mobility. I've spent weeks trying to get on.
I'm not saying that the Helium idea of having this network of access points is bad. That's actually great, I wish there were such a thing.
What doesn't work is their token. Instead of having that they could have used a whitelist of acceptable payment... eg. ETH, USDT, USDC, DAI, WBTC, BTC...
But no, they had to have their own shitcoin of course, because if they used a cryptocurrency with actual value they wouldn't be able to give themselves a bunch of it to dump on the suckers.
Agree 100%. Helium and similar project could very well work with other tokens or even with regular payments in dollars or whatever. But they choose to come up with their own shitcoin so that they could dump it to others with marketing.
You know WiFi can use the same spectrum and get better range? Check out Halow. For IOT applications, power during transmit is not a big deal. Battery life is limited by the leakage (sleep power). Also those "miners" use lots of power.
LoRa makes a lot of sense. Whether Helium can make a lot of sense as a way to deliver LoRa connectivity remains to be seen, but it's certainly not true that there's no good use case for the underlying tech or that WiFI and cellular cover all such use cases just as well.
Isn't the idea that you'd get paid for use of a LoRaWAN access point pretty much the same thing as money. Sure, earning HNT for mining/proof of coverage is nice, but I see the long term game is pretty much earning money (via crypto) for use of your home internet connection. Otherwise why the hell are you building a wireless network in the first place?
It has nowhere close to the density for this to work, and there's nothing to stop the Beaconer and Witness from being the same person.
If the goal is to enable renting out of WiFi, then the sensible thing is to make a system that automates payment in ETH/USDT/USDC/DAI/BTC/etc... Or to put it another way, use the money cryptocurrency that exists and works already. But no, that was never the point of this. The point of Helium is to mint and dump the shitcoin.
The S&P 500 pays out over a trillion dollars each year in dividends and stock buybacks funded by the profits of their productive economic activity.
This is what you are investing in when you buy a stock. The numbers-go-up of the stock market is both directly (through stock buybacks) and indirectly (through expectations of future dividends) a consequence of this productive activity, not just greater fools.
The technology and adaptation is definitely not ripe -- yet!
But assessing the success of a web3 product by the ability of selling a specific product is akin to assessing the success of a country by its ability to sell passports.
The cost to offset the operations should come from the activity in the economy it encompasses -- these should not be assessed as traditional companies.
The crypto down rounds are going to be hilarious.
Note to investors: if you’re investing in crypto projects, carefully consider the ponzinomics and the vesting schedule. You want your unlocks to happen in the middle of the bullrun when exit liquidity is ample.
And also remember that whatever you might think of as “normal” volume will crash 90%. And when you think it has stabilized, it will crash 90% more.
The number of investors who bought the top is hilarious. But then, this is also a field where risk management is treated like a sin.