Also: during our fundraising, we faced a number of the "Monday pitch meetings" -- this is where you've gone through the early crap talking with VC's and are invited in to pitch to the partners. It's typically the last step before an offer. a16z's partner meeting was, by far, the most tech-savvy and aware group. It seems obvious that VC's would understand the technology they're investing in, but honestly, that's often not the case. We faced a lot of brand-name VC firms that couldn't understand what we were working on. We'd get a sense of that and quickly adjust our pitch to focus on what they could understand.
For those asking "Why give them so much credit when they're just doing their job?" -- there are special occasions when a startup's interests and its investors' interests are not aligned. The first big opportunity for a VC to mess with you is the period between a letter of intent and closing the round, when all the smaller details come up and are negotiated. a16z was excellent in the process and we closed quickly without issue.
A later possibility of disagreement is what ar7hur describes here, and here's why it happens: VC's have zero risk aversion and aim to maximize expected value in dollars, which is what you'd want as an investor in the VC. But especially if you're a first-time founder, your dollar-to-utility curve is anything bit linear. Most humans wouldn't trade $5 million for a 1-in-10 chance at $100 million. This discrepancy is the source of a lot of possible problems. How VC's behave during both subsequent rounds and possible exits is perhaps the most important measure of them from a founder's perspective.
tl;dr very happy with a16z and Chris Dixon.
As an outsider, I'm curious as to how bad the VC situation is in SV that doing your job is called out as exceptional. How common are the "Russ Hanneman's"?
The VC situation _outside_ of SV is generally considered much worse as far as I know. Such that characters in the HBO show would be depressingly accurate or even lightened up a bit.
There are great investors everywhere, but "a deal with the devil" can be the nature of most VC investments if you're not lucky/careful (disclaimer, 2nd/3rd hand)
Anecdotes like this help quell that fear a bit, even if wrongly.
To me, this seems like saying that removing the batteries from your smoke alarm will help you sleep, even through house fires.
My parent comment received 14 upvotes and was ranked as the top response for the 4 hours after posting it.
Then, in the span of one hour, every other comment reply received enough upvotes to displace my parent comment. Even, "Thank you for sharing this".
Is there a way to call @dang over? It makes me sad that HN is being gamed.
(1) commenting on voting on comments is off topic;
(2) insinuating astroturfing is not ok;
(3) you should email us instead: email@example.com.
Re #1: a moderator correctly marked your comment off topic. That lowers its rank. Re #2: I looked at the upvotes. There's no trace of abuse that I can see. People are far, far too quick to assume manipulation when the truth is simply that large subsets of the community like different things. That's why we have that guideline.
The article is vague in what it actually means, but it sounds to me like A16Z is going through the process of giving up its VC exemption to the Investment Advisers Act and registering as a RIA. It could also mean they're registering as a broker-dealer and getting its relevant employees licensed as such (e.g. Series 65)
Source: I run a VC firm.
Here is some more info: https://www.strictlybusinesslawblog.com/2018/05/31/the-ventu...
I know what these things are: hedge fund, private equity, wealth management, venture capital.
Which is A16Z now closest to? Or is there a class of financial firm I'm not aware of?
Edit: I'm also curious, does this place any material restrictions on their startup investment activity?
VCs, hedge funds and wealth management tend to be RIAs. Private Equity I'm unsure. Wealth managers are all either RIAs, brokers, or banks.
The article is unclear. A16Z are forgoing a certain exception that VCs have, I'm not sure what their legal structure was beforehand.
You can look up all RIAs on the SEC website https://adviserinfo.sec.gov/
Isn't VC the person with the money, so they are more in control.
While an "investment advisor" is just advising or suggesting where the money can be put for maximum returns like an investment advisor in banks? So, presumably less in control.
I don't understand why a title change was needed. Any technical or legal reasons?
This classification, in turn, also limits what an entity with a VC status can ultimately do and invest in.
In this case, a16z has ambitions that outstrip the limited definition of VC in the eyes of the SEC. Under their new classification, they still have the monies as an 'investment advisor' but aren't hamstrung on what they can invest in. It will, however, change the way they will be required to operate due to new regulations that come with the investment advisor classification.
Related, an article from the NVCA on the subject from December. 
> Isn't VC the person with the money, so they are more in control.
Most of the money VCs invest isn't their own. The money is allocated by "limited partners" (entities such as pension funds, endowment funds, sovereign wealth funds, rich individuals/families), and the VC firm uses their expertise and network to invest the money on the LPs' behalf, in exchange for a "management fee" and a cut of the returns.
The VC firm's partners do usually invest some of their own money (to have some "skin in the game"), but it's a token amount compared to the outside money they're investing.
Due to their role as custodians for huge amounts of other people's money (which, particularly in the case of pension funds, ultimately belongs to ordinary people), there are substantial regulatory controls and requirements.
> Most of the money VCs invest isn't their own.
To underscore tomhoward's point--VCs are largely (already) stewards of other people's money (their LPs). So while they are set up to be "the person with the money" from the market's perspective (e.g., if you are looking to get your company funded), they are acting as investment advisors (e.g., where and how to spend the fund's money--and by extension the LP's money--for a fee). Albeit with a specific legal exemption set forth in the Investment Advisers Act that governs certain activity depending on how they are registered* (this is what is changing for a16z). No matter how they are registered, they do have compliance requirements as custodians of other people's money.
*Under the Investment Advisory Act, they can be registered as:
(1) ERA - exempt reporting advisor (what we are referring here as a VC in the traditional sense), or
(2) RIA - registered investment advisor.
As it relates to a16z, they are giving up their IAA exemption as a fund (registering as an RIA vs ERA). No need to get into why that matters again (see other posts that have already addressed it well). The point being, VCs are already in many ways "investment advisors" as custodians of other people's capital (and sometimes their own) through their funds and they have compliance requirements, just different depending on how they are registered.
They are the person with other people‘s money.
> While an "investment advisor" is just advising or suggesting where the money can be put for maximum returns like an investment advisor in banks?
That is basically what they are doing. Making dcisions where to invest their client’s money.
Cryptocurrency prices jumped 20% because of a well executed 100M order
But if you act like an advisor for Mr. Evil Money, then it's not you who is on the hook, right?
Basically, it means they want to do something more aggressive and risky and maybe the opportunities in VC space are disappearing.
either the revenues are that high such that nobody has a desire to sell some of the company, or there is a language barrier in the host jurisdictions where these can legally operate, or nobody has considered it as the incumbents are so comfortable with their licensing/turf that they don't need to change a thing
the technology is so much better now than 2013 and nobody calls them crypto-securities anymore, it is such an obvious use case for price discovery, liquidity, and acceleration of public policy
Crypto maybe, not real estate doesn't sound as risky as startups.
Sounds like they'll blow up their wallet next
Yes, 2017 was over-hyped. The tech was not mature then, and while it has matured some since then, there's still quite a ways to go.
Bitcoin Lightning network is growing. Ethereum has successfully navigated core upgrades and has a clear path to scalability. Other platforms are doing great innovative things.
But to the core of the argument that crypto has no use case. It's 2019. We've seen our internet rights to speech and expression violated by companies imposing their values on their user base. We've seen digital ghosting, deplatforming, fake news manipulation, propaganda and all kinds of insidious behaviors from corporate giants that are too big to be truly accountable anymore.
Bitcoin et al. are a very real promise that the future of banking and finance and money will be decentralized. Which as far as I'm concerned, is about freedom as much as speech is. You don't have any freedom if you have to beg VISA or PayPal for permission to spend your money. That alone should be enough to justify the existence of block chain technology and we should all be cheering on its eventual success.
But besides that, the tech is being used in novel ways. From gaming to loans to tokenized asset trading. Cryptocurrency is programmable in a way that is just not possible with dollars.
>Bitcoin et al. are a very real promise that the future of banking and finance and money will be decentralized. Which as far as I'm concerned, is about freedom as much as speech is. You don't have any freedom if you have to beg VISA or PayPal for permission to spend your money.
The moral high ground you are trying to claim in your second argument is undercut by your first argument. If this was all about freedom, we would see similar sized investments in open and decentralized platforms focused on free speech. The reason we aren't seeing that is obvious. It is much easier to see a path to profitability in the cryptocurrency space.
Most cryptocurrency investments aren't about freedom, they are about carving out a piece of the pie from the existing financial services industry. There is nothing immoral about turning a profit, just be open about it. It is dishonest for cryptocurrency investors to claim their intent is to save the world especially considering how much electricity and therefore fossil fuels some of the popular cryptocurrencies waste.
Sell the tech on its own merits and accomplishments. There is a reason why the "making the world a better place" pitches have been parodied for years.
This is already a mostly solved problem. There are lots and lots of places on the internet, when I can engage in speech and it won't be censored.
Yes, the big platforms might censor you, but there are still lots and lots of small platforms that won't or can't.
A lot of people in the US don't seem to realize how extreme we are as a country when it comes to free speech. We fetishize free speech in a way that I feel is not healthy. I don't think any country's laws are perfect in this regard, but all the other western democracies seem to be just fine with their laws against things like hate speech. I don't see how the US allowing hate speech is beneficial to the country or its people.
This opinion tends to be an unpopular on HN and I figured I would meet the original OP on their terms.
If mere functioning is your goal for the country, then certainly countries without strong free speech protections can function. They can even function without democracy at all.
But most people want more for their country.
Western democracies with weaker free speech protections do function, but they also have a substantial pressure outlet in the form of websites hosted in other countries that don't kowtow to oppressive governments.
 - https://en.wikipedia.org/wiki/Democracy_Index
 - https://en.wikipedia.org/wiki/Hate_speech
It's not implemented well enough to detect the fine differences between western countries.
Hate speech laws reduce the range of discourse. They suppress dissent. That's inherently undemocratic.
Relegating that permissiveness to a particular entity allows that subjectivity to be enforced in perverse ways.
Many people feel it is better to tolerate the objectionable and hurtful speech than to allow a 3rd party to use subjective judgment to censor.
...unless you think they are terrorists.
Money is a collective action problem, a public good - it requires a solution that bounds everyone - just like defence.
Competing tethered currencies aren't gone because they're a bad idea, they're gone because they've been made illegal.
Crypto gives the power to operate such a currency back to the people in a way that can't be stopped.
Thats fine. If you don't like deflationary currencies, then feel free to not use them.
Other people disagree, though, and are preferring deflationary currencies.
Everyone can get what they want.
Why do you think this? Ethereum has changed its inflation schedule a few times recently.
It seems you are basing this on the hard capped supply model of bitcoin which is not the same as every cryptocurrency.
But maybe there are some good in-between solutions, less dogmatic, more pragmatic.
The possibility of forking is a necessary deterrent in cryptonetwork governance.
If the maintainers of a network become compromised or get coopted by special interests, the collective owners of the network(the holders of the cryptocurrency) have the right to exit.
The right to exit is a necessary part of governance.
There is no guarantee that decentralized anything has a place in the future. So far the trends have been depressingly centralizing, whether it's government, finance, manufacturing, or even our great hope, the Internet.
Tech people have been warning about this forever because they have a strong grasp of the consequences and they also better understand what we have (or had) with the internet and other parts of the economy and politics.
I’m starting to see far more ‘regular’ people outside of tech concerned about the top down centralization of communication and payment networks.
And for all this technical progress there's still the human problem that the core team/individuals decided exploiting vulnerable contracts' and hard forking the failed DAO were morally right ideas.
As long as those team members are involved then the truth is that no one in the Ethereum ecosystem can escape the Spectre of their will. They've historically proven to be operating as simply a different centralized body of power that isn't a government issuing fiat.
I can imagine at least a couple of scenarios where it might be in the interests of (some?) investors to spruik such a thing.
There’s a lot of power being generated by, and flowing within and between, various organisations throughout the world. It’s probably possible to tap in to that a gather some of it close to you, especially if you are a group of tech minded wealthy folk.
Could you clarify? Do you mean flowing as in transactions between major banks or major manufacturers? Or something less obvious?
Where is it you live that Internet service is provided by a free market, that can't be disabled?
Oh come on, this american-centric meme has to die off already. Drugs. Every drug-related transaction I know or heard off for the last ~2 years have been done through bitcoin.
In some aspects, US is ahead of the globe. In others, though - like having people such as drug dealers who meet their clients in person and make transactions in cash - it's way behind.
10 years ago, people who clamored about a subset of the NSA's dragnet could have been justifiably labeled "conspiracy theorists".
Cultures and public opinions change over time. In America, and certainly for the most part on the internet, the ability to express opinions, including and especially controversial ones, is both a hallmark of and litmus test for freedom. Censoring controversial statements based on the current cultural temperament is antithetical to it.
Perhaps because the people you label "right-wing trolls" are, sometimes, actually just people with different opinions, and deserve (at least in their minds) some protection? They aren't merely getting kicked off Twitter; in some cases they are being demonetized.
It's all well and good to sit back and say, "too bad for them", but it would be diligent to at least concede your "side" may not win this fight, and one day you might be getting the label.
A phrase from each of the first four paragraphs. Is this parody, or just pandering cliche?
Selecting the NASDAQ in 2009 is a bit of a cherry-pick.
Returns also tend to be inversely correlated to fund size and fund reputation. Top 5 or 10 firms generate virtually all the returns in the asset class.
And given that these reasonable but not stellar returns put them in the top quartile (and VC has high variance even relative to hedge funds), you can guess how well things have gone for other folks.
The evidence shows that it is much easier to censor a credit card payment, or bank transaction, than it is to censor a crypto transaction.
Adult content is one area that comes to mind. If you run a business in this area, on the internet, which is perfectly legal, you will quickly find that every major financial institution refuses to do business with you.
If you do business in one of these controversial areas, then you will quickly find that you are being charged extremely high costs and/or kicked off of their network.
Which is why I support solutions that undermine attempts by a couple monopolies to impose larger costs on legal, but controversial businesses.
That said, with $1.26 transaction fees + 1-2% to buy BTC vs. even 20% for a credit card in this high-risk MCC, the breakeven is ~$7, and while I'm not sure what adult content costs on a monthly basis, I'd imagine the fee difference isn't a whole lot.
It's also not an imposition, nobody is required to use credit cards. Adult content is largely and lucratively ad-supported. Some businesses choose to offer content on a subscription model like the NYT paywall, and some choose not to. I don't see anything inherently wrong with the status quo. The cost of doing business is being passed down. They accept credit cards because even at a 20% fee, it's in their interests to do so. If it wasn't they'd stop. Either way, they're recovering their fees from customers.
It is also not enough to censor a singular Blockchain. You'd have to get the hardware to attack all the chains, because then people would just move to the other ones.
This is still not impossible. That's why I used the words "censorship resistant". But it is certainly much more difficult than a phone call to 2 or 3 executives who control the major financial companies.
This is proven by the fact that censorship just isn't happening on most Blockchains. The actual state of the network proves that it is difficult, because it isn't happening.
You can talk all you want about theoretical attacks, but those attacks aren't happening, so it works. Whereas there are many examples of the "phone call to Visa" that are happening right now.
They aren't stopping any transactions, and have never done so, in the 10 years that crypto has been around.
This is in comparison to visa and mastercard which censor people all of the time.
So for whatever reason that those pools aren't censoring anything, and have never done so, but the major finance companies are censoring transactions, is the reason why crypto is valuable.
a) BTC-BTC Transfer: Only BTC transfer fee. Beats TransferWise by a large Margin.
b) BTC-USD: Depends on many variables, including if the receiving country taxes BTC to fiat. Considering how expensive transferwise is, it's probably a wash.
Speed depends on if GP literally meant Cash. If so, BTC is obviously far faster and easier as you still need to get you cash into your bank account. Otherwise… Transferwise takes a few hours, BTC 10-20 minutes I think?
Privacy: The Banks and TW know who sent how much to whom. With BTC everyone knows that A sent X to B, but not necessarily who A and B are. As this transaction is public forever, I'd probably prefer TW from a privacy perspective, this of course changes with something like Monero.
Further, since you've got to foot the transaction fee (~$1.50) instead of the merchant and the merchant has already padded their prices for a 3% credit card fee, you're getting royally screwed. I pay with my 2% cash back credit card, get all sorts of warranties and protections, and you pay 3% + $1.50 and get nothing but losing your ability to file your taxes with TurboTax because they dont support crypto on Form 8949.
I was simply trying to show that your original statement was hyperbole, as there are clearly notable retailers that do.
Also as a consumer, I don't see why your point about intermediaries is relevant (barring the marginal price difference between them). If you are planning on purchasing something from a business you don't really care if they are using Intuit or Square to process credit cards transactions, just that they accept credit cards for payments.
COGS: $10.00, retail after CC markup: $10.30. I get a 2% rebate, so I paid $10.09, and for that $0.09 I get a one-month interest free loan, chargeback abilities and numerous warranties.
COGS: $10.00, retail after CC markup: $10.30. You have to buy the $10.30 from an exchange for $10.51 (assuming 2% fee). You then pay another $1.26 for the BTC transaction and get back nothing, for a total of $12.07. That means your total fees paid are 23X the total fees I paid. No chargebacks, no warranties, no loan, 23X higher fees. Then, you have to report your cost basis to the IRS and can't do your taxes easily. That makes your payment method inferior for any normal, legal purchase. That's one of the reasons buyers don't want it. Sellers don't want it because it exposes them to enormous FOREX risk.
Yes, it's hyperbolic, however the fraction of businesses accepting BTC is already practically zero and falling, it's not unfair to round it to zero. Otherwise we would just be happy with Overstock.com gift cards as a medium of foreign exchange. After a 2% cash back rebate on a credit card their cost is negative.
COGS: $10.00, retail after CC markup: $10.03. In Germany I would get a 0% rebate, so I would pay $10.03, and for that $0.03 I would get a one-month interest free loan, chargeback abilities and numerous warranties.
COGS: $10.00, retail after CC markup: $10.03. You have to buy the $10.03 from an exchange for $10.07 (assuming 0.4% fee). You then pay another $1.26 for the BTC transaction and get back nothing, for a total of $11.33. That means your total fees paid are 44X the total fees I paid. No chargebacks, no warranties, no loan, 44X higher fees. In Germany no tax liability is incurred AFAIK when using it as currency. That makes your payment method inferior for any normal, legal purchase. That's one of the reasons buyers don't want it. Sellers don't want it because it exposes them to enormous FOREX risk.
Companies that offer crypto discounts are unicorns. Why would they? It's more expensive and more risky to offer it. The only reason I can think of to offer a crypto discount is if you're not reporting to tax authorities like cash-only restaurants. Your one counter-example is by no means representative, and in Germany, you're even worse off than in the US in the average case, by double.
How? Risky? When the customer has literally zero way of doing a chargeback? And most businesses instantly transfer the received amount to cash, so there is no wallet complication.
> Sellers don't want it because it exposes them to enormous FOREX risk.
No, because the time they actually hold crypto is measured in seconds to fractions of them.
A streamer I watch allows you to donate with crypto and buy food for people. The Paypal way gives you less resulting money to buy food for people with because of tx fees. Crypto for them is safer and cheaper.
> In Germany no tax liability is incurred AFAIK when using it as currency.
I wish. You have to hold for 1 year, then whatever you do is tax-free. Before that, anything you do (incl. trading) counts for your income tax.
And FWIW, a) I don't buy anything with BTC, if anything I'd pay with ETH, Nano or any of the alts that have fast and cheap TXs but I'd buy things with a CC anyway because I find it too be simpler. b) Where I work the best tx fee we can get for CC Payment for 10€ is 0.395€
Re: the streamer, I don't think you're doing the math right. With a 0.4% + $1.26 transaction fee, PayPal's 3% would break even at ~$45. Whether they buyer or the seller pay the fee is irrelevant, the fee is paid. Either the buyer asks for more or the seller sends less, the net is the same. The difference here is fixed vs. percentage fee payment which reaches a break-even point pretty high up there for most purchases.
I based my tax treatment implications on this article: https://www.bna.com/germany-reaffirms-crypto-n73014476891/ ("But when the digital currency is used as a means of payment, or when it’s exchanged or sold, it will be exempt from Germany’s 19 percent VAT.") but I guess the capital gains still need to be paid?
The alts have even more risk due to their even more wild fluctuations and dreadful past performance.
BTC to BTC :I can do it.
Non of the fancy services allow me to send money from Mexico to the UK.
It is crypto or paying for SWIFT, Western Union or similar. With very high costs.
BTC is a nightmare. You have to find an exchange in Mexico (which won't run away with your money a la Quadriga) and they'll take 1-2% and sit on the transfer for a few days. Then you have to transfer from there to another exchange in the UK paying a BTC exchange fee, then cash out in the UK, they'll take another 1-2%. In the week the exchanges have been camping on your money if you ever see it again, the forex risk is astronomical as it regularly swings +/- 20% weekly. Then due to the inevitable change in value of BTC during the week your transfer takes, you now have reporting obligations to your local tax authorities in BOTH Mexico AND the UK. This may require hiring an accountant to resolve which adds yet another mess of fees.
Pay a service 2-2.5% and be done with it or:
1-2% fee to Exchange 1 + a few days FOREX risk + the current BTC fee of $1.26 + 1-2% fee to exchange 2 + the risk anyone in the chain is going to ruin you because they're totally unregulated fly-by-night operations then learn the nuances of both Mexican and UK tax law in regards to capital gains.
This is a common crypto shill talking point. It's been thoroughly disproven that crypto is better for international remittences than existing solutions. It's a solved problem.
I tried both of them and I can't (I am living in Mexico). I don't understand why you think BTC is a nightmare. For me, living in Mexico, and dealing with MXN and GBP (my brother is in Northen Ireland) it has worked wonders.
You are assuming that Bitcoin exchanges in Mexico are unregulated, when they are VERY regulated. You are making negative assumptions for every Crypto step while making positive assumptions for every step in your scenario. I does not make sense.
And why wouldn't I make negative assumptions of crypto , , , . There's a scammer at every single level and being intentionally resistant to censorship, control and authority makes that impossible to stop. It's designed to support scams.
Remember the man who lost $420,000USD while attempting to use Quadriga to exchange USD for CAD when moving to Canada using exactly the approach you're describing?  It's like asking me why I've got negative associations with the "Titanic II." Something about what happened to the first Titanic.
Last, based on my research, it appears Mexican crypto exchanges aren't regulated yet, and that regulators are about to shut them all down . "Because cryptocurrencies are such complicated technologies, the argument goes, average citizens can’t understand how they work and should not, therefore, be allowed to buy them." I'm 100% with your regulators.
It is actually very simple: A lot of these services do not provide services in Mexico. Really, the passive aggressive comment is not necessary.
I assume that you live in the UK or the USA. Usually what happens is that people that live there live in a "technological bubble" where all of those first-world services are available. But most of them do not have service in most of other countries.
I work in a B2B payment company and have had the opportunity to deal with these kind of issues. Believe me that cross-country payments is nowhere a solved problem. The blockchain technology definitely has something on it if used correctly.
Either way, another legitimate option for you to consider is an Interactive Brokers account which has great forex options (interbank rates) and Mexico is a supported country. They charge a commission of 0.2 basis points (0.2/100 of a percent) with a minimum of $2USD per order. There really are a lot of legitimate options that don't require cryptocurrency. People have been trading currencies for hundreds of years.
There's a great writeup on the way you can do it here: https://gfmasset.com/2018/09/better-than-transferwise-saving...
For interest you can even do USD-CAD exchanges with zero spread via Norbert's Gambit (https://medium.com/young-wild-and-cheap/the-norberts-gambit-...)
Both https://www.currenciesdirect.com/ and https://www.smartcurrencyexchange.com can do it.
SmartCurrencyExhcange: https://ibb.co/4RGXvbc also nope
They don't have MXN/Mexico, along with a lot of other currencies from Latin America, Africa and Asia
https://www.mycurrencytransfer.com/apply/smart-currency-exch... also has it.
Example news site: https://yalls.org
Example browser extension for great UX: https://github.com/wbobeirne/joule-extension
Or even nanopayments for single API calls, between the browser and a server or between servers.
Example pay-per-call web service / API: https://lightning.ws (disclaimer: my project, based on another project by me: https://github.com/philippgille/ln-paywall)
The mining and gas fees for BTC and ETH respectively are going to be higher than the cut a payment processor would take.
The one advantage that you might be alluding to is that bitcoins are divisible into satoshi’s, which are much more granular than cents.
There's much more to it, many smart people have put a lot of thought into LN, so I recommend reading the whitepaper and other documentation about it.
And looking at how many people use a custodial Bitcoin wallet today (e.g. Coinbase), many will probably use custodial LN wallets as well, with only the wallet service requiring a channel. Not recommending this of course.
Also, my use case was regarding micropayments (e.g. for reading a news article) and nanopayments (e.g. for an API call). That's below $0.30. If you're now going to say that you could top up some balance (like $20) and just deduct a cent from that for every payment, that was exactly the other point of my use case: No accounts required, neither in the DB of the news or API service, nor in the DB of some payment processor that must keep your credit card data.
So it's not just about fees, it's also about privacy.
The reason we don't have micropayments isn't an accounting issue, fee-related or a technical issue -- or even a privacy issue -- it's a human biology issue. IMO hooking it up directly to a wallet without topping off isn't going to change that, especially since you still have to top off the BTC wallet regularly as you get paid in real currency. Boat-anchoring two things that are complex and people don't really want (crypto + micropayments) isn't going to make the two work all of a sudden.
The only way to really solve the news business model with something other than ads is a Netflix-for-news. I hope that Apple News becomes that because newspapers deserve to exist.
And that's if you want really fast confirmations.
What is the alternative? Card? 2% + .3 fee. That's expensive. ACH? takes 5 days to be processed.
What is the fast, cheap digital alternative?
Works great if you're settling transferring between friends doesn't work for buying/selling goods, otherwise you get charged the same 3%. Also, the "free" transaction aspect is most likely a loss leader.
Besides, talking worked well for thousands of years, what use would humanity have for the Internet? /s
The reality is that for the rest of the world bitcoin is missing the initial distribution problem. Nobody in Venezuela has bitcoin. How are they going to get it? If they can trade with other countries, they would just get USD and be better off. If not, then net, it's zero sum. That's really all there is to it. Even after that, it's like cash if cash had a $1.50 transaction fee for handing it to your buddy. Not exactly tenable in countries where thats basically a daily wage.
Edit: ...and LN transactions are essentially instantaneous and free. Also you can’t program cash without a middleman.
Nothing in that twitter account refutes that in Venezuela the minimum wage is $6.70USD per MONTH  so a single transaction fee is nearly a WEEK of wages. And that's up from $2.20 per MONTH so a single transaction fee was THREE WEEKS of wages.
LN transactions are "instantaneous and free" once you open a channel ($1.50) and lock in your balance, then close out your channel ($1.50). Again, two weeks wages.
Bitcoin is not a solution to the problems of Venezuela. Changing the government is. They're totally disconnected.
I pity someone who is so offended by a simple technology.
Look at Bitcoin's yearly lows, and tell me more people aren't finding it useful every year. Again, YOU mentioned the Venezuela example, and IT IS BEING USED THERE. I never claimed it would save that country, nor have I heard anyone else make that claim. Clearly some people there find it more useful than other alternatives to their hyperinflationary fiat currency.
Bitcoin doesn't care about Venezuela nor any other specific use case. It keeps existing because people keep running the software. You can deny this, but there's no point being exasperated over it. Just let it go and concentrate on whatever you do care about.
But don't go around claiming fiat currencies are the final solution when situations like Venezuela are happening right before our eyes.
Trading with other countries opens up many different options for storing value like fiat currencies backed by 'stable' governments like AUD, CAD, NZD, USD, EUR -- or assets like gold, equities, real estate, etc. Each of which would have stored value 5X better than BTC over the last 2 years. However, the real issue remains, you have to trade to obtain either these assets or BTC and nobody wants to trade anything for Venezuelan Bolivars because they in turn don't believe they'll get anything for them. That won't be solved until the government is replaced.
Until the government is replaced any BTC "solutions" for the Venezuelans are efforts to legitimize BTC and increase the value of the holdings of the "helpers," not to really solve the problems on the ground there. If they were trying to help, they'd just raise money for NGOs.
Okay. So where is the Venture Capital going, and where will the returns stem from?
(I don't know this area, other than a little small business personal finance, but I recall hearing about some fluctuation in rules about financial advisors, within the last few years.)
Maybe I'm conservative, but I'd rather they stuck to their knitting (which they're pretty damned good at). There are downsides to this 'diversification' first and foremost, losing focus, but also risk. Basically, I can't help but think of SV's overall trend towards Too Big To Fail.
I'm not a fan of crypto at all. Re-structuring A16Z so that they can bet on that seems worse than silly. Real estate? Perhaps they can bet on Chinese ghost cities as well.
From what I understand though, a16z is trying to breakaway from investing in the limited scope of securities (e.g. equities) of private companies. They want to offer a suite of wealth management services to their Investors in addition to VC investing.
But then, will the Investors pool capital in the Fund and the Fund be advised by the RIA? Or will the RIA directly advise the Investors? The structure isn't too clear to me. Apologies for the ignorance.
As companies stay private longer, and get bigger and raise more money while staying private:
* The secondary market for private shares becomes more important.
* VC's now may have more asymmetric information or more reasons to invest in public markets.
* Mutual funds are competing with VCs in later private rounds so why should VCs be able to compete with Mutual Funds in public markets.
* The obligatory crypto reference.
Another one he doesn't touch on is maybe it's difficult to efficiently deploy > $10 billion in just private markets?
I can see why it can help if the opportunities are shrinking in the legit space.
Maybe the winter is finally coming?
Get your portfolio companies coming and going.
Pitchforks and funding purism aside (forget about blockchain debates), crypto assets are here to stay. They're the new publicly traded vehicles and function as a way for new startups to raise capital from new truly global 'capital markets' along with being a valuation metric. a16z figured this out. They knew what happened with facebook in SecondMarket  and also knew the largest upside in shareprices (aka IPOs/exits) are dictated by a public market marketplace, not with private startups.
Factor what Fidelity with $6T AUM has already released in rolling out global crypto services .
Separate crypto, as a capital raising vehicle and trading vehicle, from 'blockchain' and then it all begins to make sense. Real scientific and technical due diligence will help too .
I see comments here which indicate there may be something worth reading in there, but my brain is screaming at me to ignore it. The whole thing feels like an advertisement.
Perhaps it's because suits are making a corporate comeback.
This is not the first, and won't be the last, group of successful people who rise to top-tier power through offering to propel middle-class folks into entry-level upper class power at great risk to society.
Move fast, break things.
It's a silly thing to say on its own.
These cryptocurrency implementations along with some infrastructure would let you build a cheap low-cost micropayments system where you would just need to have some local trust. You could build out a federated payment network and build out infrastructure based on needs. All while avoiding the massive waste that comes from "everyone store every transaction ever"
The problem of credit card companies and the like charging really high rates still affects a lot, and "Paypal, but federated" could help tackle this with some cryptocurrency concepts in the background.
Though to be honest, I don't think this is going to happen. The communities are so focused on completely trust-free models that they don't see how they could build something extremely useful with way less cost and more utility by being more flexible on that point
Why not just use the real Paypal?
cryptocurrency micropayments could potentially be much smaller. What if you could pay per packet the wifi access point forwards for you? Or pay per watt some charger gives you? Maybe nanopayments is a better name for them.
Fair point about nanopayments. But what's the win? Why split up the cost per single watt or packet? No one cares about losing one cent per day due to rounding errors
Honestly with this question you've summed up most of my feelings about blockchains. Humanity feels like it's become more powerful in some very specific way. We have a new tool and we're trying to figure out what it's good for.
I've pattern matched this to early reactions to the internet. Many of the critics pointed out that the internet didn't really make anything new possible, we could already quickly communicate with people across the world! But, it radically lowered the cost of that communication and put it into a format computers could use and that was enough to put companies like Blockbuster out of business.
It's really hard to work backwards from a new tool to places it could successfully be applied. And if 10 years from now we haven't found a use for nanopayments I'll admit it was a silly idea, but it sure does seem interesting.
Why do you need another 10 years? Bitcoin has already been around for 10 years. The micropayment and tipping use case has been explored fully and has failed.
NSFNet started in 1985 and with it the US could finally transfer Megabits of internet every second! By that point more people had computers but they weren't on them enough for things like e-commerce to make any sense at all.
It took until 1991 for the Web to be invented, and arguably in 2000 the web had still failed to really find it's niche.
I make no claims as to whether crypto will have as much of an impact as the Internet had, I suspect it will impact only a few domains. However, we're still decidedly in the ArpaNet phase. Bitcoin can only process ~5 txns/second, Ethereum can only process ~13/sec. This isn't good for anything at all! I'd argue the nanopayment use-case hasn't been explored at all, because there's still no good way for me to spin up a server and accept nanopayments with it. Bitcoin transaction fees just spiked to ~$1, ETH transactions currently cost 15 cents.
You're looking at a steam engine the size of a building and telling me it'll never fit onto a train. And you're right! It took something like a hundred years for them to be compact and strong enough to power any vehicles.
A lot of people with a lot of money are working on newer designs which can process a lot more transactions for a lot cheaper, it's only once those cryptocurrencies have been built that the experimentation can really begin.
Though the idea of even jokingly giving miniscule amounts of money to friends has some traction in stuff like WeChat. If the systems were more open then you could run a collection system on your site pretty easily.
Some of us are banned for no actual reason from Paypal. Some others, banks.
1. Making money by trading fun bucks.
2. Anything where you need a currency but all the way better options aren't viable (crime).
With crypto, you fly anywhere in the world with a private key in your luggage. That key could have $100 or $1,000,000,000.
Thinking of international drug smuggling, one serious problem is moving all of the cash out of the country. Crypto solves that easily.
I have found it to be very useful during these conversations.
I suppose in theory all of the industry players could get together and establish a joint venture or nonprofit company specifically for the purpose of creating and maintaining an accurate database of provider contact information. But that seems a lot more complex.
Also, replacing trust in centralized banks with trust in mostly-centralized crypto software developers and mostly-centralized majority of miners.
I think the same arguments that come up about privacy can also apply to currency - I'm not doing anything illegal, why I do I care if I'm being monitored? or I'm not buying anything illegal, why do I care if banks and payment processors can block transactions? It's nice to have an alternative and be able to do things outside of that system just in case.
I don't, however, really understand the fanatics that want every cup of coffee they buy to use crypto. I definitely don't see any practical benefit to that.
Not sure if you're familiar with crypto by this comment, but inflation control was the key feature that enabled Bitcoin (and the rest) to exist.
The whitepaper is worth a read: https://bitcoin.org/bitcoin.pdf
Any blockchain going through repeated attack would be pointless to use anyway, so anyone with such hashpower has an incentive to cooperate in the long-term. It's also not possible to stop others from contributing hashpower, so you don't really own it in a meaningful sense.
51% attacks do not allow double spending on the blockchain. If a block is overwritten the attacker may choose to change the destination of their own transactions for that block, but the previous spends are undone. This is why merchants wait for multiple confirmations. Typically 6, which would require a 98% attack to undo.
At this point it'd take a nation-state to produce that much of bitcoin's hashpower, if it's even still possible.
Hey, the public also use bank notes with unique serial numbers. That has no bearing at all on institutions who hold your assets for you, as they don’t generally let you audit them.
Edit: Strugglinng to type on my phone.
Note that my use of the term "blockchain" here isn't limited to public blockchains. You most likely wouldn't want to store police evidence publicly on a blockchain like Ethereum. You'd want that to be private, but there do exist private blockchain consensus algorithms like BFT that do have the same tamper-proof properties without requiring a public proof of work network.
Writing data on a decentralized blockchain inherently provides a secure timestamp that cannot be modified without being noticed. Not to mention the extreme costs involved with trying to rewrite a blockchain's history. 
I disagree with the parent comment on one thing-- I would much rather trust a public blockchain with a respectable hashrate over a private blockchain. You could simply store a salted hash of the data on the public blockchain, and still keep the actual evidence private.
That would be the judiciary. If they -- the people with the guns and the resources of the state -- become corrupted, you'd be unwise to think that your cryptographic signatures are going to help much.
In the example given, having lodged the evidence with the court would have prevented the abuse.
It was you who suggested simple cryptographic signatures in your initial reply to the parent comment. I was only pointing out that securely signing a message with a timestamp requires a cryptographic entity known as a "Trusted Third Party". Please see the first link in my original comment.
> That would be the judiciary. If they -- the people with the guns and the resources of the state -- become corrupted, you'd be unwise to think that your cryptographic signatures are going to help much.
If there was verifiable proof on a globally distributed blockchain that evidence had been tampered with by a judiciary member of a democratic country, I find it very hard to believe they would get away with it in the long term.
No, you were pointing it out and then saying that the flaw of this system was that the judiciary could be corrupted.
> If there was verifiable proof on a globally distributed blockchain that evidence had been tampered with by a judiciary member of a democratic country
Putting aside the many many political and practical ways in which this fantasy will stay firmly a fantasy, why does this need a blockchain instead of simply a published list of documents, if this is globally distributed?
What centralized entity would you trust to run and maintain this database? What if this centralied goes bankrupt and shuts down the servers? If you are a small game developer, you are screwed. Even if it's Google, you still can't be certain that Google will not shut down the project and turn off the database like it has with certain projects in the past.
A public open blockchain is a neutral database that it would be reasonable for many small game developers to use for this purpose without fearing that it will get shut down, or the rules would be changed.
This is a made up problem.
Looking at the hard forks in existing cryptocurrencies I wouldn't trust the rules to not change
Compare this to a centralized entity like Blizzard changing rules in World of Warcraft. Wouldn't you agree that it's much much easier for Blizzard to change the rules in their game, than to change the rules of a blockchain by hard forking?
For bitcoin - paperclips are PoW hashrate.
The network rewards people that contribute to it's growth.
It doesn't care about people and people values - it's like a new kind of living organism that uses people as substrate to exist
Ownership of a property is a difficult concept to prove, and there is an enormous industry of title insurance which exists to dig through the records and insure a purchase against unknown claims against the property.
A public ledger would make property title/ownership simple and knowable.
Overall I think blockchain technology is incredibly over-hyped, but does have some suitable applications, particularly where public records are involved.
Only if all the property records are already in the ledger, right? If I buy a house via blockchain, someone can still come along and say their great-aunt should have inherited it 80 years ago, before blockchain records existed. So you still need title companies.
It wouldn't be easy, but it is a good use for the tool.
Company ownership information seems like much the same thing, and is a solved problem in all countries (that want to have solved it).
And "my computer got hacked" is kind of a blanket argument against using technology in general - by that same argument you should probably never use digital banking/investment or anything online to manage your life, and nothing should ever be digitized.
Why would a blockchain magically fix this?
> "my computer got hacked" is kind of a blanket argument against using technology in general
Many (most?) financial actions you can take with a computer can be rolled back if shown to be fraudulent, because the asset isn't stored on the computer itself. This is specifically not true of crypto assets.
We implicitly trust a tremendous amount of digitized information because we trust its sources - for instance, digital banking works because we trust banks to only log verified transactions to our account. Sourcing that information is absolutely very difficult, but it doesn't mean it can't or shouldn't be done.
What digital assets enable are markets around digital goods. Software can be funded and operated using new tokens specifically for that project. I believe it can be one solution for financing and creating real gains from open source.
But I still fail to see how blockchain is relevant here? A centralized system for managing supply and demand equilibrium through dynamic price changes seems like the best system here.
I do not feel as though have answered my question - would you mind expanding on your answer?
1. Better efficiency
2. The third party is there to help when things go wrong
3. The legal system can help when 2 won't work
4. It's more accessible to the less tech-literate
5. The third party always has skin in the game, and therefore an incentive to always be improving the system
I don't know how anyone over the age of twelve cannot see #2 and #3
Code has bugs. Things will go wrong. You need lawyers.
The use cases are novel and not necessarily directly applicable to current problems, just as the Internet was novel and required entrepreneurs to invent new business models.
But let’s imagine you created a new protocol for email. You decide that all emails in the new protocol require the use of a token. You are now incentivizing early users to bootstrap, improve, develop, and promote the protocol. What was previously unfundable is now profitable.
I’m only scratching the surface, but with some imagination you can see how “not crazy” this is.
In your email example, what is the advantage to you over charging a subscription? How do you create ongoing revenue?
Similarly, someone creates a new open-source project and AWS hosts it and earns all the money.
Blockchain allows you to create protocols that actually profit as more people use the base layer. This is a brand new thing.
It is much more difficult to censor crypto payments than it is to censor credit card, paypal, or bank transactions.
Crypto payments being censored just isn't something that is happening, even though crypto has been around for 10 years. The evidence proves that it is more difficult to censor.
It is something that happens with or without a court order, to people who have broken zero laws. Yes, the government often censors perfectly legal financial transactions, to people who aren't criminals.
And crypto makes such censorship against people who have broken zero laws, much more difficult. It makes it no longer as easy as just calling up a bank, or a couple credit card companies, and telling them to cancel all of their transactions to people who didn't commit any crimes.
It makes it no longer as easy as a couple monopoly companies making a quick agreement to screw over an entity that didn't do anything illegal.
Of course there is a way to do this. You go to a store and pay for food with crypto if the store accepts it.
Is has an advantage over credit cards, as a couple companies could block your transactions, whereas this is much more difficult with crypto.
Lots of in person stores have had problems with the visa MasterCard duopoly.
Being able to escape from the risk of censorship from visa and MasterCard, for brick and mortar stores, is useful in and of itself.
Money is digital. And you can use digital money to pay for physical things. And you can get around censorship, enacted by private companies, using digital payments that are harder to censor, and this works for real life physical goods.
Such a system could allow you to move purchases between devices and apps, and prevent vendor lock-in.
Coinbase like to claim they have solved this issue but it is total BS because they won't let you purchase BTC on their platform without a state ID. Useless for an expat who moved overseas long ago.
But if I need to be paid by someone in another country who can buy BTC then that is usually the best solution for me.
It is a small market so not a driver in the crytocurrency space.
I admit to knowing almost nothing about the US banking system, but is it really true that one can't make an electronic transfer using an IBAN (International Bank Account Number)?
I live in Austria and just paid a number of invoices, through online banking, to bank account holders in France, Czechia, Slovenia and the UK. All I needed was their IBAN.
The comment you’re replying to is actively soliciting examples of those
(And yes that’s a much smaller space than the block chain hype machine makes it out to be, but it is something tangible.)
My gut feeling on this is no, having used it with some frequency over the past 7 or 8 years, and I've yet to hear a really convincing argument about why Bitcoin is so much better.
We would have to make a few changes though - we couldn't send all transactions to all nodes - instead we'd need a tree of confirming networks or something. And we might need a 2PC protocol for transactions. (Eg first I send money and generate a hash. Once thats been confirmed you can commit a receive money message. Or something like that).
But I acknowledge that the burden of proof is on me here. And I'm not convinced its worth doing - I agree that there aren't many good use cases for this.
Also, no one is saying that blockchain in its current state solves all problem better than what we have now. What matters, and why some people would bet on certain blockchains/tokens/projects/etc is the belief that there are certain projects that have real potential to disrupt a big incumbent like Visa.
But governments could announce certain coins are not spendable and enforce that on companies or people subject to their jurisdiction. Prosecuting anyone who accepted one of those coins with a crime.
1. Althea (https://althea.org/) is incentivized mesh networking. Currently, mesh networking is an under-provisioned public good. It's a public good because how would you even pay for it? If you want to provide bandwidth to some mesh network you need to spin up your router and then form some sort of business arrangement with all the other routers in range. If you want to consume bandwidth from some mesh network you must first form a business relationship with every router you'll be using. With a protocol such as Althea all you have to do is start your router and set a price in $/byte . Your router broadcasts that price, and assuming the price is competitive packets will start to be forwarded and you'll start to receive payments.
With Althea all of these business relationships I described before are still formed! However, they exist in the form of standardized smart contracts which are cheap and quick to create. Like in all liquid markets, there's no negotiation over terms.
While incentivized mesh networking is theoretically possible without a blockchain, the transaction costs are so high that I'm not aware of any deployments. The blockchainless answer for reducing transaction costs seems to be: create some central entity which everyone signs up for. It collects information on who routed packets through who and collects and distributes payments accordingly.
The blockchain answer gives you:
- no intermediary who takes 20% just for matchmaking
- an easy way of paying other parties
- no need to sign up or register for anything. You're just communicating with your peers!
2. Filecoin is distributed file storage much like Amazon's S3. Currently, there are only a couple suppliers (Google, Amazon, Microsoft, etc) who store your files. They have some healthy competition and economies of scale which bring your price down but supply is still rather limited: mostly because there's no standardized "file storage contract". Also, they seem to enjoy premium pricing, even with all those economies of scale they manage to be most expensive options. Backblaze and some company called Wasabi are much cheaper for what appears to be the same service. Can you really trust them though? My data is important. I'll put it into S3 just to be sure.
The Filecoin network goes through some crazy steps to prove that providers are actually storing the files they claim to be storing and actually replicating them the number of times they claim to be replicating them. This lets you trust any supplier on the network and turns object storage into a commodity. Filecoin also has the same blockchain benefit of requiring little registration. Do you have a desktop computer with a 2 TB hard drive, even though you're only using a few hundred GB of it? Start the Filecoin daemon and wait, after some time passes you'll have money.
This 0-registration is a level of UX which blockchains cannot currently provide but in principle they could. However, it's something that would be very difficult for any central service to provide. And again, the file storage becomes a commodity without any intermediate market-maker taking x%. The blockchain acts as that market-maker.
A lot of things with M2M communications, be it microgrids, industrial IoT networks, self driving cars that can manage payments and invoicing themselves, blockchain networks can be very effective. Fetch.ai was an interesting project that came out.
Data marketplaces are interesting, checkout numeraire and ocean network
Having non fungible assets on the internet currently is an impossibility, say having a special gun in fortnite that no one else can have. This may not appeal to everyone but I know a lot of gamers who would treat these as assets. I’m not sure but I don’t think any service on the Internet today can guarantee that only one copy of a digital piece of information exists, Blockchain’s can.
Current internet infrastructure depends on us trusting one organisation to manage critical infrastructure and I don’t think that’s really the optimum way for anything.
Governance and management of networks was something we've never thought of, but some of the best experiment in governance are running in the crypto world. I do think networks like Google and Facebook were something people never imagined, and the capitalistic model clearly rewards the builders asymmetrically. A network like Google or Facebook was built by its users and is still being built by its users. SV has propagated this stupid ideology that 10 upstarts were able to build a network that powerful and all the credit should go to them. I'm not sure what the solution to this is, but I do think users should receive a fraction of the value the networks make. And blockchains make it possible to build networks like this. Steem is an interesting experiment but hasn't gained much steam.
BAT is a great experiment that could change the direction of the internet. I'm not sure if their model would work, but I do think its an experiment that must happen. The future of the internet is at stake with the ad driven cess pool that it has become.
In terms on energy inefficiency, this has been a problem people have acknowledged and have been trying to solve, I think we’re less than 2 years away from a breakthrough in PoS which would make PoW redundant.
Either way, I think people obsess over payments too much. I'd obsess more over how this is the first time in the history of mankind we don't need a third party to supply trust. There is no trust premium on services, which can upend multiple services, finance being the obvious one but I think it's much larger than finance. I do think that there is a lot of noise in this space and its hard for anyone rationally observing to get a clear perspective on what's going on. I could go on all day and maybe even write a scifi fantasy but yeah, there's a lot of people working towards building the future, sadly its a small fraction compared to the number of people speculating and creating noise.
Something seems so so wrong with the notion that, "aww shucks, we just need more VC attention! And then we'll become a real boy!"
Whatever problem they supposedly solve does not outweigh the staggering impact to the planet.