Hype vs. Reality in Web3
Hype vs. Reality in Web3
Solana hack and Bridge Attacks
AUGUST 3RD, 2022, 12:25 PM MONTREAL, CANADA
Hey Guys,
As an accountability journalist I’m always interested in telling contrarian stories. Not all $ backed PR and hype generation is good coverage, and crypto media is incredibly biased to the positive.
This makes me question the ethical integrity and journalist practices of crypto media backed VCs.
While I’m pleased that a16z has started a Substack, I mostly know where to look for hype-coverage from our generous VC backers in Web3.
The problem is of course, with fraud and regulation coming, that’s only one half of the actual story. While it’s understandable VCs would pump their startups and their origin stories, I feel bad for the retail investors.
The Solana Hot-Wallet Hack
Nearly 8,000 digital wallets have been drained of just over $5.2 million in digital coins including solana’s sol token and USD Coin (USDC), according to blockchain analytics firm Elliptic.
To see some of my coverage of the most recent Bridge hack go here:
The first three days of August have been beset by a multitude of negative stories in the land of crypto. $SOL is only down 3%.
Is Solana really the heir apparent to Ethereum? Will Ethereum 2.0 even really enable it to scale? Hackers have targeted the Solana ecosystem, draining crypto funds from thousands of “hot” wallets connected to the internet. Such attacks are common among blockchain platforms, but the news is still significant given the praise Solana has attracted as one of the faster and cheaper ecosystems for trading digital assets.
No mention of any controversy in Web3 in the a16z Newsletter, it figures.
I was mentioning to a PR leader how the entire internet is just a social amplification hype machine. I guess this means VC wins and the readers lose. I would not want to be lowly DIY retail investor in such a volatile environment with so much misinformation.
The Lack of Crypto Regulation Stunts Real Innovation
Regulation is so slow and hardly does anything, just cracking down on a few outliers. Hackers stole millions of dollars worth of tokens from investors, while the Securities and Exchange Commission is clamping down on ( a few of the) crypto Ponzi schemes.
Web3 will have a hard time scaling with so little accountility, regulation and ethics. The trust and security component is still a major issue even as NFTs went viral in 2021. We can’t build an ecosystem on hype alone? If we had or were able to do so, the last decade would have host of incredible blockchain products and utilities that went mainstream, which has not been the case!
I’m starting to lose patience with the latest string of revelations about the fraud in crypto and Web3. The developments add to an already torrid year for the crypto market, which has seen huge declines as fears around tightening monetary policy set in.
For every seemingly solid or good project, there’s dozens of stories of misconduct in the space many of which border on or are criminal offenses. The failure of leadership in the youth-culture appears to be systemic on a business integrity level. VCs in the space universally only put their dollars into hyping their ecosystem and some promise of a future of adoption and an Oasis of price points for Bitcoin, Ethereum or other various tokens.
The Ideological Behavior Modification at Scale
Their arguments are the same as Bitcoin maximalists that this (or any negativity about crypto) is just mainstream FUD coverage. The hacking of young people at scale to buy into the FOMO of crypto is one of the worst uses of the internet at scale that I have ever seen, while Whales and VCs at the top of the food-chain profiteer the most. This is of course misinformation at such a scale that the internet is no longer a trustworthy place.
The failures of the Ad-based internet are spilling over into Web3’s ideological and exploitative foundations. Go against a youth movement and you are labeled as naïve. But if the youth culture is driven by Venture Capital interests, and profiteers, how will that lead to real innovation with so much fraud and dishonesty?
The FTC going after Forsage or Coinbase are just microcosms of what is happening all around us.
These are not isolated incidents. So it leaves me with a kind of skepticism of the entire culture. Celsius investors now becoming beggars, is the new reality so what is the moral of the story? American free-market capitalism only parades the winners and Web3 they say, will be a huge winner.
Without accountability journalism in Crypto, which sources are we supposed to trust if we can’t trust the specialized media or the VCs or the actual “decentralized” companies? Is hype really a goal in and of itself? ICOs have been replaced by NFTs, crypto has been re-branded into “Web3”, but are we further along in the timeline? Blockchain products remain underwhelming.
Now even older Millennials and GenX have suddenly become Web3 advocates, citing Bitcoin’s price as proof of mainstream adoption. I guess the Venture Capitalists are the true heir of whatever this all becomes in cyberpunk dystopia. The crypto tycoons at Binance, FXT, Block and the Joseph Lubins and Chris Dixons of the world have already so much power. A great democratization of finance indeed.