Beyond The Bitcoin Bubble

My friend Steven Johnson has penned a long and wonderful piece exploring what lies beyond the speculative market in crypto tokens.

This essay, which will run in Sunday’s New York Times Magazine, but is online now, could not have come at a better time.

All most people know about Bitcoin, Ethereum, ICOs, and alt-coins, is that you can trade them and make (and lose) money on them.

But that is not what interests me about crypto tokens and blockchain technology and it is not what interests USV and the folks in this sector we work with.

What interests us is that “crypto” could well be the architectural breakthrough that we need to move beyond the current Internet market dominated by a few large tech companies.

And Steven, as is his gift, explains this beautifully and easily in roughly 9,000 words.

This is a piece that requires sitting down with a cup of coffee or tea and reading it.

I would suggest you find some time this week to do that.


Comments (Archived):

  1. pointsnfigures

    behind a paywall, grrrr. maybe I would pay 1 Satoshi to read it. : )

    1. fredwilson

      Not for me. Try doing a Google search on “Beyond The Bitcoin Bubble” and clicking on the link Google serves you

      1. JamesHRH

        Those bastards 😉

    2. kidmercury

      never pay NYT, especially on a celebratory day like today — fake news awards day. try using the brave browser, that doesn’t seem to trigger the paywall.

      1. Pointsandfigures

        Brave hack worked.

        1. kidmercury

          i enjoy their browser, it’s a very nice product, and got me to switch away from chrome on desktop (except in instances where brave does not work fully). i’m a little skeptical they’re going to find a viable business model, but i hope i’m wrong.

    3. Susan Rubinsky

      You get ten free articles a month from NYT before the paywall. That’s 10 more than WSJ gives you.

      1. Pointsandfigures


    4. jason wright

      beyond the paywall, beyond!

  2. Rob Underwood

    I’ve been dollar cost averaging the last 6-8 months or so using automated buys of *very* small amounts of the 4 cryptos offered on Coinbase. If you believe the long term trend is up, and following earlier advice here of 1) not putting much more than 3-5% or so of your holdings to crypto and 2) not trying to time the market/dollar cost averaging, I think that continues to be a boring way to “play” this and maybe make some money in the process.I also decided to overweight Ether on the premise that that which people are building stuff on and using today is likely the one with the most underlying value.Seems like the decision is whether one wants to play the long game or not.

    1. Daniel Clough

      Your strategy is the same as mine. I have 4%. It would be nice to top that up to 5-6% seeing as we’re at a low, but coinbase is being super unreliable at the moment. Failing payments and now put a temp block on card payments. Annoying.

    2. Richard

      lets be truthful here, 98% of the bitcoin activity is no different than the house flippers of the 2007.Fred can avoid it blog post after blog post, but it’s hard to explain away the role manufactured scarcity into the crypto story.The central investment thesis is based essentially on greed.What messages are you telling kids today?

      1. creative group

        Richard:We asked directly to a main player and it was blown off like a storm. It is very obvious to all intelligent investors of real markets and real companies with intrinsic value.Jamie Dimon proclaimed crypto-currency as a fraud then had to Walk it back because now the Wall Street firms found a way to make money off the blind exuberance.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

        1. Richard

          What’s the scope of a main player and to whom would one ask?What I heard first hand is an active pitch of bitcoin by the bitcoin community / Coinbase to investment managers

    3. JamesHRH

      I wish I was a trader. There is so much $ to be made on this sector.

  3. kidmercury

    there is still too much open vs closed thinking. what’s needed is not a beef but a truce. we have the open part, best exemplified by bitcoin. now we need the closed part on top. and we’re getting there. the traction that ripple is getting as a real product with actual use cases is enabled by its greater closedness. ethereum is more closed than ethereum classic, and this evolutionary step has enabled greater adoption.there is also the exchange rate issue, which greater closedness/centralization will solve (and ethereum is closer to solving it than its more open brethren).

    1. fredwilson

      Ripple is like AOL. Ethereum is like Netscape

      1. creative group

        FRED:Many people that understand basic investing (We included) are puzzled by the comparisons to AOL & Netscape which both real companies had intrinsic value and fundamentals that could be relied upon.AOL & Netscape didn’t have only 1000 people controlling 40 percent of the value. Some cite that as the difference of real companies providing a service or product verses the Pump & Dumb promotion of new crypto-currency entities with unqualified heads. This is really a shame for what value the Blockchain can actually offer main street.All the players are unwittingly assisting the good (Huge returns in their wallets) and the bad (Straight fraud) by the swindlers.To whom much is given much is expected.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

        1. Voting and Weighing Machines

          “Never argue with a fool, onlookers may not be able to tell the difference.” Mark TwainDon’t bother Fred with facts regarding this crypto scam he’s helped foist on greedy and gullible people. Fred needs to keep his conscience clear so he pretends to believe the lies he has proffered.Below is some truth. But see t-r-u-t-h is something swindlers assiduosly avoid when it threatens to expose their prized lies.The Voting and Weighing Machines…The father of value investing, Benjamin Graham, explained this concept by saying that in the short run, the market is like a voting machine–tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine–assessing the substance of a company. The message is clear: What matters in the long run is a company’s actual underlying business performance and not the investing public’s fickle opinion about its prospects in the short run.

      2. jason wright

        Then I won’t be buying either of them.

        1. JamesHRH

          IF you trade them right, you’ll make tons of $.

        2. mplsvbhvr

          lol, fair

      3. Fun with analogies

        Fred Wilson is like Charles Ponzi.

    2. Richard

      What did the crypto crowd do with all their ugly cousins, the anti central bank conspiracy theorists anarchist kooks ?Do the kooks feel like they pulled one over the eyes of the non-technical noobs who are, unknowingly, supporting their cause?

      1. kidmercury

        thank you for your comment which i perceive to be both intellectually worthwhile and entertaining! :)i would estimate (for what it’s worth) that a slight majority kooks see bitcoin as true salvation, but i don’t think the margin is overwhelming. there is definitely a not insignificant sub-section of kooks that are on the fence, and a similarly sized minority that is deeply skeptical and views it as the widely anticipated march towards the elimination of cash and a corresponding centralized control over all economic transactions.of the kooks who are true believers, i don’t think they feel they have “pulled one over” on the masses. rather, i think they are more inclined to believe the masses are awakening and seizing their independence from the matrix-like system that has enslaved them. one central theme that tends to unify the vast majority of kooks of all stripes is their belief that the oppressive system enslaving our world can be defeated rather easily once a mass awakening occurs — and that such an awakening is inevitable (or even pre-destined, for the eschatologically-oriented kooks).

        1. JamesHRH

          Always good to have you around Kid.

        2. Richard

          Thanks for the perspective.I remember reading things like this 7 years ago from the kook et al community“My prescriptions are simple: promote Bitcoin and oppose proprietary software and proprietary devices. These will greatly diminish the risk imposed on us from the banking and financial industries, and from the software and computer industries. If you are a coder, improve cryptographic free software, such as Bitcoin, Tor, or RetroShare. Above all, however, is to keep the mind open for new ideas. Search for government risks that have not yet been addressed. Search for new services that can be provided by cryptographic communities. Stay one step ahead of the government and don’t get embroiled in politics.”

        3. First Rock from the Sun

          “the oppressive system enslaving our world can be defeated rather easily once a mass awakening occurs…”Winning the lottery jackpot is easy too. I’ve seen many winners on television.Why not start a revolution man? You know, power to the people. Peace, love, and… Oh wait. Hold on. You’ve got a better idea. Sure. Yeah. Right.One out of ten million or a hundred million guys end up taking power… and then they become the new thugs in charge.It’s Noahides and Jews on one side and Pagans on the other side. Which side you are on?Mabye Elon Musk will build you a rocket ship so you can blast off to create a People’s Utopia of Whatever on the first rock nearest the sun. It’s a hot idea. A hot, hot idea!

          1. kidmercury

            Utopia comes every 26000 years, so we are due. Cryptocurrencies are the ticket. We’re almost there! 🙂

          2. Creating Nonesense

            If only someone were dedicated to, “…creating abundance by re-building the world’s money supply” then humanity would have a chance to experience true love and unending peace not merely on earth but throughout the universe! But where could we find such a savior to rescue us all? Is that him over there hugging a tree?

          3. kidmercury

            i doubt you or anyone else can benefit much by looking for a savior. you could, of course, try to be your own savior….

          4. sigmaalgebra

            Well, there’s the idea, first dedicate your life to saving the world and, then, when you need help the grateful world will take care of you. There actually are people who take this quite seriously.While there are people like this who also want to save the world, more commonly they are in a small community, devote themselves to saving everyone else in that community, and expect the community to take care of them later. To show how deserving they are, they can try hard to live an ascetic life.Not the same but closely related, there are people who see the world as a mess and want to clean up the mess and have everyone saved and, then, have themselves saved as a special case.

  4. William Mougayar

    It’s always good to read outsiders perspectives. Steven has done his research and articulates his thoughts really well, in a beautifully written piece. No matter how the prices of cryptocurrencies fluctuate, the fundamentals of blockchain technology and its promise are unchanged. Big market caps do assert the potential importance of these currencies, and they generate mainstream headlines which helps to increase public awareness and eventual adoption, so it’s all kind of inter-related although not entirely logically.

    1. awaldstein

      Surprised to hear this inside/outside language honestly.Blockchain world is prone to this to a fault and invariable a questionable dichotomy especially as the basis of community especially open source communities is open and inclusive by nature when successful.

      1. JamesHRH

        Really? Open or closed is the internet.

    2. Fred's Friends

      Them big words does confuse little ‘ole me. Sheesh. I be thinkin’ real hard to understand what you be sayin’.Let me seez if I understands you.crypto-nonsense is essentially a fraud.Blockchain is an apparently a useful new technology.Make gullible investors think crypto-nonsense is legitimate by focusing on blockchain.Iz me onto sumptin’?

  5. DJL

    My coffee is hot and Houston is under a hard freeze for the first time in a decade. Good timing… Here I crypt-goSteven is amazing. I can only imagine sitting next to him at a dinner party!

  6. PhilipSugar

    I love reading well thought out pieces like this. You can agree or disagree but it makes you think.While you are on that coffee on a snowy day (at least here) if you haven’t go read the 7,000 word letter from MLK in a Birmingham Jail.

    1. Vasudev Ram


      1. PhilipSugar

        I will share but you have to share one about Mahatma Gandhi, he must have some great ones as well.Here is one from my alma mater Penn:

        1. Vasudev Ram

          Thanks. Will read it and reply if I have any comment.Will think of one like you asked for and comment again.

        2. Vasudev Ram

          Okay, remembered one.Reporter: What do you think of civilization?Gandhi: I think it is a good idea.

        3. Vasudev Ram

          Off topic, but may interest you, since you travel a lot: while browsing, came across this restaurant, seems amazing: use Google Translate to read the text.

        4. Vasudev Ram

          Here’s a second one:”A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work – he is the purpose of it. We are not doing him a favor by serving him. He is doing us a favor by giving us the opportunity to serve him.” – Mahatma GandhiSeen here (although I had come across it before, it’s there on signs in some shops in India):https://www.pureindianfoods

        5. Vasudev Ram

          And another good one, supposedly (mis)attributed to Gandhi by many people:”First they ignore you.Then they laugh at you.Then they fight you.Then you win.”- Mahatma Gandhi.I first saw it in a Red Hat ad some years ago, IIRC.

  7. Tom Labus

    The long view of the big picture, well done and written. But with the insane level of speculation it will take a major implosion to clear the air and lose that crew.But if it does survive and starts to gain traction that’s when the real attacks will come.

  8. WA

    Had it with coffee yesterday. I’ll dot the i’s and drink the Tea in a Sunday reread of history rhyming.

  9. jason wright

    in honour to Korea’s undue influence…’krypto’.

  10. JamesHRH

    Steve Johnson has a unique gift for clarity and, as far as I can tell, the patience of Job when it comes to research. Just a fantastic summary.OK, time to fire up the Asshole Marketer Anti-Blockchain Nasty Hard Rhetorical Question Machine. As always, participation from here on is voluntary and I already know the answers (have some fun with this people).1) Name a single non-technical / finance person (let’s go with NTFP as an acronym) who thinks that web protocols are broken.Or, name an NTFP who would care after you made the ‘ BlockChain is InternetOne 2.0 ‘ argument.Bonus points: estimate how long it would take you to summarize the situation for my 94 year old Mother (this really matters, she uses Email, FB, an iPad, a laptop and has a NEXUS card).2) Describe the demand for Blockchain. Only use NTFP sources (time saving tip: no person quoted in the article is a NTFP, despite all of them being crazy smart, generally awesome and in so early on this deal that they could become trillionaires.)Bonus points: describe the need for Blockchain for me, a married 52 year old male with two children, with one of the following – saves me money or time; makes me money or allows me to do something I currently want to do but cannot; improves my social standing.3) Is advertising a feature or a bug of mass media?Pro tip: no mass medium has ever been ad free.Please note: we can discuss the nature of niche subscription based properties that survive in mass media markets over a Shiner Bock on my patio, once the ice thaws here in Houston. You will enjoy the patio and the beer more than the realization that ads are inherent to all modern mass media.4) Name a post Industrial Revolution technology with mass adoption that did not consolidate into an open protocol and a very limited number of suppliers.Pro tip: there were 63 American manufactures of motor vehicles in the 1920’s. There were 3 in the 1970’s.5) Explain why it is that 95% of humans don’t have a personal web site, even after several companies created easy tools with slick UIs that, basically, hid the protocol ‘langua franca’ from the average Normal and allowed Normals to control their interaction with the internet.Bonus points: explain why these people would want to interface with a BlockChain transit protocol to get an Uber. Explain how that protocol would reach escape velocity.Double bonus points: explain why every transaction in life is improved by multiple offers from multiple sources with accompanying meta-data and how this drives adoption.Triple bonus points: estimate the number of vehicle drivers who understand or interact with any part of their vehicle’s systems. Graph the percentage of drivers who possess this knowledge, from 1958-2018.6) Is responsibility for personal information a feature or a bug of Blockchain?Bouns points: do you really own your activity log with your credit card company? Do you care, given the value that company provides? How is this different from FB?7) Pie chart the percentages for ‘ Actively manage my attention re: time spent away from work or family or friends, yes / no? ‘8) Did users of BitTorrent or Napster want a P2P protocol platform, or free music and movies?9) Describe Juan Benet’s technical ambitions without using social rationales for his P2P platform.Bonus points: explain how FileCoin is not a political movement.10) Name the last technology that altered human nature.I love you guys, but there is no discernible NTFP demand for Blockchain.The web allows the entire community of early stage NTFP to play in the same sandbox, which is creating the loudest unsupported bubble in the history of mankind.The financial support for the web in the 1990’s was based on access to information transforming society. There is no discernible rationale or analogy for ownership of that information.

    1. Richard

      From the early investorshttps://uploads.disquscdn.c…

      1. JamesHRH

        How much action is there in the two nodes in the right side of this diagram?

        1. Richard

          Well, this blog has been pumping user adoption (successfully) via Coinbase for quite some time. There has been an attempt to push the application layer but transaction costs (to which not one AVC blog has been directed) seem to have been to strong a headwind.

          1. JamesHRH

            I don’t buy your characterization of Fred’s blogging.He blogs what he thinks and what he is doing. He is OCD on tech ideas and that’s the nature of he content here: it mirrors his current obsession.And, he’s ringing the bell that the sheep are going to get sheared.

          2. Richard

            I don’t believe Fred or anyone else has any idea what Bitcoin is worth. This market makes the opaque 2008 synthetic CDO market look like the hubble telescope.

          3. JamesHRH

            Fred is an excellent barometer for activity though.

    2. mplsvbhvr

      These are all great questions, and let’s be honest we probably agree on the answers to most of them… but isn’t it fairly normal for people to not know what they want until they have it? No one wanted a phone with a full screen and no keyboard, but I think it’s safe to say at this point the iPhone was a pretty good idea executed at the right time 🙂

      1. JamesHRH

        The iPhone was built on the success of the RIM Blackberry. Everyone who had email saw the use of the CrackBerry – ‘ email anywhere? Holy shit! ‘It was also built out from a sound Apple strategy that media was the main use of the home PC – the iMac was built, then the iPod, then the iPhone – and that devices would be a natural extension of the home PC media hub.At the very least, when you described an iPhone, people got it immediately – it’s your computer, but on a small screen you can take everywhere.And, although I cannot support this – 80% of smart phone usage is media, I bet.Interestingly, the trend in digital media storage was one of centralization: from the desktop or home server to the cloud.So, yes – people do not always know what they want until they see ‘it’ but, no – people who develop ‘it’ almost always have a clear analogy for the value it provides to the user.Blockchain has no valid consumer value proposition.

        1. mplsvbhvr

          I’m curious why you think there’s no value proposition… Do you not believe it can lower fees institutions sending cross border payments (particularly in countries with poor financial infrastructure)? What about the ability to create a worldwide income floor/UBI? Digitization of ownership (art, music, etc)?I guess I’m wondering if you don’t see these as valid value propositions because you don’t believe they can be done, or if it’s because you believe they can be done but don’t add economic value to anyone.

          1. JamesHRH

            No one – using one as a large mainstream consumer base – wants those things.In particular, no one wants a global, unregulated financial system.

          2. mplsvbhvr

            Never said it would be unregulated – regulation will absolutely be necessary for this tech to fully realize it’s potential in all the use cases I suggested above.We may have reached an impasse though… I believe people do want these things and I believe they will provide true value to humanity, but building it and seeing the (lack of?) usage will probably be the only way to tell which one of us ends up being right 🙂

          3. JamesHRH

            No, I’m right. ;-)One thing is for sure, we will find out in time.PS – If its regulated tech, what value does all the crypto mining provide?

        2. Goodhelp

          Hack proof voting for all citizens. Point, set, match!

    3. PhilipSugar

      Every great technology has done one of two things first:1. Improve communications Cell phone: Make calls anywhere Email: Send people notes for free Google: Look up stuff instantly for free iPhone: Those plus internet, but you pay Facebook: (I’d argue this is people’s website) Post stuff for friends for free Twitter: Mass communication for free2. Get around societal restrictions Watch Porn Transfer money out of countries with security (Bitcoin originally but blockchain)Western Union and a whole host of companies do this. But you know there are also local little services that do this as well. (untracked)There are places here that do it. I’m sure if you ask around you can find a place you give them cash and a relative can pickup the money (for a much smaller fee than Western Union) at a specific store in let’s say Mexico.But there is no store of value. Now I’d argue that the massive run-up in price has been a great marketing tool. Not only do I store my value but I make money!!!Like all things when the whipsaw happens people are going to get smoked. But the run-up has people asking me about bitcoin that would never have asked me about it. I am surprised your Grandmother hasn’t.

      1. JamesHRH

        The folks in medical research want a word Phil.I think it is important to note that you do not list examples for 2. I think the reason why is that you are confusing adoption with value. This is known as The Porn Industry Corollary, which states:Porn is the first wide adopter of every commercially viable media technology.VHS – yes sir.CD / DVD – yes sir.P2P streaming – no thanks.Freemium driven cloud hosted subscription service – yes sir.As a fun aside, did you see that Netflix has huge top line growth while HBO has higher net? Can you see a day when Netflix does not charge a subscription, but offers rentals and ad included content, while HBO just keeps holding the line on how much their subscription costs?Or do you think YouTube will get that market from underneath and Netflix will go the premium route with Disney?And, yes, you are right: the Android / iOS comparison is striking ;-)Markets tend to duopolies, but the duopolies are based on price and 0 is never one of them (counting ads a price of use here).So, P2P tech is not one of the players in mature market duopolies.In the world of Co-operatives, the whole point is to cut costs through the aggregation of buying power. P2P tech does the opposite, disaggregating buying power and raising transaction costs, in terms of time and effort.Legit users don’t want that. Criminals are ok with it.Try the Veal, I’m here all week.

        1. PhilipSugar

          Ok I am going to a place I don’t want to go but you are wrong.My neighbors SIL is head of the Child Porn Unit of the MD State Police.P2P-no thanks? For those of us that should not rot in hell.

          1. JamesHRH

            I said commercially viable.Of course P2P is big time with dark pools.That’s a Blockchain bug, right?

          2. PhilipSugar

            I’d say feature. (sadly) The price fluctuations are a big feature when they go up and a huge bug when they go down. Set it to a fixed currency you lose the feature (which got it noticed) but remove the bug.

          3. JamesHRH

            I’m thinking that criminals sharing vile content anonymously on your platform is a bug.But, the criminal lawyer in me says that privacy rights are a feature.

      2. JamesHRH

        That’s cheating Phil! You edited!Grandma is actually my Mom & my kids Grandmother, made the sedit. But, anyhoo, quick question:I agree that black markets have always existed. Would you describe any of them as mainstream?No wait, two quick questions.Is Jaimie Dimon thinking about opening JPMorgan Black,the anonymous black pool financial system that is the equivalent to Fight Club?

        1. PhilipSugar

          No cheating disqus had a bug (more probably user error and it posted) Edit again: so I don’t clog up comments. My Dad said “the internet is just a bunch of porn” now he can’t live without it. No Jamie Dimon is not going to open up a black pool financial system, but might he use blockchain to link money to a place like Isle of Wight where you can bet on sports unrestricted?Maybe.Then it go mainstream like FanDuel?Hmmm.

          1. JamesHRH

            That’s a great use case. Probably the best I have heard.Your Pops was right with both his take and then his take up. That is how commercially viable innovation works.Does you Pops use FanDuel? ;-)Why couldn’t countries with economic citizenship programs just declare that they don’t need to know who their citizens are and say that you can Blockchain your funds into the CaymanCoin account and pay 1% tax on wealth or income created in the account.Answer seems to be that they will get economically blown to hell in some way, by major economies.Blockchain is like nuclear power – it makes sense but willl never be adopted.

          2. PhilipSugar

            Never to FanDuel.Nuclear Power, not discussing here. We use US Sub Nuke Tech? WinBut I am on a 25k student campus where I see wealth being transferred from foreign countries.I think this is the biggest thing non political that I want. The U.S has to do two things: we attract the best and brightest, and on the other side of the coin we have people that are willing to do the hardest work.Now this hurts lots of people that don’t want to do either..

      3. LE

        Also fax machine (and morse code, telex and so on).I’d argue that the killer app with facebook is people’s vanity and ego. Similar to Linkedin it’s a way to brag w/o appearing so much to be bragging. So it feeds egos. Best part is nobody sees anything but positive reactions. Key point. Twitter has a bit of this as well.Would add also transportation as point 3.

        1. JamesHRH

          I was going to add your #3 but got caught up having too much fun.Someone in my Twitter feed has a pinned tweet that says something like :- Snap = my life is a nonstop party- Ingram = my life is an nonstop adventure- FB = my life turned out great!

        2. PhilipSugar

          LinkedIn is plain and simple one thing: You post your resume to be searched by recruiters without it seeming offensive to your current employer.Plain and simple.They won. If an employer said no LinkedIn profiles they would never hire people, but that is it’s use case. Recruiters pay money, people post resumes.

          1. LE

            I think that you could calculate the cost of having an employee on linkedin and compensate them at their option to not be on linkedin. I know it sounds like a crazy idea (because of current social proof) but it’s not a non-starter. Just nobody wants to break the mold and is fearful.I assume you’ve never done online dating. I can tell you though that it’s a big deal once you are dating someone and you’ve made the commitment you expect them to take their profile down. And if they don’t it kind of means ‘cocky yuen’ (roughly: shit on you).I find it totally annoying that employees do this. It shows a lack of respect. What if the employer simply said ‘we will keep our eyes open and if we find someone better we will replace you’. Of course they could do that now. But openly stating things is a bit different. It’s like looking at women when your wife is next to you vs. when she isn’t. Shows a lack of respect the way I see it.At your company I wonder what would happen if you said to employees ‘I will give you $500 to any employee that takes down their linkedin profile’. Would they all rise up against you? (I guess they would?)After they rise up you can say to them ‘Should have taken the deal I never said how long it had to be down for haha’ (you like stunts, right?) I do things like this with my stepkids sometimes when I want them to think and not just react (or ask questions).

          2. PhilipSugar

            Interesting point and question. The difference is the relationshipI am not in a one to one relationship with employees. I am not having an intimate relationship. If business change then we might part ways

          3. Donna Brewington White

            That is definitely a strong feature/use case. But, for me, it is also a strong market research/intel and business development tool.Of course the focus of that research has to do with recruiting — who to recruit for and from, and occasionally, finding service providers or business partners/networking.For the most part, I use LinkedIn alongside other tools.LinkedIn seems to want to become a walled garden, but just like Google attempting to do social, those efforts have been an annoyance. Occasionally they hit on something truly useful outside of the “recruitment tool” realm such as their salary survey feature which few seem to know about. And their offering of Lynda training videos, etc.I do not trust them enough to become as dependent as they seem to want me to be. Rarely use InMail, separate CRM and project files, etc. One of my team members has been shut out of LinkedIn twice with no explanation and the second time completely in error. She lost hours of work time. Had to remove all Chrome extensions that LinkedIn considers to be a threat.

          4. PhilipSugar

            I think you are kind of proving my point. When somebody gets laid off I know before it is publicly announced because they reach out to get a link ask for a recommendation start posting

          5. JamesHRH

            I have never been able to state it that succinctly.You nailed it – LinkedIn basically let’s you job hunt without pissing off your boss.

        3. cavepainting

          Yeah. Which is why there is a fair case to be made that the social media platforms appeal to the worst human instincts. They are designed to produce dopamine hits and increase engagement in viral loops. They make it easier for human minds to seek external validation, indulge in comparisons, brag, and deceive.I hold a much darker view of these platforms now than a few years back. They seem to embody the anti-happiness formula for many people.

        4. jason wright

          yes, the human mind is the constant. I read about how it is being reengineered by the influence of the web, but the human psyche is unchanging imo.LinkedIn, FB, et.c. they all allow the rampant expression of the human psyche. It all seems very self indulgent, self obsessive, unhealthy, and a general waste of time and energy. FB especially seems to be people seeking out themselves in the reactions of others, or people confirming themselves in the reactions of others. I don’t think Zuckerberg conceived of FB as the solution to Plato’s Cave. If he did he got it so very wrong.

          1. LE

            Like any other addiction best thing is to never get started.

    4. Bruce Warila

      Have not read the article yet, but after shallow diving into blockchain, it seems to me that a protocol that delivers a “censorship resistant” benefit is missing from the benefit list of existing protocols? Does censorship resistant not carry the day?- i want to be censorship resistant- i want property records in Costa Rica to be censorship resistant- i want my contracts to be censorship resistant- i want my song royalties to be censorship resistant- i want my tokens to be censorship resistant- i want history to be censorship resistant- i want to be able to look under the hood of something with complete confidence that it can’t be fucked with.. – etc.Do I have this right?

      1. Prokofy

        Well, I don’t want you to be “censorship resistant” so that I don’t have to suffer the consequences of illegal drugs, child pornography, bids for assassinations and endless hacking forever to preserve your citadel. But there’s room for dialogue as at least you want your song royalties which means you aren’t letting the kids copying them for free instead of using encryption on digital creation, you know, like they want on privacy.

    5. cavepainting

      Great questions. I think there is zero demand for “blockchain” from NTFP people.But NTFP people do want some or many of the following. I would place a fair bet that many will actively lap it up when these services arrive and offer a compelling UX. (Note: They will still not care a shit about the blockchain)- A digital resume, but they control who gets to see it, if they are anonymous verified or public, and who offers attestations. They can express what they need at any point in time, determine who gets to see it, and can deal effectively with inbound responses. A service that solves for utility, authenticity, and privacy vs. vanity, ego, noise, and engagement.- A simple way to access their financial providers’ reports on their payments and credit, dispute them if incorrect with guaranteed SLAs on resolution times. And have high confidence that none of this data will ever be hacked.- Cross borders with all their life savings and money with just a passphrase in your brain.- Apply for credit easily and securely with high degree of control on who sees the documents, level of PII exposed, and use of instantly verifiable collateral.- Ability to chunk up a large illiquid asset (like real estate) into small parts and liquidate them partially.- Watch adult content without being worried that the charges will show up on a credit card and the activity can ever be traced back to them.And so on..Eventually, people want services that make their life easier, better, cheaper than status quo. If apps on blockchain deliver this, it will succeed.And there is enough hope to bet on it. After all, some of the smartest people around the world (not just in the valley) are working on it to make it happen.

    6. jason wright

      Do NFPT’s get what a web ‘protocol’ is, how it is presently architectured, or that there may be a possible alternative architecture? I would say no, no, and no. NFPT’s don’t live at that layer. They do not demand protocols.Looking at FB content as primary source material to guide understanding of lives in the twenty first century may be misleading. I have the feeling that not everyone in the Middle Ages indulged in self flagellation and witch hunting. Content is a function of the medium. The medium is the message, expressed by the content. The medium changes, the content changes, the economics changes….?

      1. JamesHRH

        Agreed on the first part.McLuhan always a little off the ground for me.

    7. Donna Brewington White

      Ha! A blog post with a quiz afterward.In all seriousness, this is impressive, James. Much food for thought.

      1. JamesHRH

        Thanks. I wish I could be enthusiastic, but ……..

        1. Donna Brewington White

          Can’t hurt to tuck away a bit of crypto though. Hedge your bets.But, then, your comment was focused more blockchain, not crypto.Your vantage point is from the edge of a frontier. (As is everyone else’s except those visionaries pushing blockchain forward and others who see things the rest of us don’t.) Are we at the point where the true impact on/value to NTFPs has really kicked in?And isn’t the value that counts at this point, the value blockchain holds for the visionaries and innovators who will translate this into use cases that benefit NTFPs?Caveats: (1) I have no idea what I’m talking about. (2) Have not yet read Steven Johnson’s article.

          1. JamesHRH

            Buying is easy, selling is hard.I am supposed to be a person who stands between these Visionary types & NTFP / Normals……it just screams product looking for a problem to solve.I don’t think it’s going to find any.

          2. Goodhelp

            IF block chain technology can operate a non-hackable, voting systemand show results viewable online in real-time, then that is it’s prime use case. Perhaps only use case!

          3. Vasudev Ram

            >(1) I have no idea what I’m talking about.Did you get that from Jeff Atwood’s blog, maybe? I’m not saying you did, I just saw it there earlier :)https://blog.codinghorror.c…See near end of the page.”Indoor enthusiast. Co-founder of Stack Overflow and Discourse. Disclaimer: I have no idea what I’m talking about.”Regardless, good one.

          4. Donna Brewington White

            No help from Jeff Atwood. 🙂

  11. SubstrateUndertow

    Can the blockchain possibly play some sort of role as a core organizing mechanism/platform vector for the the evolutionary emergence of a collectively distributed hive-mind intelligence/consciouness ?A serendipitous timing collision between todays AVC post and this podcast :-)”Consciousness and the Self”…

  12. Pointsandfigures

    Two schools of thought. Network effects work great for some businesses, and are an excellent strategy to win. For example, the corporate culture at Ritz Carlton decentralizes decision making down to the lowest levels when it comes to servicing customers. The flip side is a highly regulated industry like a food operation. It’s very important to make sure quality is the same over and over so they don’t run afoul of regulators-Mrs. Fields Cookies might be a good example of it.The question then becomes in highly regulated industries can network effects dominate over a centralized solution. Clearly, they can in some industries like banking. I can see how it can work in something like a supply chain where Coase Theorem and price mechanisms coordinate markets.Can it work for a company like McDonalds? Certainly on the supply chain side you could see it working-but not sure how it works for the consumer facing side.As I blogged today, I don’t think the price of any particular token is important today. Each chain is its own separate hypothesis and a lot of them will fail. However, the businesses that win will integrate the chain directly into their core business culture. They will win.What will be extremely interesting to see is how incumbents fight, or change to embrace blockchain. I love making fun of Kodak, but what if their move is a pivot to a new reality?

  13. Vasudev Ram

    It would be great if there was an abstract a lot shorter than 9000 words – not so as to make people not need to read the full thing, but to give them an idea of what it is about, and whether they want to read it or not. IMO, anyway.

  14. creative group

    CONTRIBUTORS:This is sad to watch regular people who have no financial sophistication getting hoodwinked into losing real hard earned money. When we start to see people and their real motivation it pains us not to address it.This can’t even be compared to any legitimate business at all. When it is done by sophisticated investors it is simply a pump and dumb move then covering it with don’t put all your eggs in one basket advisory after pocketing millions. Not a good visual.The speculation in the housing market (Flipping houses was based upon the fraud of Mortgage brokers and RE system of allowing fraud, stated income of people without jobs, etc.) is not even a fair comparison of what is occurring.This is just straight up fraud occurring and those who know are not saying a word.Just not right!Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

    1. Fred "The Greedy Shill" Wilson

      I concur. Fred Wilson is one of those sophisticated investors you mentioned. His shilling of Bitcoin, etc has been despicable.

  15. sigmaalgebra

    Sorry, Stevie!To me Steven Johnson is writing light vicarious escapist fantasy emotional experience entertainment to let NYC English and humanities majors, uninformed, overly emotional, anxiety ridden, afraid of business, and so far left they are shoulder to shoulder with Communism, who never read an Internet Engineering Task Force (IETF) Request for Comments (RFC), believe that in the essay they learned something significant about the technology and business of current information technology.Before reading that essay they were uninformed; after reading it they were misinformed.The essay has nothing very new. The essay has a lot that is correct and significant, but the correct is not significant, and the significant, not correct.In short Johnson is trying to tell a story, somewhat less real than from Disney, based on the pop culture view of information technology.Exercise: Find and describe Johnson’s heavy use of the main techniques of classic (back to the ancient Greeks) formula fiction story telling, e.g., with good guys, bad guys, and some scary threats.There is an old remark in a child’s movie about middle school where, praising an essay to the class, the teacher says fervently IIRCThe essay makes good use of adjectives, and that’s VERY important in ANY writing. Sounds like Johnson was in the front row taking in all that as profound wisdom and a lifeboat, no, a luxury yacht, in life.Sorry Stevie. The NYT still believes in the anxiety ridden gullible ignorance of its loyal readers and continues to misinform them.Apparently Johnson and the NYT are sure their suckers, uh, devoted audience, have already forgotten about the many years long NYT scam on evil humans with filthy carbon causing catastrophic (transgression, retribution) global warming, oops, since that didn’t happen as predicted, “climate change”. The redemption? Sure, sacrifice!!!!! A lamb, the first born child, humans killed to pour their blood on a rock, etc.? The readers forgot already?So, then the gullible NYT readers, awash in anxiety and eager to learn more, get misinformed and leave even more desperate to be informed. Sounds like an addictive manipulation, don’t it? Nasty stuff the NYT, ain’t it?Stevie, in case you are just misinformed and not merely manipulative (right, awful alliteration — English teachers love that stuff), I’ll outline a little for you:(1) Ad TargetingStevie, in ad targeting we take in data, process it, and try to make a good estimate of which ad to show to maximize the expected revenue. So, it’s a math problem.Then what math? Well, Stevie, there’s a lot of math in the research libraries, and a good research mathematician is free to stir up more.But, gotta tell you, Stevie, for a lot of that data, finding math to do much to increase the expected value is not so easy! In particular, the data is nearly never Gaussian distributed!!!!!Exercise 1: State and prove at least the real version of the polar decomposition and outline its potential role in ad targeting 101?Hint: First take a fast pass through Halmos, Finite Dimensional Vector Spaces. It’s a good book:(A) Halmos wrote that when he was an assistant to von Neumann.(B) The book is a Baby Hilbert Space theory.(C) Sometimes physics profs give the book to their quantum mechanics students as an easy introduction to the Hilbert space theory they may encounter in quantum mechanics.(D) At least at one time, Harvard used the book in their famous Math 55.Disclosure: In my startup, the crucial core is some applied math I derived, and the monetization is based on ad targeting. And Halmos is one of my favorite authors, along with von Neumann and J. Doob, the dissertation advisor of Halmos, and the polar decomposition is one of my favorite results, but the polar decomposition is not the crucial math of my startup or its ad targeting!Lesson: For nearly all the data available, as in the anxieties in the essay, there are relatively few people good enough at math to make much use of that data.(2) Good Ad Targeting is HardThere’s long been a lot of data available on people, maybe useful for ad targeting and otherwise for Johnson’s audience maybe scary:(A) E.g., phone companies have long had each phone call, numbers from and to, time of day, and length of the call.(B) Sam’s Club has a perfect record of everything every customer has bought there, including what they bought in the pharmacy.(C) When I browse at Amazon, they note what I look at and, then, send me “suggestions”. While I’ve bought a lot of stuff at Amazon, their suggestions are useless; Amazon has never gotten even one penny of revenue from me from their suggestions.Lesson: Don’t be so afraid of ad targeting.(3) AmazonI know; I know; I know; J. Bezos is a rich guy. But, really, Amazon has no very good barrier to entry.(A) Wal-Mart should be working to do much the same, and there is no good reason they cannot.(B) Amazon bought Whole Foods and, thus, got into the grocery business. Wal-Mart has long been in the grocery business.(C) Amazon is buying or did buy Target, maybe to have some retail locations. Wal-Mart has long nearly covered the US with retail locations.(D) Amazon has been working on warehouses and their supply chain. Wal-Mart has long done a lot on both.(E) Amazon has some of their suppliers make Amazon private label items — Wal-Mart and Sam’s Club have been doing that for years.(F) Amazon has thought about getting into cargo airplanes. FedEx has been doing that for a long time, and there’s no chance Amazon will have competitive economies of scale.(G) Amazon is a big importer of products from other countries. So is Wal-Mart.(H) Amazon has a really well done Web site. Wal-Mart can build a similarly good site.(I) Amazon is like a big department store and not much like a good specialty store. Well, so far, a good specialty store can beat Amazon.And for a good Web site, that is general enough that a specialty store should be able to buy general purpose software for such a site and customize it as needed. For their server farm? Sure, use the cloud, Microsoft, Google, Amazon.(J) The Internet and shopping Web site construction that did so much to build Amazon can be on the way to destroying Amazon: E.g., why do Intel, HP, Western Digital, Samsung, AMD, …, Campbell’s soups, etc., indeed, any significantly large manufacturer or original supplier need a retail site? E.g., from Hanes, can buy direct.Amazon is a “middle man”, and as we know middle men have been losing ground, especially due to the Internet.Lesson: Bezos has done his job; the interesting parts are about over; he should sell out and do something else or retire.(4) GoogleGoogle has been very successful, but since Microsoft, Yahoo, and others in China and Russia have been able to do comparable work, Google has a relatively low barrier to entry and is vulnerable to competition. Yes, apparently Google can write a lot of good C++ code, but there is more to their business than that.IMHO, there’s much more to do that Google is badly neglecting.Lesson: Google is not very scary.(5) FacebookI’m on Facebook but am anonymous, and that makes ad targeting more difficult. Also I make only meager use of Facebook.Lesson: Facebook is not about to be too powerful.(6) Blockchains(A) It may be that the blockchain and bitcoin cryptography will not be secure for long. That is, IIRC, so far there is no proof that the data mining or breaking the encryption have to be difficult forever.Using encryption for a financial transaction this afternoon is very low risk. Depending on the same encryption to be unbroken and secure for 10-20 years has much higher risk.(B) For something really big and important, the headless nature of blockchain technology, with, essentially as in the essay, a lot of people around the world holding hands, worshiping open systems, and singing Kumbayah, is not very worthy of our trust.(C) So far it appears that the interest in blockchain and bitcoin is essentially just (i) currency transaction already illegal or soon to be illegal and (ii) speculation. As we know from tulips, speculation is a cute zero-sum game that can go wild based on nothing real at all.And IIRC so far there is next to nothing in blockchain applications that are legal, real, and not done easily enough by other, well-known, quite solid means.As usual, if someone sees a good application, then they should do it. For the candidate applications in the essay, if any of those are good, then some people should do them now and without waiting on bitcoin or blockchains.

    1. Michael Elling

      Hashgraph anyone?Mind you, like net neutrality I believe the original premise of the argument to be misplaced. There are no fully distributed systems in nature. There is hierarchy and constant attempt at balance but in the end never achieving it. I think they call that risk; something around which the Wall Street securitization wizards of the 1990s-2000s and the current crypto geeks have in common.

    2. F. Jovan Jester

      Quite the rant there but some valid points perhaps. This was hilarious: For something really big and important, the headless nature of blockchain technology, with, essentially as in the essay, a lot of people around the world holding hands, worshiping open systems, and singing Kumbayah, is not very worthy of our trust.

  16. Consolidation in Rollup Nation

    Fred Wilson’s frequently litany of complaints about business consolidation (which is disadventageous to small venture capital firms like USV) remind me of Main Street merchants complaining about Walmart and other Big Box retailers. Despite those complaints, since the Reagan Revolution, business consolidation has been ongoing in the US.The US has become Rollup Nation.…I suppose Peter Thiel is savoring what he probably perceives as the beginning of the realization of his dream to return the USA to the allegedly halcyon era before FDR and the New Deal. The New Deal (big federal government) should be dismantled, but returning the the dog eat dog era of the Gilded Age would be a terrible mistake.What’s the answer? I do not know but I know how to find it. It’s actually simple. Assemble something like the Great Sanhedrin (71 great rabbis), ask that body “what should the USA do?”, and then follow their advice.

  17. Paulo Trezentos

    Inspiring article. Probably 15 years ago, he wrote a similar one about Free Software and Microsoft.The difference is that the (ICO) geeks today are highly capitalized. What had been of Linus if he was not economical dependent of Transmeta or the sponsors of Linux Foundation? What would be of Stallman if he has 100 millions of an ICO in FSF?Not the store of the value, but the smart contracts will break, kill and create more markets than any other technology. Exciting times to live.

  18. Randall Tinfow

    The crypto industry is spending $1B per annum on public relations to drive their story. There are two agencies in NYC who only work for crypto-currency promoters.Who needs to flog a healthy horse?Crypto technology has value. As a method of storing value or as a medium of exchange, crypto-currencies are limited at best.

  19. Pete Griffiths

    Unusually excellent

  20. BillMcNeely

    Interesting post on the day that Bitconnect had to shut down due in part to maybe being a Ponzi Scheme

  21. Daniel Clough

    I did my DD. Out of all of the platforms, Coinbase seemed the most solid and easy to use. And I know most of their problems are capacity related. So I am patient.I am not looking to take it out in the short or mid term. I have also tested some small withdrawals and it worked fine.

  22. Chris Phenner

    I agree the piece was great, and then I started thinking about the graph of sources that Steven spoke with — it’s like a phone tree hatched off AVC:- Brad Burnham- Chris Dixon- Blockstack- Consensys- Filecoin- Fred WAnd as I finished, I wondered why nobody based in China or Russia was sourced, and wondered why the Telegram Team was not mentioned (and perhaps Steven tried).I just had a weird echo chamber shiver, but I loved the catharsis it delivered — protocols galore!The GeoBook bit was my favorite.

  23. Ashwib

    Saw this funny commercial on bitcoin and how it works. The irony of this commercial is how true it is for the vast majority of people out there, including myself. What good resources are out there to demystify this? Help!

  24. Mason Simon

    Have you seen a reduction in entrepreneurial activity, as potential founders and startup employees choose to earn cash to invest in Bitcoin, etc… rather than receiving startup equity?

  25. Yulo Pola

    I did this for the fourth time and it worked. Found out an investment program that give back 4.3 BTC on an investment of 2.7 BTC, and I tried with a part of the bitcoin I stacked for 3 years. And I got my 4.3 BTC today, right at exactly 24 hours. Making my second investment, you can join me. It’s

    1. Jose Mulligan

      I invest on this platform too. They are too much. Just helped me get my finance right this year.

  26. Prokofy

    Your own reasons for not wanting to invest in bitcoin money frenzy per se and to look beyond to the putatively more valuable blockchain technology are all good, I understand them, even though I don’t agree with the idea with the idea of them as salvation for humankind, because any anonymous and unaccountable technology that does not answer to the rule of organic law will doom us. But it’s an especially good thing that you are staying away from the Telegram IPO for many reasons that ultimately speak to the ties that bind even those “in the ether” as they say in Russia, to states, and not always good states.…I wouldn’t mind if you took up the leadership of a “Digital Nation” because you’re my neighbour, I know you, I’ve met you in a coffee shop or a conference, and you’re a good man who shows your work even if I don’t agree with your theories. But Zuckerberg or Durov are different… Organic ties still matter not only for trust but for good governance.