NEW YORK TIMES: Tales From Crypto: A Billionaire Meme Feud Threatens Industry Unity
By Ephrat Livni | January 18, 2022
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Essentially, web3 refers to an internet operating on so-called tokenomics. Tokens are digital units of cryptocurrency, and in web3, developers and users have mutual financial interests and everyone can earn crypto. Users benefit directly from their contributions — creativity, play, engagement or deposits, say. They can also help govern futuristic community-run companies, where they can vote on decisions with tokens created by the particular project.
Believers say these innovations will change how companies are formed and run. A report on 2022 trends by the crypto research firm Messari called web3 an “unstoppable force” that will take society “from an internet built on ‘rented land’ with monopoly overlords to an infinite frontier of new possibilities.” Messari’s founder, Ryan Selkis, contends that “crypto presents a credible revolution to all monopolies.”
Yet big investors also appear attracted to the infinite frontier. Last year, venture capitalists backed about 460 blockchain projects, spending nearly $12.75 billion, up from 155 deals worth $2.75 billion in 2020, per Pitchbook data provided to The New York Times. And the venture arms of crypto exchanges like Coinbase and FTX are some of the biggest deal makers, compounding concerns about corporate concentration. That means major players increasingly control the decentralized entities said to democratize everything for little guys.
Before Mr. Dorsey’s warning, many in crypto muttered about insiders with outsize control hampering decentralization and undermining the democratic ethos.
The venture firm Andreessen Horowitz, which Mr. Andreessen co-founded, has stakes in Compound and Uniswap, two web3 programs that allow for lending, borrowing and trading. More than 95 percent of the coins that are used for governance on those two platforms are owned by just 1 percent of token holders, said Alexis Goldstein, the financial policy director of the progressive think tank Open Markets, in recent testimony to the Joint Economic Committee in Congress.
“While cryptocurrency industry insiders promote the ‘democratized’ benefits of digital assets,” Ms. Goldstein testified, “in truth, crypto concentrations of money and power match or surpass those in traditional financial markets.”
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Read the full article from The New York Times HERE.
