[eloff]

It's obvious YC would make some crypto bets. The same way Ark invest is doing on the public markets, YC will do at the seed stage to ensure they have exposure to a market segment that might turn into a big thing (I'm skeptical, but it's not impossible and I don't have a crystal ball.)

What I'm curious about is the initial pitch. Did YC have a way to know that company was a terrible (potentially fraudulent) idea, or did the founders mask it sufficiently that it would have been difficult to tell?

[gitfan86]

Either they are incompetent to realize that crypto is 99% a scam and should be avoided or they knew it was a scam but still thought they could make some money before it all fell apart (Coinbase investors)

[eloff]

Look, I tend to agree with you. Crypto has not found it's use case, it has a lot of scams, a lot of environmental issues, and other problems. It's been many years, it's fair to think if it hasn't found that killer application yet, that maybe it never will.

But it's also still possible that it will. If you make a living by making long bets, then it's completely reasonable to want exposure to crypto.

[gitfan86]

If you are in the business of promoting your brand to young entrepreneurs, so that they include you in funding rounds, then yes, it makes sense to have exposure to anything that young entrepreneurs are working on.

If you are in the business of owning a piece of any company that may go public via IPO or SPAC one day, then yes, might as well give money to anyone who seems like they may be able to get to that finish line.

If on the other hand you are in the business of predicting the future of technology, it doesn't make sense to have exposure to technologies that are 99% scams on the off chance that someone accidently makes something useful in an effort to get rich. There is a lot of real innovation happening in the world that deserve that funding.

[eloff]

That 99% number you're quoting is made up. It's a value call. I think it's a reasonable position to give crypto a small chance of becoming something really big. If you're in the business of making long bets on the future, you want a piece of everything that fits that description. Including crypto. You don't know which bets will pay off, and it's nearly impossible to make an educated guess. It's simpler to just invest in everything that has that potential.

[gitfan86]

So where would you draw the line?

If a group of people created a perpetual motion machine community, would they deserver some funding? How can you prove that they are not going to discover new physics that allow energy generation from nothing?

[eloff]

Obviously not. But are you implying that crypto has as much chance of turning into something as finding a way to violate the law of conservation of energy? That's ridiculous.