[kkielhofner]

Thank you for succinctly saying what takes me multiple paragraphs.

One nitpick - it’s easily $10s of billions of in investment, more than likely approaching or surpassing $100s of billions.

A16Z alone has raised roughly $10b. Throw in other big VCs, a bunch of coin/crypto specific funds, likely thousands or tens of thousands of angel/seed rounds we’ve never heard of capitalizing on the hype (or just outright frauds), initial coin allocations (the Ethereum foundation alone had over $1b last I looked), etc, etc. Then there’s trying to figure how to “value” “investment” in things like ICOs and ICO 2.0 stuff like NFTs, etc.

Not to mention the tendency for crypto projects to be outright frauds from the start. OneCoin alone brought in $4b in what could be characterized as “investment” from the perspective of the victims. One incomplete analysis[0] shows this specific category of frauds (of which there are many in crypto) to be at least $26b in total.

It’s been 14 years, hundreds of billions in investment and roughly speaking zero non-criminal usage and no real-world killer use cases. That’s just fact. Time to move on.

[0] - https://www.comparitech.com/crypto/cryptocurrency-scams/

[leppr]

You are both going around my very simple argument that these mind-blowingly huge piles of money poured into crypto scams, don't undermine the undeniable reality of crypto that is not a scam.

Yes, people pouring their savings in tulips, fake railroad companies, and beanie babies is absurd. Does it follow that tulips, railroad companies, and baby plushies are scams and criminal in nature? The grifters and their victims moved on, and the underlying objects of speculation seem to exist and do their respective jobs just fine now.

Crypto is doing its job just fine of being a trustless and permissionless way of transferring value. It doesn't care if grifters hype, pump, and dump its tokens. The few actual decentralized networks in existence just keep running and securing their immutable ledgers. The few actual peer-to-peer researchers and developers keep improving them.

[JohnFen]

> Does it follow that tulips, railroad companies, and baby plushies are scams and criminal in nature?

At the time that those things were happening? Definitely scams. Not necessarily criminal, though.

> It doesn't care if grifters hype, pump, and dump its tokens.

True. But, as I think you've noticed, a whole lot of people do care, and don't want to have anything to do with the whole idea. Maybe even most people.

It doesn't help that pro-cryptocurrency people cannot articulate a real, practical use case (outside of one or two niche things, like moving money across contested national borders) that isn't already done at least as well by the existing monetary system and also isn't scammy.

[kkielhofner]

In attempting to calculate a total for "investment" in the ecosystem my criteria is whether or not the investor considered it an investment.

Consider Theranos as a non-crypto example. Fraud, yes, with two people convicted under those charges. Holmes was charged with defrauding investors and not convicted on those counts (IIRC). Balwani was.

I think it's relatively safe to say the parallel between people investing in what ended up being a bubble, fraud, etc (from tulips on) was considered as investment from the source of funds - the investors. It's why they call it "speculative investment". Speculative but investment nonetheless. Any early money on moonshot tech companies could be characterized the same way. Just turns out for Facebook, Google, etc it worked out because the founders and team weren't defrauding from the start, executed well, etc. It helps that the fundamental premise of these companies didn't go against human nature and demonstrated tremendous value and therefore significant user adoption from day 1.

Where it gets more complicated is going back to the original argument - money poured into the space for what ostensibly should have been work to legitimately further the ecosystem. Frankly I'm not entirely sure how to characterize it but the other issue here are situations like FTX (which I didn't include or mention). They did a lot of legitimate work for a while. How would this be accounted for in this distinction? What about companies like Coinbase that have had wildly swinging valuations? The other scary thing - what about companies/projects/etc that have taken investment but just haven't collapsed yet (due to outright fraud or otherwise)?

So... Very complex scenario but I think it's safe to say the core point remains - there's been a ton of money, effort, and time (over the course of 14 years) committed to this space with essentially nothing to show in the real world. I've spent a lot of time analyzing on chain data and at best there are MAYBE 100m crypto "users" worldwide. If we say $100b of investment that's a user acquisition cost of $1000 - and investors can't even fully capitalize on those users due to the decentralized nature of crypto. Hell, let's call if $50b of non-fraud "legit" investment. That's still $500/user which is at least one order of magnitude beyond anything you see in the non-crypto space.

If the entire crypto space was a tech startup funded by VCs they would have cut their loses, exited years ago, and crypto would essentially be back at the "investment" model of early Bitcoin (which IMO is perfectly fine and even preferred by many). Even the early web investment period (with the 2000 bubble burst) saw enough successes and returns within the span of a decade (1995-2005) to keep the money pouring in (and returning) to this day.