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Comment by dehrmann | Hacker News Reader

Side question I've been wondering: what was Sequoia, a well-respected VC, doing investing in companies that do nothing but enable people to trade speculative assets with no track record? I'm not so worried about Fundrise or Robinhood because those assets are at least useful or Masterworks because art has a track record. Maybe it's because prospective LPs had the same crypto fomo as retail speculators, but don't GPs also have skin in the game?

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Sequoia is well respected because they invest and generate returns for their investors, not for displaying any kind of morals.

It's not the morals I'm wondering about; it's the viability of the businesses. Investing in one of these companies is hoping you can cash out before the bubble pops. At least if you invest in a boring SaaS company, when the bubble pops, you might still have a boring SaaS company on the road to profitability.

If an exchange isn't misappropriating customer funds, it doesn't matter if the bubble pops. They facilitate transactions and take a fee in return. As long as they have customers and don't blow money all over the place, they should be profitable.

Risk management for traditional derivatives is hard, risk management for crypto derivatives is almost impossible.

Even if "exchange" doesn't misappropriating customer funds, the customers themselves can easily become insolvent in a moment, and then it will cascade to every other market participant.

If crypto stops appreciating, won't transaction volume collapse? I guess the question is how much crypto use is real (I'm sure there's a better word) and how much is speculative.

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