German Social Justice
Germany is known for its social justice system. Most Americans and Asians usually can’t get their head around this setup, such as free healthcare for all, housing rent controls, and unemployment benefits. Here is another example - civil penalties based on your income.
Recently, the founder of unicorn and publicly listed Tech company Aboutyou was caught drunk driving an E-scooter on the streets of Hamburg. He was fined 1500 euros and a 10-month driving license suspension, but he decided to appeal against it in court. Bad move!
Once in court and part of fillings, the judge noticed his personal fortune and decided to increase the fine to 80,000 euros! Here is what the judge had to say -
If I punished Mr. Müller with 300 euros, he wouldn't even notice it," the judge is quoted as saying by Bild. "It's in the interests of social justice. He should be met like any normal employee. It has to be felt.”
Makes sense. Civil fines are meant to hurt you a bit financially and that serves as a deterrent. However, if the fine is like less than 0.1% of your income, you won’t even notice it and doesn’t work as a deterrent anymore. Therefore the judge decided to make it hurt just a bit so that he learns a lesson.
Trust
Crypto was built on trust and principles that banks and financials are bad and do bad things, whereas if you leave everything to code, these things will never happen. Code is good and will never do bad things or exploit as the bad banks or institutions do.
Err….move to 2022, and you have multiple Ponzi schemes in cryptos, hackers stealing coins, people getting scammed, Bitcoin price down 66%, multiple Crypto hedge funds (more like glorified Ponzi schemes) going bankrupt, and NFTs losing their value faster than a falling hammer.
But, the blue-chip players were considered safe….. until that trust was broken as well.
SEC (US financial watchdog) decided to bring two cases against Coinbase. Coinbase is like the Microsoft of the crypto ecosystem. Coinbase is the most trusted and valued firm in the crypto ecosystem.
SEC has brought two cases against Coinbase
Insider Trading - Product manager giving his brother and friends a sneak peek into coins that were going to be listed by Coinbase. Thereby helping them to make millions in profit by buying them early. I’m sure the Product Manager thought who would look into crypto insider traders, and everyone is doing them, so I can as well. Similar to the case the SEC brought against OpenSea (biggest NFT marketplace) employees doing insider trading on NFTs.
Selling unregistered secutiries - Basically SEC is saying the 9 of the coins Coinbase was selling are secutiries aka they are financial assests and there are some rules to be followed before you sell them to unwitting buyers. However, Coinbase says TLDR: “Coinbase does not list securities. End of story.” - in simple language Coinbase says - we list, sell and promote financial securities but since they are digital they should not follow the rules the all the other financial securities have to abide by. Coinbase stock dropped 20% after the news came out. Ouch!
When it comes to systems, Human elements are mostly the weaker link and systems are generally (there are exceptions) robust one be it database, Java, Blockchain, or even Excel. Systems are designed with inherent assumptions that entry and exit points, which are mostly controlled by humans, are robust and will not be exploited by the humans operating them. And therein lies the trust problem. The problem of trust is the human problem and not the machine problem. And for that, even the simplest system of Excel can work and doesn’t need an environmentally hazardous network of servers such as blockchain.
Lies
Helium - all gas and no substance!
Continuing with Crypto today, we dig into the case of Helium. Helium has been cited as a good example of Web3, even got a headline from NYtimes - “Maybe there is a use of Crypto after all”. But recently, Helium is in a lot of trouble, so let’s dig in.
Let’s start with What is Helium - Helium is simply an IoT blockchain. Users run Helium Hotspot (run helium network) and at the same time mint Helium coins, which can be redeemed when the network is used by external users. So basically, a crowdfunded data hotspot where external users pay money to use the network. Sounds cool, right?!
It’s so cool that Andreessesen Horowitz invested $111M into it.
However, recently things are not looking so good.
It started with an article that stated that Fee Revenue for the whole of Helium network was just $6.5k in June’22. While the founders claims millions in fees revenues and millions of users. It basically showed that the Helium network is not as big or fast-growing as claimed. Strike #1
Then, there were Reddit threads where users were complaining that they are earning way less than they were advertised. Strike #2
"My city is just too overloaded with miners. I make about 0.03$ a day," one user complained.
"I get like .10 a month so I unplugged that piece of crap," one hotspot owner said.
And then, Mashable ran an article where it says Helium has been lying about its clients. Particularly Lime ( E-scooter) and Salesforce. Lime and Salesforce were quite prominently featured on the website. And even written about in articles.
"Anyone can use the Helium network, although most of its users so far are companies like Lime (which has used Helium to keep tabs on its connected scooters)," wrote Roose. "It’s a real product used by real people and companies every day."
Here is what Lime had to say
The company, however, told Mashable that it hasn’t had a relationship with the company since 2019, and that it had only ever done initial testing with Helium’s tech.
And Salesforce
Now, Salesforce, whose logo appeared on Helium’s website right next to Lime’s, says that it also doesn’t use the technology. “Helium is not a Salesforce partner,”
And shortly after, the logos of two prominent companies were removed from the website.
Strike #3
I guess Crypto is really the wild west of our times!
That’s all, folks.