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What Zuckerberg’s money can’t buy

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Welcome back to Chain Reaction.

Last week, we looked at Solana’s smartphone and the post-Apple tech industry. This week, we’re looking at a web3 without Big Tech.

To get this in your inbox every Thursday, you can subscribe on TechCrunch’s newsletter page.


no trillionaires allowed

Unlike other moonshot tech categories, it’s become increasingly clear that there isn’t a huge whitespace open for Big Tech in defining the future for crypto.

This week, Meta announced it will be shutting down its Novi crypto payments wallets in September. This pilot, which was only available in a couple geographies, was pretty much the last hurrah of the company’s broadly ambitious Diem stablecoin plans and leaves the company without a clear path forward for a crypto play that expands beyond its current networks.

This failure was no surprise, Meta has been a punching bag for regulators over the years and that has played out most aggressively in the gutting of their crypto ambitions — something that eventually led to the selloff of its Diem assets and the exodus of its top talent. Meta isn’t alone, plenty of tech’s biggest $1T+ market cap companies (or at least those that were up there a few months ago) have not made a blockchain play despite ideal positioning. For some companies, this might be ideological, but for others it’s clear that the regulatory risks are too present for them to endanger their other revenue streams.

Comparing crypto to another moonshot like AR/VR, it’s clear the government generally has no idea how to regulate internet-native social networking companies while they have a pretty solid idea of what they’re doing when it comes to throwing financial instruments and vehicles into the right buckets. Not having this diversified tech market support means that the lows might continue to sink pretty dang low for crypto hopes pinned on web3 ambitions. AR/VR has been in a dry spell for years but Meta has been spending the industry through the drought without a clear focus on present revenues, this isn’t an investment that GAFAM is going to be dropping in web3 anytime soon.

While most in the crypto industry aren’t going to cry over Meta’s lack of inclusion in the core toolkit of crypto, relying on the good fortunes of financial firms that are entirely bought into crypto alone is why the current flavor of crypto consolidation appears so chaotic. This is likely going to be a very restless year or more for the crypto industry and the deep war chests of the top tech companies won’t make life for them any easier.


the latest pod

Last week while I was away, you got to hear from our talented colleague Jacquie Melinek. Well, she’s back! Big shoutout to Jacquie, who subbed in while Lucas was out sick this week to help me unpack some incredibly juicy but complicated topics, including how all roads in the DeFi downturn seem to lead back to the same hedge fund.

Joining us as this week’s guest was one of the most memorable founders I’ve met – Tux Pacific of crypto custodial startup Entropy. Pacific is a trans, anarchist cryptographer who raised $25 million in seed funding from a16z and other VCs last month. They joined us to chat about what it’s like to raise venture capital as an anti-capitalist and what they think is wrong with how digital currencies are typically stored.

Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to keep up with us every week.


follow the money

Where startup money is moving in the crypto world:

  1. Echo3D raised $5.5 million for cloud storage and AR/VR streaming in a round led by Qualcomm Ventures.
  2. Web3 scaling protocol AltLayer closed a $7.2 million seed round with Polychain as lead investor.
  3. Crypto gaming firm Cauldron raised $6.6 million led by Cherry Ventures to build the “Pixar of web3.”
  4. Binance Labs led a $3 million seed investment in Magic Square, a crypto app store.
  5. DeFi platform Increment Labs scored $1 million in seed funding led by Dapper Labs.
  6. Crypto tax platform KoinX brought in $1.5 million from angel investors including Polygon’s Sandeep Nailwal.
  7. Gaming-focused layer two blockchain Oasys raised $20 million in funding from a private token sale to investors including Republic Capital and Crypto.com.
  8. DimensionX, a play-to-earn gaming firm, nabbed $3 million in a funding round led by Coatue.
  9. Klang Games nabbed $41 million led by Animoca Brands and Kingsway Capital for its Seed virtual world.
  10. Singaporean metaverse startup Enjinstarter raked in $5 million from True Global Ventures.

this week in web3

It’s Anita here again, back from a week out of office, during which I had some time to reflect on the weird cognitive dissonance that seems to be unfolding across web3. Valuations are looking miserable, crypto lenders are declaring bankruptcy on a near-daily basis and the overall industry is now worth just one-third of what it was at its peak last year. But, as Washington Post columnist Sebastian Mallaby points out, the same financial fate has befallen plenty of other technologies that still went on to transform the world thereafter.

Clearly, the jury is still out on what exactly this downturn means for crypto, but one thing is clear to me when I look back at this industry’s recent, rapid rise and fall. We actually haven’t “seen this before,” as so many investors and ecosystem participants will have you believe. Two major things have changed from past crypto downturns, and both stem from crypto going from a niche hobby for eccentric people to a mainstream, normal dinner table topic.

First of all, crypto companies are much more interconnected now than they ever were before, resembling traditional finance in 2008. Sam Bankman-Fried is the new Jamie Dimon, bailing other companies out left and right. Crypto lender Celsius halting withdrawals last month may well have been the industry’s Lehman Brothers moment. I can’t say I’m entirely surprised the crypto markets sobered up a bit, but there are a shocking number of parallels between tradfi’s best-known crisis and crypto’s current calamities. Even if the underlying technology is here to stay, it’s still a defining disaster for the industry – let’s not forget, mortgage-backed securities and CLOs are very much still around despite the carnage of 2008.

The second big difference I see between this crypto downturn and past such instances is that crypto just isn’t that quirky anymore. Its journey to the mainstream has brought a heavy dose of groupthink, evident from the trite, jargon-like phrases we now hear repeated over and over again. 

They say we’ve “seen this before,” the crash is a “black swan event,” but not to worry, “it’s still early days.” Crypto will eventually reach “mass adoption” and “onboard the next billion users,” as long as founders keep at it because “the best time to build is during a downturn.” 

I’m not saying I’m a crypto OG. In fact, I only started following it very closely during those dreary lockdown days, when plenty of people were doing the same. But I often recall being much younger, listening with curiosity and wonder to a relative of mine who has a distaste for authority and an affinity for math explain to me why blockchain could change the world. It makes me feel a bit nostalgic for when crypto was a space filled with contrarians, outcasts and truly independent thinkers. To me, that’s the most interesting thing about this space, so I say: let’s keep crypto weird.


TC+ analysis

Here’s some of this week’s crypto analysis you can read on our subscription service TC+ (written by TC’s Jacquelyn Melinek): 

Crypto losses hit $670M in Q2, up 52% from year-ago period
The second quarter of 2022 was one for the books amid a tumultuous period of what I like to call market madness, and the evidence keeps stacking up for the crypto markets. Q2 was full of massive crypto “losses” across the web3 ecosystem, some 97% of which were the result of hacks, according to a new report. 

Crypto trading volume drops in India as additional taxes hit investors
India’s government on July 1 implemented a 1% tax deducted at the source (TDS) on every cryptocurrency trade over 10,000 Indian rupees, or about $127. The law has only been in place a few days, but there’s already been a chilling effect on Indian digital asset marketplaces. The increasing taxation could also serve as a further roadblock for citizens looking to trade crypto as the potential for financial gains dwindles.

FTX policy exec says its ‘priorities have not changed’ amid market madness
As the crypto markets continue to trend downward, the world’s second-largest crypto exchange, FTX, remains undeterred. “Our priorities have not changed,” Mark Wetjen, head of policy and regulatory strategy at FTX, told TechCrunch. “Markets will do what they do, but the reality is that the digital asset marketplace and digital asset ecosystem, we believe, is here to stay.”

The SEC rejected bitcoin spot ETFs again. Now what?
The U.S. Securities and Exchange Commission rejected Bitwise Asset Management and Grayscale Investments’ applications for bitcoin spot ETFs. Shortly thereafter, Grayscale — one of the largest digital asset managers, with around $20 billion in assets under management — filed a lawsuit against the SEC. But not everyone is convinced the lawsuit will go in their favor…

Valkyrie CEO says suing US SEC for a spot bitcoin ETF ‘isn’t likely to succeed’
“The SEC rejecting both Bitwise and Grayscale’s GBTC spot bitcoin ETF applications is not at all surprising because it follows the same precedent that other asset managers have endured,” Leah Wald, CEO of Valkyrie Investments, said in a Twitter thread. “Suing the SEC isn’t likely to succeed.” The SEC made clear in its response that it views the underlying holdings of futures versus spot as fundamentally different, in particular because the former trades on a regulated market whereas the latter is traded on unregulated markets, Ryan Shea, crypto economist at Trakx, said to TechCrunch.


Thanks for reading! And, again, to get this in your inbox every Thursday, you can subscribe on TechCrunch’s newsletter page.

Have a great weekend!

Lucas & Anita

Finance

The Orgy Of Nontaxation

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Sometime during the next two years — we don’t yet know when — the House of Representatives will be hosting a public orgy. House Speaker Kevin McCarthy, R-Calif., has promised to hold a floor vote on the FairTax Act of 2023 (H.R. 25).

The promise was one of multiple concessions McCarthy made to the Freedom Caucus to become speaker. As we shall see, the FairTax is nothing if not an exuberant orgy of nontaxation.

Now, you may find yourself tempted by this fiscal seduction. There’s a visceral titillation at the thought of not paying income tax and never again dealing with the bureaucracy of the IRS. But caution is well advised. On close inspection, the FairTax is one apple that you don’t want to bite into.

In case you missed it, the main feature of the FairTax is that it would eliminate all federal income taxes, for both individuals and corporations. They’d be replaced with a 23 percent national sales tax, which would apply broadly to goods and services. The FairTax would also dissolve the IRS.

The proposal would eliminate all federal payroll taxes, as well — which are technically separate from income taxes, although they’re imposed on your wage earnings. That includes the payroll taxes that fund Social Security and Medicare. The proposal would also eliminate withholding taxes, estimated taxes, self-employment taxes, the estate and gift tax, and the alternative minimum tax. That’s a mother lode of repealing things.

The congressional debate over the FairTax will center on whether we want our federal government to be funded primarily by revenue mechanisms based on a person’s ability to pay. The salient point about an income tax is that it allows for a progressive rate structure, in which those of us with higher annual incomes pay more than folks with lower annual incomes. And by “more” I mean both in gross terms and proportionally. That’s what it means for a tax framework to be based on the ability to pay.

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By contrast, a consumption tax is conceptually divorced from a person’s ability to pay. These taxes are inherently blind to the consumer’s economic status or income level. The amount of sales tax a billionaire pays when buying a six-pack of Coca-Cola is identical to the sales tax a homeless person pays on the same purchase. You might regard that outcome as fair, or you might regard it as a perversion of economic justice. Either way, that’s how all sales taxes operate.

Here are two other things to note about the FairTax.

First, it claims to be revenue neutral. That is, it intends to neither expand nor reduce the overall volume of tax receipts collected by the federal government each year. This point is highly disputable. Mathematically, there’s some rate at which a national sales tax would produce receipts equivalent to what we collect under current law. Nobody knows exactly what that rate is, and it might be a lot higher than the proposed figure of 23 percent.

On the matter of revenue, I suspect that proponents of the FairTax might derive pleasure if the resulting yield were less than that of all the taxes it would replace.

People in this camp have a track record of regarding diminished taxation as an effective constraint on government spending. You often hear advocates of small government comment on the need to “starve the beast.” Realistically, the FairTax is a platform for doing just that.

Second, the FairTax promises price stability. That is, the introduction of a national sales tax would not increase retail prices. The claim seems dubious, but here’s what they are getting at. Tucked away within every current retail price is an economic component that corresponds to the embedded costs of each party in the supply chain, from providers of raw materials to manufacturers to wholesalers and retailers. Some of those embedded costs are attributable to the current system of income and payroll taxes — both the taxes themselves and the accompanying compliance costs.

The theory goes that once Congress repeals all income and payroll taxes, the related embedded costs would simply disappear. They would vanish into the ether, by force of the invisible hand of the marketplace. Conveniently, their elimination almost perfectly offsets the effect of the new sales tax. Et voila, price stability.

For some sectors of the economy, removal of embedded costs is projected to more than compensate for the introduction of the new tax — such that prices of those goods and services will actually decline. Imagine that — a 23 percent retail sales tax that makes prices go down. It’s almost too good to be true. Hint, hint . . . It is.

As a self-professed tax policy nerd, I’ll admit that I retain a measure of fondness for the idea of a consumption tax. The concept has some intellectual merit. Compared with the income tax, consumption taxes are pro-growth because they functionally exempt savings, which fosters capital formation.

Despite the known growth effects, no country in the world funds itself exclusively through a national consumption tax. There’s a good reason for that. Growth potential, while important, isn’t the only objective.

Most nations couple their progressive income tax with a broad-based consumption tax (namely, a VAT). This is a classic pattern. It acknowledges that consumption taxes are regressive, but justifies their presence because the resulting tax receipts can enable a wide variety of federal spending — which would be difficult to support solely through other revenue resources.

The key point is that these consumption taxes supplement the income; they do not replace it.

The dominant trend in international taxation over the last 25 years has been for countries to reduce their corporate tax rates as they increase VAT rates. This is usually done for the sake of global competitiveness. In effect, these governments are incrementally trading away the taxation of capital income for the taxation of consumption.

The United States can’t participate in this global trend because we don’t have a VAT, or some other national consumption tax, to make up for the lost revenue. In effect, the FairTax is saying we can bypass the trade-off by dispensing with income taxation altogether. That’s a high-risk proposition. It swaps a progressive revenue source for a regressive one.

Despite my fondness for the consumption tax, I can’t jump on the FairTax bandwagon. If it’s enacted, the fiscal implications would be severe, as would be the cultural implications. Stripped naked of all distractions — spurious claims of deprived liberty — the FairTax is revealed to be more about those lusty cultural changes than it is about the dry and academic business of tax reform.

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Bitcoin ATM – Learn More About Quick Change Cash to Cryptocurrency

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Cryptocurrencies such as Bitcoins have become a global currency. They are well-known globally and more popular than traditional money, for example American Dollar.

Bitcoin ATM

This article will tell more about Bitcoin ATMS with zero commissions, how to change crypto to cash in a short time or how to find the most beneficial Bitcoin ATMs.

  1. Bitcoin ATM with 0% commission
  2. Bitcoin ATM can change cash on several cryptocurrencies
  3. How to change cash on cryptocurrency?
  4. Where to learn about bitcoin ATMs?
  5. Is it safe to use Bitcoin ATMs?
  6. What are the Bitcoin ATMs locations?
  7. What are the opening hours of Bitcoin ATMs?
  8. Where can you find some information on exchange rates?
  9. Where can you find some more information on Bitcoin ATMs?

Bitcoin ATM with 0% commission

When you want to buy and sell bitcoin you do not have to pay an additional fee in your area like many different bitcoin ATMs charge (even 8%). Every bitcoin ATM provides transactions with 0% commission. What is more, the clients can get various discounts and enjoy higher exchange rates.

Bitcoin ATM can change cash on several cryptocurrencies

Although Bitcoin is the most recognizable cryptocurrency in the world, there are also other cryptocurrencies worth mentioning. What is more, they are also available in the bitcoin ATM. They are the following: Tether (USDT), Litecoin (LTC), Tron (TRX) and Ether (ETH). The whole process – it means converting cash to your favourite cryptocurrency lasts a few minutes.

It is very intuitive and every user can change cash to crypto without any problems.

How to change cash on cryptocurrency?

It is very simple to use the Bitcoin ATM. It is similar to withdrawing money from a standard ATM. The first thing you have to do is to insert cash and then scan qr code. Next, you have to select the transaction details (exchange rate and transaction fee) and finally the cryptocurrency is transferred to your wallet.

It is childishly easy to use the bitcoin ATM. As an outcome, it is also popular in Ukraine where the war with Russia takes place.

Where to learn about bitcoin ATMs?

If you want to get some relevant knowledge on bitcoin ATM and how to buy and sell bitcoin and litecoin you should visit the official social media of bitcoin ATM. There is a tutorial for beginners who have never tried the bitcoin ATM and want to know what bitcoin ATMs are.

The popular social media where you can find the information are You tube and Facebook. Furthermore, it is worth watching it regularly to learn more about special offers or unique discounts for anonymous bitcoin buyers and sellers.

Is it safe to use Bitcoin ATMs?

The clients should feel safe during converting cash to cryptocurrency. That is why, the bitcoin ATMs are located in public places, mainly in the shopping malls where the advance monitoring system is provided. What is more, it is also possible to change cash to cryptocurrencies in independent places. However, in those places the doors are locked and the person who is doing the transaction can feel safe.

Bitcoin ATM
photo credit: Sharon Hahn Darlin / Flickr

What are the Bitcoin ATMs locations?

If you need to change cash to cryptocurrency, you have to see the bitcoin ATM map. There you can find all bitcoin ATMs in your area. What is more, you can get some interesting details about the bitcoin ATM. There is provided the name of the city with a detailed address as well as additional information on the bitcoin ATM. Moreover, you can find there also a picture of the bitcoin ATM and available funds to withdraw at the moment.

What are the opening hours of Bitcoin ATMs?

If you are in Madrid, the capital city of Spain you can check the opening hours of Bitcoin ATMs Madrid online. At the same website where you can check the location of a bitcoin ATM, there is some information about opening hours. The majority of bitcoin ATMs are open 24 hours, 7 days a week and they are available in the shopping malls or independent places. However, some of them are available in limited time.

That is why, it is always worth checking the opening hours before you visit the bitcoin ATM.

Where can you find some information on exchange rates?

The exchange rate is the crucial information when it comes to converting cash to cryptocurrencies. However, it is not a problem when you use the bitcoin ATMs. At the website where the detailed address and opening hours are provided you can also find some information about the current exchange rate.

It is worth selecting the place that offers the best exchange rate before you leave your house.

Where can you find some more information on Bitcoin ATMs?

Before you make a transaction at a bitcoin ATM, you should learn more about the bitcoin ATMs. You can do it at the official website of the device or at one of the YouTube channels where the latest information and detailed tutorial are provided.

You should also visit Facebook and Instagram where the latest news is updated and find out that there are more and more bitcoin ATMs in your location.

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The Future Of Economic And Workforce Development

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Our economic attention currently is fixed on national policy, with growing risks from a debt limit deadlock and debates over inflation versus recession. But economic prosperity also depends on state, regional, and local policy, and now there’s a free guide to some of the best thinking in the field in the newest edition of the Economic Development Quarterly (EDQ).

EDQ is a leading journal overseen by the W.E. Upjohn Institute for Employment Research. It brings together practitioners and scholars through “supporting evidence-based economic development and workforce development policy, programs, and practice in the United States.” (I’m a member of the editorial board, and also a contributor to this new issue.).

The new issue asked experts associated with the journal “what are the key research and policy questions facing economic development and workforce development today?” In order to reach a broad audience, including policy makers, academics, journalists, and the public, the issue is free for a limited time.

There are 15 articles in the issue, and their range and excellence make it impossible to summarize them. Some focus on companies and firms, including how entrepreneurs can be included in economic development, what policies and programs are most effective in supporting businesses and job creation. Other analyze how public economic development and workforce professionals in the field can be most effective in our complex and tangled systems.

Several articles examine changing workforce dynamics. How can policy engage with macro trends like globalization, high housing costs, and changes in commuting and working from home? Can greater inclusion for the workforce be part of an effective economic development strategy? What would economic development look like if it paid more attention to environmental, racial equity, and family and household issues?

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My contribution draws on my new book, Unequal Cities: Overcoming Anti-Urban Bias to Reduce Inequality in the United States. The book outlines how America depends on cities for innovation, growth, and productivity, but also how our political systems—regional, state, and national—are biased against cities.

That pervasive bias holds down both regional and national productivity and growth. And it perpetuates racially stratified inequality in jobs, economic growth, housing, and education.

Wealthy (and predominantly white) suburbs capture the lion’s share of urban economic growth while not paying their fair share of the costs. That ongoing and structural racial bias is perpetuated over time by our public policies and fragmented metropolitan governments. This in turn makes it very hard for cities to address these problems on their own.

I argue that hyper-mathematized models in urban economics divert energy from more empirical engagement on our economic and workforce problems. We need multi-disciplinary analysis of policy, with special attention to how seemingly neutral policies generate racial and other forms of inequality. And we must recognize how our metropolitan fragmentation and segregation hold back shared economic prosperity.

Although there’s a wide range of policy viewpoints in the EDQ issue, all of the authors use research and analysis to help improve the places where we live. That distinguishes this work from much of mainstream urban economics, which is skeptical of place-based policies. Standard urban economics favors individually-based approaches emphasizing education and skills, and encouraging mobility by companies and people.

Of course, education and skill development are essential components of sound policy, and several of the EDQ articles suggest how to improve it. But in the real economy, experts like those at the Economic Policy Institute show our policy bias towards individualized and company-focused approaches hasn’t led to shared prosperity.

Instead, as watchdog analysts like Good Jobs First point out, we far too often see wasted tax subsidies going to firms that don’t need them, without good jobs and other benefits that were promised in return for the tax breaks. Public education mirrors the unequal fragmentation of regional governments, with suburbs creating better education from their higher property tax bases and wealth while core cities struggle to generate adequate educational funding.

So if you’re interested in economic and workforce development, national and regional and city prosperity, and how equity and growth can be combined in public policy, get your free issue of Economic Development Quarterly. I’m proud to be in such distinguished company, and there’s a lot to learn from them.

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