Solana, the Venture Capitalist Scam
The divide between libertarians in favor of sound money and grifters looking to capitalize off of trends is massive.
Everyone can see that there is a problem with the way money works today. We are all at the mercy of the central bankers which design monetary policy and this has never been more clear than it is now. The excessive printing of our currency followed by the constriction of credit has gutted the working class through higher prices on goods and wages which don’t keep pace with the growth of the money supply.
Money is supposed to be a tool. In its pure form, it acts as an intersubjective measure of value, a way to conduct trade when two parties do not have mutual needs, and an instrument to store wealth across time. However, the form of money we have today does not fullfil those requirements. If a central institution can acquire or produce money without having to provide value, it can warp the value measurements of anything within its system to suit its needs. The need to trust this institution to act responsibly destroys the currency as a store of wealth over time, and the central control of the digital ledgers this currency exists on makes it easy to censor and reverse transactions.
Bitcoin was created in the wake of the 2008 financial crisis to offer an alternative monetary system which does not have the flaws of the centralized one we have today. As insiders were collecting bonuses while the taxpayer monetized mortgage debt and paid for massive bank bailouts, the Bitcoin protocol was offering a perfectly fixed money supply, transactions which could not be censored, and an immutable blockchain which no individual had control over. While the technical aspects like blockchain, public and private keys, proof of work, and social consensus were incredibly impressive, the success of Bitcoin to this point was also driven by set and setting. It came out of a natural desire to fix the system, was supported by individualists who weren’t interested in making money but instead sovereignty and cryptography, and came as a response to historic levels of money printing and global corruption.
13 years ago, the words “Chancellor on Brink of Second Bailout for Banks” were stamped in the Genesis block of the Bitcoin blockchain. It was the start to the peaceful monetary revolution that has changed millions of lives, and will soon change billions.
So what does any of this have to do with Solana and Venture Capitalists?
While Bitcoin continued on with its goal of changing the way money works around the world, it appreciated massively in price. This price appreciation of Bitcoin has led many wealthy and technically skilled individuals to create tokens of their own, in an attempt to capture the same price appreciation for themselves. Solana is one of the most blatant examples of a project which was created and supported by Venture Capitalists for the sole goal of printing and selling the underlying token to new retail investors.
Let’s start by talking about theater. Everyone has probably seen a play before, where people dress up and put on advanced performances of fictional characters to create emotions in the audience. Some are much higher quality than others, but they all involve creating a false reality and then convincing the viewer to suspend their disbelief and follow along with the story. The TSA has been enacting security theater since the attacks in 2001, and Americans constantly have their privacy and dignity violated at airports. While the chances of your grandmother having a bomb hidden in her shoe as she flies from Orlando to San Diego are very low, we now spend a massive amount of money, time, and energy putting on the security theater. While TSA has never produced meaningful results which cover the financial cost and the loss of freedom and privacy, it has produced the feeling of safety for those who get on a plane.
Aside from Bitcoin, almost all crypto projects participate in theater too. They participate in decentralization theater. They will use big fancy words, technical language, and flashy advertising to convince you that they are trust-less, immutable, and un-censorable too, but when it comes down to it they are just as manipulated and easy to control as the fiat system which they claim to desire to escape.
Solana is a prime culprit of being DINO, or decentralized in name only. Ask anyone participating in the Solana ecosystem if they validate, run a node, mint tokens, or take any meaningful part in the network, and the answer will undoubtedly be no. This is not their fault, but by design. To meet the minimum requirements to validate, you must first purchase over 20 thousand dollars worth of hardware. This includes requirements for over 256 gigs of ram, 12 cores or greater for a CPU, and massive amounts of SSD disk space, usually totaling well past 10TB. Not to mention that since the network is proof of stake, you need to deposit over 50,000 SOL to even have a chance at actually being selected to validate and produce blocks. The creation of new tokens also goes to those who stake instead of those who work like in proof of work, which ends up functioning very similar to the system we have today where simply having more money buys you more power over the network rules and the creation of future money. The end result of these massive hardware requirements and the reward of more wealth for those who already have it is a very centralized and fragile network state. And this has been shown numerous times through Solana's time of operation.
Sound money and decentralized networks are not supposed to go down, be able to be taken down, or have to be restarted through discord calls with validators.
In the two years that Solana has been online, it has experienced 14 partial or full outages, ranging from 10 minutes to just under a full day. This is not what happens in a system which is unable to be controlled and is sufficiently decentralized. Bitcoin, by comparison, has not had downtime since 2013, and has experienced no unexpected downtime since Satoshi left the project around 2010. No one can turn it off, change the social consensus on their own, or organize the full nodes to preform planned actions. This is the key feature for its value and is what sets it apart from other projects and other forms of money. You cannot have truly decentralized and sound money, and claim to promote a stronger internet and ‘Web 3.0’ while being able to be turned on and off by a few validators and developers.
Some may point to the increase in Solana validators as a positive direction for the network and proof it is becoming more decenralized. Not so. Wells Fargo may have 8,000 branches, but it is still a centralized institution. The truth is that there are upper limit rules on the amount of SOL that can be staked, and insiders who can afford the equipment for more nodes run many of them. This plays into why pre-mines and ICO (Initial coin offerings) are so dirty to proof of stake systems. If proof of stake rewards those who hold lots of a token disproportionately and allows validators to decide on network consensus rules, then networks which offer up 50% or more of their tokens to Series A investors and insiders are already captured networks from day 1.
At the end of the day, if you are a supporter of Solana, you are a great advertising tool for the Venture Capitalists who backed it. The network is not decentralized, is not immutable, and has only ever served as a vessel for insiders to sell to greater fools and for retail investors to buy based on price speculation alone. Even worse, it encourages people to mint supposedly permanent images onto its blockchain and attempt to sell them themselves to others who don’t understand what the original ideas behind cryptography were either. This is not the future, and it is not anything to be a part of if you value sound money and decentralization.
Many Solana supporters will point to its speed and relatively low costs as to why it still has value over other tokens. News flash, Visa is very fast, very efficient, and has relatively low costs which are mostly driven by its huge share of the payment processing market. If I wanted to use a centralized network backed by Venture Capitalists and banks, I can already do that with any Visa or American express card. People attack Bitcoin for ‘only’ doing 5–7 transactions per second, but fail to understand that is by design. Block space is incredibly valuable and block sizes must remain small to keep the requirements to run a node very low. A network which is truly decentralized and free to use which does very cheap and impossibly secure final settlement on Layer 1 is immensely valuable, and has much more real world demand than one that simply processes more transactions per second in a much more centralized and less final way. Plus, there are now Layer 2 networks like lightning which offer free Bitcoin transactions while retaining the decentralization and security through the ability to settle if needed on Layer 1. Just like how the early internet started with broadcasting information and scaled through the ability to route information, the same will be true with Bitcoin. Layer 1 of global sound money is no place for monkey NFTs and other hype beast garbage.
For those who are still not convinced that Solana is a Venture Capital project with the sole goal of rewarding early investors at the cost of uneducated retail ones, here is a link to them laughing about dumping on retail once their lockup period expires.
Funny, I don’t remeber the ‘CEO of Bitcoin’ waiting for his lockup to be done to dump his coins. Oh wait…
Stay safe, stay skeptical, and be careful with Alt-coin projects. There will be future innovation and there will be amazing technology developed. I do not want to pretend like nothing besides Bitcoin can succeed. But right now, it is simply better to look at reality for what it is, rather than what we wish it would be. Don’t go to the theater to make your investments.