Gushiken Yona
Privacy advocate and former NSA contractor Edward Snowden has thrown a wrench into the gears of the booming crypto world, raising concerns about the potential pitfalls of venture capital investment in blockchain projects.
Speaking at Near’s Redacted conference in Bangkok, Snowden argued that heavy VC funding can compromise the very foundation of cryptocurrencies – decentralization. He went so far as to label Solana, a high-profile blockchain platform, as “born in prison” due to its reliance on VC backing, suggesting that such funding can hinder a network’s ability to operate independently.
Snowden’s critique stemmed from the belief that large, centralized stakeholders, like VC firms, can wield disproportionate influence over decentralized projects. He pointed to a recent vote by Andreessen Horowitz (a16z) against a proposal to deploy Uniswap v3 on the BNB Chain, a vote that effectively blocked the move due to the VC firm’s significant UNI token holdings.
This incident, Snowden argued, highlighted how VC investment can disrupt the intended decentralized governance of crypto projects. Once again, Snowden cited Solana as an example during his speech.
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While he acknowledged Solana’s rapid growth, Snowden expressed reservations about the network’s level of decentralization, stating, “It is absolutely more centralized than its competitors,” and citing several instances where the entire network experienced outages.
“They want to be investing in something. They want it to be regulated, they want it to be controlled,” Snowden explained, referring to billionaire venture capitalists. “They want it to be something that works for them and I think that’s absolutely wrong.”
He further argued that the benefits of decentralization become apparent only in difficult times, emphasizing that Bitcoin’s success can be attributed, in part, to its decentralized nature, which has protected it from government interference. “It is clear that Bitcoin would not exist now if it were centralized,” Snowden said, advocating for a similar approach to the development of artificial intelligence.
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The whistleblower’s concerns came at a time when venture capital interest in crypto projects is experiencing a resurgence. In the first quarter of 2024, investments totaled around $2.17 billion, a slight dip compared to the same period in 2023, but indicating sustained interest.
This funding, according to Galaxy Research, is largely flowing towards infrastructure-focused projects, representing 62% of Q1 investments, with a focus on supporting blockchain frameworks and technology foundations. Web3 and gaming projects are also attracting considerable attention.
For instance, in Q2 2024, Web3 projects secured approximately $758 million, driven by companies like Farcaster and Zentry. Blockchain gaming companies garnered around $83 million in Q1, a sector that has seen ongoing VC involvement.
Read More
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- Solana Centralized? Edward Snowden Questions Its Utility Beyond ‘Meme Coins and Scams’
YONA GUSHIKEN
Yona brings a decade of experience covering gaming, tech, and blockchain news. As one of the few women in crypto journalism, her mission is to demystify complex technical subjects for a wider audience. Her work blends professional insight with engaging narratives, aiming to educate and entertain.
