$136.8 million poured into crypto in June. Sounds like a win, right? Before you pop the champagne, ask yourself: is this a genuine surge, or just a cleverly disguised mirage shimmering in the desert heat? Well, I’m here to tell you it’s much more likely the latter. What VCs are toasting about, and the key facts they’re conveniently missing. Missing these may leave you cash dry and fiscally bankrupt.

AI's Allure Hides Algorithm Anxiety

Perhaps the hottest trend of all is the convergence of AI and blockchain technologies. Projects such as Inference Labs, Gradient Network, and Yupp are cashing out in the millions! C’mon, do we want to create a decentralized utopia here, or a crypto-enabled Skynet?

Think about it. We're entrusting AI with increasingly complex tasks, and now we're layering it with the immutability of blockchain. What do we do when an AI, protected by this impenetrable blockchain, makes a racist, sexist or exploitive choice? Who's accountable? How do you un-bake that cake?

This isn't just hypothetical. Algorithms are biased from the start, mirroring the prejudices of their makers. Couple that with the extreme opacity of many crypto projects, and you’ve created a recipe for fraud. We're so busy being wowed by the awe of this new tech that we're not asking the hard questions about its ethical implications. Then you go watch the magic trick, excited and engaged, under the spell of the phenomenon. In the process, the magician skillfully robs your pocket blind without you even realizing it.

You know those perfect shots you’ve taken on your favorite hiking trail? Perhaps Survivor is apt, because you did prepare by watching all the episodes, charting the battlefield, outfitting yourself in camo, and checking the forecast. You didn’t leave home and just wander off on a path that was colorful and beautiful. Crypto investing, particularly creative playmaking like this new AI-dominated terrain, requires no less than that same kind of oodles of careful calculated planning.

RWA Tokenization: Regulation's Reckoning

RWA tokenization Another VC world darling The concept of tokenizing old assets onto the blockchain is appealing, offering the potential for greater liquidity and accessibility. Beam, for instance, is trying to connect digital assets and traditional finance with its stablecoin settlement service.

Here's the inconvenient truth: regulators are watching. And they're not exactly thrilled.

The tokenization of RWAs exacerbates this Pandora’s Box of regulatory challenges. What’s the appropriate way to apply existing securities laws to these new, tokenized assets? But what if a tokenized asset is found to be implicated in some kind of illicit activity? How do you maintain investor protection when you create a completely decentralized environment?

Their absence layered with the absence of clear regulatory frameworks going forward creates huge uncertainty. It's a ticking time bomb. At any moment, a government could choose to clamp down, instantly erasing the value of these tokens overnight.

VCs are fine funding these projects, safe in the knowledge that they will be able to cash out long before the regulatory reckoning comes. What about you, the average investor? Are you ready to take the risk of losing it all if the SEC shows up on your doorstep?

This kind of fun regional food tour is a lot like the Reconnect program. You’re ready to discover fantastic and creative new flavors! You want to know that the ingredients are responsibly sourced and that the restaurant is reputable. Before exploring RWA tokenization, follow your curiosity 🪄 🧙‍♀️. Know your underlying assets, know your legal framework, and know your potential losses.

DePIN's Dream: Decentralization Or Delusion?

Decentralized Physical Infrastructure Networks (DePINs) are being hailed as the next big thing in infrastructure. Projects like Units Network are leading the charge on building scalable Web3 infrastructure. The promise practically means a more resilient, censorship-resistant, and democratized internet.

Sounds great, right? Let's inject some realism here. Constructing and ensuring the longevity of physical infrastructure is costly and burdensome. It takes a lot of capital, technical expertise, and logistical coordination. Consider the potential backlash from ticking off the incumbents.

Are these newfangled, decentralized networks really going to be able to take on the incumbents who’ve had decades of experience and a very deep well of resources? And do we know that these projects are actually capable of producing the value they claim to provide? Or are we just giving the green light to expensive and complex fantasies that will eventually fail under their own heft?

The idea of “decentralization” can itself be a mirage. First, as we’ve seen with many of these networks, they are often dominated by a few major actors, which negates many of the purported benefits of decentralization.

The current funding frenzy around DePINs seems like a perfect example of joyful exuberance making us forget the trouble lurking below. That’s a bit like throwing a party to celebrate the completion of a new bridge before making sure it can hold any weight.

Let's be blunt. Venture capitalists aren't your friends. They're in the business of making money. Their only real obligation is to make the short-term best investments, no matter the long-term impact.

They gladly raise a ruckus in support of these new knowledge-based industries. They understand that this hysteria will attract a flood of retail investors and increase the value of their crypto assets. When the bubble pops, they’ll be history, leaving you to hold the bag.

Don’t get suckered in by the glittery headlines and unrealistic projections of returns in the thousands of percent. Do your own research. Understand the risks. And be ready to walk away if the terms aren’t in line with your needs.

That $136.8 million in venture funding doesn’t automatically mean that the crypto market is doing hunky-dory. Or maybe it’s simply the logic of irrational exuberance, fueled by hype and greed.

We should welcome these investments and innovations, but be sure to treat these new and emerging sectors with skepticism and caution. It is up to us as the community and as taxpayers to demand more transparency and accountability with every project and VC involved. We have to shift the focus from short-term profit to sustainable growth.

The future of crypto depends on it. Don't let the mirage blind you.

We need to approach these emerging sectors with caution and skepticism. We need to demand greater transparency and accountability from projects and VCs alike. And we need to prioritize sustainable growth over short-term profits.

The future of crypto depends on it. Don't let the mirage blind you.