VC funding provides crypto projects with easy access to working capital.
There have been a lot of discussions around how crypto projects should raise funds.
VCs Will Make Crypto Centralized
Many stakeholders of the Web3 space believe that crypto projects should raise money only through token sales.
However, recently many projects are resorting to raising funds from Venture Capitalists (VC) as routinely happens in the case of Web2 startups.
This prompted Jack Dorsey, co-founder of Twitter and Block, to say, ‘You don’t own “web3.” The VCs and their LPs do.’
He meant that as more VCs enter the space, crypto projects will not remain as Decentralized as they are touted to be. That’s why many become believers in Bitcoin as it did not receive any institutional investment for its development.
Dorsey himself is a firm believer in Bitcoin.
The whole crypto community went berserk when this debate was triggered.
Advantages of VC Funding for Crypto
Web3 space does not deny entry to anyone. Consequently, even VCs and their Limited Partners (LP) can enter the space.
Denying entry to VCs would be counterintuitive, considering Web3 is against any kind of censorship.
Moreover, they provide easy access to working capital for budding entrepreneurs.
Today the total number of cryptocurrencies amounts to more than 5000 cryptocurrencies, according to data from Statista.
Competing with all of them and grabbing the attention of people for a token sale has become a lot more difficult.
The proliferation of crypto is so fast that even Web3 projects are providing funds to other projects in the space. Furthermore, some projects have even acquired others.
Cryptocurrencies were created for free flow of money; when it is happening, one cannot stop it.
It is human nature to amass as much power as you can. The most important qualities of Web3 are Decentralization and Ownership. They help the users in keeping the developers of any project accountable. As long as that is being achieved, a project should be hailed as successful.
Absolute Decentralization is similar to Direct Democracy. Bear in mind the logistical challenges of doing so. That’s why Representative Democracy evolved, so did Delegated Proof of Stake (DPoS) consensus mechanism.
Innovations always aim to solve a problem. Their inventors and early adopters always capitalize on the opportunity and make it big. However, as the market grows more people enter and compete against each other. In that situation whoever has the skill and resources rises further.
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