Working to make the internet more private, Nym Technologies recruited former U.S. Army intelligence analyst and whistleblower Chelsea Manning, who used privacy software Tor to leak thousands of classified documents in 2011. Now, with a fresh $13 million capital injection, valuing the three-year old Neuchâtel, Switzerland-based company at around $270 million, Nym is gearing up to accelerate the advent of the private web powered by blockchain.
Revealed exclusively to Forbes, the Series A financing round was led by Silicon Valley monolith Andreessen Horowitz (a16z Crypto). Other investors include Barry Silbert’s Digital Currency Group, Tayssir Capital, Huobi Ventures, HashKey, Fenbushi Capital, and more than two dozen operators of validator nodes, or servers responsible for verifying transactions on the startup’s network.
Following a $2.5 million seed investment led by Binance’s VC arm and incubator, in 2019, and a Polychain Capital-led $6.5 million raise, which closed this July, Nym’s latest round signals the growing interest in privacy preserving technologies, no longer a niche avail of the paranoid and the criminal. And the world at large is paying attention.
“Encryption is becoming an incredibly important component of the internet today,” says Ali Yahya, general partner at Andreessen Horowitz, and “Nym provides privacy at the very bottom layer as a foundation for other private solutions to be built on top.”
The Nym blockchain uses a mix network, or mixnet, where nodes are rewarded with tokens to shuffle internet traffic. If needed the nodes can inject dummy packets of data to make it harder for adversaries to decode information even at the highest level. Nym CEO Harry Halpin, who had worked at the World Wide Web Consortium with Web inventor Tim Berners-Lee prior to founding the firm in 2018, says this approach, offering what he calls “network level privacy”, can defeat even nation-state level mass surveillance, unlike VPNs or the Tor network.
That said, Nym is not trying to directly compete with Tor. “We do recommend people use the Tor Browser,” Halpin notes, “but for bitcoin and Layer 2 solutions I think, we would be a better fit.” In fact, Nym has been rewarding its network node operators with bitcoin. In the long run, he hopes Nym’s technology could be integrated with protocols like Lightning, an additional layer built on top of the bitcoin network for instant, high-volume micropayments.
Prior to founding Nym in 2018, Harry Halpin had worked with World Wide Web inventor Tim Berners Lee.
Nym
Chelsea Manning, who is now working closely with Halpin on client side security, told Forbes “Nym has demonstrated it has secured its mixnode process to a degree worthy of investment.”
While not every privacy startup uses crypto, those that do have found renewed success raising capital, says Halpin, who in 2017 managed to raise only a few thousand dollars for a similar idea that didn’t use blockchain. By contrast, Nym’s network, which is now operating in test mode with approximately 5,000 nodes and 30 validators, is expected to go live at full capacity by the end of this year.
Notably, this is at least the fifth blockchain-related privacy investment for the round’s lead investor Andreessen Horowitz. Others include cloud computing firm Oasis Labs, zero-knowledge private applications platform Aleo, blockchain and software development company Orchid Labs, and infrastructure builder for private data on Ethereum, Keep. Since 2018, when Nym was established, funding for privacy startups has picked up: more than two thirds of the total $3.1 billion raised by companies in the field has come in the past four years, according to Crunchbase. Not to mention, many privacy-focused cryptocurrencies have proven to be sound investments this year, with several quietly outperforming bitcoin during the current bull market.
Ahead of its mainnet launch, Nym has already begun deploying fresh capital for new hires, expanding the original eight-member team to 30. Among them is Nym’s cofounder George Danezis, who briefly left the project to help design Facebook’s controversial digital currency Libra when another company he cofounded, Chainspace, was acquired by the social media giant. Danezis rejoined Nym in October. Additionally, Halpin says Nym will be giving out grants to independent third party developers starting next year.
Nym team at their first in-person meeting during the Covid-19 pandemic in Crete, Greece, Oct. 2021.
@GaryDHillPhotography
Last week, the team rolled out a wallet for node miners, through which they can pledge tokens to join the Nym network, earn reputation and, consequently, more tokens, based on the amount and quality of mixing the internet traffic. This helps ensure that the quality of service is sufficient for the network to remain usable and incentivizes miners to do the work correctly, Halpin explains. Though much of Nym’s tokenomics is still in the works, he believes these economic incentives combined with mixnet’s potential will help Nym “to make privacy real on the scale of the entire internet.”
You might not think it’s possible to outperform the average Wall Street professional with just a single investment. Fund managers are highly educated and steeped in market data. They get paid a lot of money to make smart investments.
But the truth is, most of them may not be worth the money. With the right steps, individual investors can outperform the majority of active large-cap mutual fund managers over the long run. You don’t need a doctorate or MBA, and you certainly don’t need to follow the everyday goings-on in the stock market. You just need to buy a single investment and hold it forever.
That’s because 88% of active large-cap fund managers have underperformed the S&P 500 index over the last 15 years thru Dec. 31, 2023, according to S&P Global’s most recent SPIVA (S&P Indices Versus Active) scorecard. So if you buy a simple S&P 500 index fund like the Vanguard S&P 500 ETF (NYSEMKT: VOO), chances are that your investment will outperform the average active mutual fund in the long run.
It’s a good bet that the average fund manager is hardworking and well-trained. But there are at least two big factors working against active fund managers.
The first is that institutional investors make up roughly 80% of all trading in the U.S. stock market — far higher than it was years ago when retail investors dominated the market. That means a professional investor is mostly trading shares with another manager who is also very knowledgeable, making it much harder to gain an edge and outperform the benchmark index.
The more basic problem, though, is that fund managers don’t just need to outperform their benchmark index. They need to beat the index by a wide enough margin to justify the fees they charge. And that reduces the odds that any given large-cap fund manager will be able to outperform an S&P 500 index fund by a significant amount.
The SPIVA scorecard found that just 40% of large-cap fund managers outperformed the S&P 500 in 2023 once you factor in fees. So if the odds of outperforming fall to 40-60 for a single year, you can see how the odds of beating the index consistently over the long run could go way down.
Warren Buffett is one of the smartest investors around, and he can’t think of a single better investment than an S&P 500 index fund. He recommends it even above his own company, Berkshire Hathaway.
In his 2016 letter to shareholders, Buffett shared a rough calculation that the search for superior investment advice had cost investors, in aggregate, $100 billion over the previous decade relative to investing in a simple index fund.
Even Berkshire Hathaway holds two small positions in S&P 500 index funds. You’ll find shares of the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) in Berkshire’s quarterly disclosures. Both are great options for index investors, offering low expense ratios and low tracking errors (a measure of how closely an ETF price follows the underlying index). There are plenty of other solid index funds you could buy, but either of the above is an excellent option as a starting point.
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The numbers from the Department of Finance suggest they have struck taxation gold. But they’ve been wrong before
Published Apr 19, 2024 • Last updated 8 hours ago • 5 minute read
“99.87 per cent of Canadians will not pay a cent more,” the prime minister said this week, in reference to the budget announcement that his government will raise the inclusion rate on capital gains tax in June.
The move will be limited to 40,000 wealthy taxpayers. “We’re going to make them pay a little bit more,” Justin Trudeau said.
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But it’s hard to see how that number can be true when the budget document also says 307,000 corporations will also be caught in the dragnet that raises the inclusion rate on capital gains to 66 per cent from 50 per cent.
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Many of those corporations are holding companies set up by professionals and small-business owners who are relying on their portfolios for their retirement.
The budget offers the example of the nurse earning $70,000 who faces a combined federal-provincial marginal rate of 29.7 per cent on his or her income. “In comparison, a wealthy individual in Ontario with $1 million in income would face a marginal rate of 26.86 per cent on their capital gain,” it says.
Policy wonks argue that the change improves the efficiency and equity of the tax system, meaning capital gains are now taxed at a similar level to dividends, interest and paid income. The Department of Finance is an enthusiastic supporter of this view, which should have set alarm bells ringing on the political side.
That’s not to say it’s not a valid argument. But against it you could put forward the counterpoint that capital gains tax is a form of double taxation, the income having already been taxed at the individual and corporate level, which explains why the inclusion rate is not 100 per cent.
The prospect of capital gains is an incentive to invest particularly for people who, unlike wage earners, usually do not have pensions or other employment benefits.
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That was recognized by Bill Morneau, Trudeau’s former finance minister, who said increasing the capital gains rate was proposed when he was in politics but he resisted the proposal.
Morneau criticized the new tax hike as “a disincentive for investment … I don’t think there’s any way to sugar-coat it.”
Regardless of the high-minded policy explanations that are advanced about neutrality in the tax system, it is clear that the impetus for the tax increase was the need to raise revenues by a government with a spending addiction, and to engage in wedge politics for one with a popularity problem.
The most pressing question right now is: how many people are affected — or, just as importantly, think they might be affected?
One recent Leger poll said 78 per cent of Canadians would support a new tax on people with wealth over $10 million.
But what about those regular folks who stand to make a once-in-a-lifetime windfall by selling the family cottage? We will need to wait a few weeks before it becomes clear how many people feel they might be affected.
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The numbers supplied to Trudeau by the Department of Finance suggest they have struck taxation gold: plucking the largest amount of feathers ($21.9 billion in new revenues over five years) with the least amount of hissing (impacting just 0.13 per cent of taxpayers).
The worry for Trudeau and Finance Minister Chrystia Freeland is that Finance has been wrong before.
Political veterans recall former Conservative finance minister Jim Flaherty’s volte face in 2007, when he was forced to drop a proposal to cancel the ability of Canadian companies to deduct the interest costs on money they borrowed to expand abroad.
“Tax officials vastly underestimated the number of taxpayers affected when it came to corporations,” said one person who was there, pointing out that such miscalculations tend to happen when Finance has been pushing a particular policy for years.
Trudeau’s government has some experience of this phenomenon, having been obliged to reverse itself after introducing a range of measures in 2017, aimed at dissuading professionals from incorporating in order to pay less tax. It was a defensible public policy objective but the blowback from small-business owners and professionals who felt they were unfairly being labelled tax cheats precipitated an ignoble retreat.
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Speaking after the budget was delivered, Freeland was unperturbed about the prospect of blowback. “No one likes to pay more tax, even — or perhaps more particularly — those who can afford it the most,” she said.
She’d best hope such sanguinity is justified: failure to raise the promised sums will blow a hole in her budget and cut loose her fiscal anchors of declining deficits and a tumbling debt-to-GDP ratio.
That probably won’t be apparent for a year or so: the government projected that $6.9 billion in capital gains revenue will be recorded this fiscal year, largely because the implementation date has been delayed until the end of June. We are likely to see a flood of transactions before then, so that investors can sell before the inclusion rate goes up.
After that, you can imagine asset sales will be minimized, particularly if the Conservatives promise to lower the rate again (though on that front, it was noticeable that during question period this week, not one Conservative raised the new $21 billion tax hike).
The calculated nature of the timing is in line with the surreptitious nature of the narrative: presenting a blatant revenue grab as a principled fight for “fairness.” The move has the added attraction of inflicting pain on the highest earners, a desirable end in itself for an ultra-progressive government that views wealth creation as a wrong that should be punished.
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Trudeau’s biggest problem is that not many voters still associate him with principles, particularly after he sold out his own climate policy with the home heating oil exemption.
The tax hike smacks of a shift inspired by polling that indicates that Canadians prefer that any new taxes only affect the people richer than them.
Success or failure may depend on the number of unaffected Canadians being close to the 99.87-per-cent number supplied by the Finance Department.
History suggests that may be a shaky foundation on which to build a budget.
National Post
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