Tech and crypto funder Andreessen Horowitz wants to replace the media. Is that bad news?

If you have even a passing familiarity with Silicon Valley or cryptocurrency, you’ve likely heard of Andreessen Horowitz, one of tech’s highest-profile venture capital firms. The firm, which tech insiders call a16z, is famous in part because of its investments—Facebook, Coinbase and other familiar names—but also because of its mastery at charming (and manipulating) the media.

So perhaps it’s no surprise that a16z is building a media empire. The details are still trickling out, but the short version is that, after a decade of cultivating journalists over intimate cocktail affairs, the firm has decided it no longer needs them. Instead, a16z is hiring a large editorial team to cover stories about crypto, fintech and other topics with an upbeat slant. (If you want the long story, read this excellent piece about a16z’s press whisperer, Margit Wennmachers, and how media, money and power really work in the Valley).

One reason that a16z became a media outlet is because it can. Once, companies needed to rely on the likes of the New York Times to get their stories out to the public. Those publications, including Fortune, had a virtual monopoly on information because they controlled the bundles—aka newspapers and magazines—through which news got distributed. The Internet blew up that monopoly, slowly at first, and then rapidly once platforms like Twitter, Medium and Substack came on the scene.

The other big reason a16z has turned its back on traditional media is because the firm, like many in the tech world, regards the press as ignorant and unfair. Instead of hailing the many ways tech is changing our lives, these critics say journalists fixate on negative stories, pursuing hit pieces and takedowns that serve their own agenda. What’s more, a16z and others would add, reporters are prone to publishing pieces even if they don’t know what they’re talking about. It’s better, then, to leave it to those—like the partners at a16z and their scribes—who do.

So what should we make of all this? Unsurprisingly, many reporters are recoiling at what a16z is doing, claiming its media ambitions are simply propaganda and not “real” journalism. Part of this is sour grapes. Journalists are prone to self-importance and, in criticizing the push by a16z and others to cut them off, they may simply be lamenting a loss of power and prestige.

And while it’s easy to knock a16z’s motives, it’s hard to bash the stuff they are publishing. I’ve been reading the company’s fintech newsletters and have to concede they’re excellent: sophisticated, well-informed and crisply written. If this is the case, perhaps our impulse should be to praise rather than criticize the company. After all, the information they’re publishing is free and useful—and better than a lot of the clickbait dreck that passes for much of “real” journalism these days.

And yet. As much as I appreciate high-caliber content, I shudder at the prospect of a world where a16z carries more media clout than the Times or the Wall Street Journal. As is the case with so much else in Silicon Valley, this new class of media barons appears to want the money and the glory, but not the responsibility that comes with disrupting, and increasingly dominating, entire industries.

The founders of a16z are reportedly sick of the growing chorus of anti-tech voices in mainstream media, and that’s understandable. Silicon Valley, despite its flaws, still creates the technology that offers the best hope for alleviating global problems like disease, pollution and poverty. But the tech industry has exacerbated a host of other problems, from disinformation to inequality, and simply adopting a pro-tech vision feels irresponsible.

Then there is the “truth to power thing”—a phrase an a16z insider recently used to suggest to me that the ideals of journalism are quaint or naive. I disagree. In the last century, traditional media institutions have been fearless in standing up to powerful businesses and Presidents, fighting in court for free speech while individual journalists have gone to jail to protect their sources. Such activities are essential to the functioning of a free democracy. And for now, it appears a16z is not interested in taking part in them.

In this sense, a16z’s media ambitions remind me of the cryptocurrency industry—a field the firm is also trying to dominate. Many Bitcoin believers will tell you the currency and the industry around it are about freedom and escaping the power of government and big banks. And while there’s something to that, few in the crypto industry have much to say about how to help the millions of Americans struggling with hunger, unemployment and lack of healthcare. I worry that, if pressed, their response would be “it’s not my problem.”

Jeff John Roberts

@jeffjohnroberts

jeff.roberts@fortune.com

DECENTRALIZED NEWS

Credits

Criminal activity in crypto fell sharply in 2020 ... Goldman Sachs considering big acquisitions to juice growth at Marcus fintech unit ... Crypto fan Andrew Yang will run for Mayor of New York ... Norway's currency, the krone, outpaces Sweden's very different krona ... U.S. crypto exchange Gemini mulls an IPO ... Grammy winners Portugal.The Man launch their own cryptocurrency ... The Federal Reserve is evaluating the systemic risk of stablecoins (see Tether below) ... The Block researcher Larry Cermak proposes a Bitcoin Froth Index.

Debits

Jamie Dimon says JPMorgan should be 'scared s***less' of fintech ... Treasury Secretary nominee Janet Yellen worries about crypto crime ... Capitol rioters and Nazi forum received $500k worth of Bitcoin from foreign sources ... Walmart ecommerce head Marc Lore moves on ... eToro warns that Bitcoin demand could make orders hard to fill ... We regret to inform you that Bitcoin is dead for the 391st time.

BUBBLE-O-METER

$1,439.33

The price of Ether (ETH) at approximately 12pm UTC (7am EST) on Tuesday, Jan 19, a new all-time high for the cryptocurrency according to data from CoinDesk. Primarily, interest in Ether and the Ethereum network have been driven by the rise of Decentralized Finance systems, or DeFi, services such as crypto-loans which run primarily on Ethereum.

That new high, however, was not reflected across all price data - CoinGecko, for instance, measured a 24-hour peak of $1,426.57, also at 7am EST, short of a new high. That disconnect appears to reflect continued fragmentation in crypto market data, even as the sector rapidly professionalizes.

FOMO NO MO

It seemed I’d been wrong to dismiss Tether. Tether wasn’t just in the crypto markets — Tether was the crypto markets.

Every surge in the price of Bitcoin is met by rehashing of well-worn concerns as new entrants discover the oddities of the crypto market. Sometimes, that's because systemic issues have never been resolved – and Tether is the ultimate example.

Tether is a 'stablecoin,' or a cryptocurrency that circulates on a blockchain, but has its value pegged to a government currency. In Tether's case, each token is worth $1 USD and is backed by a basket of dollars, bitcoin, and other assets. But Tether has never been formally audited, and is not U.S.-based, so its claims of reserves are largely unproven. These have been major concerns in the crypto community for nearly half a decade, and one anonymous trader last week rehashed the worries in a widely-noticed Medium post. Based on fishy issuance patterns and other evidence, the anon concluded that the stablecoin is "a highly probably fraud," specifically an "exit scam," or a planned scheme to disappear with Tether buyers' dollar deposits. Because of Tether's systemic importance, that's a risk to the entire cryptocurrency market.

But, while acknowledging much of Tether's questionable behavior, asset manager David Fauchier devoted a Twitter thread to allaying the analysis' most extreme worries. First, Fauchier says the correlation between Tether issuance and Bitcoin price is not a sign of manipulation, because Tether is used to make roughly 70% of Bitcoin purchases. In other words, Bitcoin demand drives Tether issuance – not the other way around. Faucier also argues that the rise in Bitcoin's price makes it much more likely Tether has sufficient backing. Most strikingly, he argues that Bitfinex, the crypto exchange run by Tether's creators, generates so much revenue that "exit scamming" with the Tether reserves simply wouldn't be worth it.

THE LEDGER'S LATEST

Coinbase acquires Bison Trails for more than $80m - Jeff John Roberts

I used to wiretap. Here's why encryption backdoors are dangerous - Chris Howell, CTO, Wickr (Commentary)

Affirm IPO leaves $1.23 billion on the table - Shawn Tully

Why more stimulus and more impeachment add up to very little for investors - Bernhard Warner

It's time to raise the price of spreading conspiracy theories - Ryan Young (Commentary)

MEMES AND MUMBLES

Just a small portion of Twitter CEO Jack Dorsey's lengthy thread about the decision to ban former President Donald Trump from the platform. Dorsey has long looked at Bitcoin as a model for an internet based on protocols, not platforms, a transition that would make deplatforming debates less thorny. In late 2019, he announced that a small internal team at Twitter would develop "an open and decentralized standard for social media."

This edition of The Ledger was curated by David Z. Morris. Contact him at david.morris@fortune.com