I hereby certify that all of these ICOs are crap. The world doesn't need another highly frothy 'currency' with no underlying value, whose only useful properties are some famous dude (or some guy on YouTube) says it's cool and you can think you'll get in early like when you missed out on Bitcoin or whatever.
What's the point of this comment? You know, this is exactly the same attitude every MBA suit has towards any new startup, until it's successful of course, then it starts praising them.
The crypto space is rife with inside jobs, but I think most of the ICO hacks are real. There's not a strong incentive to run an ICO hack when you'd otherwise just get the money without much accountability.
Not sure what you and sibling comment are getting at. Noone is forcing you to participate in cryptocurrency ICO's, just like noone was forcing anyone to participate in dot-com stocks back in the day. In both cases it was perfectly avoidable.
Well obviously, but if you don't see the value of the blockchain and the technology behind it then you're on the wrong site my friend.
I'm saying that it's always better to get familiar with new technology at the earliest point possible. To "Completely ignore the world of coins" would be kind of stupid and shortsighted don't you think?
Have you done any profitability analysis on these? When I checked in 2015 you were losing about 20 ct on each dollar you invested.
To summarize the probably resulting discussion of this question: The profit is probably in doing ICOs and offering business opportunities on top of coins, not in mining the coins.
A pump-and-dump scheme drives the price up by promoting the commodity only to allow insiders who bought it earlier to sell when the price peeks just before the the price plunges again.
You can easily see it in penny-stocks and/or OTC-stocks. The price stays flat, then peaks, then crashes to about the pre pump-and-dump price.
I haven't seen such a behaviour in any of the new coins. Does anyone have an example or link to a chart?
The scammy ICOs (which is most of them) aren't really pump and dumps. They're more like variations of the "big store" and other phony front investor scams. It's more like outright stock fraud. They're selling shares in something that doesn't exist and isn't going to exist.
I think this is biggest difference. Selling things that there is no real intent to actually make the systems. The other issue is that a real company could get sued and you'd be able to track the real assets bought with the ill gotten gains. With these ICOs, I'm not sure how you track the money to even know who to sue.
Just to provide more options to the discussion and because nobody has mentioned it: Have you considered that all ICOs are a scam of some sort? Or that you can participate in scams and still end up being a winner?
To get the noodle baking about the first part: The goal of every public offering is to make more money than what the stuff you're offering is worth to you. Of course it may have more value to other people for different reasons, but the basic idea is not to get the same value or less of what it's worth to you. So to some degree an ICO always plans to take more than it gives.
Ehhh the definition of every successful business is one that creates more value than the sum of its parts. There has to be a consumer somewhere, and consumers usually buy something with intrinsic value (you chop down a tree, I buy the wood from you for my house.)
When there is no intrinsic value being gained, this means that the company is really just a shell game, moving money around. Think poker. People are voluntarily risking money, to play a game, to get someone else's money (and some slight entertainment.)
So, if a business markets itself as one that is creating value ("we do easy digital, global payments!"), but is really just moving money around ("buy our ICO, get in on the ground floor!")...
I like your way to define it better, because it also provides an inherent way of avoiding (more, probably not all) scams.
Don't buy stuff for the sole purpose of hoping for profit. Things you buy need to have intrinsic value. The least thing you have is a logical reason why someone else would buy it for more. And in that case early adopters of ICO-scams are doing it the smart(er) way. Because they buy coins for less than the offering price and can guess from marketing hype what they may get on offering day for it.
Buying something expressly for profit, but masquerading it as a business, that = Herbalife.
Now, some people actually do drink Herbalife shakes, but usually they are doing so as a rite-of-passage to some kind of "next level of distributorship."
I think it's important to maintain a distinction between an intentional, predatory scam and something that's just an ill-conceived, but well-intentioned, bad idea that ends up flopping.
However I don't agree with the good intention, bad intention part. In truth we all want to make the world better and we all want to gain from it. While there are few really predatory offers, many are just basic human selfishness+ignorance. It's the difference between taking someone's purse and finding that the cashier gave you too much change. The second part is not really evil, but it's very likely to happen. So you better count twice before handing out your money.
I agree with you that both are on the same side of the spectrum, the point I'm making is that I think it's important to recognize that one is more sinister than the other.
The irony of ICOs is that the very purpose nearly forbidden by the SEC and other global regulators -- namely issuing securities of a company -- is the most natural fit.
Nobody wants a domain specific currency. If I want to purchase services whether it's from a company or from some kind of decentralized amorphous protocol I want to make that purchase in fiat cash or some general purpose crypto cash like BTC or ETH. I do not want to convert cash into some domain specific currency. That's annoying and introduces complexity, breakage, and market inefficiency.
Ah the dot-com bubble 2.0. I think it'll go down in history as the crypto-crash because that's cool to say.
But seriously this is exactly what happened in the late 90's during the rise of the web. There is real value in Bitcoin, there is real value in blockchain technology. There probably isn't any value in PETCOIN or AOLCOIN if you catch my drift. Smart investors who can stomach risk can make a lot of money over the next few years before all the shit hits the fan. Gotta love irrational exuberance.
No, this is substantially worse than the late 90s.
In the late 90s there were a lot of very premature IPOs and a lot of money raised for bad ideas, but very few of them were total cranks or scams. I could in fact buy pet food on pets.com-- it just wasn't a viable business and wasn't well executed. The CueCat was a horrible business idea but CueCats actually did exist and you could in fact use them. (I used to have one! Kept it for teh lulz.)
Most ICO projects are complete and utter vapor consisting of nothing more than a stock bootstrap web site and a "white paper" that could have been generated by a Markov chain model using crypto and decentralized systems buzzwords. A few have a bit of code online that doesn't work. Of those that have shipped most of them are unusable, and of those that are usable I am only aware of maybe one or two that are at all interesting. Of those none are very compelling and none are things I couldn't do without.
There are literally no hits in this space. It's all junk, and most of it is outright scams. I'd be surprised if a single current generation coin ever actually delivers real ROI.
It pains me to say it too. This stuff is very much in the "I want to believe" category for me. But I've gone through them and that's what I see. It's depressing.
We've discussed an ICO here at ZeroTier and I've consistently come up against it. There is so much fraud here I don't want to go near it even if there might be good use cases. A lot of capital is sloshing around but I have both ethical and pragmatic problems with participating in a system so absolutely rife with fraud. I also don't particularly want to deal with SEC investigations.
Cryptocurrency on the other hand is useful. We have used Bitcoin to pay overseas contributors for open source work and consulting. The function for which block chains have become most known is so far the most useful and real.
The only upside is this: I find it satisfying that the scammers are gaming the "serious math/CS papers must be written in TeX" heuristic by writing their buzzword salad white papers in LaTeX. I hate lazy prejudiced heuristics like that.
I have a strong suspicion that some of these exist as fronts to move flight capital out of China, Russia, and other places that hemorrhage dodgy money.
There almost seems to be an inverse relationship between reality and funds raised. Here's one of the very few real ones:
It's one of the few coin-backed distributed things that seems like it might be useful to the point that I may actually try it, and I've heard it actually does work.
I can agree with that. There isn't a whole lot of utility in individual ICO's. However if you look at ICO's in general the concept is pretty remarkable, ICO's essentially facilitate the "move fast and break things" mentality of Silicon Valley. If ICO's work over the next 10 years (after the crash and into the future) that's a pretty great tool that Silicon Valley now has, they can now surpass the SEC and having the burden of pleasing investors and most importantly posting quarterly profits and still raise all of the money that they need.
This goes back to my original point that there is value in cryptocurrency and the technology behind it. It's just going through a period of explosive interest and growth, which in turn is causing the technology to get better rapidly.
The multimillionaire investors are going to be made over the next 3 years. The next google could come out of an ICO in 10, it's just a matter of the market correcting itself once the hype wears off.
The SEC has ruled that some coins in ICOs are actually securities and are subject to the SEC rules[1] so they aren't going to really bypass the SEC at all. It's just a matter of time before things get ugly.
I'm betting many of these participants will get in considerable legal trouble. They are dealing in trackable cryptocurrency as opposed to hard cash. The paper trails are quite clear. If they were smart enough to only spend the funds on the project perhaps they just get hit with securities violations. If they instead chose to spend it on personal stuff, there will be Interpol warrants, extraditions, and prison time waiting.
Earlier in the year I began going through the list of alt-assets and ICOs. I appreciate how the lists of advisors (or whatever they are being called) are full of people with experience in completely irrelevant areas.
Cryptography is one of those areas where you really need to be good at what you do or your skills have a deeply negative value. To create some sort of cryptographic asset with a team devoid of cryptographers and people with deep software security experience is a joke.
Yeah I have this sense that the hammer is hovering over some of these peoples' heads and we are about to see mass arrests. Some of these are flagrant scams with very identifiable names attached to them. I'm sorry but if you raise capital for a venture it is not your money, and if you behave as if it is you are committing a crime.
If that does happen crypto will crash. The crash will bleed over into Bitcoin too because sheep.
In the long run it might be a good thing. Maybe ICOs will get re-invented as something more reputable. I know Naval Ravikant (AngelList) is involved in a project to create a reputable sort of ICO vehicle patterned after the SAFE and he has an excellent reputation. I feel bad for the people right now trying to do legitimate work in this space and having to compete with a bunch of obvious cranks and fakes.
The sad thing is that this is actually very cool technology and I bet there are real use cases out there that could benefit from them. But the ones I have seen are not it.
I wonder if Ethereum itself will also be punished when all these tokens come crashing down...
The other key difference is that the 1990s startups were for the most part aiming to take advantage of a novel form of distribution rather than a novel means of fundraising.
Even though many of the nineties startups lacked the skill or timing to execute it, the advantage of replacing catalogues or human agents already using computerised reservations systems with an always-available, easily-updated website was huge, obvious and real as was the size of the future online advertising market. So there was every reason to believe that some internet companies would eventually become huge. By contrast, many ICO startups boast no tangible advantage or difference over the existing congested and conventional markets they purport to serve except for a novel funding method which allows their investors to trade any oversight or traditional legal recourse against the company for a theoretically liquid market to dump the "coins" in if the founders don't even attempt to deliver...
I still haven't seen a situation where cryptocurrency is going to work better for me than cash, credit, or bill pay would. I'd have to pay a commission to buy crypto currency, I'd have pay a commission to cash out again, how is that better than just using cash/credit?
You are paying for privacy. There is no company to sell your buying habits. There is no company the government can demand turn over your purchasing history.
This all depends on where you are. In the US, you have to provide KYC information to get bitcoins so there will be a wallet tied to your personal identity. From there, you can follow the transactions on the blockchain and see where it leads. It isn't as easy as a subpoena to get information from a single company but it isn't like there is actual privacy either.
Bitcoin as a currency doesn't solve any problems for people in developed countries. For the 5 billion plus who are underbanked due to lack of access or government red tape, it solves a big problem. Maybe you live in a country where there is hyper inflation like Venezuela or Argentina, or you are a female in Saudi Arabia and you cannot open a bank account, or you need to purchase prescription drugs online because you cannot afford it. Bitcoin is not perfect, but it actually solves problems for some people. We mostly buy Bitcoin in the west as speculation.
I think the real value of crypto will come when the market is stable enough that people feel comfortable leaving their money in crypto instead of cashing out (avoid the commissions). Get paid in crypto, buy goods and services in crypto, and never have to deal with cash or banks. I think a great use for crypto is microtransactions which are cumbersome using cash (literally coins) or expensive using credit ($0.30 transaction fee).
How about a modern investment project in construction industry based on blockchain technology? An ICO investment in the infrastructure of a plot of land in Russia, which will make you a 300% return. Of course, All transactions will be securely processed in Ethereum Virtual Machine and stored in a blockchain – distributed database on numerous nodes around the globe. Decentralized consensus gives Ethereum extreme levels of fault tolerance, ensures zero downtime, and makes data stored on the blockchain forever unchangeable and censorship-resistant.
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[ 3.5 ms ] story [ 42.1 ms ] threadNot calling Morningstar scammers, but they also have millions in revenue...
I hereby certify that all of these ICOs are crap. The world doesn't need another highly frothy 'currency' with no underlying value, whose only useful properties are some famous dude (or some guy on YouTube) says it's cool and you can think you'll get in early like when you missed out on Bitcoin or whatever.
https://youtu.be/XCZ4xk8Xojc?t=2m18s
I'm saying that it's always better to get familiar with new technology at the earliest point possible. To "Completely ignore the world of coins" would be kind of stupid and shortsighted don't you think?
To summarize the probably resulting discussion of this question: The profit is probably in doing ICOs and offering business opportunities on top of coins, not in mining the coins.
You can easily see it in penny-stocks and/or OTC-stocks. The price stays flat, then peaks, then crashes to about the pre pump-and-dump price.
I haven't seen such a behaviour in any of the new coins. Does anyone have an example or link to a chart?
To get the noodle baking about the first part: The goal of every public offering is to make more money than what the stuff you're offering is worth to you. Of course it may have more value to other people for different reasons, but the basic idea is not to get the same value or less of what it's worth to you. So to some degree an ICO always plans to take more than it gives.
When there is no intrinsic value being gained, this means that the company is really just a shell game, moving money around. Think poker. People are voluntarily risking money, to play a game, to get someone else's money (and some slight entertainment.)
So, if a business markets itself as one that is creating value ("we do easy digital, global payments!"), but is really just moving money around ("buy our ICO, get in on the ground floor!")...
then buyer be aware :)
Don't buy stuff for the sole purpose of hoping for profit. Things you buy need to have intrinsic value. The least thing you have is a logical reason why someone else would buy it for more. And in that case early adopters of ICO-scams are doing it the smart(er) way. Because they buy coins for less than the offering price and can guess from marketing hype what they may get on offering day for it.
Buying something expressly for profit, but masquerading it as a business, that = Herbalife.
Now, some people actually do drink Herbalife shakes, but usually they are doing so as a rite-of-passage to some kind of "next level of distributorship."
craziness, really :)
However I don't agree with the good intention, bad intention part. In truth we all want to make the world better and we all want to gain from it. While there are few really predatory offers, many are just basic human selfishness+ignorance. It's the difference between taking someone's purse and finding that the cashier gave you too much change. The second part is not really evil, but it's very likely to happen. So you better count twice before handing out your money.
They are not, Dan bytemaster was around when Satoshis was active back then
Nobody wants a domain specific currency. If I want to purchase services whether it's from a company or from some kind of decentralized amorphous protocol I want to make that purchase in fiat cash or some general purpose crypto cash like BTC or ETH. I do not want to convert cash into some domain specific currency. That's annoying and introduces complexity, breakage, and market inefficiency.
Regular crowd-funding mostly have rules about what you pre-buy. Regular IPOs have tight rules and regulation on how, when and to whom you may offer.
I fail to see how and why we should tolerate these ICOs scams these days. A lot of people will lose a lot of money.
But seriously this is exactly what happened in the late 90's during the rise of the web. There is real value in Bitcoin, there is real value in blockchain technology. There probably isn't any value in PETCOIN or AOLCOIN if you catch my drift. Smart investors who can stomach risk can make a lot of money over the next few years before all the shit hits the fan. Gotta love irrational exuberance.
In the late 90s there were a lot of very premature IPOs and a lot of money raised for bad ideas, but very few of them were total cranks or scams. I could in fact buy pet food on pets.com-- it just wasn't a viable business and wasn't well executed. The CueCat was a horrible business idea but CueCats actually did exist and you could in fact use them. (I used to have one! Kept it for teh lulz.)
Most ICO projects are complete and utter vapor consisting of nothing more than a stock bootstrap web site and a "white paper" that could have been generated by a Markov chain model using crypto and decentralized systems buzzwords. A few have a bit of code online that doesn't work. Of those that have shipped most of them are unusable, and of those that are usable I am only aware of maybe one or two that are at all interesting. Of those none are very compelling and none are things I couldn't do without.
There are literally no hits in this space. It's all junk, and most of it is outright scams. I'd be surprised if a single current generation coin ever actually delivers real ROI.
It pains me to say it too. This stuff is very much in the "I want to believe" category for me. But I've gone through them and that's what I see. It's depressing.
We've discussed an ICO here at ZeroTier and I've consistently come up against it. There is so much fraud here I don't want to go near it even if there might be good use cases. A lot of capital is sloshing around but I have both ethical and pragmatic problems with participating in a system so absolutely rife with fraud. I also don't particularly want to deal with SEC investigations.
Cryptocurrency on the other hand is useful. We have used Bitcoin to pay overseas contributors for open source work and consulting. The function for which block chains have become most known is so far the most useful and real.
The only upside is this: I find it satisfying that the scammers are gaming the "serious math/CS papers must be written in TeX" heuristic by writing their buzzword salad white papers in LaTeX. I hate lazy prejudiced heuristics like that.
Some don't even bother to do that. This is literally the white paper for one of the hottest cryptos out there right now :
http://docs.neo.org/en-us/
This is the codebase :
https://github.com/neo-project
The current net value of the entire circulation is about 3.7 billion, all of which was pre-"mined" and 50% of which is reserved by the creators.
There almost seems to be an inverse relationship between reality and funds raised. Here's one of the very few real ones:
http://sia.tech
They got nowhere near the funding, and most of it was conventional:
http://sia.tech/funding2016/
It's one of the few coin-backed distributed things that seems like it might be useful to the point that I may actually try it, and I've heard it actually does work.
Guess that's passe in these quarters.
This goes back to my original point that there is value in cryptocurrency and the technology behind it. It's just going through a period of explosive interest and growth, which in turn is causing the technology to get better rapidly.
The multimillionaire investors are going to be made over the next 3 years. The next google could come out of an ICO in 10, it's just a matter of the market correcting itself once the hype wears off.
[1]http://fortune.com/2017/07/26/sec-icos/
Earlier in the year I began going through the list of alt-assets and ICOs. I appreciate how the lists of advisors (or whatever they are being called) are full of people with experience in completely irrelevant areas.
Cryptography is one of those areas where you really need to be good at what you do or your skills have a deeply negative value. To create some sort of cryptographic asset with a team devoid of cryptographers and people with deep software security experience is a joke.
If that does happen crypto will crash. The crash will bleed over into Bitcoin too because sheep.
In the long run it might be a good thing. Maybe ICOs will get re-invented as something more reputable. I know Naval Ravikant (AngelList) is involved in a project to create a reputable sort of ICO vehicle patterned after the SAFE and he has an excellent reputation. I feel bad for the people right now trying to do legitimate work in this space and having to compete with a bunch of obvious cranks and fakes.
The sad thing is that this is actually very cool technology and I bet there are real use cases out there that could benefit from them. But the ones I have seen are not it. I wonder if Ethereum itself will also be punished when all these tokens come crashing down...
Even though many of the nineties startups lacked the skill or timing to execute it, the advantage of replacing catalogues or human agents already using computerised reservations systems with an always-available, easily-updated website was huge, obvious and real as was the size of the future online advertising market. So there was every reason to believe that some internet companies would eventually become huge. By contrast, many ICO startups boast no tangible advantage or difference over the existing congested and conventional markets they purport to serve except for a novel funding method which allows their investors to trade any oversight or traditional legal recourse against the company for a theoretically liquid market to dump the "coins" in if the founders don't even attempt to deliver...
There would have to be a solid(likely with some sort of central authority) proof of stake crypto for inexpensive microtransaction models to work.
Of course the alternative is doing it off chain but that pretty much gets us back to trusting some sort of central authority.