17 ms·

What is an Initial Coin Offering and How Does it Work?

206 points by discombobulate 9y ago

silverbax88 9y ago
FTA: ICOs conclude once the coins or tokens are tradable in the open market. This is a part that has eluded me thus far: how are the new coins tradable on the open market? I'm genuinely asking - most exchanges don't support all crypto coins, and certainly not the dozens of new ones being created. How does one invest in an ICO and then 'cash out'? I see the ROI stats on some of these ICOs but I'm curious as to if those investors are basically sitting on that ROI hoping it doesn't evaporate before they can sell. Can anyone provide insight here?
- jhildings 9y ago
  You can trade most pairs at EtherDelta which is a decentralised exchange on the blockchain https://etherdelta.github.io/ https://etherdelta.github.io/
- ksahin 9y ago
  Almost all these ICOs are made on the Ethereum blockchain, there is a standard that almost all ICOs uses which is called ERC20 : https://theethereum.wiki/w/index.php/ERC20_Token_Standard https://theethereum.wiki/w/index.php/ERC20_Token_Standard Exchanges knows how to deal with ERC20 tokens so sometimes theses token hits the exchanges 5mn after the ICO is over (exchange like liqui.io or Bittrex). So no people are not sitting on their ROI since there is liquidity for these tokens
  - erikb 9y ago
    The meta-coin basically. You have to admit this is a very well designed scheme.
- bitxbitxbitcoin 9y ago
  The open market in crypto is very, very open. As others have pointed out there are centralized and decentralized solutions for trading a lot of these things.
sillysaurus3 9y ago
"Step 1: Tell literally everybody in the world about an initial coin offering."
fiatjaf 9y ago
In the past history of ICOs, did anyone gain from participating in the ICO more than they could have gained by buying the coin later in an exchange?
- sirpauldenino 9y ago
  https://icostats.com/roi-since-ico https://icostats.com/roi-since-ico
  - ksahin 9y ago
    To complete the link, there is a story behind each ICO, some ICOs were "disasters", i.e there was a hidden cap (a maximum amount where the ICO stops) and people flooded the blockchain with high fees transactions and only some "whales" did particpate. For example, this happened with Basic Attention Token (150 people only did the ICO if I remember correctly), but also with Status, Bancor etc. So when you have 10 000+ people trying to buy a token, and only a few hundreds achieve to buy it because the network does not scale yet and a bunch of people with a lot of money can afford 1000$+ transaction fees, these tokens skyrocket once they hits exchanges.
  - ggambetta 9y ago
    What a fun UI! If you click the > arrow, you go from page 1/2 to page 2/2 to... page 0/2. From there you can click the < arrow to go to negative pages.
- Subcide 9y ago
  Yes, though usually not by just holding. ICOs with small caps often list on exchanges at a decent % profit in the first few days, while the people that missed out on the ICO buy in. The link the other user posted obviously doesn't take this into account, and only tracks holding the token indefinitely. In all likelihood, a LOT of people profited on the ICOs that ICOStats lists as negative right now.
  - beager 9y ago
    This sounds like the same dynamic that institutional investors use on IPOs, where only privileged players get to buy in the IPO, and they sell through a pop fueled by hype or an underestimated target. Shares hit the general public and by the time you've got a few quarterly calls in, the true value is set and the long road begins, while the institutionals and earlier investors have already cashed out some good gains. If democratizing access to ownership offerings for the purpose of quick sell off is the major benefit of ICOs, what does this do for serious businesses? Why would they choose an inherently less stable and less secure (cf. DAO hack on Ethereum) medium if it primarily benefits the investors and not the company? Beyond that, it remains to be seen what IRL innovations can be enabled by ICO, whether more easily or necessarily vis a vis traditional fundraising vehicles.
lawless123 9y ago
Initial scam offering.
- nikolay 9y ago
  I thought that the number of idiots and greedy people in tech is in limited supply, but it looks like I was wrong by orders of magnitude!
- erikb 9y ago
  This is so common, they even have their own file format, and you can mount them like good old CDs.
paulgb 9y ago
> An IPO is a onetime sale with multiple intermediaries involved in the process of determining the conditions, pricing, etc., whilst ICOs can have multiple rounds of fund raising [...] The rounds aren't really "initial" after the first one though, are they.
- deepvibrations 9y ago
  Token Distribution might be a better way to phrase it. At least this is how Eos named their fund raising- it takes place over 341 days, launched a few days ago and has already raised over $600M...Crazy times! Anyone investing should be careful, as there are a lot of scams out there.
nikolay 9y ago
I'm tired of these scams. Worst of all, tech guys are getting involved. We are like chemists going into drug manufacturing or physicists making A-bombs! But, of course, this is not much different than the plethora of iFart apps or brainless startups that steal money from investors, essentially, and then they crash like there's no tomorrow. At some point, HN didn't pay much attention to these, but recently there's a new wave of the crapto attack, and this no longer is my oasis from the world's bullshit that's echoed pretty much everywhere.
- nameisu 9y ago
  nicely put
- brianshaler 9y ago
  I'm with you, but it's not necessarily new. HN has always been a blend of STEM and money/hustle.
philfrasty 9y ago
ICO fan to hater: „Cash me outside howbow dah“
fowlerpower 9y ago
A lot of people are calling these things Scams. People arent wrong and to a certain degree they do attract the "quick buck" type to them. Keep in mind though that these are also very useful for companies to get the Digitial Currency and block chain into the hands of the masses without some of this money, which large parts of that may be burned, will yield some killer apps. The people doing an ICO do it to raise a bunch of money, much like a kick starter campaign. The people buying an ICO buy it for a quick buck and a lot of times they end up selling these coins from the ICO for 10x, see BATs. The allure for people starting a company is that you can raise millions and give 0% of your company away. Some people will scam, it's true maybe a lot will, but some will undoubtedly start something big and will want to do more than just scam.
- richardknop 9y ago
  Call me when a single of these projects that raise a ton of money from ICOs actually delivers and becomes a success. So far we have seen a lot of no strings attached cash given away to people with just an idea who would never raise money from real investors. I think it's a ponzi scheme. As far as people selling ICO tokens for 10x price, only a small number of people can logically do that and it relies on influx of new buyers. Usually after listing of your token on exchange you get a fresh infusion of speculators and gamblers which allows the earliest investors to cash out but most people end up losing money.
  - creeble 9y ago
    Technically, I don't think you can call it a Ponzi scheme unless you're paying existing ICO owners with new, incoming ICO buyers' money. Coins sort of prevent that? I think it's technically just fraud: they take your money, convert it into worthless acorns, then when nothing happens, the acorns can't be traded for any value.
    - richardknop 9y ago
      Yes, perhaps. I think most people who "invest" in ICOs follow this logic: 1) Get into the ICO race and be quicker than others so you get tokens. There is always massive demand to participate in ICOs so most people aren't quick enough to get their transactions in. 2) Wait until the new worthless token is listed on some speculative exchange which allows trading of these tokens (Poloniex). In the meantime hype the token on social media like Reddit to increase FOMO. Once it's listed those people that didn't get into ICO will rush in to buy tokens as they anticipate the price to go up by 10x. 3) The ICO investors cash out their coins from this initial spike of new money rushing in after listing on exchange. 4) Rinse and repeat.
ponzICO 9y ago
Initial Coin Offering - the 'i' in 'Coin' is completely optional the best summary I've read so far is this, you don't need to know more https://www.reddit.com/r/Buttcoin/comments/67b420/investors_of_the_future_put_a_300m_valuation_on_a/dgplw9m/ https://www.reddit.com/r/Buttcoin/comments/67b420/investors_...
wyldfire 9y ago
Previously, we had a filter screening new altcoins (expletive deleted) in that you had to know enough about bitcoin to at least fork the repo, build it and make some modest changes to create a new namespace. We could see whether those coins are worth anything by looking to see if there was a novel PoW or other network changes, premine, etc. Now, Counterparty and much moreso Ethereum have created an opportunity for anyone to mostly click through to a new asset/token and make claims about some abstract business idea. FOMO drives folks to invest in the pump-n-dump of the day. Very few of these have any real claim of value. Please, tell your friends not to invest in these ludicrous scams.
- richardknop 9y ago
  Exactly my thoughts. This is pure gambling. Lots of people will end up losing money while a small amount of people will make millions from these scams.
  - sillysaurus3 9y ago
    True, though it's probably best to go further: Any money into any cyptocoin is pure gambling. Don't put any money in you can't afford to lose. If anyone is saying the word "investment" while talking about a cryptocoin, smile and nod while slowly receding in the other direction. As a gambling vehicle, cryptocoins are one of the finest ever created. But people should at least admit to themselves that it's not investing. That's a little bit of a No True Scotsman, but there's a grain of truth to it. Yes, abstractly cryptocoins are going to create a lot of value for the world. But that value is abstract, at least for now. It's different from the sort of value that a startup creates: at least a startup is trying to affect the world in a tangible way that can usually be explained in a couple of sentences. EDIT: I think it's possible to invest in cryptocoin, but you have to be willing to put money in and then not touch the coins for years. What bugs me about ICOs is that it's pandering solely to a get-rich-quick mindset. That's nearly the definition of any "initial X offering."
    - leovailati 9y ago
      > It's different from the sort of value that a startup creates: at least a startup is trying to affect the world in a tangible way that can usually be explained in a couple of sentences. I agree that it is different. Arguably, though, if Bitcoin gains enough traction, it would affect the world too.
jcoffland 9y ago
Usually this kind of blatant negativity would be down voted to oblivion but for some reason HN has a special place in it's heart for crypyocurrency haters.
- sctb 9y ago
  We detached this subthread from https://news.ycombinator.com/item?id=14688593 https://news.ycombinator.com/item?id=14688593 and marked it off-topic.
- Anderkent 9y ago
  Nope, HN can just see when a 'crowdfunding' system is designed to support scammers. For fucks sake, even kickstarter etc is full of scams that never deliver - and they work within a legal system, with clear lines of identity and responsibility, and build things that are much easier to understand ahead of the time. It's obvious that the ICO buyers are half clueless people who can't evaluate the risks, and half folks exploiting the former by buying early and trying to flip the tokens once the market opens up. Sure, there's certainly some teams that are trying to build legit things with ICOs. But when you have two funding systems, where one is completely open, and the other requires certain guarantees (identity, legal responsibility), the first is always going to be full of scammers.
  - ckastner 9y ago
    > But when you have two funding systems, where one is completely open, and the other requires certain guarantees (identity, legal responsibility), the first is always going to be full of scammers. Exactly. It always cracks me up when people tout the completely deregulated nature of cryptocurrencies as a good thing.
    - drdeca 9y ago
      > It always cracks me up when people tout the completely deregulated nature of cryptocurrencies as a good thing. Well, I'll acknowledge that there are real downsides, but I think it might be feasible to (over time) build opt-in layers on top of the existing layers which serve some of the same purposes as some regulations and handle some of those issues. States are good and important and all, but if we can build something that makes some of the roles of the state unnecessary/redundant, that would be cool I think. I don't know, maybe this is largely an aesthetic preference?
deleted 9y ago
[deleted]
pishpash 9y ago
The name itself is a bit scammy.
erikb 9y ago
> So, is this the new revolution in fund raising or another pyramid that is soon to explode? Everything is a pyramid. The question is just for how long it lasts. I mean there was a pyramid called monarchy that ruled the planet for a few centuries. There's capitalism which will be replaced by something else, maybe 20 years, maybe 500 years from now. Instead of worrying about the pyramid-ness of something it's much smarter to decide whether or not it is currently under- or overvalued and what the trend will be. And here starts my opinion: I think crypto coins are currently way overvalued. They exist for longer now than most people spend in university. And yet a real market value hasn't been established yet. The one possible true market value, micro transactions, seems to have been overcome by simple small step technological evolution. It was a huge thing around 2010 that nobody could do, but now it's common to pay sub-dollar prices on all kinds of things online. Also opinion: The reason why people are willing to spend so much money on ICOs is that they hope the bitcoin dream will repeat itself. And as is often the case: if the dream is strong enough, it seems to get fulfilled, because so many people pour their money and energy into this hope. But I don't see what there is besides the hope. Many people will be disappointed when they find out there wasn't much besides their own self-illusions.
- dave_sullivan 9y ago
  > a real market value hasn't been established yet. The one possible true market value, micro transactions, seems to have been overcome by simple small step technological evolution. A real market value, in the sense that "something is worth what someone will pay for it", has been established. There's just a lot of people scratching their heads about it. What's the real market value of diamonds? Or gold? In the apocalypse, you can't do anything with either, but I think you'd have a hard time making the case that there's no "true market value" to these goods, even if you find their utility dubious.
  - erikb 9y ago
    Yes, diamonds are such a pyramid that is kept alive by pure market controlling efforts like monopoly and advertisment, just like crypto coins. Gold however has some market value by being impossible to artificially create, by being limited, by being hard to come by and by being hard to transport, all combined in one item. Yes, you concluded correctly that I see a strong relationship between market value and utility. I'm not sure if market value is the correct word for it, though. English is not my native tongue. There are two values a product has. One is trade value, the other is what you call utility. I believe the trade value of crypto coins exceeds their utility a lot. And I believe they have nearly no utility at all, because otherwise it would have shown by now what the utility is. I also believe it's totally possible that trade value can be kept high without utility for a long time, thus "people are willing to pay a big price for it for a few years" is not a proof of utility to me.
idibidiart 9y ago
Every new technology is feared at first. I have $0 in Bitcoin or any other cryptocurrency and I was there in 2009 when Satoshi was marketing Bitcoin to those of us at the P2P Foundation. I have to say ICOs may be the killer application for a semi-perfect medium of speculation like Bitcoin.
BurningFrog 9y ago
So I read half the article and still don't feel like I know what an ICO is. Only the 101 ways it's different from an IPO... I understand that I could create a FrogCoin by cloning Bitcoin or Ethereum. And then I sell investors... what exactly? Individual coins? Are coins not mined in this scenario? Would FrogCoin be tied to some real world asset that makes them inherently valuable and/or practical? Or are ICOs just gambles that maybe FrogCoin will be the winning currency? It can't be that stupid? Right?
- ksahin 9y ago
  Several years ago, ICOs were a way to crowdfund and distribute a new crypto currency. With your example you would sell "pre-mined" FrogCoin and there wouldn't be any real world asset that make them valuable, only speculation. Today, most of the ICOs are made on the Ethereum blockchain, it's a way to crowdfund distributed/decentralized application and protocol. It's not about currencies anymore. The tokens that are sold are "API keys" that will be needed to use the protocol / application. Lots of things are good candidate to decentralisation : VPN, cloud computing, cloud storage, social media plateform, Quora, Reddit, HN, any service that make the bridge between users and take a HUGE commission : Uber, Airbnb ... I don't know if any of these decentralized application will ever succeed but the business model / crowdunding model is evolving and in some area, like open source projects it makes lot of sense to create / use decentralized services.
  - skewart 9y ago
    So, from the token buyer's perspective, how is it different from a company that pre-sold a bunch of regular old API keys without any connection to any cryptocurrency or blockchain? I get the trustlessness of 'smart contracts', but with tokens-as-API-keys I still have to trust that your company's products will work and that those API keys will continue to work. Or, is the idea that the code my API key gives me access to is also defined and executed on the blockchain? That would reduce the trust I would need to have in the company pre-selling the API keys. At the same time, buying access to immutable code where functionality can't be enhanced and bugs can't be fixed is kind of lame too.
skywhopper 9y ago
A: It's a scam, and it works by scamming people. The text as written on this site describes a conspiracy to commit tax and securities fraud. I have no idea if it will ever be prosecuted as such, but that is what is being proffered here. The subtext is that a bunch of finance quants read Cryptonomicon and think the blockchain is the answer to their dream of becoming the gangster bosses of the anarcho-capitalist hellscape from Snow Crash.
- hudon 9y ago
  I'm curious to know if you erased all of modern civilization (governments, laws, et. all) and replaced it with decentralized apps and a blockchain-based currency, would it work? I read Snow Crash and I can see how fascinating the concepts are to libertarian technocrats, but I would like to see a rebuttal to it. I know the transition to this model seems impossible and this is what most people in the blockchain-space blissfully ignore. > The subtext is that a bunch of finance quants read Cryptonomicon and think the blockchain is the answer to their dream of becoming the gangster bosses of the anarcho-capitalist hellscape from Snow Crash. This made my day, it's a shame it's too long to tweet
  - api 9y ago
    It would be gamed. Real resistance to gaming requires continuous adaptation. Google "red Queen's race." All closed form systems would fall.
- programmarchy 9y ago
  There's good arguments for the IMF and Federal Reserve being scams, too. [1] I'd rather live in Snow Crash than Brave New World. [1] https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
princetontiger 9y ago
How would someone convert crypto currency to real cash? is it even possible?
- paulgb 9y ago
  As long as someone who has cash wants the crypto currency, you can trade with them.
- vocatus_gate 9y ago
  There are a multitude of websites. One of the most well-known and reputable US-based sites is coinbase.com
jonstokes 9y ago
I think the cryptocurrency story is real, just like the internet story was real in 1999, but these ICOs show that the market is getting way ahead of the tech, regulations, business models, etc. I have a longer rant about it, here: https://twitter.com/jonst0kes/status/880806655067291649 https://twitter.com/jonst0kes/status/880806655067291649 (Sadly, twitter's threading model is now so broken that you have to do lots of clicking to get to the good back-and-forth dialogue in there.) Anyway, I'm sort of toying with the idea of doing a kickstarter for a big explainer book on blockchain, cryptocurrencies, and DLT in general, which would basically be like my CPU architecture book ("Inside the Machine"), but for this topic. (I'm spending all my spare mental bandwidth right now on understanding this tech, mostly so I can think through shorting this space eventually, but I'm not convinced it's worth my time to try to explain it to the general public... a kickstarter would help me price that. I dunno though, I've never even backed anything on kickstarter so I'd have to spend a bunch of time figuring out how to set up a successful campaign, first.) But to sum up, people I've talked to in this space think the ICO thing is a frothy mess, but it's also set to get worse as the general public gets more opportunities to buy in. A lot of these ICOs are built on top of ETH, and the path to USD liquidity is through ETH, so despite the platform's issues it seems likely that ETH is going to get much of the benefit of this bubble (and much of the negative impact when the bubble pops). I'm keeping an eye on the upcoming ETH exchange-traded trust, and I think there will be an ETH ETF that will eventually launch and get bid up.
- nradov 9y ago
  Why do you need a Kickstarter campaign? Most authors just go ahead and write.
  - jonstokes 9y ago
    It's not clear to me from this reply that you know very much about authors, advances, and the like. Maybe I'm wrong. Anyway, writing a book is an actual job for some people, and not a hobby, a passion project, a speculative endeavor, a side gig, or a way to boost your leverage in compensation negotiations with potential employers. Seeing as how it's an actual job that entails a bunch of really hard work that I don't have to do and, frankly, don't particularly enjoy more than N number of other things I'm doing right now and that I'm good at, I'm not interested in doing it unless it can replace some subset of the paid work I'm currently doing that I enjoy (and learn from).
fny 9y ago
So how exactly does one change these currencies to fiat? Is it even possible or are you trapped with the currency until some type of exit event?
- lrvick 9y ago
  That is what exchanges offer for a fee.
sktrdie 9y ago
Rather than thinking about the businesses that currently are trying to get rich by doing ICOs, I'd like to point out that the idea of creating tokens out of thin-air, and having them obtain value purely by speculation, is an interesting system we should ponder more about. We're now capable, thanks to these consensus systems, of creating tokens that have certain properties. For instance Bitcoin is a specific kind of token which is scarce - hence will work more like gold. Other tokens (perhaps Ether or Dogecoin) instead are not scarce at all, and new tokens continue entering the system all the time. What's interesting about these systems is that we're converting money from the "real world" into this "speculation world". And purely because of speculation, real money is essentially being converted into this digital world. In a very abstract way, we're essentially converting FIAT real-world money into these digital tokens that are hackable and can take on a myriad of different attributes. To me this smells like the future - even though we're still far from it. Capitalism and the banking system we have created for ourselves is certainly not going to cope with the technological automations and the sheer amounts of jobs we're going to lose (hence automate) quickly. Universal basic income is only part of the solution - but something like a world of tokens that behave in very different ways might be part of the solution as well. Even though we might not see the possibilities nowadays, to me it's very exciting to see how something can gain value simply because of speculation. Perhaps in the future we'll have to redefine even what "money" is, or what "valuable" means. Again, if we're thinking about fully-automated societies, perhaps the idea of having a scarce token that only banks can create (our FIAT system) is not ideal. Perhaps the future is any kid creating his own token with some funky properties for his own videogame, and living off the "likes" he gets on some social network.
- JumpCrisscross 9y ago
  > creating tokens out of thin-air, and having them obtain value purely by speculation, is an interesting system we should ponder more about There's a rich history of this in the securities world. Note that many times across multiple countries, joint-stock companies' stock ended up becoming interchangeable with government- or metal-backed currency. John Law's currency scheme for France was a sale of stock and bills, not modern cash [1]. [1] https://en.wikipedia.org/wiki/John_Law_(economist) https://en.wikipedia.org/wiki/John_Law_(economist)
jcousins 9y ago
I've been investing in this space since 2012. "Investing" in the loosest sense of the term, because I was simply looking for ways to grow my bitcoin stash. It started out as a naive attempt at diversification. In reality, I had no clue what I was doing, lost a lot of bitcoin to scam investments, made some bitcoin on fruitful investments. I became diligent and conservative with my bitcoin over time and ethereum happened to be one of the investments I made in 2014. I look at my ethereum presale investment as dumb luck. Long before the term ICO was coined (no pun intended), there were multiple markets for bitcoin securities dating back to 2012 - possibly earlier. I am referring to business ventures here, not clones of the bitcoin repo with a modified PoW mechanism or similar. There were many scams for every one legitimate venture. Many legitimate ventures eventually mutated into scams. Investors that started out as bitcoin maximalists were often crying to the SEC for help getting their bitcoin back. Some of those ventures run to this day. The market was chump change back then. Tens of millions maybe. With ERC20 and ICO mania, we have front row seats for failure on a grand scale. The exuberance is terrifying to me given what I experienced years ago with bitcoin securities. For that reason I stopped making investments in May and started doing some real diversification. For many investors, ICOs will be their first taste of "a fool and his money are soon parted." For many projects who have conducted an offering, ICOs will be their first taste of what it's like when the SEC come knockin'. I'm quite sure there will be some success stories a few years down the line, but they will be accompanied by a plethora of scams and all the media attention that comes with bad news. I think this form of funding is a vague peek into the future of project funding. Ethereum is not necessarily the specific answer, and the ICO framework will have to burn to the ground a few times before it evolves into something useful.
fny 9y ago
Look at this gem of an ICO: https://humaniq.co/ https://humaniq.co/ WARNING: This site has been identified to potentially trigger vomiting for people with morals. Viewer discretion is advised.
- vibrolax 9y ago
  I was most impressed by the "cartoon" illustrations of the board, advisors, team, etc.
  - hellbanner 9y ago
    I noticed the same thing.. I would expect a financial company to have clear photographs, bios
- mtremsal 9y ago
  So target users are "unbanked and have no identification papers", but what exactly is the product? What problem is humaniq solving? Why are people funding their ICO? I'm not being facetious; I just had a hard time getting answers from the website.
blhack 9y ago
I can't believe there is no mention of tezos here (https://www.tezos.com/ https://www.tezos.com/). Which currently has raised $123,317,760.00 in bitcoins and $68,709,765.86 in ethereum. Almost $200,000,000 raised for something that doesn't even exist yet, all so that the founders can create it. It's basically $200,000,000 into a kickstarter. What the absolute frell is going on there I have no idea.
- api 9y ago
  > What the absolute frell is going on there I have no idea. Money laundering? Flight capital? Under the table payments for services rendered in some other area? I have no insider knowledge. It's just a speculation. But if even 10% of this actually exists in some liquid sense this is serious money. The number of participants in these markets is far lower than Kickstarter and yet the money in question here is massive. I've read a few of these ICO white papers. They are largely jokes, total buzzword salad with little in the way of novel developments. There are a few ICOs that might actually be worthwhile experiments but the majority are ridiculous. "If something makes no sense from a business perspective, maybe it makes sense in some other way." I've heard that saying from multiple sources. Apparently it's a saying in the investigative world. It is said of perpetually money-losing yet eternally floated businesses, businesses that don't actually do anything yet seem to be moving a lot of money around for services rendered, and absurd-looking "investments" that raise money from weird sources. Chinese or Russian flight capital is one very good possibility. There are a lot of very rich and often corrupt people who want to get money out of those countries without tipping off authorities and skirting currency controls and (in Russia's case) embargoes. One way of moving money illicitly is to basically execute a pump-and-dump or Ponzi scheme against yourself. The losing side is the sender, the winning side is the receiver. You lose some in the transfer but that's cost of doing business. Vancouver recently enacted a foreign property speculation tax to curtail its ridiculous flight-capital-driven property bubble. There are rumblings of similar measures elsewhere. Perhaps other avenues for flight capital are being experimented with. There are hundreds of billions of dollars waiting to be expatriated from these countries. Someone is always paying attention, especially when this kind of money flies around. I again have no inside knowledge but I can nevertheless say with 100% certainty that intelligence agencies and police agencies are watching. In any case stay away. Stay far away from scams. A lot of people get deluded into thinking they can skim from these, but if you aren't an insider and don't know the timing you'll get fleeced. Edit: I've long heard the rumor that some obscenely big ticket sales of crummy WTF "art" are money laundering. "If something makes no sense..."
CalChris 9y ago
While I think they're incredibly clever, I'm distrustful of cryptocurrencies and ethereum. So I'm putting ICOs into that basket as well. Still, they always garner a lot of attention, probably for their cleverness. On the other hand, I'm very interested in Hyperledger (IBM Blockchain) [1] which gets scant attention here. Indeed this thread already has more comments than all of the Hyperledger threads combined. Hyperledger is strongly influenced by ethereum and bitcoin. But instead of being slow (10 minute transactions), expensive (you're bidding for miners time), and anonymous (anonymous), Hyperledger is fast, cheap and identified. And apparently boring. [1] https://www.hyperledger.org/ https://www.hyperledger.org/
- hudon 9y ago
  You've got the right idea. Hyperledger and R3's Corda [1] are where it's at for distributed ledgers (fast and cheap, as you say). Blockchains add censorship resistance and that's their primary feature, not a weakness as you state. You can put in ledger entries and know that no one will arrest/kill you for it, and because anyone in theory can be a transaction validator, all ledger entries get validated. This means the tech is not useless but it's a whole different market. Hyperledger and Corda are to make the existing financial networks more efficient. The blockchain is a new financial network for censorship resistant transactions (think activism, capital flight, buying drugs, scamming people, political donations, etc.). [1] https://www.corda.net https://www.corda.net
ereyes01 9y ago
Much has been said about risks to investors buying into ICOs. What about risks to startups selling ICOs? Should every startup be fundraising via ICOs right now or risk missing the gravy train?
- ac29 9y ago
  Any startup with competent legal counsel, accountants, etc, would certainly be advised to stay far, far away.
- richardknop 9y ago
  If you take a look at startups raising money with ICOs, they are usually based in some sort of exotic country in Asia or something like Gibraltar. I think there are couple of reasons for this. 1) Tax avoidance 2) "Safe" jurisdictions (so they don't have to worry about any repercussions in case they just run away with the money)
jayeshsalvi 9y ago
If cryptocoins are equivalent to shares in the company, what is the equivalent of dividends?
nateberkopec 9y ago
The fact that this is on "fxempire.com" is really all you need to know, isn't it? FX trading and daytrading are two forms of legalized gambling for the upper class, so it makes sense that the same crowd will be interested in cryptocurrency. Such people are generally aware they are speculators and participating in a high-risk activity, so, fine. But what I worry about is the "dumb money" that follows. I saw Twitter ads for a "Bitcoin IRA" today. If you're putting your retirement savings in Bitcoin...
claudiulodro 9y ago
All the people crying "Scam!", I have a question for you: How is this fundamentally different than pre-orders? It seems to me like these ICOs are selling future access to some software that hasn't been built yet. Game companies sell pre-orders to the public all the time to finance the development of the software. (I don't have any money in cryptocurrencies, but the ICO seems like a good way to fund a seed round for certain types of software, as far as I can tell)
- stanleydrew 9y ago
  This is a reasonable question. I'm not an expert by any means, but the difference appears to be that with a pre-order, you have some right to own something in the future, and an expectation of delivery. If delivery is not received, you might expect a refund. When you buy a new coin you get the right to use that coin in some future micro-economy. What rights and expectations go along with that purchase? What if the micro-economy doesn't value the coin the way you originally thought? What if it never materializes? Both pre-orders and ICOs can be scams. The difference with ICOs appears to be an added layer of misdirection that could perhaps enable more successful scams.
- TylerE 9y ago
  The vast majority have no existing implementation of what they claim to do, if they even STATE what they aim to do. It's like pre-ordering a game where they don't tell you the genre, won't tell you what platforms it runs on, and don't have any concept art drawn. Oh, and the fine print says they make no promises to actually make a game, and if they do, they don't have to give you a copy.
dreamdu5t 9y ago
From these comments it looks like HN is now behind the times. HN crowd seems totally ignorant of crypto space, economics, and where it's going
notadoc 9y ago
Surely this is a sort of top indicator. I was at a social event recently and some remarkably non-technical people were talking about bitcoin. It reminded me an awful lot of the wall street adage about the shoeshiner/waiter/driver talking stocks...
- vocatus_gate 9y ago
  Friend of mine is a model in NYC. She PM'd me last week asking about putting money into Ethereum. Now she's not stupid by any means, but she's pretty far from the demographic typically associated with cryptocurrencies. Was kind of eye-opening to me about how far the hype is reaching right now.
Kiro 9y ago
How are these token actually used after purchase? For example BATs. How are they tied to Brave, technically speaking?
swrobel 9y ago
"though even rating agencies have been known to get it wrong from time to time." Lol! Financial crisis, anyone?
- colordrops 9y ago
  And it wasn't that they got it wrong - they chose to rate bad securities as AAA to their and their cohorts benefit.
deleted 9y ago
[deleted]
caretStick 9y ago
It's a scam usually. When something breaks people's understanding of the world, a lot of imagination creeps in, followed by loads and loads of snake oil, even sincere snake oil, which is just mistakes.
Animats 9y ago
Mastercoin, mentioned in the article, is now down to 85th place on Coin Market Cap. Despite all this smart contract stuff, few of these "ICO coins" give the holders any authority over anything. It's not like 51% of the coin holders can fire management. Ethereum now has half the market cap of Bitcoin, despite the total failure of the DAO, the one big application of the smart contract technology. See "Use Cases Of Ethereum In Different Sectors 2016".[1] It's been six months; what's actually working? * Branche.io - payday loans. Got as far as the initial token offering 6 months ago. Then, nothing. Did they take the money and run? * Iconomi.net - "digital asset management platform" - site says "Coming in 2017". * Augur.net - prediction/gambling platform. Not yet operating for real, but there's a play-money beta. * RexMLS.com - distributed real estate listing service. Was supposed to have test listings live in April 2017. Didn't happen. * truststamp.net - distributed identity system to detect fake social accounts. "Connect your Social Networks. The more accounts you connect, the higher your potential Trust Score! Your account information is not stored and your privacy is protected." Not working yet. If it did work, spammers could defeat it by creating interlinked fake accounts on Twitter, Facebook, etc., which some already do. * chainy.info - store misc. info such as URL shortening bindings on the Etherium blockchain. This seems to work, but isn't used much. If it caught on like tinyurl, the Ethereum blockchain would choke on the traffic. * uport.me - "self sovereign identity". Still at "sign up for alpha". * dynamisapp.com - supplementary unemployment insurance that checks LinkedIn to see if you're employed. Not working. Last blog update January 2016. * ico.inchain.io - insurance against cyber hacks. Site not responding. * ujomusic.com - some kind of music platform. Not working yet. * peertracks.com - distributed music royalty system. Not working yet. * singulardtv.com - distributed video payment system. 5000 Twitter followers! Not working yet. * beyond-the-void.net - game with Ethereum contracts for in-game currency. Beta version downloadable. At least it's running. * firstblood.io - e-sports where you can put up money on your play. Alpha available, no beta yet. * etherplay.io - "Play games and win tokens" - "Coming Soon". * akasha.world - distributed social network. There's a downloadable alpha. * vdice.io - online gambling. Like Satoshi Dice, but for Etherium. "Coming soon". * slock.it - the guys with the DAO and the IoT door lock. That didn't end well. * electricchain.org - buy and sell solar power over the Ethereum block chain. Lots of PR. May actually be working on a tiny scale. * lo3energy.com - another energy trading system. Lots of PR, no operating installations. So that's what people are actually doing with Ethereum. Not all that much. Even the online gambling startups aren't fully operational. [1] https://www.ethnews.com/use-cases-of-ethereum-in-different-sectors-2016 https://www.ethnews.com/use-cases-of-ethereum-in-different-s...

FTA: ICOs conclude once the coins or tokens are tradable in the open market. This is a part that has eluded me thus far: how are the new coins tradable on the open market? I'm genuinely asking - most exchanges don't support all crypto coins, and certainly not the dozens of new ones being created. How does one invest in an ICO and then 'cash out'? I see the ROI stats on some of these ICOs but I'm curious as to if those investors are basically sitting on that ROI hoping it doesn't evaporate before they can sell. Can anyone provide insight here?

jhildings 9y ago
You can trade most pairs at EtherDelta which is a decentralised exchange on the blockchain https://etherdelta.github.io/ https://etherdelta.github.io/
ksahin 9y ago
Almost all these ICOs are made on the Ethereum blockchain, there is a standard that almost all ICOs uses which is called ERC20 : https://theethereum.wiki/w/index.php/ERC20_Token_Standard https://theethereum.wiki/w/index.php/ERC20_Token_Standard Exchanges knows how to deal with ERC20 tokens so sometimes theses token hits the exchanges 5mn after the ICO is over (exchange like liqui.io or Bittrex). So no people are not sitting on their ROI since there is liquidity for these tokens
- erikb 9y ago
  The meta-coin basically. You have to admit this is a very well designed scheme.
bitxbitxbitcoin 9y ago
The open market in crypto is very, very open. As others have pointed out there are centralized and decentralized solutions for trading a lot of these things.

sillysaurus3 9y ago

"Step 1: Tell literally everybody in the world about an initial coin offering."

fiatjaf 9y ago

In the past history of ICOs, did anyone gain from participating in the ICO more than they could have gained by buying the coin later in an exchange?

sirpauldenino 9y ago
https://icostats.com/roi-since-ico https://icostats.com/roi-since-ico
- ksahin 9y ago
  To complete the link, there is a story behind each ICO, some ICOs were "disasters", i.e there was a hidden cap (a maximum amount where the ICO stops) and people flooded the blockchain with high fees transactions and only some "whales" did particpate. For example, this happened with Basic Attention Token (150 people only did the ICO if I remember correctly), but also with Status, Bancor etc. So when you have 10 000+ people trying to buy a token, and only a few hundreds achieve to buy it because the network does not scale yet and a bunch of people with a lot of money can afford 1000$+ transaction fees, these tokens skyrocket once they hits exchanges.
- ggambetta 9y ago
  What a fun UI! If you click the > arrow, you go from page 1/2 to page 2/2 to... page 0/2. From there you can click the < arrow to go to negative pages.
Subcide 9y ago
Yes, though usually not by just holding. ICOs with small caps often list on exchanges at a decent % profit in the first few days, while the people that missed out on the ICO buy in. The link the other user posted obviously doesn't take this into account, and only tracks holding the token indefinitely. In all likelihood, a LOT of people profited on the ICOs that ICOStats lists as negative right now.
- beager 9y ago
  This sounds like the same dynamic that institutional investors use on IPOs, where only privileged players get to buy in the IPO, and they sell through a pop fueled by hype or an underestimated target. Shares hit the general public and by the time you've got a few quarterly calls in, the true value is set and the long road begins, while the institutionals and earlier investors have already cashed out some good gains. If democratizing access to ownership offerings for the purpose of quick sell off is the major benefit of ICOs, what does this do for serious businesses? Why would they choose an inherently less stable and less secure (cf. DAO hack on Ethereum) medium if it primarily benefits the investors and not the company? Beyond that, it remains to be seen what IRL innovations can be enabled by ICO, whether more easily or necessarily vis a vis traditional fundraising vehicles.

lawless123 9y ago

Initial scam offering.

nikolay 9y ago
I thought that the number of idiots and greedy people in tech is in limited supply, but it looks like I was wrong by orders of magnitude!
erikb 9y ago
This is so common, they even have their own file format, and you can mount them like good old CDs.

paulgb 9y ago

> An IPO is a onetime sale with multiple intermediaries involved in the process of determining the conditions, pricing, etc., whilst ICOs can have multiple rounds of fund raising [...] The rounds aren't really "initial" after the first one though, are they.

deepvibrations 9y ago
Token Distribution might be a better way to phrase it. At least this is how Eos named their fund raising- it takes place over 341 days, launched a few days ago and has already raised over $600M...Crazy times! Anyone investing should be careful, as there are a lot of scams out there.

nikolay 9y ago

I'm tired of these scams. Worst of all, tech guys are getting involved. We are like chemists going into drug manufacturing or physicists making A-bombs! But, of course, this is not much different than the plethora of iFart apps or brainless startups that steal money from investors, essentially, and then they crash like there's no tomorrow. At some point, HN didn't pay much attention to these, but recently there's a new wave of the crapto attack, and this no longer is my oasis from the world's bullshit that's echoed pretty much everywhere.

nameisu 9y ago
nicely put
brianshaler 9y ago
I'm with you, but it's not necessarily new. HN has always been a blend of STEM and money/hustle.

philfrasty 9y ago

ICO fan to hater: „Cash me outside howbow dah“

fowlerpower 9y ago

A lot of people are calling these things Scams. People arent wrong and to a certain degree they do attract the "quick buck" type to them. Keep in mind though that these are also very useful for companies to get the Digitial Currency and block chain into the hands of the masses without some of this money, which large parts of that may be burned, will yield some killer apps. The people doing an ICO do it to raise a bunch of money, much like a kick starter campaign. The people buying an ICO buy it for a quick buck and a lot of times they end up selling these coins from the ICO for 10x, see BATs. The allure for people starting a company is that you can raise millions and give 0% of your company away. Some people will scam, it's true maybe a lot will, but some will undoubtedly start something big and will want to do more than just scam.

richardknop 9y ago
Call me when a single of these projects that raise a ton of money from ICOs actually delivers and becomes a success. So far we have seen a lot of no strings attached cash given away to people with just an idea who would never raise money from real investors. I think it's a ponzi scheme. As far as people selling ICO tokens for 10x price, only a small number of people can logically do that and it relies on influx of new buyers. Usually after listing of your token on exchange you get a fresh infusion of speculators and gamblers which allows the earliest investors to cash out but most people end up losing money.
- creeble 9y ago
  Technically, I don't think you can call it a Ponzi scheme unless you're paying existing ICO owners with new, incoming ICO buyers' money. Coins sort of prevent that? I think it's technically just fraud: they take your money, convert it into worthless acorns, then when nothing happens, the acorns can't be traded for any value.
  - richardknop 9y ago
    Yes, perhaps. I think most people who "invest" in ICOs follow this logic: 1) Get into the ICO race and be quicker than others so you get tokens. There is always massive demand to participate in ICOs so most people aren't quick enough to get their transactions in. 2) Wait until the new worthless token is listed on some speculative exchange which allows trading of these tokens (Poloniex). In the meantime hype the token on social media like Reddit to increase FOMO. Once it's listed those people that didn't get into ICO will rush in to buy tokens as they anticipate the price to go up by 10x. 3) The ICO investors cash out their coins from this initial spike of new money rushing in after listing on exchange. 4) Rinse and repeat.

ponzICO 9y ago

Initial Coin Offering - the 'i' in 'Coin' is completely optional the best summary I've read so far is this, you don't need to know more https://www.reddit.com/r/Buttcoin/comments/67b420/investors_of_the_future_put_a_300m_valuation_on_a/dgplw9m/ https://www.reddit.com/r/Buttcoin/comments/67b420/investors_...

wyldfire 9y ago

Previously, we had a filter screening new altcoins (expletive deleted) in that you had to know enough about bitcoin to at least fork the repo, build it and make some modest changes to create a new namespace. We could see whether those coins are worth anything by looking to see if there was a novel PoW or other network changes, premine, etc. Now, Counterparty and much moreso Ethereum have created an opportunity for anyone to mostly click through to a new asset/token and make claims about some abstract business idea. FOMO drives folks to invest in the pump-n-dump of the day. Very few of these have any real claim of value. Please, tell your friends not to invest in these ludicrous scams.

richardknop 9y ago
Exactly my thoughts. This is pure gambling. Lots of people will end up losing money while a small amount of people will make millions from these scams.
- sillysaurus3 9y ago
  True, though it's probably best to go further: Any money into any cyptocoin is pure gambling. Don't put any money in you can't afford to lose. If anyone is saying the word "investment" while talking about a cryptocoin, smile and nod while slowly receding in the other direction. As a gambling vehicle, cryptocoins are one of the finest ever created. But people should at least admit to themselves that it's not investing. That's a little bit of a No True Scotsman, but there's a grain of truth to it. Yes, abstractly cryptocoins are going to create a lot of value for the world. But that value is abstract, at least for now. It's different from the sort of value that a startup creates: at least a startup is trying to affect the world in a tangible way that can usually be explained in a couple of sentences. EDIT: I think it's possible to invest in cryptocoin, but you have to be willing to put money in and then not touch the coins for years. What bugs me about ICOs is that it's pandering solely to a get-rich-quick mindset. That's nearly the definition of any "initial X offering."
  - leovailati 9y ago
    > It's different from the sort of value that a startup creates: at least a startup is trying to affect the world in a tangible way that can usually be explained in a couple of sentences. I agree that it is different. Arguably, though, if Bitcoin gains enough traction, it would affect the world too.

jcoffland 9y ago

Usually this kind of blatant negativity would be down voted to oblivion but for some reason HN has a special place in it's heart for crypyocurrency haters.

sctb 9y ago
We detached this subthread from https://news.ycombinator.com/item?id=14688593 https://news.ycombinator.com/item?id=14688593 and marked it off-topic.
Anderkent 9y ago
Nope, HN can just see when a 'crowdfunding' system is designed to support scammers. For fucks sake, even kickstarter etc is full of scams that never deliver - and they work within a legal system, with clear lines of identity and responsibility, and build things that are much easier to understand ahead of the time. It's obvious that the ICO buyers are half clueless people who can't evaluate the risks, and half folks exploiting the former by buying early and trying to flip the tokens once the market opens up. Sure, there's certainly some teams that are trying to build legit things with ICOs. But when you have two funding systems, where one is completely open, and the other requires certain guarantees (identity, legal responsibility), the first is always going to be full of scammers.
- ckastner 9y ago
  > But when you have two funding systems, where one is completely open, and the other requires certain guarantees (identity, legal responsibility), the first is always going to be full of scammers. Exactly. It always cracks me up when people tout the completely deregulated nature of cryptocurrencies as a good thing.
  - drdeca 9y ago
    > It always cracks me up when people tout the completely deregulated nature of cryptocurrencies as a good thing. Well, I'll acknowledge that there are real downsides, but I think it might be feasible to (over time) build opt-in layers on top of the existing layers which serve some of the same purposes as some regulations and handle some of those issues. States are good and important and all, but if we can build something that makes some of the roles of the state unnecessary/redundant, that would be cool I think. I don't know, maybe this is largely an aesthetic preference?

deleted 9y ago

[deleted]

pishpash 9y ago

The name itself is a bit scammy.

erikb 9y ago

> So, is this the new revolution in fund raising or another pyramid that is soon to explode? Everything is a pyramid. The question is just for how long it lasts. I mean there was a pyramid called monarchy that ruled the planet for a few centuries. There's capitalism which will be replaced by something else, maybe 20 years, maybe 500 years from now. Instead of worrying about the pyramid-ness of something it's much smarter to decide whether or not it is currently under- or overvalued and what the trend will be. And here starts my opinion: I think crypto coins are currently way overvalued. They exist for longer now than most people spend in university. And yet a real market value hasn't been established yet. The one possible true market value, micro transactions, seems to have been overcome by simple small step technological evolution. It was a huge thing around 2010 that nobody could do, but now it's common to pay sub-dollar prices on all kinds of things online. Also opinion: The reason why people are willing to spend so much money on ICOs is that they hope the bitcoin dream will repeat itself. And as is often the case: if the dream is strong enough, it seems to get fulfilled, because so many people pour their money and energy into this hope. But I don't see what there is besides the hope. Many people will be disappointed when they find out there wasn't much besides their own self-illusions.

dave_sullivan 9y ago
> a real market value hasn't been established yet. The one possible true market value, micro transactions, seems to have been overcome by simple small step technological evolution. A real market value, in the sense that "something is worth what someone will pay for it", has been established. There's just a lot of people scratching their heads about it. What's the real market value of diamonds? Or gold? In the apocalypse, you can't do anything with either, but I think you'd have a hard time making the case that there's no "true market value" to these goods, even if you find their utility dubious.
- erikb 9y ago
  Yes, diamonds are such a pyramid that is kept alive by pure market controlling efforts like monopoly and advertisment, just like crypto coins. Gold however has some market value by being impossible to artificially create, by being limited, by being hard to come by and by being hard to transport, all combined in one item. Yes, you concluded correctly that I see a strong relationship between market value and utility. I'm not sure if market value is the correct word for it, though. English is not my native tongue. There are two values a product has. One is trade value, the other is what you call utility. I believe the trade value of crypto coins exceeds their utility a lot. And I believe they have nearly no utility at all, because otherwise it would have shown by now what the utility is. I also believe it's totally possible that trade value can be kept high without utility for a long time, thus "people are willing to pay a big price for it for a few years" is not a proof of utility to me.

idibidiart 9y ago

Every new technology is feared at first. I have $0 in Bitcoin or any other cryptocurrency and I was there in 2009 when Satoshi was marketing Bitcoin to those of us at the P2P Foundation. I have to say ICOs may be the killer application for a semi-perfect medium of speculation like Bitcoin.

BurningFrog 9y ago

So I read half the article and still don't feel like I know what an ICO is. Only the 101 ways it's different from an IPO... I understand that I could create a FrogCoin by cloning Bitcoin or Ethereum. And then I sell investors... what exactly? Individual coins? Are coins not mined in this scenario? Would FrogCoin be tied to some real world asset that makes them inherently valuable and/or practical? Or are ICOs just gambles that maybe FrogCoin will be the winning currency? It can't be that stupid? Right?

ksahin 9y ago
Several years ago, ICOs were a way to crowdfund and distribute a new crypto currency. With your example you would sell "pre-mined" FrogCoin and there wouldn't be any real world asset that make them valuable, only speculation. Today, most of the ICOs are made on the Ethereum blockchain, it's a way to crowdfund distributed/decentralized application and protocol. It's not about currencies anymore. The tokens that are sold are "API keys" that will be needed to use the protocol / application. Lots of things are good candidate to decentralisation : VPN, cloud computing, cloud storage, social media plateform, Quora, Reddit, HN, any service that make the bridge between users and take a HUGE commission : Uber, Airbnb ... I don't know if any of these decentralized application will ever succeed but the business model / crowdunding model is evolving and in some area, like open source projects it makes lot of sense to create / use decentralized services.
- skewart 9y ago
  So, from the token buyer's perspective, how is it different from a company that pre-sold a bunch of regular old API keys without any connection to any cryptocurrency or blockchain? I get the trustlessness of 'smart contracts', but with tokens-as-API-keys I still have to trust that your company's products will work and that those API keys will continue to work. Or, is the idea that the code my API key gives me access to is also defined and executed on the blockchain? That would reduce the trust I would need to have in the company pre-selling the API keys. At the same time, buying access to immutable code where functionality can't be enhanced and bugs can't be fixed is kind of lame too.

skywhopper 9y ago

A: It's a scam, and it works by scamming people. The text as written on this site describes a conspiracy to commit tax and securities fraud. I have no idea if it will ever be prosecuted as such, but that is what is being proffered here. The subtext is that a bunch of finance quants read Cryptonomicon and think the blockchain is the answer to their dream of becoming the gangster bosses of the anarcho-capitalist hellscape from Snow Crash.

hudon 9y ago
I'm curious to know if you erased all of modern civilization (governments, laws, et. all) and replaced it with decentralized apps and a blockchain-based currency, would it work? I read Snow Crash and I can see how fascinating the concepts are to libertarian technocrats, but I would like to see a rebuttal to it. I know the transition to this model seems impossible and this is what most people in the blockchain-space blissfully ignore. > The subtext is that a bunch of finance quants read Cryptonomicon and think the blockchain is the answer to their dream of becoming the gangster bosses of the anarcho-capitalist hellscape from Snow Crash. This made my day, it's a shame it's too long to tweet
- api 9y ago
  It would be gamed. Real resistance to gaming requires continuous adaptation. Google "red Queen's race." All closed form systems would fall.
programmarchy 9y ago
There's good arguments for the IMF and Federal Reserve being scams, too. [1] I'd rather live in Snow Crash than Brave New World. [1] https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

princetontiger 9y ago

How would someone convert crypto currency to real cash? is it even possible?

paulgb 9y ago
As long as someone who has cash wants the crypto currency, you can trade with them.
vocatus_gate 9y ago
There are a multitude of websites. One of the most well-known and reputable US-based sites is coinbase.com

jonstokes 9y ago

I think the cryptocurrency story is real, just like the internet story was real in 1999, but these ICOs show that the market is getting way ahead of the tech, regulations, business models, etc. I have a longer rant about it, here: https://twitter.com/jonst0kes/status/880806655067291649 https://twitter.com/jonst0kes/status/880806655067291649 (Sadly, twitter's threading model is now so broken that you have to do lots of clicking to get to the good back-and-forth dialogue in there.) Anyway, I'm sort of toying with the idea of doing a kickstarter for a big explainer book on blockchain, cryptocurrencies, and DLT in general, which would basically be like my CPU architecture book ("Inside the Machine"), but for this topic. (I'm spending all my spare mental bandwidth right now on understanding this tech, mostly so I can think through shorting this space eventually, but I'm not convinced it's worth my time to try to explain it to the general public... a kickstarter would help me price that. I dunno though, I've never even backed anything on kickstarter so I'd have to spend a bunch of time figuring out how to set up a successful campaign, first.) But to sum up, people I've talked to in this space think the ICO thing is a frothy mess, but it's also set to get worse as the general public gets more opportunities to buy in. A lot of these ICOs are built on top of ETH, and the path to USD liquidity is through ETH, so despite the platform's issues it seems likely that ETH is going to get much of the benefit of this bubble (and much of the negative impact when the bubble pops). I'm keeping an eye on the upcoming ETH exchange-traded trust, and I think there will be an ETH ETF that will eventually launch and get bid up.

nradov 9y ago
Why do you need a Kickstarter campaign? Most authors just go ahead and write.
- jonstokes 9y ago
  It's not clear to me from this reply that you know very much about authors, advances, and the like. Maybe I'm wrong. Anyway, writing a book is an actual job for some people, and not a hobby, a passion project, a speculative endeavor, a side gig, or a way to boost your leverage in compensation negotiations with potential employers. Seeing as how it's an actual job that entails a bunch of really hard work that I don't have to do and, frankly, don't particularly enjoy more than N number of other things I'm doing right now and that I'm good at, I'm not interested in doing it unless it can replace some subset of the paid work I'm currently doing that I enjoy (and learn from).

fny 9y ago

So how exactly does one change these currencies to fiat? Is it even possible or are you trapped with the currency until some type of exit event?

lrvick 9y ago
That is what exchanges offer for a fee.

sktrdie 9y ago

Rather than thinking about the businesses that currently are trying to get rich by doing ICOs, I'd like to point out that the idea of creating tokens out of thin-air, and having them obtain value purely by speculation, is an interesting system we should ponder more about. We're now capable, thanks to these consensus systems, of creating tokens that have certain properties. For instance Bitcoin is a specific kind of token which is scarce - hence will work more like gold. Other tokens (perhaps Ether or Dogecoin) instead are not scarce at all, and new tokens continue entering the system all the time. What's interesting about these systems is that we're converting money from the "real world" into this "speculation world". And purely because of speculation, real money is essentially being converted into this digital world. In a very abstract way, we're essentially converting FIAT real-world money into these digital tokens that are hackable and can take on a myriad of different attributes. To me this smells like the future - even though we're still far from it. Capitalism and the banking system we have created for ourselves is certainly not going to cope with the technological automations and the sheer amounts of jobs we're going to lose (hence automate) quickly. Universal basic income is only part of the solution - but something like a world of tokens that behave in very different ways might be part of the solution as well. Even though we might not see the possibilities nowadays, to me it's very exciting to see how something can gain value simply because of speculation. Perhaps in the future we'll have to redefine even what "money" is, or what "valuable" means. Again, if we're thinking about fully-automated societies, perhaps the idea of having a scarce token that only banks can create (our FIAT system) is not ideal. Perhaps the future is any kid creating his own token with some funky properties for his own videogame, and living off the "likes" he gets on some social network.

JumpCrisscross 9y ago
> creating tokens out of thin-air, and having them obtain value purely by speculation, is an interesting system we should ponder more about There's a rich history of this in the securities world. Note that many times across multiple countries, joint-stock companies' stock ended up becoming interchangeable with government- or metal-backed currency. John Law's currency scheme for France was a sale of stock and bills, not modern cash [1]. [1] https://en.wikipedia.org/wiki/John_Law_(economist) https://en.wikipedia.org/wiki/John_Law_(economist)

jcousins 9y ago

I've been investing in this space since 2012. "Investing" in the loosest sense of the term, because I was simply looking for ways to grow my bitcoin stash. It started out as a naive attempt at diversification. In reality, I had no clue what I was doing, lost a lot of bitcoin to scam investments, made some bitcoin on fruitful investments. I became diligent and conservative with my bitcoin over time and ethereum happened to be one of the investments I made in 2014. I look at my ethereum presale investment as dumb luck. Long before the term ICO was coined (no pun intended), there were multiple markets for bitcoin securities dating back to 2012 - possibly earlier. I am referring to business ventures here, not clones of the bitcoin repo with a modified PoW mechanism or similar. There were many scams for every one legitimate venture. Many legitimate ventures eventually mutated into scams. Investors that started out as bitcoin maximalists were often crying to the SEC for help getting their bitcoin back. Some of those ventures run to this day. The market was chump change back then. Tens of millions maybe. With ERC20 and ICO mania, we have front row seats for failure on a grand scale. The exuberance is terrifying to me given what I experienced years ago with bitcoin securities. For that reason I stopped making investments in May and started doing some real diversification. For many investors, ICOs will be their first taste of "a fool and his money are soon parted." For many projects who have conducted an offering, ICOs will be their first taste of what it's like when the SEC come knockin'. I'm quite sure there will be some success stories a few years down the line, but they will be accompanied by a plethora of scams and all the media attention that comes with bad news. I think this form of funding is a vague peek into the future of project funding. Ethereum is not necessarily the specific answer, and the ICO framework will have to burn to the ground a few times before it evolves into something useful.

fny 9y ago

Look at this gem of an ICO: https://humaniq.co/ https://humaniq.co/ WARNING: This site has been identified to potentially trigger vomiting for people with morals. Viewer discretion is advised.

vibrolax 9y ago
I was most impressed by the "cartoon" illustrations of the board, advisors, team, etc.
- hellbanner 9y ago
  I noticed the same thing.. I would expect a financial company to have clear photographs, bios
mtremsal 9y ago
So target users are "unbanked and have no identification papers", but what exactly is the product? What problem is humaniq solving? Why are people funding their ICO? I'm not being facetious; I just had a hard time getting answers from the website.

blhack 9y ago

I can't believe there is no mention of tezos here (https://www.tezos.com/ https://www.tezos.com/). Which currently has raised $123,317,760.00 in bitcoins and $68,709,765.86 in ethereum. Almost $200,000,000 raised for something that doesn't even exist yet, all so that the founders can create it. It's basically $200,000,000 into a kickstarter. What the absolute frell is going on there I have no idea.

api 9y ago
> What the absolute frell is going on there I have no idea. Money laundering? Flight capital? Under the table payments for services rendered in some other area? I have no insider knowledge. It's just a speculation. But if even 10% of this actually exists in some liquid sense this is serious money. The number of participants in these markets is far lower than Kickstarter and yet the money in question here is massive. I've read a few of these ICO white papers. They are largely jokes, total buzzword salad with little in the way of novel developments. There are a few ICOs that might actually be worthwhile experiments but the majority are ridiculous. "If something makes no sense from a business perspective, maybe it makes sense in some other way." I've heard that saying from multiple sources. Apparently it's a saying in the investigative world. It is said of perpetually money-losing yet eternally floated businesses, businesses that don't actually do anything yet seem to be moving a lot of money around for services rendered, and absurd-looking "investments" that raise money from weird sources. Chinese or Russian flight capital is one very good possibility. There are a lot of very rich and often corrupt people who want to get money out of those countries without tipping off authorities and skirting currency controls and (in Russia's case) embargoes. One way of moving money illicitly is to basically execute a pump-and-dump or Ponzi scheme against yourself. The losing side is the sender, the winning side is the receiver. You lose some in the transfer but that's cost of doing business. Vancouver recently enacted a foreign property speculation tax to curtail its ridiculous flight-capital-driven property bubble. There are rumblings of similar measures elsewhere. Perhaps other avenues for flight capital are being experimented with. There are hundreds of billions of dollars waiting to be expatriated from these countries. Someone is always paying attention, especially when this kind of money flies around. I again have no inside knowledge but I can nevertheless say with 100% certainty that intelligence agencies and police agencies are watching. In any case stay away. Stay far away from scams. A lot of people get deluded into thinking they can skim from these, but if you aren't an insider and don't know the timing you'll get fleeced. Edit: I've long heard the rumor that some obscenely big ticket sales of crummy WTF "art" are money laundering. "If something makes no sense..."

CalChris 9y ago

While I think they're incredibly clever, I'm distrustful of cryptocurrencies and ethereum. So I'm putting ICOs into that basket as well. Still, they always garner a lot of attention, probably for their cleverness. On the other hand, I'm very interested in Hyperledger (IBM Blockchain) [1] which gets scant attention here. Indeed this thread already has more comments than all of the Hyperledger threads combined. Hyperledger is strongly influenced by ethereum and bitcoin. But instead of being slow (10 minute transactions), expensive (you're bidding for miners time), and anonymous (anonymous), Hyperledger is fast, cheap and identified. And apparently boring. [1] https://www.hyperledger.org/ https://www.hyperledger.org/

hudon 9y ago
You've got the right idea. Hyperledger and R3's Corda [1] are where it's at for distributed ledgers (fast and cheap, as you say). Blockchains add censorship resistance and that's their primary feature, not a weakness as you state. You can put in ledger entries and know that no one will arrest/kill you for it, and because anyone in theory can be a transaction validator, all ledger entries get validated. This means the tech is not useless but it's a whole different market. Hyperledger and Corda are to make the existing financial networks more efficient. The blockchain is a new financial network for censorship resistant transactions (think activism, capital flight, buying drugs, scamming people, political donations, etc.). [1] https://www.corda.net https://www.corda.net

ereyes01 9y ago

Much has been said about risks to investors buying into ICOs. What about risks to startups selling ICOs? Should every startup be fundraising via ICOs right now or risk missing the gravy train?

ac29 9y ago
Any startup with competent legal counsel, accountants, etc, would certainly be advised to stay far, far away.
richardknop 9y ago
If you take a look at startups raising money with ICOs, they are usually based in some sort of exotic country in Asia or something like Gibraltar. I think there are couple of reasons for this. 1) Tax avoidance 2) "Safe" jurisdictions (so they don't have to worry about any repercussions in case they just run away with the money)

jayeshsalvi 9y ago

If cryptocoins are equivalent to shares in the company, what is the equivalent of dividends?

nateberkopec 9y ago

The fact that this is on "fxempire.com" is really all you need to know, isn't it? FX trading and daytrading are two forms of legalized gambling for the upper class, so it makes sense that the same crowd will be interested in cryptocurrency. Such people are generally aware they are speculators and participating in a high-risk activity, so, fine. But what I worry about is the "dumb money" that follows. I saw Twitter ads for a "Bitcoin IRA" today. If you're putting your retirement savings in Bitcoin...

claudiulodro 9y ago

All the people crying "Scam!", I have a question for you: How is this fundamentally different than pre-orders? It seems to me like these ICOs are selling future access to some software that hasn't been built yet. Game companies sell pre-orders to the public all the time to finance the development of the software. (I don't have any money in cryptocurrencies, but the ICO seems like a good way to fund a seed round for certain types of software, as far as I can tell)

stanleydrew 9y ago
This is a reasonable question. I'm not an expert by any means, but the difference appears to be that with a pre-order, you have some right to own something in the future, and an expectation of delivery. If delivery is not received, you might expect a refund. When you buy a new coin you get the right to use that coin in some future micro-economy. What rights and expectations go along with that purchase? What if the micro-economy doesn't value the coin the way you originally thought? What if it never materializes? Both pre-orders and ICOs can be scams. The difference with ICOs appears to be an added layer of misdirection that could perhaps enable more successful scams.
TylerE 9y ago
The vast majority have no existing implementation of what they claim to do, if they even STATE what they aim to do. It's like pre-ordering a game where they don't tell you the genre, won't tell you what platforms it runs on, and don't have any concept art drawn. Oh, and the fine print says they make no promises to actually make a game, and if they do, they don't have to give you a copy.

dreamdu5t 9y ago

From these comments it looks like HN is now behind the times. HN crowd seems totally ignorant of crypto space, economics, and where it's going

notadoc 9y ago

Surely this is a sort of top indicator. I was at a social event recently and some remarkably non-technical people were talking about bitcoin. It reminded me an awful lot of the wall street adage about the shoeshiner/waiter/driver talking stocks...

vocatus_gate 9y ago
Friend of mine is a model in NYC. She PM'd me last week asking about putting money into Ethereum. Now she's not stupid by any means, but she's pretty far from the demographic typically associated with cryptocurrencies. Was kind of eye-opening to me about how far the hype is reaching right now.

Kiro 9y ago

How are these token actually used after purchase? For example BATs. How are they tied to Brave, technically speaking?

swrobel 9y ago

"though even rating agencies have been known to get it wrong from time to time." Lol! Financial crisis, anyone?

colordrops 9y ago
And it wasn't that they got it wrong - they chose to rate bad securities as AAA to their and their cohorts benefit.

deleted 9y ago

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caretStick 9y ago

It's a scam usually. When something breaks people's understanding of the world, a lot of imagination creeps in, followed by loads and loads of snake oil, even sincere snake oil, which is just mistakes.

Animats 9y ago

Mastercoin, mentioned in the article, is now down to 85th place on Coin Market Cap. Despite all this smart contract stuff, few of these "ICO coins" give the holders any authority over anything. It's not like 51% of the coin holders can fire management. Ethereum now has half the market cap of Bitcoin, despite the total failure of the DAO, the one big application of the smart contract technology. See "Use Cases Of Ethereum In Different Sectors 2016".[1] It's been six months; what's actually working? * Branche.io - payday loans. Got as far as the initial token offering 6 months ago. Then, nothing. Did they take the money and run? * Iconomi.net - "digital asset management platform" - site says "Coming in 2017". * Augur.net - prediction/gambling platform. Not yet operating for real, but there's a play-money beta. * RexMLS.com - distributed real estate listing service. Was supposed to have test listings live in April 2017. Didn't happen. * truststamp.net - distributed identity system to detect fake social accounts. "Connect your Social Networks. The more accounts you connect, the higher your potential Trust Score! Your account information is not stored and your privacy is protected." Not working yet. If it did work, spammers could defeat it by creating interlinked fake accounts on Twitter, Facebook, etc., which some already do. * chainy.info - store misc. info such as URL shortening bindings on the Etherium blockchain. This seems to work, but isn't used much. If it caught on like tinyurl, the Ethereum blockchain would choke on the traffic. * uport.me - "self sovereign identity". Still at "sign up for alpha". * dynamisapp.com - supplementary unemployment insurance that checks LinkedIn to see if you're employed. Not working. Last blog update January 2016. * ico.inchain.io - insurance against cyber hacks. Site not responding. * ujomusic.com - some kind of music platform. Not working yet. * peertracks.com - distributed music royalty system. Not working yet. * singulardtv.com - distributed video payment system. 5000 Twitter followers! Not working yet. * beyond-the-void.net - game with Ethereum contracts for in-game currency. Beta version downloadable. At least it's running. * firstblood.io - e-sports where you can put up money on your play. Alpha available, no beta yet. * etherplay.io - "Play games and win tokens" - "Coming Soon". * akasha.world - distributed social network. There's a downloadable alpha. * vdice.io - online gambling. Like Satoshi Dice, but for Etherium. "Coming soon". * slock.it - the guys with the DAO and the IoT door lock. That didn't end well. * electricchain.org - buy and sell solar power over the Ethereum block chain. Lots of PR. May actually be working on a tiny scale. * lo3energy.com - another energy trading system. Lots of PR, no operating installations. So that's what people are actually doing with Ethereum. Not all that much. Even the online gambling startups aren't fully operational. [1] https://www.ethnews.com/use-cases-of-ethereum-in-different-sectors-2016 https://www.ethnews.com/use-cases-of-ethereum-in-different-s...