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Filecoin Suspends ICO After Raising $186M in One Hour

287 points by ianopolous 9y ago

Torai 9y ago
So much people with much money trying to find new ways to make money out of money. That says much about the current state of the economy.
- sschueller 9y ago
  And making the rich richer. No way to invest unless you have money or you are in the inner circle. Code has also not been released. So much for open source.
  - arethuza 9y ago
    If it makes you feel any better, I suspect that a lot of these schemes are going to make a lot of rich people that bit less rich...
    - koolba 9y ago
      And a few rich people a bit more rich. All depends which side of the coin you're on (pun intended).
      - arethuza 9y ago
        Well I propose "RobinHoodCoin" with an innovative "proof of no stake" approach!
        pmlnr 9y ago
        "RobinHoodCoin" - whatever is mined will get evenly distributed, incl. genesis.
        teekert 9y ago
        RobinHoodCoin will constantly leak money form large to small wallets
  - jondubois 9y ago
    Yep, only accredited investors could buy Filecoin at the ICO. The rest of us can still buy Siacoin which is similar. I don't think these VC-backed cryptocurrencies will win in the long term. It's the same principle as with stocks, cryptocurrencies are going to work in favour those who understand them the most; in this case, developers. The mission of cryptocurrencies is to take control away from finance people. Hobbyist developers are going to decide which cryptocurrencies deserve their precious development time. Cryptocurrencies are all about the tooling and infrastructure around them.
    - chii 9y ago
      > in this case, developers. i dont think developers are the ones who will profit - after all, developers are the ones who wrote the code for a lot of financial institutions, and none of them gain much more than just a salary.
      - jmknoll 9y ago
        At the same time though, 3 of the 5 largest companies in the US have CEOs with a background in software development/computer science. 5 years ago, 0 of 10 did. There's definitely a trend toward developers having more power.
        jamespo 9y ago
        That trend started further back than the last couple of years, as billg can confirm.
        chii 9y ago
        and yet, are those CEO's doing dev when they are being paid their large sums of money? They may have learnt something as a developer, but _doing_ development isn't their major money making activity.
        icebraining 9y ago
        jondubois said understand, not do.
  - drieddust 9y ago
    Crypto currency are the new tulip bulbs[1]. Only some are going to make money. Current buyers are relying on greater fools to take these off their hands. A crash is eminent so hold tight and wait for it. You will have plenty of opportunity. History will repeat itself as new fools arrive on the scene[2]. [1] https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania [2] https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets https://en.wikipedia.org/wiki/List_of_stock_market_crashes_a...
    - kdelok 9y ago
      I'm actually worried that one of the main things in favour of cryptocurrencies is that they can act as an effective currency for illegal activities, i.e. they'll stay profitable for as long as regulations struggle to keep up with them.
      - saiya-jin 9y ago
        this is already a case for quite a few years in dark web (mostly bitcoin for now). or you think that illegal drugs and weapons and whatnot are being paid by money account transfers over SEPA?
      - soneca 9y ago
        I believe that cryptocurrencies only reached a critical mass to be relevant att all because of the value it delivers to criminals. All that is ever discussed about cryptocurrencies at HN is marginal in comparison.
        matthewbauer 9y ago
        I think enthusiasts and speculators are actually a significant driver of the high prices. Criminals would much rather have a stable, quick Bitcoin than what we're seeing right now.
    - empath75 9y ago
      I am starting to worry that this bubble is going to grow until it threatens the world economy.
  - sp332 9y ago
    According to https://arstechnica.com/information-technology/2017/08/investors-poured-millions-into-a-storage-network-that-doesnt-exist/ https://arstechnica.com/information-technology/2017/08/inves... they hardly have any code yet anyway.
  - the_stc 9y ago
    We're about to announce our company and do a fundraising round. Relatively small, a few million at first with a limited number of investors, then do a blockchain IPO (yes IPO - we're selling shares with control and dividends, not pointless tokens). And our market is huge with no real coordinated players, so it should be very lucrative. Even so, I am concerned about letting just anyone put money in. Even though we are an extrajurisdictional company and the SEC doesn't trouble us, I'd like to know people putting money in have some idea what they're doing. At first we thought to limit the amount, require a minimum $1000 or $2000 purchase. But that makes it worse, I think. What is a company in our situation supposed to do to be socially aware and not just "make the rich richer", while also making sure someone doesn't invest their last $1000? Just put up disclaimers?
- raverbashing 9y ago
  And how many computing cycles and kWH are wasted on cryptocoins
  - pmlnr 9y ago
    To be honest, this is my reason for not jumping mindlessly on the cryptocurrency bandwagon: it's wasting so much resources and power, especially when you take a look at videos of mining farms.
    - wwwv 9y ago
      I'm not really in this world, but you'd save more power by recycling aluminium cans (%5+ of US power consumption) than by killing off cryptocurrency mining.
      - pmlnr 9y ago
        Personally I bring everything I can to recycling points, sometimes even if it's not my own garbage. But I'm aware people don't care. On the other side the crypto mining is not only the power consumption: it's all the hardware and it's production as well. The ASIC antminers can't be used for anything else, hard to recycle as well and they constantly need to get bigger and faster. For Ethereum, people are buying shitloads of high end GPUs. I also don't like the idea of storing insane amount of data, hoping to find correlations to make more money, but this is also nothing I can do anything about.
    - wscott 9y ago
      You understand that this article is about a cryptocurrency that uses a service (long term file storage and access) and the proof of work function instead of pointless computation.
      - pmlnr 9y ago
        Yes, I do, and this sounds like a good idea - emphasis on the sounds, because it's not new, see primecoin.
- csomar 9y ago
  And it is the whole world-wide economy. It is important that they keep this money from the poorer guys too, so that inflation doesn't look high and their investments look promising.
pavlov 9y ago
I don't get it. Competing with Amazon S3 seems like a very unpromising business idea, blockchain or not.
- davidgerard 9y ago
  The only point is to come up with a flimsy excuse to sell an ERC-20 compatible token as an unregistered security on exchanges. Long rant: https://davidgerard.co.uk/blockchain/icos-magic-beans-and-bubble-machines/ https://davidgerard.co.uk/blockchain/icos-magic-beans-and-bu...
- moe 9y ago
  There is indeed only a single legitimate use-case: Censorship resilient storage. For everything else the available Cloud storage options are cheaper, faster, easier and more reliable.
  - prepend 9y ago
    I agree. But censorship resilient storage should be really niche.
  - wslh 9y ago
    Would you accept filecoin to use your resources to host children pornography? I also think you will receive a visit from the police if you do that.
    - tehlike 9y ago
      if it's encrypted, i don't think anyone can prove it's porn, which probably makes you immune
      - bhouston 9y ago
        Unless that is the primary reason to use Filecoin. You can not prove it is porn, but if Filecoin's primary use case is child porn, then if you have Filecoin, you are likely storing someone's child porn, and you are likely running Filecoin to access your own child porn that is stored on someone else's computer. Remember that just running a Tor node makes the authorities suspicious about that person. There are few non-suspicious reasons for running Tor unfortunately from a government's perspective, you are either an activist fleeing some government censorship (sometimes, but I think that is rare) or doing something semi-illegal (much more often.) There is a big risk that is where this is heading.
andy_ppp 9y ago
Great, another Ponzi scheme I can get in at the start with... how do I invest?
joeblau 9y ago
I listened to this YC podcast[1] twice with Juan Benet. Listening to Juan talk about a lot of historical information and the correlations he drew was fascinating. When he tried to explain the need for Filecoin to Dalton, I just didn't hear it. Dalton kept asking him over and over what the point was and he kept giving non-answers (at least in my opinion which doesn't mean much to be honest). I understand the goal of the protocol and the incentive structure behind the protocol, but I don't see a clear vision with the product. [1] - https://blog.ycombinator.com/ipfs-coinlist-and-the-filecoin-ico-with-juan-benet-and-dalton-caldwell/ https://blog.ycombinator.com/ipfs-coinlist-and-the-filecoin-...
- fccc 9y ago
  > When he tried to explain the need for Filecoin to Dalton, I just didn't hear it. Dalton kept asking him over and over what the point was and he kept giving non-answers His favorite response was "...and a whole bunch of other things". On a more serious note, it's very early days for the filecoin and related group of projects that they intend to fund, so the answer to Dalton's question is : "we don't have the answers yet. There are a whole bunch of theoretical use cases and the most promising seems to be decentralized storage. The reason we are raising money through this ICO is simple : people are ready to invest dumb money and we are more than happy to take it. We have legitimacy because we are backed by the most well known VCs who are eager to 10X their money within 3 years and we have a whole bunch of protocol design/specs." It's kind of self fulfilling : promise a grand vision, take hundreds of millions and hopefully deliver any working product sometime in the future.
  - deleted 9y ago
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  - jboggan 9y ago
    But seriously, what are they going to do with that much money? How many developers do they actually need to scale up and what milestones are they trying to hit?
  - tarr11 9y ago
    When people say "its early days" I mentally replace it with "I don't know" https://www.google.com/search?q="its+still+early+days" https://www.google.com/search?q="its+still+early+days"
ico_skeptic 9y ago
Half the money these ICOs are raising is going to end up being paid to the SEC in fines. Maybe not Filecoin because they have at least made an attempt to pretend to comply with the rules - although Christ knows what will happen when Filecoins start trading on exchanges! But there are a LOT of companies out there who are going to be totally screwed.
joosters 9y ago
I assume that the VC investors actually bought a stake in the company? It's misleading to lump them together with the ICO investors, who are buying nothing more than a vague, non-enforceable promise (see any ICO terms & conditions, you have absolutely no rights or ownership as a coin holder)
- 659087 9y ago
  Many of the ICOs flat out stated that the tokens you're receiving entitle you to absolutely nothing, and hold no value, but somehow people have convinced themselves that the people behind these ICOs are going to give them something in return out of the goodness of their hearts anyway.
moe 9y ago
This is probably a money laundry/tax evasion operation. I don't believe these "big name Silicon Valley investors" just flush such amounts of money down a toilet without a hidden agenda.
- jbob2000 9y ago
  After watching Ozark, I'm actually convinced that software is amazing for money laundering, it's stupid easy to generate huge amounts of fake data. "Look, our food delivery app delivered 10,000,000 meals and everyone paid by cash!" "Wow, we rented 10,000 homes through our short term rental app this month and everyone paid by cash!" "Hey, we have an ATM that lets you convert money into NameCoin, sooo many people are using it, look at all this cash!"
  - raverbashing 9y ago
    From a bit of inside info from the aggregator side (think app - but let's keep it generic), there are some fraudulent activity in the 'seller' side and the aggregators pay a lot of attention to it.
  - wmf 9y ago
    "Uber for X" apps generally don't even accept cash; it's credit card or nothing. Building an app that accepts cash would be a red flag in itself.
    - hobofan 9y ago
      Not in Germany (and I think also other european countries). People here love using cash, and so a lot of the startups go with it, or they would lose out on +50% of the market.
    - the_stc 9y ago
      Why is that a red flag? Uber accepts cash. We are doing an Uber for X and accepting cash, cryptocoin, and limited credit cards (CC companies dislike adult services so it might involve too much cat-and-mouse to be worthwhile). Not accepting cash seems like a the lack of features in an MVP. It's easier to handle CCs, but collecting cash in a sharing-economy situation is more work. It certainly isn't a good thing to not accept cash!
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manigandham 9y ago
So instead of on-premise SANs or cloud provider block storage, store your files all over random devices protected by a complicated crypto that requires miners and tokens to stay active? Fantastic. I'm sure the enterprise sales are going to go really well. This fallacy that everything needs to be distributed is really getting out of hand.
- charlesdm 9y ago
  It's not about the solution. It's about having a token that can go up in value.
- problems 9y ago
  > This fallacy that everything needs to be distributed is really getting out of hand. Unlike many other ICOs, I think this is actually a good example of something that can and arguably should be distributed. Cheap storage is much more readily available in a system like this than from cloud providers and there's no real trustworthiness of the cloud providers. No nth time dropbox gets hacked, no EC2 going down, etc. I've been using client-side encrypted cloud storage for a while, but you either self-host with relatively poor tooling, use fairly untrustworthy proprietary tooling or use a provider that charges an arm and a leg for storage fees. There's no good compromise right now - and I'm not saying FileCoin will be it, but they have a good backing of developers and have decent chances. Other contenders: - GridSync - fixes Tahoe-LAFS syncing, making the self-hosted solution much more bearable, but still size limited - Sia - an already existing cryptocurrency based solution that seems to have done a lot right, but doesn't have the same marketing wank. I'm really not impressed with the way Filecoin has run their token sale though - but it doesn't rule it out if they can make the best solution in the end.
prepend 9y ago
I don't understand why they would do the coin offering now. The network is inoperable and won't be for quite a while. The main advantage to me seems to be a more of a community-driven storage approach. S3 is really cheap and really reliable and really old. A distributed file store would be cool, but as a community/free network like P2P. The $200M seems really high for a community project.
- evgen 9y ago
  They do the offering now because they have a bit of a name and the world is currently filled with suckers who think that getting in on an ICO is a worthwhile speculation. The greater fool theory at work.
  - matthewbauer 9y ago
    It could still tie their hands later on. Once it starts crashing they'll lose a lot of the early adopter enthusiasm that they will need to catch on.
- rcarrigan87 9y ago
  Timing. Do it before the bad PR and bubble talk leave no more "greater fools" and makes it harder to pull off an ICO.
- sametmax 9y ago
  To make money, even if it doesn't work. And to drive attention. And to engage people in a way they will have to defend their investment later.
- stephengillie 9y ago
  > A distributed file store would be cool, but as a community/free network like P2P. Something like IPFS? https://ipfs.io https://ipfs.io
  - jonmaim 9y ago
    filecoin is made by the creators of ipfs.
noway421 9y ago
Their Filecoin Token Sale Economics says that 10% of all tokens is allocated to investors. Not sure how much they sold, but even if it's almost all out, does it make it a $1.8bn capitalisation?
- DanBlake 9y ago
  There is also 52 million they sold in a 'pre-sale' I dont think is included here. Yes, that would mean they have ~litecoin valuation currently.
- Taek 9y ago
  The total number of Filecoins that will enter circulation is going to be around 2 billion, and they are selling right now for somewhere between $2 and $5 each. That puts the valuation somewhere between $4 billion and $10 billion.
wscott 9y ago
I decided not to invest after reading this: https://medium.com/token-economy/the-analysis-filecoin-doesnt-want-you-to-read-e60d5243f17c https://medium.com/token-economy/the-analysis-filecoin-doesn...
- problems 9y ago
  It still amazes me that people buy what everyone on Bitcoin Forums would have called a "premined shitcoin" just a few years ago...
  - wmf 9y ago
    Bitcoin maximalists may accidentally be right occasionally, but I wouldn't take advice from them.
- ve55 9y ago
  I wouldn't want to invest in it either, but the truth is is that these investors will likely all make a lot of money. Just because a project is terrible in various ways doesn't mean the investors in the ICO won't get rich, and the founders won't get rich. Especially the special ones that got in early at a fraction of the price.
  - matthewbauer 9y ago
    Yes some will. But you should look at it like gambling for those that do. They lucked in to FileCoin and will probably make money, but perhaps they've also lost money on other ICOs. If they get out now, they might end up ahead but for each one of them, there has to be someone that loses equal money (assuming it truly is a bubble).
ckastner 9y ago
After glancing over the whitepaper, I get the motivation, but I just don't see how this scheme is viable, financially. Participants with little storage to give, have little to earn, but must remain connected to the network. Why bother with that? Participants with large amounts (petabytes) of storage to give are competing with Amazon S3, Google Cloud Storage, etc. At this scale, it's hard to imagine competing financially with these and other giants. (Furthermore, if you have petabytes of storage idling around, you might have a business problem anyway.)
- nicpottier 9y ago
  This is all pretty hand-wavy, but I think the idea is you are creating a wide open market wrapped up in a protocol, in such a way that the network effect becomes your advantage. I believe the economic model is such that buyers reward nodes that are closer to where the content is being accessed most. I'm not positive, but I'm hoping the protocol actual distributes / moves content accordingly. If so, then you suddenly have something pretty neat, in that you incentivize providers to pop up where they are needed most, across country borders and at cut-throat rates. Yes, this happens to some extent with CDNs now, but imagine anybody being able to be a CloudFront provider and being able to charge for storage at the same terms as everyone else and I think that is getting closer to what Filecoin is trying to do. (though I fully admit I may be totally wrong given that a lot of these details haven't been worked out yet) To put it in more concrete terms, when I lived in Rwanda one big problem is that within the country the network is great, they have quite a bit of fiber and very developed mobile networks. But their connection to the outside internet is terrible, they have two pipes coming in and neither is reliable. So there would be great benefits to having local CDNs there, and Facebook and Google do but others don't because it just isn't worth it. You could see something like Filecoin being the economic incentive for someone local to provide that service and greatly increase the speed of internet access for everyone in the country.
progx 9y ago
What is the difference compared to storj?
- 659087 9y ago
  A different group of people is running with the money this time.
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gaetanrickter 9y ago
These could go big too... "3 ICOs Set To Out-Perform Long Term Benchmarks In The Cryptocurrency Markets" https://medium.com/@alexanderwestin/3-icos-set-to-out-perform-long-term-benchmarks-in-the-cryptocurrency-markets-b83f445ab8bd https://medium.com/@alexanderwestin/3-icos-set-to-out-perfor...
- yclopediaen 9y ago
  I actually think we'll see our first billion dollar ICO here soon.
  - zero_one_one 9y ago
    I don't doubt you, and I think that's an incredible shame to everything computing has enabled humanity to achieve.
    - tylersmith 9y ago
      I don't think it's a shame personally. Cryptocurrencies and especially ICOs have enabled economic Darwinism at a scale rarely before seen.
FozzworthSE 9y ago
Half the money these ICOs are raising is going to end up being paid to the SEC in fines. Maybe not Filecoin because they have at least made an attempt to pretend to comply with the rules - although Christ knows what will happen when Filecoins start trading on exchanges! But there are a LOT of companies out there who are going to be totally screwed.
tyingq 9y ago
Not completely thought out, but I believe parasitic storage might be a better approach to scaling out a censorship resistant distributed object store. Some kind of cryptocurrency could help fuel it as well. A parasitic storage approach would leverage existing "free" tiers of services like google drive, onedrive, dropbox, yandex.disk, etc. One of the hard parts of scaling that would be creating the fake accounts to hold the data, so a cryptocurrency+contract could fuel the reward needed for people to create these by hand. You use the reward to buy storage space, so there's some incentive for the people creating them. I'm less clear on how you would combat the various providers finding the fake accounts and deleting them along with the data. Would clearly need duplicate storage of objects to work around that, and some central reference table to map keys to the various copies, and provide the high level "api" for creating buckets, etc.
- davrosthedalek 9y ago
  This is why we can't have nice things. If you misuse the free tiers in this way, they will go away.
  - tyingq 9y ago
    That's a fair point. Maybe if it focused on the services that more clearly abuse their customer's privacy. Like mapping to Facebook post attachments.
    - davrosthedalek 9y ago
      Yeah, an interesting way to change the balance of "if it's free, you are the product".
  - notheguyouthink 9y ago
    > This is why we can't have nice things. If you misuse the free tiers in this way, they will go away Imo, we shouldn't have free tiers. It's like "unlimited" internet. I don't want things to be non-sustainable, it's a myth. Give me scalable solutions. How about instead of free tiers, very cheap tiers with very limited resources to try the product out? etc etc.
bhouston 9y ago
For most storage, one needs it to be local to compute or easy to put behind a CDN - e.i. in a datacenter or on a very fast network that is connected to the datacenters. If not, you are cut out from the main commercial storage market. What is left is: - People who want to store stuff that is can not be legally stored on existing networks, such as illegal drug or porn stuff. - People who need secure stuff stored in a distributed fashion. - People who want to have a way of backing up their PC? But will this be faster and cheaper than using Backblaze-like solutions that buy storage in bulk and optimize for costs? Is there enough redundancy to ensure that no data is ever lost? Could someone actually attack the network to cause data loss? What are the costs? - Inbound, new storage per GB. - Outbound, access per GB. - Deleting storage. - Static storage on a per GB/hour. What is the performance of this? Can Backblaze make more money being a provider to Filcoin or should Backblaze use Filecoin for it storage? Just like Bitcoin mining Filecoin should, if successful, be dominanted by people like Backblaze.
- simias 9y ago
  That's pretty much my take as well. I really like the concepts behind IPFS and FileCoin and I think they're really fine piece of software engineering (well, IPFS is, can't say much about FileCoin yet) but as an other comment pointed out it's a solution in search of a problem. I tried hard to find a use for IPFS but I failed. I could use it to share files with other people but simply having a publicly reachable web server is simpler and more convenient. People don't have to install IPFS or use a public gateway to get my content. The cool feature is being able to rehost any content if you want to "cache" it but that's only possible if the original provider decided to host it through IPFS, so there's kind of a chicken-and-egg issue. I can't really use it for backup either unless I pay a third party to always cache my data, but in this case I might as well use tarnsap, dropbox or something similar and it'll probably be even more straightforward. So it's a pretty cool piece of tech but sadly I simply have zero practical use for it.
- Zarath 9y ago
  Say my desktop is always running and always connected to the network. Now I can rent out my extra storage space. Considering I am incurring almost no additional cost to rent out this space, the price is extremely elastic and will therefore be lower than the cost of a service like S3.
sktrdie 9y ago
What's important to note about ICOs is not necessarily whether the idea is actually practical and that it will work. What matters right now is whether the idea can stir our intellect and get the crowds excited. This is because behind the idea there's a new token which value is completely driven by the excitement of the crowds (it's pure speculation). If I invest N amount of money in a token which gets people excited, I will surely get back N + <crowd excitement>. So it's sort of like a snake that bites its own tail, and we see these crazy prices specifically for this reason. People are not investing hoping for the project to be developed - they're investing because they know others will as well, which will drive the prices up. ICOs are a new breed in economy where people can speculate, anonymously, using tokens that are distributed to the crowds in various ways (PoW, initial distribution, etc.). What does this mean for our future economy? I'm not sure, but it surely looks exciting (even though most projects behind ICOs are complete crap). If our future economies will be driven by these tokens, we might think back at this period of time, looking at perhaps the people who will be the %1 of the future.
- dplgk 9y ago
  ICOs are a new breed of gambling.
  - tankenmate 9y ago
    I'll probably get down voted for this but nonetheless it needs to be said, partly tongue in cheek; ha ha, only serious. Gambling is not a sin / Provided that you always win. -- Roald Dahl
    - tankenmate 9y ago
      For those who abhor levity and reading between the lines the lesson is this; Risk is a spectrum; p < 1 is gambling for small n. So where does sure thing become risky become gambling become plain stupid? And one thing society as a whole will agree on is that p = 1 is not morally wrong. Therefore, "Gambling is not a sin / Provided that you always win" is true regardless of your sense of humour. The grey areas are less well defined, just like people's sense of humour.
crypt1d 9y ago
I'm kind of amazed how Filecoin managed to create such a hype, even though its nothing more than a whitepaper right now. I mean, there are already 2 or 3 coins that are doing something very similar and already have at least a working prototype (eg Siacoin, Storj), or have an interesting algo like Proof of Storage from Burst. Is there anything that makes Filecoin superior compared to the other's, or is it just that its VC-backed?
bhouston 9y ago
The end result of Filecoin will be extreme centralization just like Bitcoin mining unless there are extreme legal issues that makes everyone scared of being part of the network (e.g. child porn.) Thus there will be a few ultra large cost optimized providers probably similar to BackBlaze that handle 90% of all storage on the network. Does that extreme centralization fulfill the vision of Filecoin?
runeks 9y ago
Can anyone tell me how they arrived at the $186m figure? Are they just multiplying the last traded price by total supply, and forgetting about market depth/slippage? I mean, if I sell a plastic cup to someone for 10 cents, and then go produce 100 million of these plastic cups, do I have $10m in plastic cups? Or could it be that I’m unable to find 100 million buyers each willing to pay 10 cents for a cup, even though that’s the last traded price? As far as I’m concerned, the amount of USD they’ve raised equals what they could earn by executing a limit sell order with a price of zero into the Filecoin/USD market (thus eating up all bids).
- DanBlake 9y ago
  They literally sold 186m worth. As in, Filecoin literally has 186 million in the bank. Its insanity
  - Taek 9y ago
    They also have no obligation to deliver a product. If they fail to deliver a product after 5 years, they must return all of the money to the original investors. They could theoretically just earn interest on $186 million for 5 years and then return the money and say "oops, we missed our target". The terms of the SAFT allow it.
  - runeks 9y ago
    Wow... I just had to get it confirmed, and I still can’t believe it. Did they raise this without giving up any equity?
    - uncoder0 9y ago
      Yes
  - QML 9y ago
    Is that 186 million in ETH or fiat?
    - 9y ago
HashThis 9y ago
This is pointing out something profound. Investing is powerful when you can have liquidity right away. AN ASIDE: The valuation in the ICOs too high. But the following profound point still holds true... Imaging if an angel investor can invest in a company early, like Dropbox. Then when it grows some, he could sell 10% of his shares on a highly public and liquid market (like Ethereum coin exchange). He then invests that in AirBnB when it was tiny. He may invest in a startup that goes down after the Series A. Oh well, he may sell for 30% the valuation he invested in. The power is there by those who make big gains in the big winners, and that they can then move money out very soon and into new places.
- dpark 9y ago
  > Imaging if an angel investor can invest in a company early, like Dropbox. Then when it grows some, he could sell 10% of his shares on a highly public and liquid market (like Ethereum coin exchange). He then invests that in AirBnB when it was tiny. He may invest in a startup that goes down after the Series A. Oh well, he may sell for 30% the valuation he invested in. The power is there by those who make big gains in the big winners, and that they can then move money out very soon and into new places. What is your point? This has nothing to do with cryptocurrencies. If you replace "Etherium coin" with "USD", the scenario is unchanged.
- wmf 9y ago
  he could sell 10% of his shares on a highly public and liquid market This is the part that's illegal. If a company's shares trade on a public market then they need to file all the paperwork of a public company with all the costs that entails.
Lon7 9y ago
I have a (not very well supported) prediction that Filecoin will be the first ICO company to incur the wrath of the Securities and Exchange Commission. Last month the SEC released a report [0] that said in many cases these ICO tokens can be classified as securities, and therefor going forward, could be subject to all the same laws and regulations. These are not laws you want to be breaking. This Filecoin ICO has been highly publicized, and importantly, came after the SEC's report. It doesn't matter if it all only exists on a blockchain. When the SEC decides to make an example of one of these companies it will be a bloodbath. Matt Levine has been covering this topic recently. [1] [0] https://www.sec.gov/news/press-release/2017-131 https://www.sec.gov/news/press-release/2017-131 [1] https://www.bloomberg.com/view/articles/2017-07-26/tokens-vaults-ties-and-taxes https://www.bloomberg.com/view/articles/2017-07-26/tokens-va...
- problems 9y ago
  They've done their best to abide by SEC guidelines here - they've only sold to accredited investors by US standards and placed a lot of KYC/AML restrictions on it. Now, I'm not sure if that'll be enough or if they'll be held responsible for the secondary markets which will surely pop up once it's released.
- rficcaglia 9y ago
  scrutiny surely, but since they only accepted accredited investors, and likely under 100 of those, probably would not run afoul of regulations. though as someone in the DC cognoscneti told me once, any Fed prosecutor can make a career by going after a high profile target - win, lose or draw
- detaro 9y ago
  Filecoin seems at the top end of the scale when it comes to following these regulations (from my laymans perspective), e.g. only selling to accredited investors. I guess attacking them would make it even clearer that all ICOs are a potential target, but there are going to be a lot of targets in clearer violation of the rules.
memossy 9y ago
A lot of money for what's basically Pied Piper without middle-out. Seriously though these coins won't be worth much given a competitor could either a) dominate mining or b) fork it.
- cableshaft 9y ago
  Yeah, these guys don't even have a cool name like EndFrame. I'm actually more confident in Sia than Filecoin, despite them flying much more under the radar. Sia devs are more transparent (you can reach the lead dev here or on reddit pretty easily), have software that's in early stages but works, they've been regularly putting out new releases with new features, bug fixes, and polish. But Filecoin does have the funding, so they might be able to sweep the rug out from under Sia just by paying serious money to close the gap. I'm hoping Sia ends up the dominant player, though.
  - api 9y ago
    I tried Sia and it worked. I was able to use it. The tech seems solid and the plan seems straightforward and logical. If there is a good niche for decentralized storage then it already exists and they have it. No wonder nobody has heard of them. /cynicism Edit: Cynicism is not wholly unjustified. A while back I was taking to a big marketing guy about how marketing teams in big companies often get less excited about products once they hit prototype. Something that doesn't exist is just so much more exciting than something that does. Real things have caveats, limitations, and costs.
    - cableshaft 9y ago
      Yep, Silicon Valley covered that as well. "Don't try to make money with your software! Because there will be solid numbers and it'll never be enough. Have a zero revenue model! That way all they see is the potential!" (paraphrasing) A startup I worked for actually had exactly this problem when they had a big idea the company was founded for, but wanted to put out a couple small apps first as a warmup for the team. When those ancillary practice apps didn't perform amazingly well, the board of directors got nervous and killed the company before it even got started on the app that the company was founded to do in the first place. I'm pretty convinced in hindsight that if we just worked on the big app in the first place, the company might still be around today.
richardknop 9y ago
Is this a joke? Regardless whether the concept has any merit, at this stage of idea/startup we would normally be talking about seed level funding round so small sums of money to get a small team and build a product. Almost 200 million is obscene as a seed funding. If this isn't the proof this is tullip mania then I don't know what is.
- api 9y ago
  I lived through the late 90s dot.com mania and you saw an MBA out of Harvard and a couple techies raise this kind of money on nothing more than a hair brained idea with .com after it. Russ from Silicon Valley with his "radio. on. internet!" is pretty close to the truth. This is a bubble. Not FileCoin, but ICOs and block chain. The vast majority of these ICOs are outright scams or unworkable nonsense. I've read some of these white papers but I stopped when they threatened to give me an eye rolling injury. (Can eyes roll so far back they get stuck?) Some of them read like they were generated by a statistical language model to parody CS papers on distributed systems. FileCoin is actually one of the best I've seen-- the team behind it has actually shipped distributed/decentralized systems that actually work (IPFS). I have to stress this-- in the ICO space a team that has actually shipped something useful is rare and this places them far above the herd. They might actually do something with this money. I also hope the honest/good ICOs don't get crushed when this inevitably implodes or gets prosecuted by the SEC. There's so much obvious outright fraud in this space I can't imagine the SEC (and FBI, etc.) aren't watching or even briefing prosecutors. That being said we (ZeroTier) have looked at an ICO but... (1) Our system has no built-in scarcity that needs a token. We have no use case for a token. It would be a force fit or an invented case, which would make it scammy. (2) We have existing investors who are justifiably nervous about taking on an unknown liability of the "potential criminal violation of securities laws" sort. So am I for that matter.
  - jrs95 9y ago
    Well, Russ from SV's story is essentially what happened with Mark Cuban and Broadcast.com...so it effective is the truth.
- sah2ed 9y ago
brianwawok 9y ago
So if I am personally bearish on the entire "alt-money" movement, how do I turn this into a potential profitable bet? Any tips on where I go to "short" coins?
- bspn 9y ago
  I'm not aware of any regulated exchanges that currently have Bitcoin futures contracts, but even if you could find one the volatility + leverage would make for a very interesting ride down (assuming you're not immediately stopped out).
- Tepix 9y ago
  You can do it on Kraken.com
- ve55 9y ago
  You can short these coins in a lot of locations, depending on which ones you want to short. If you want to short larger ones, you should check out bitmex (https://bitmex.com https://bitmex.com), a derivatives platform, or bitfinex (https://bitfinex.com https://bitfinex.com), a very large exchange. If you are expecting platforms as regulated as stock brokers in the US, you are out of luck. There's many other exchanges that will allow you to work with more (lesser value/known) assets. Keep in mind just about everyone who has tried to short these things has lost everything. I've watched coins that I think are completely worthless and have zero real users go from 100 million market cap to 200 million, to 500 million, to over a billion. And they still sit there today. And every step of the way, 'rational actors' are trying to short it, waiting for it to finally correct. I've seen this quote mentioned a lot recently in cryptocurrencies, and it is still not mentioned enough: "the market can remain irrational longer than you can stay solvent".
zero_one_one 9y ago
This is what's good (and bad) about the cryptocurrency / blockchain (etc.) state at the moment. It's all pure speculation, and makes a fantastic study from an anthropological and economic standpoint into how the perception of value (and the belief in that value in something) can increase the value of that 'thing'. I think there's a lot of hyper-salesmanship at play at the moment - my real worry is that the hype catches up to the technology which is (at the base level at least), proven. When this happens, I believe a lot of these ICOs are going to crash and burn due to a lack of understanding of the base technologies they're implementing in order to generate revenue. Abstraction is not always a good thing.
fpgaminer 9y ago
$186M ... that's crazy. And here I've been sitting wondering if anyone would bother investing in my idea for a Bitcoin mining co-op. I want to create a U.S. based mining farm that allows anyone to buy-in and have access to a portion of the hashrate. The idea being that, today, the average Bitcoin user has no way to reasonably voice their opinion through the hashrate because they can't compete with the efficiency of the big miners. We fix that by being a big miner; build our own ASIC, hardware, everything, and sell that back to average users at market rate. Level the playing field. But the level of investment needed is in the tens of millions (custom ASIC, custom hardware, custom datacenters, etc). It's not an incredible amount, and I'm not worried about the technicals (I previously co-founded a company making FPGA miners and my previous company was a hardware startup), but it's enough to give me pause and sit on the idea for now. But if Filecoin got $186M through an ICO ...
- kenning 9y ago
  Yeah but your idea is not a get rich quick, pump and dump scheme.
- dajohnson89 9y ago
  Isn't it already possible to own shares of a mining pool?
  - fpgaminer 9y ago
    I'm not aware of any such thing.
  - kanwisher 9y ago
    oh there have been quite a few but they have all been scams
- runeks 9y ago
  It’s worth noting that, if you enter this space, you’ll be competing with existing miners, some of which are quite large. Some have over 10% network hashrate, which means they’re earning 12.5BTC×$3500/BTC=$43,750 every two hours. That’s half a million dollars per day, or $15m per month, and I assume most of it is being channeled back into optimizing their already fairly optimized ASIC chips. And you’ll be starting from scratch.
fav_collector 9y ago
So are the developers of Filecoin just going to retire in Hawaii now after becoming rich?
- 659087 9y ago
  Only if EOS and Tezos didn't already buy the property they were looking at.
nikolay 9y ago
Didn't centralized storage win long ago as there were a bunch of failed decentralized storage services in the past? With the low price, high speed, CDN, and reliability of centralized storage, what would the decentralized one give me that I don't already have?
nagarjun 9y ago
Can someone please explain how exactly someone would transfer their files onto Filecoin? How does the system ensure reliability? I just don't understand why I would put my files in some random person's hard drive.
dpiers 9y ago
Can we stop describing ICO raises in USD? They raised ethereum tokens (ETH). The value of those tokens is specious, as there is no liquidity for the volume of ETH raised. Based on current ETH/USD rates, the USD figure given translates to ~614K ETH. The value of 614K ETH has ranged from 92MM USD to 240MM USD in the last two months, and has been as low as 4.3MM USD since the beginning of the year.
- dahdum 9y ago
  "as there is no liquidity for the volume of ETH raised" Volume is over $80 million in the ETH-USD pair over the past 24 hours, on just two exchanges (Coinbase/GDAX, Bitfinex). Add in CNY, KRW, EUR and the true liquidity is much higher than that. Edit: https://coinmarketcap.com/currencies/ethereum/#USD https://coinmarketcap.com/currencies/ethereum/#USD
  - 101km 9y ago
    There are no exchanges that will let you withdraw $xx million a day in fiat. They'll need to spread the ETH to basically all the big exchanges, with multiple bank accounts attached, and liquidate large sums everyday for months and hope none of the accounts get frozen. Still quite the windfall even if realistically just a fraction of the sums being thrown around.
    - dahdum 9y ago
      GDAX & Gemini will definitely let you withdrawal millions per day, you just need to be verified and clear from AML/KYC standpoint.
    - Animats 9y ago
      There are no exchanges that will let you withdraw $xx million a day in fiat. That's why your lawyers and their lawyers have to negotiate this up front and have a deal with penalties signed before any transactions take place. If you're dealing with amounts that big, you do that.
- Animats 9y ago
elmar 9y ago
The Economics of Filecoin https://medium.com/@ryanshea/the-economics-of-filecoin-a8d826774674 https://medium.com/@ryanshea/the-economics-of-filecoin-a8d82...
glebecho 9y ago
LIke to know how this can be done I have a Quant Trading Platform I need to raise money pinder321@gmail.com

287 points by ianopolous 9y ago

So much people with much money trying to find new ways to make money out of money. That says much about the current state of the economy.

sschueller 9y ago
And making the rich richer. No way to invest unless you have money or you are in the inner circle. Code has also not been released. So much for open source.
- arethuza 9y ago
  If it makes you feel any better, I suspect that a lot of these schemes are going to make a lot of rich people that bit less rich...
  - koolba 9y ago
    And a few rich people a bit more rich. All depends which side of the coin you're on (pun intended).
    - arethuza 9y ago
      Well I propose "RobinHoodCoin" with an innovative "proof of no stake" approach!
      - pmlnr 9y ago
        "RobinHoodCoin" - whatever is mined will get evenly distributed, incl. genesis.
        teekert 9y ago
        RobinHoodCoin will constantly leak money form large to small wallets
- jondubois 9y ago
  Yep, only accredited investors could buy Filecoin at the ICO. The rest of us can still buy Siacoin which is similar. I don't think these VC-backed cryptocurrencies will win in the long term. It's the same principle as with stocks, cryptocurrencies are going to work in favour those who understand them the most; in this case, developers. The mission of cryptocurrencies is to take control away from finance people. Hobbyist developers are going to decide which cryptocurrencies deserve their precious development time. Cryptocurrencies are all about the tooling and infrastructure around them.
  - chii 9y ago
    > in this case, developers. i dont think developers are the ones who will profit - after all, developers are the ones who wrote the code for a lot of financial institutions, and none of them gain much more than just a salary.
    - jmknoll 9y ago
      At the same time though, 3 of the 5 largest companies in the US have CEOs with a background in software development/computer science. 5 years ago, 0 of 10 did. There's definitely a trend toward developers having more power.
      - jamespo 9y ago
        That trend started further back than the last couple of years, as billg can confirm.
      - chii 9y ago
        and yet, are those CEO's doing dev when they are being paid their large sums of money? They may have learnt something as a developer, but _doing_ development isn't their major money making activity.
        icebraining 9y ago
        jondubois said understand, not do.
- drieddust 9y ago
  Crypto currency are the new tulip bulbs[1]. Only some are going to make money. Current buyers are relying on greater fools to take these off their hands. A crash is eminent so hold tight and wait for it. You will have plenty of opportunity. History will repeat itself as new fools arrive on the scene[2]. [1] https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania [2] https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets https://en.wikipedia.org/wiki/List_of_stock_market_crashes_a...
  - kdelok 9y ago
    I'm actually worried that one of the main things in favour of cryptocurrencies is that they can act as an effective currency for illegal activities, i.e. they'll stay profitable for as long as regulations struggle to keep up with them.
    - saiya-jin 9y ago
      this is already a case for quite a few years in dark web (mostly bitcoin for now). or you think that illegal drugs and weapons and whatnot are being paid by money account transfers over SEPA?
    - soneca 9y ago
      I believe that cryptocurrencies only reached a critical mass to be relevant att all because of the value it delivers to criminals. All that is ever discussed about cryptocurrencies at HN is marginal in comparison.
      - matthewbauer 9y ago
        I think enthusiasts and speculators are actually a significant driver of the high prices. Criminals would much rather have a stable, quick Bitcoin than what we're seeing right now.
  - empath75 9y ago
    I am starting to worry that this bubble is going to grow until it threatens the world economy.
- sp332 9y ago
  According to https://arstechnica.com/information-technology/2017/08/investors-poured-millions-into-a-storage-network-that-doesnt-exist/ https://arstechnica.com/information-technology/2017/08/inves... they hardly have any code yet anyway.
- the_stc 9y ago
  We're about to announce our company and do a fundraising round. Relatively small, a few million at first with a limited number of investors, then do a blockchain IPO (yes IPO - we're selling shares with control and dividends, not pointless tokens). And our market is huge with no real coordinated players, so it should be very lucrative. Even so, I am concerned about letting just anyone put money in. Even though we are an extrajurisdictional company and the SEC doesn't trouble us, I'd like to know people putting money in have some idea what they're doing. At first we thought to limit the amount, require a minimum $1000 or $2000 purchase. But that makes it worse, I think. What is a company in our situation supposed to do to be socially aware and not just "make the rich richer", while also making sure someone doesn't invest their last $1000? Just put up disclaimers?
raverbashing 9y ago
And how many computing cycles and kWH are wasted on cryptocoins
- pmlnr 9y ago
  To be honest, this is my reason for not jumping mindlessly on the cryptocurrency bandwagon: it's wasting so much resources and power, especially when you take a look at videos of mining farms.
  - wwwv 9y ago
    I'm not really in this world, but you'd save more power by recycling aluminium cans (%5+ of US power consumption) than by killing off cryptocurrency mining.
    - pmlnr 9y ago
      Personally I bring everything I can to recycling points, sometimes even if it's not my own garbage. But I'm aware people don't care. On the other side the crypto mining is not only the power consumption: it's all the hardware and it's production as well. The ASIC antminers can't be used for anything else, hard to recycle as well and they constantly need to get bigger and faster. For Ethereum, people are buying shitloads of high end GPUs. I also don't like the idea of storing insane amount of data, hoping to find correlations to make more money, but this is also nothing I can do anything about.
  - wscott 9y ago
    You understand that this article is about a cryptocurrency that uses a service (long term file storage and access) and the proof of work function instead of pointless computation.
    - pmlnr 9y ago
      Yes, I do, and this sounds like a good idea - emphasis on the sounds, because it's not new, see primecoin.
csomar 9y ago
And it is the whole world-wide economy. It is important that they keep this money from the poorer guys too, so that inflation doesn't look high and their investments look promising.

pavlov 9y ago

I don't get it. Competing with Amazon S3 seems like a very unpromising business idea, blockchain or not.

davidgerard 9y ago
The only point is to come up with a flimsy excuse to sell an ERC-20 compatible token as an unregistered security on exchanges. Long rant: https://davidgerard.co.uk/blockchain/icos-magic-beans-and-bubble-machines/ https://davidgerard.co.uk/blockchain/icos-magic-beans-and-bu...
moe 9y ago
There is indeed only a single legitimate use-case: Censorship resilient storage. For everything else the available Cloud storage options are cheaper, faster, easier and more reliable.
- prepend 9y ago
  I agree. But censorship resilient storage should be really niche.
- wslh 9y ago
  Would you accept filecoin to use your resources to host children pornography? I also think you will receive a visit from the police if you do that.
  - tehlike 9y ago
    if it's encrypted, i don't think anyone can prove it's porn, which probably makes you immune
    - bhouston 9y ago
      Unless that is the primary reason to use Filecoin. You can not prove it is porn, but if Filecoin's primary use case is child porn, then if you have Filecoin, you are likely storing someone's child porn, and you are likely running Filecoin to access your own child porn that is stored on someone else's computer. Remember that just running a Tor node makes the authorities suspicious about that person. There are few non-suspicious reasons for running Tor unfortunately from a government's perspective, you are either an activist fleeing some government censorship (sometimes, but I think that is rare) or doing something semi-illegal (much more often.) There is a big risk that is where this is heading.

andy_ppp 9y ago

Great, another Ponzi scheme I can get in at the start with... how do I invest?

joeblau 9y ago

I listened to this YC podcast[1] twice with Juan Benet. Listening to Juan talk about a lot of historical information and the correlations he drew was fascinating. When he tried to explain the need for Filecoin to Dalton, I just didn't hear it. Dalton kept asking him over and over what the point was and he kept giving non-answers (at least in my opinion which doesn't mean much to be honest). I understand the goal of the protocol and the incentive structure behind the protocol, but I don't see a clear vision with the product. [1] - https://blog.ycombinator.com/ipfs-coinlist-and-the-filecoin-ico-with-juan-benet-and-dalton-caldwell/ https://blog.ycombinator.com/ipfs-coinlist-and-the-filecoin-...

fccc 9y ago
> When he tried to explain the need for Filecoin to Dalton, I just didn't hear it. Dalton kept asking him over and over what the point was and he kept giving non-answers His favorite response was "...and a whole bunch of other things". On a more serious note, it's very early days for the filecoin and related group of projects that they intend to fund, so the answer to Dalton's question is : "we don't have the answers yet. There are a whole bunch of theoretical use cases and the most promising seems to be decentralized storage. The reason we are raising money through this ICO is simple : people are ready to invest dumb money and we are more than happy to take it. We have legitimacy because we are backed by the most well known VCs who are eager to 10X their money within 3 years and we have a whole bunch of protocol design/specs." It's kind of self fulfilling : promise a grand vision, take hundreds of millions and hopefully deliver any working product sometime in the future.
- deleted 9y ago
  [deleted]
- jboggan 9y ago
  But seriously, what are they going to do with that much money? How many developers do they actually need to scale up and what milestones are they trying to hit?
- tarr11 9y ago
  When people say "its early days" I mentally replace it with "I don't know" https://www.google.com/search?q="its+still+early+days" https://www.google.com/search?q="its+still+early+days"

ico_skeptic 9y ago

Half the money these ICOs are raising is going to end up being paid to the SEC in fines. Maybe not Filecoin because they have at least made an attempt to pretend to comply with the rules - although Christ knows what will happen when Filecoins start trading on exchanges! But there are a LOT of companies out there who are going to be totally screwed.

joosters 9y ago

I assume that the VC investors actually bought a stake in the company? It's misleading to lump them together with the ICO investors, who are buying nothing more than a vague, non-enforceable promise (see any ICO terms & conditions, you have absolutely no rights or ownership as a coin holder)

659087 9y ago
Many of the ICOs flat out stated that the tokens you're receiving entitle you to absolutely nothing, and hold no value, but somehow people have convinced themselves that the people behind these ICOs are going to give them something in return out of the goodness of their hearts anyway.

moe 9y ago

This is probably a money laundry/tax evasion operation. I don't believe these "big name Silicon Valley investors" just flush such amounts of money down a toilet without a hidden agenda.

jbob2000 9y ago
After watching Ozark, I'm actually convinced that software is amazing for money laundering, it's stupid easy to generate huge amounts of fake data. "Look, our food delivery app delivered 10,000,000 meals and everyone paid by cash!" "Wow, we rented 10,000 homes through our short term rental app this month and everyone paid by cash!" "Hey, we have an ATM that lets you convert money into NameCoin, sooo many people are using it, look at all this cash!"
- raverbashing 9y ago
  From a bit of inside info from the aggregator side (think app - but let's keep it generic), there are some fraudulent activity in the 'seller' side and the aggregators pay a lot of attention to it.
- wmf 9y ago
  "Uber for X" apps generally don't even accept cash; it's credit card or nothing. Building an app that accepts cash would be a red flag in itself.
  - hobofan 9y ago
    Not in Germany (and I think also other european countries). People here love using cash, and so a lot of the startups go with it, or they would lose out on +50% of the market.
  - the_stc 9y ago
    Why is that a red flag? Uber accepts cash. We are doing an Uber for X and accepting cash, cryptocoin, and limited credit cards (CC companies dislike adult services so it might involve too much cat-and-mouse to be worthwhile). Not accepting cash seems like a the lack of features in an MVP. It's easier to handle CCs, but collecting cash in a sharing-economy situation is more work. It certainly isn't a good thing to not accept cash!

deleted 9y ago

[deleted]

manigandham 9y ago

So instead of on-premise SANs or cloud provider block storage, store your files all over random devices protected by a complicated crypto that requires miners and tokens to stay active? Fantastic. I'm sure the enterprise sales are going to go really well. This fallacy that everything needs to be distributed is really getting out of hand.

charlesdm 9y ago
It's not about the solution. It's about having a token that can go up in value.
problems 9y ago
> This fallacy that everything needs to be distributed is really getting out of hand. Unlike many other ICOs, I think this is actually a good example of something that can and arguably should be distributed. Cheap storage is much more readily available in a system like this than from cloud providers and there's no real trustworthiness of the cloud providers. No nth time dropbox gets hacked, no EC2 going down, etc. I've been using client-side encrypted cloud storage for a while, but you either self-host with relatively poor tooling, use fairly untrustworthy proprietary tooling or use a provider that charges an arm and a leg for storage fees. There's no good compromise right now - and I'm not saying FileCoin will be it, but they have a good backing of developers and have decent chances. Other contenders: - GridSync - fixes Tahoe-LAFS syncing, making the self-hosted solution much more bearable, but still size limited - Sia - an already existing cryptocurrency based solution that seems to have done a lot right, but doesn't have the same marketing wank. I'm really not impressed with the way Filecoin has run their token sale though - but it doesn't rule it out if they can make the best solution in the end.

prepend 9y ago

I don't understand why they would do the coin offering now. The network is inoperable and won't be for quite a while. The main advantage to me seems to be a more of a community-driven storage approach. S3 is really cheap and really reliable and really old. A distributed file store would be cool, but as a community/free network like P2P. The $200M seems really high for a community project.

evgen 9y ago
They do the offering now because they have a bit of a name and the world is currently filled with suckers who think that getting in on an ICO is a worthwhile speculation. The greater fool theory at work.
- matthewbauer 9y ago
  It could still tie their hands later on. Once it starts crashing they'll lose a lot of the early adopter enthusiasm that they will need to catch on.
rcarrigan87 9y ago
Timing. Do it before the bad PR and bubble talk leave no more "greater fools" and makes it harder to pull off an ICO.
sametmax 9y ago
To make money, even if it doesn't work. And to drive attention. And to engage people in a way they will have to defend their investment later.
stephengillie 9y ago
> A distributed file store would be cool, but as a community/free network like P2P. Something like IPFS? https://ipfs.io https://ipfs.io
- jonmaim 9y ago
  filecoin is made by the creators of ipfs.

noway421 9y ago

Their Filecoin Token Sale Economics says that 10% of all tokens is allocated to investors. Not sure how much they sold, but even if it's almost all out, does it make it a $1.8bn capitalisation?

DanBlake 9y ago
There is also 52 million they sold in a 'pre-sale' I dont think is included here. Yes, that would mean they have ~litecoin valuation currently.
Taek 9y ago
The total number of Filecoins that will enter circulation is going to be around 2 billion, and they are selling right now for somewhere between $2 and $5 each. That puts the valuation somewhere between $4 billion and $10 billion.

wscott 9y ago

I decided not to invest after reading this: https://medium.com/token-economy/the-analysis-filecoin-doesnt-want-you-to-read-e60d5243f17c https://medium.com/token-economy/the-analysis-filecoin-doesn...

problems 9y ago
It still amazes me that people buy what everyone on Bitcoin Forums would have called a "premined shitcoin" just a few years ago...
- wmf 9y ago
  Bitcoin maximalists may accidentally be right occasionally, but I wouldn't take advice from them.
ve55 9y ago
I wouldn't want to invest in it either, but the truth is is that these investors will likely all make a lot of money. Just because a project is terrible in various ways doesn't mean the investors in the ICO won't get rich, and the founders won't get rich. Especially the special ones that got in early at a fraction of the price.
- matthewbauer 9y ago
  Yes some will. But you should look at it like gambling for those that do. They lucked in to FileCoin and will probably make money, but perhaps they've also lost money on other ICOs. If they get out now, they might end up ahead but for each one of them, there has to be someone that loses equal money (assuming it truly is a bubble).

ckastner 9y ago

After glancing over the whitepaper, I get the motivation, but I just don't see how this scheme is viable, financially. Participants with little storage to give, have little to earn, but must remain connected to the network. Why bother with that? Participants with large amounts (petabytes) of storage to give are competing with Amazon S3, Google Cloud Storage, etc. At this scale, it's hard to imagine competing financially with these and other giants. (Furthermore, if you have petabytes of storage idling around, you might have a business problem anyway.)

nicpottier 9y ago
This is all pretty hand-wavy, but I think the idea is you are creating a wide open market wrapped up in a protocol, in such a way that the network effect becomes your advantage. I believe the economic model is such that buyers reward nodes that are closer to where the content is being accessed most. I'm not positive, but I'm hoping the protocol actual distributes / moves content accordingly. If so, then you suddenly have something pretty neat, in that you incentivize providers to pop up where they are needed most, across country borders and at cut-throat rates. Yes, this happens to some extent with CDNs now, but imagine anybody being able to be a CloudFront provider and being able to charge for storage at the same terms as everyone else and I think that is getting closer to what Filecoin is trying to do. (though I fully admit I may be totally wrong given that a lot of these details haven't been worked out yet) To put it in more concrete terms, when I lived in Rwanda one big problem is that within the country the network is great, they have quite a bit of fiber and very developed mobile networks. But their connection to the outside internet is terrible, they have two pipes coming in and neither is reliable. So there would be great benefits to having local CDNs there, and Facebook and Google do but others don't because it just isn't worth it. You could see something like Filecoin being the economic incentive for someone local to provide that service and greatly increase the speed of internet access for everyone in the country.

progx 9y ago

What is the difference compared to storj?

659087 9y ago
A different group of people is running with the money this time.

deleted 9y ago

[deleted]

gaetanrickter 9y ago

These could go big too... "3 ICOs Set To Out-Perform Long Term Benchmarks In The Cryptocurrency Markets" https://medium.com/@alexanderwestin/3-icos-set-to-out-perform-long-term-benchmarks-in-the-cryptocurrency-markets-b83f445ab8bd https://medium.com/@alexanderwestin/3-icos-set-to-out-perfor...

yclopediaen 9y ago
I actually think we'll see our first billion dollar ICO here soon.
- zero_one_one 9y ago
  I don't doubt you, and I think that's an incredible shame to everything computing has enabled humanity to achieve.
  - tylersmith 9y ago
    I don't think it's a shame personally. Cryptocurrencies and especially ICOs have enabled economic Darwinism at a scale rarely before seen.

FozzworthSE 9y ago

tyingq 9y ago

Not completely thought out, but I believe parasitic storage might be a better approach to scaling out a censorship resistant distributed object store. Some kind of cryptocurrency could help fuel it as well. A parasitic storage approach would leverage existing "free" tiers of services like google drive, onedrive, dropbox, yandex.disk, etc. One of the hard parts of scaling that would be creating the fake accounts to hold the data, so a cryptocurrency+contract could fuel the reward needed for people to create these by hand. You use the reward to buy storage space, so there's some incentive for the people creating them. I'm less clear on how you would combat the various providers finding the fake accounts and deleting them along with the data. Would clearly need duplicate storage of objects to work around that, and some central reference table to map keys to the various copies, and provide the high level "api" for creating buckets, etc.

davrosthedalek 9y ago
This is why we can't have nice things. If you misuse the free tiers in this way, they will go away.
- tyingq 9y ago
  That's a fair point. Maybe if it focused on the services that more clearly abuse their customer's privacy. Like mapping to Facebook post attachments.
  - davrosthedalek 9y ago
    Yeah, an interesting way to change the balance of "if it's free, you are the product".
- notheguyouthink 9y ago
  > This is why we can't have nice things. If you misuse the free tiers in this way, they will go away Imo, we shouldn't have free tiers. It's like "unlimited" internet. I don't want things to be non-sustainable, it's a myth. Give me scalable solutions. How about instead of free tiers, very cheap tiers with very limited resources to try the product out? etc etc.

bhouston 9y ago

For most storage, one needs it to be local to compute or easy to put behind a CDN - e.i. in a datacenter or on a very fast network that is connected to the datacenters. If not, you are cut out from the main commercial storage market. What is left is: - People who want to store stuff that is can not be legally stored on existing networks, such as illegal drug or porn stuff. - People who need secure stuff stored in a distributed fashion. - People who want to have a way of backing up their PC? But will this be faster and cheaper than using Backblaze-like solutions that buy storage in bulk and optimize for costs? Is there enough redundancy to ensure that no data is ever lost? Could someone actually attack the network to cause data loss? What are the costs? - Inbound, new storage per GB. - Outbound, access per GB. - Deleting storage. - Static storage on a per GB/hour. What is the performance of this? Can Backblaze make more money being a provider to Filcoin or should Backblaze use Filecoin for it storage? Just like Bitcoin mining Filecoin should, if successful, be dominanted by people like Backblaze.

simias 9y ago
That's pretty much my take as well. I really like the concepts behind IPFS and FileCoin and I think they're really fine piece of software engineering (well, IPFS is, can't say much about FileCoin yet) but as an other comment pointed out it's a solution in search of a problem. I tried hard to find a use for IPFS but I failed. I could use it to share files with other people but simply having a publicly reachable web server is simpler and more convenient. People don't have to install IPFS or use a public gateway to get my content. The cool feature is being able to rehost any content if you want to "cache" it but that's only possible if the original provider decided to host it through IPFS, so there's kind of a chicken-and-egg issue. I can't really use it for backup either unless I pay a third party to always cache my data, but in this case I might as well use tarnsap, dropbox or something similar and it'll probably be even more straightforward. So it's a pretty cool piece of tech but sadly I simply have zero practical use for it.
Zarath 9y ago
Say my desktop is always running and always connected to the network. Now I can rent out my extra storage space. Considering I am incurring almost no additional cost to rent out this space, the price is extremely elastic and will therefore be lower than the cost of a service like S3.

sktrdie 9y ago

What's important to note about ICOs is not necessarily whether the idea is actually practical and that it will work. What matters right now is whether the idea can stir our intellect and get the crowds excited. This is because behind the idea there's a new token which value is completely driven by the excitement of the crowds (it's pure speculation). If I invest N amount of money in a token which gets people excited, I will surely get back N + <crowd excitement>. So it's sort of like a snake that bites its own tail, and we see these crazy prices specifically for this reason. People are not investing hoping for the project to be developed - they're investing because they know others will as well, which will drive the prices up. ICOs are a new breed in economy where people can speculate, anonymously, using tokens that are distributed to the crowds in various ways (PoW, initial distribution, etc.). What does this mean for our future economy? I'm not sure, but it surely looks exciting (even though most projects behind ICOs are complete crap). If our future economies will be driven by these tokens, we might think back at this period of time, looking at perhaps the people who will be the %1 of the future.

dplgk 9y ago
ICOs are a new breed of gambling.
- tankenmate 9y ago
  I'll probably get down voted for this but nonetheless it needs to be said, partly tongue in cheek; ha ha, only serious. Gambling is not a sin / Provided that you always win. -- Roald Dahl
  - tankenmate 9y ago
    For those who abhor levity and reading between the lines the lesson is this; Risk is a spectrum; p < 1 is gambling for small n. So where does sure thing become risky become gambling become plain stupid? And one thing society as a whole will agree on is that p = 1 is not morally wrong. Therefore, "Gambling is not a sin / Provided that you always win" is true regardless of your sense of humour. The grey areas are less well defined, just like people's sense of humour.

crypt1d 9y ago

I'm kind of amazed how Filecoin managed to create such a hype, even though its nothing more than a whitepaper right now. I mean, there are already 2 or 3 coins that are doing something very similar and already have at least a working prototype (eg Siacoin, Storj), or have an interesting algo like Proof of Storage from Burst. Is there anything that makes Filecoin superior compared to the other's, or is it just that its VC-backed?

bhouston 9y ago

The end result of Filecoin will be extreme centralization just like Bitcoin mining unless there are extreme legal issues that makes everyone scared of being part of the network (e.g. child porn.) Thus there will be a few ultra large cost optimized providers probably similar to BackBlaze that handle 90% of all storage on the network. Does that extreme centralization fulfill the vision of Filecoin?

runeks 9y ago

Can anyone tell me how they arrived at the $186m figure? Are they just multiplying the last traded price by total supply, and forgetting about market depth/slippage? I mean, if I sell a plastic cup to someone for 10 cents, and then go produce 100 million of these plastic cups, do I have $10m in plastic cups? Or could it be that I’m unable to find 100 million buyers each willing to pay 10 cents for a cup, even though that’s the last traded price? As far as I’m concerned, the amount of USD they’ve raised equals what they could earn by executing a limit sell order with a price of zero into the Filecoin/USD market (thus eating up all bids).

DanBlake 9y ago
They literally sold 186m worth. As in, Filecoin literally has 186 million in the bank. Its insanity
- Taek 9y ago
  They also have no obligation to deliver a product. If they fail to deliver a product after 5 years, they must return all of the money to the original investors. They could theoretically just earn interest on $186 million for 5 years and then return the money and say "oops, we missed our target". The terms of the SAFT allow it.
- runeks 9y ago
  Wow... I just had to get it confirmed, and I still can’t believe it. Did they raise this without giving up any equity?
  - uncoder0 9y ago
    Yes
- QML 9y ago
  Is that 186 million in ETH or fiat?
  - 9y ago

HashThis 9y ago

This is pointing out something profound. Investing is powerful when you can have liquidity right away. AN ASIDE: The valuation in the ICOs too high. But the following profound point still holds true... Imaging if an angel investor can invest in a company early, like Dropbox. Then when it grows some, he could sell 10% of his shares on a highly public and liquid market (like Ethereum coin exchange). He then invests that in AirBnB when it was tiny. He may invest in a startup that goes down after the Series A. Oh well, he may sell for 30% the valuation he invested in. The power is there by those who make big gains in the big winners, and that they can then move money out very soon and into new places.

dpark 9y ago
> Imaging if an angel investor can invest in a company early, like Dropbox. Then when it grows some, he could sell 10% of his shares on a highly public and liquid market (like Ethereum coin exchange). He then invests that in AirBnB when it was tiny. He may invest in a startup that goes down after the Series A. Oh well, he may sell for 30% the valuation he invested in. The power is there by those who make big gains in the big winners, and that they can then move money out very soon and into new places. What is your point? This has nothing to do with cryptocurrencies. If you replace "Etherium coin" with "USD", the scenario is unchanged.
wmf 9y ago
he could sell 10% of his shares on a highly public and liquid market This is the part that's illegal. If a company's shares trade on a public market then they need to file all the paperwork of a public company with all the costs that entails.

Lon7 9y ago

I have a (not very well supported) prediction that Filecoin will be the first ICO company to incur the wrath of the Securities and Exchange Commission. Last month the SEC released a report [0] that said in many cases these ICO tokens can be classified as securities, and therefor going forward, could be subject to all the same laws and regulations. These are not laws you want to be breaking. This Filecoin ICO has been highly publicized, and importantly, came after the SEC's report. It doesn't matter if it all only exists on a blockchain. When the SEC decides to make an example of one of these companies it will be a bloodbath. Matt Levine has been covering this topic recently. [1] [0] https://www.sec.gov/news/press-release/2017-131 https://www.sec.gov/news/press-release/2017-131 [1] https://www.bloomberg.com/view/articles/2017-07-26/tokens-vaults-ties-and-taxes https://www.bloomberg.com/view/articles/2017-07-26/tokens-va...

problems 9y ago
They've done their best to abide by SEC guidelines here - they've only sold to accredited investors by US standards and placed a lot of KYC/AML restrictions on it. Now, I'm not sure if that'll be enough or if they'll be held responsible for the secondary markets which will surely pop up once it's released.
rficcaglia 9y ago
scrutiny surely, but since they only accepted accredited investors, and likely under 100 of those, probably would not run afoul of regulations. though as someone in the DC cognoscneti told me once, any Fed prosecutor can make a career by going after a high profile target - win, lose or draw
detaro 9y ago
Filecoin seems at the top end of the scale when it comes to following these regulations (from my laymans perspective), e.g. only selling to accredited investors. I guess attacking them would make it even clearer that all ICOs are a potential target, but there are going to be a lot of targets in clearer violation of the rules.

memossy 9y ago

A lot of money for what's basically Pied Piper without middle-out. Seriously though these coins won't be worth much given a competitor could either a) dominate mining or b) fork it.

cableshaft 9y ago
Yeah, these guys don't even have a cool name like EndFrame. I'm actually more confident in Sia than Filecoin, despite them flying much more under the radar. Sia devs are more transparent (you can reach the lead dev here or on reddit pretty easily), have software that's in early stages but works, they've been regularly putting out new releases with new features, bug fixes, and polish. But Filecoin does have the funding, so they might be able to sweep the rug out from under Sia just by paying serious money to close the gap. I'm hoping Sia ends up the dominant player, though.
- api 9y ago
  I tried Sia and it worked. I was able to use it. The tech seems solid and the plan seems straightforward and logical. If there is a good niche for decentralized storage then it already exists and they have it. No wonder nobody has heard of them. /cynicism Edit: Cynicism is not wholly unjustified. A while back I was taking to a big marketing guy about how marketing teams in big companies often get less excited about products once they hit prototype. Something that doesn't exist is just so much more exciting than something that does. Real things have caveats, limitations, and costs.
  - cableshaft 9y ago
    Yep, Silicon Valley covered that as well. "Don't try to make money with your software! Because there will be solid numbers and it'll never be enough. Have a zero revenue model! That way all they see is the potential!" (paraphrasing) A startup I worked for actually had exactly this problem when they had a big idea the company was founded for, but wanted to put out a couple small apps first as a warmup for the team. When those ancillary practice apps didn't perform amazingly well, the board of directors got nervous and killed the company before it even got started on the app that the company was founded to do in the first place. I'm pretty convinced in hindsight that if we just worked on the big app in the first place, the company might still be around today.

richardknop 9y ago

Is this a joke? Regardless whether the concept has any merit, at this stage of idea/startup we would normally be talking about seed level funding round so small sums of money to get a small team and build a product. Almost 200 million is obscene as a seed funding. If this isn't the proof this is tullip mania then I don't know what is.

api 9y ago
I lived through the late 90s dot.com mania and you saw an MBA out of Harvard and a couple techies raise this kind of money on nothing more than a hair brained idea with .com after it. Russ from Silicon Valley with his "radio. on. internet!" is pretty close to the truth. This is a bubble. Not FileCoin, but ICOs and block chain. The vast majority of these ICOs are outright scams or unworkable nonsense. I've read some of these white papers but I stopped when they threatened to give me an eye rolling injury. (Can eyes roll so far back they get stuck?) Some of them read like they were generated by a statistical language model to parody CS papers on distributed systems. FileCoin is actually one of the best I've seen-- the team behind it has actually shipped distributed/decentralized systems that actually work (IPFS). I have to stress this-- in the ICO space a team that has actually shipped something useful is rare and this places them far above the herd. They might actually do something with this money. I also hope the honest/good ICOs don't get crushed when this inevitably implodes or gets prosecuted by the SEC. There's so much obvious outright fraud in this space I can't imagine the SEC (and FBI, etc.) aren't watching or even briefing prosecutors. That being said we (ZeroTier) have looked at an ICO but... (1) Our system has no built-in scarcity that needs a token. We have no use case for a token. It would be a force fit or an invented case, which would make it scammy. (2) We have existing investors who are justifiably nervous about taking on an unknown liability of the "potential criminal violation of securities laws" sort. So am I for that matter.
- jrs95 9y ago
  Well, Russ from SV's story is essentially what happened with Mark Cuban and Broadcast.com...so it effective is the truth.
sah2ed 9y ago

brianwawok 9y ago

So if I am personally bearish on the entire "alt-money" movement, how do I turn this into a potential profitable bet? Any tips on where I go to "short" coins?

bspn 9y ago
I'm not aware of any regulated exchanges that currently have Bitcoin futures contracts, but even if you could find one the volatility + leverage would make for a very interesting ride down (assuming you're not immediately stopped out).
Tepix 9y ago
You can do it on Kraken.com
ve55 9y ago
You can short these coins in a lot of locations, depending on which ones you want to short. If you want to short larger ones, you should check out bitmex (https://bitmex.com https://bitmex.com), a derivatives platform, or bitfinex (https://bitfinex.com https://bitfinex.com), a very large exchange. If you are expecting platforms as regulated as stock brokers in the US, you are out of luck. There's many other exchanges that will allow you to work with more (lesser value/known) assets. Keep in mind just about everyone who has tried to short these things has lost everything. I've watched coins that I think are completely worthless and have zero real users go from 100 million market cap to 200 million, to 500 million, to over a billion. And they still sit there today. And every step of the way, 'rational actors' are trying to short it, waiting for it to finally correct. I've seen this quote mentioned a lot recently in cryptocurrencies, and it is still not mentioned enough: "the market can remain irrational longer than you can stay solvent".

zero_one_one 9y ago

This is what's good (and bad) about the cryptocurrency / blockchain (etc.) state at the moment. It's all pure speculation, and makes a fantastic study from an anthropological and economic standpoint into how the perception of value (and the belief in that value in something) can increase the value of that 'thing'. I think there's a lot of hyper-salesmanship at play at the moment - my real worry is that the hype catches up to the technology which is (at the base level at least), proven. When this happens, I believe a lot of these ICOs are going to crash and burn due to a lack of understanding of the base technologies they're implementing in order to generate revenue. Abstraction is not always a good thing.

fpgaminer 9y ago

$186M ... that's crazy. And here I've been sitting wondering if anyone would bother investing in my idea for a Bitcoin mining co-op. I want to create a U.S. based mining farm that allows anyone to buy-in and have access to a portion of the hashrate. The idea being that, today, the average Bitcoin user has no way to reasonably voice their opinion through the hashrate because they can't compete with the efficiency of the big miners. We fix that by being a big miner; build our own ASIC, hardware, everything, and sell that back to average users at market rate. Level the playing field. But the level of investment needed is in the tens of millions (custom ASIC, custom hardware, custom datacenters, etc). It's not an incredible amount, and I'm not worried about the technicals (I previously co-founded a company making FPGA miners and my previous company was a hardware startup), but it's enough to give me pause and sit on the idea for now. But if Filecoin got $186M through an ICO ...

kenning 9y ago
Yeah but your idea is not a get rich quick, pump and dump scheme.
dajohnson89 9y ago
Isn't it already possible to own shares of a mining pool?
- fpgaminer 9y ago
  I'm not aware of any such thing.
- kanwisher 9y ago
  oh there have been quite a few but they have all been scams
runeks 9y ago
It’s worth noting that, if you enter this space, you’ll be competing with existing miners, some of which are quite large. Some have over 10% network hashrate, which means they’re earning 12.5BTC×$3500/BTC=$43,750 every two hours. That’s half a million dollars per day, or $15m per month, and I assume most of it is being channeled back into optimizing their already fairly optimized ASIC chips. And you’ll be starting from scratch.

fav_collector 9y ago

So are the developers of Filecoin just going to retire in Hawaii now after becoming rich?

659087 9y ago
Only if EOS and Tezos didn't already buy the property they were looking at.

nikolay 9y ago

Didn't centralized storage win long ago as there were a bunch of failed decentralized storage services in the past? With the low price, high speed, CDN, and reliability of centralized storage, what would the decentralized one give me that I don't already have?

nagarjun 9y ago

Can someone please explain how exactly someone would transfer their files onto Filecoin? How does the system ensure reliability? I just don't understand why I would put my files in some random person's hard drive.

dpiers 9y ago

Can we stop describing ICO raises in USD? They raised ethereum tokens (ETH). The value of those tokens is specious, as there is no liquidity for the volume of ETH raised. Based on current ETH/USD rates, the USD figure given translates to ~614K ETH. The value of 614K ETH has ranged from 92MM USD to 240MM USD in the last two months, and has been as low as 4.3MM USD since the beginning of the year.

dahdum 9y ago
"as there is no liquidity for the volume of ETH raised" Volume is over $80 million in the ETH-USD pair over the past 24 hours, on just two exchanges (Coinbase/GDAX, Bitfinex). Add in CNY, KRW, EUR and the true liquidity is much higher than that. Edit: https://coinmarketcap.com/currencies/ethereum/#USD https://coinmarketcap.com/currencies/ethereum/#USD
- 101km 9y ago
  There are no exchanges that will let you withdraw $xx million a day in fiat. They'll need to spread the ETH to basically all the big exchanges, with multiple bank accounts attached, and liquidate large sums everyday for months and hope none of the accounts get frozen. Still quite the windfall even if realistically just a fraction of the sums being thrown around.
  - dahdum 9y ago
    GDAX & Gemini will definitely let you withdrawal millions per day, you just need to be verified and clear from AML/KYC standpoint.
  - Animats 9y ago
    There are no exchanges that will let you withdraw $xx million a day in fiat. That's why your lawyers and their lawyers have to negotiate this up front and have a deal with penalties signed before any transactions take place. If you're dealing with amounts that big, you do that.
Animats 9y ago

elmar 9y ago

The Economics of Filecoin https://medium.com/@ryanshea/the-economics-of-filecoin-a8d826774674 https://medium.com/@ryanshea/the-economics-of-filecoin-a8d82...

glebecho 9y ago

LIke to know how this can be done I have a Quant Trading Platform I need to raise money pinder321@gmail.com