7 ms·

I'm not sure I buy the premise that every service needs its own coin. Surely in most cases it would be better to just use the most widely used, most stable coin

I'm not sure I buy the premise that every service needs its own coin. Surely in most cases it would be better to just use the most widely used, most stable coin? If the concept of cryptocurrency is going to survive I think there needs to be one or two clear winners to eventually bring some stability to their value. Of course, not issuing your own coin doesn't leave as much opportunity to get rich quick off a bit of hype.

ringaroundthetx 9y ago
> I'm not sure I buy the premise that every service needs its own coin. Surely in most cases it would be better to just use the most widely used, most stable coin? The team cannot finance itself without selling a new token These projects don't use equity and there is nothing that will make the equity more valuable as there. There are lots of things that will make their token be more valuable as it is a new commodity.
- pavel_lishin 9y ago
  One thing I don't understand about ICOs is - what do the companies promise their coins to be worth? That is, if I have a Coin from your brand new endeavour - what can I, hypothetically, exchange it for? Do I get a vote in how your company is run? Can I give it back to you in exchange for a product or service later down the line? Or is it just a geegaw for me to put on a shelf, like a printout of a Patreon receipt?
  - kazagistar 9y ago
    Generally, it'd the second. The coin is supposed to be a preorder, and it's value is thus the value of the service later.
  - ringaroundthetx 9y ago
    they are for a product or service, the limited issuances of the token gives them a speculative market based on future demand and future supply. the team and organization gets funded, the buyers are liquid, nobody makes ridiculous decisions counter to their dreams hoping for "an exit", because everyone already has one. we don't have consumer or investor protections here yet so sure it is ripe for abuse, so far people are content with that, and we also haven't needed it
    - pavel_lishin 9y ago
      > the team and organization gets funded, the buyers are liquid, nobody makes ridiculous decisions counter to their dreams hoping for "an exit", because everyone already has one. Can you expand on this? What do you mean by "everyone already has one" in this scenario?
      - ringaroundthetx 9y ago
        Okay, in startups, corporations are formed and the equity (shares) in the corporation are doled out as currency. Completely useless currency given to helpers under the idea that they'll get rich one day in very improbable scenarios. There is no legal way to sell the shares (hyperbole, but very many hurdles). And exchanging additional shares for cash investments only serves to make your non-sellable stake in the company smaller while increasing your tax burdens in many scenarios. These new investors are typically VCs and they push for changes in the company completely unrelated to the founders vision, and good exits never come, because of the many ways VCs can get their much of their money back before founders or even employees get anything. In token sales, there may be a corporation for liability purposes but the equity in that corporation is not being sold at all. A product from the corporation is sold, a product with the unique characteristics of having easily formable secondary markets. Tokens are initially created and sold in exchange for US dollars, or Ethereum or another liquid token. This is used to grow the company, just like any presale on kickstarter is used to grow a company. Yet, the equities regulator is sticking their nose in it (for good reason), but a more applicable regulator could be formed to help grow the market and still obtain the consumer/investor protections they desire. I digress: Everyone that buys can immediately sell to other people, if the demand is there. Everyone that earned tokens by helping the corporation, including the founders, or large purchasers who also wanted to see the project develop, can also sell to other people. Immediately. If there is demand, then existing holders that helped fund the company (buy buying early), can sell to other people at a higher price. This is only "controversial" and "confusing" because it is more advantageous than the promises people sell to 20 year olds spending decades of their life for useless sweat equity, and it undermines the existing VC industry. It is potentially as revolutionary as "the share company" was in the year 1600.
chatmasta 9y ago
In the case of ethereum backed coins, every service does not really have its own coin, but rather a derivative of ethereum. As long as the coin is tradeable for general ETH tokens, it must fundamentally be pegged to the price of ethereum, even if it's traded separately on exchanges. There are obvious downsides to that, but it's a tradeoff for ease of development. You can create your own "coin" -- really just a (set of) smart contract(s) -- with simple tooling provided by the ethereum ecosystem. This is the real genius of ethereum; there is no "one use case" for it, but rather many, limited only by imagination. As more contracts are added to the ethereum ecosystem, ICOs funnel money into ETH, and ETH as a whole benefits from the ever increasing number of derivative services.
- deleted 9y ago
  [deleted]
- joosters 9y ago
  The technical details don't matter, all that's important is that coin X can't be spent on product Y without going through an exchange and paying conversion costs. It's plainly inconvenient and dumb. There's a reason why all real-world shops accept the local currency and not their own made up one.

ringaroundthetx 9y ago

> I'm not sure I buy the premise that every service needs its own coin. Surely in most cases it would be better to just use the most widely used, most stable coin? The team cannot finance itself without selling a new token These projects don't use equity and there is nothing that will make the equity more valuable as there. There are lots of things that will make their token be more valuable as it is a new commodity.

pavel_lishin 9y ago
One thing I don't understand about ICOs is - what do the companies promise their coins to be worth? That is, if I have a Coin from your brand new endeavour - what can I, hypothetically, exchange it for? Do I get a vote in how your company is run? Can I give it back to you in exchange for a product or service later down the line? Or is it just a geegaw for me to put on a shelf, like a printout of a Patreon receipt?
- kazagistar 9y ago
  Generally, it'd the second. The coin is supposed to be a preorder, and it's value is thus the value of the service later.
- ringaroundthetx 9y ago
  they are for a product or service, the limited issuances of the token gives them a speculative market based on future demand and future supply. the team and organization gets funded, the buyers are liquid, nobody makes ridiculous decisions counter to their dreams hoping for "an exit", because everyone already has one. we don't have consumer or investor protections here yet so sure it is ripe for abuse, so far people are content with that, and we also haven't needed it
  - pavel_lishin 9y ago
    > the team and organization gets funded, the buyers are liquid, nobody makes ridiculous decisions counter to their dreams hoping for "an exit", because everyone already has one. Can you expand on this? What do you mean by "everyone already has one" in this scenario?
    - ringaroundthetx 9y ago
      Okay, in startups, corporations are formed and the equity (shares) in the corporation are doled out as currency. Completely useless currency given to helpers under the idea that they'll get rich one day in very improbable scenarios. There is no legal way to sell the shares (hyperbole, but very many hurdles). And exchanging additional shares for cash investments only serves to make your non-sellable stake in the company smaller while increasing your tax burdens in many scenarios. These new investors are typically VCs and they push for changes in the company completely unrelated to the founders vision, and good exits never come, because of the many ways VCs can get their much of their money back before founders or even employees get anything. In token sales, there may be a corporation for liability purposes but the equity in that corporation is not being sold at all. A product from the corporation is sold, a product with the unique characteristics of having easily formable secondary markets. Tokens are initially created and sold in exchange for US dollars, or Ethereum or another liquid token. This is used to grow the company, just like any presale on kickstarter is used to grow a company. Yet, the equities regulator is sticking their nose in it (for good reason), but a more applicable regulator could be formed to help grow the market and still obtain the consumer/investor protections they desire. I digress: Everyone that buys can immediately sell to other people, if the demand is there. Everyone that earned tokens by helping the corporation, including the founders, or large purchasers who also wanted to see the project develop, can also sell to other people. Immediately. If there is demand, then existing holders that helped fund the company (buy buying early), can sell to other people at a higher price. This is only "controversial" and "confusing" because it is more advantageous than the promises people sell to 20 year olds spending decades of their life for useless sweat equity, and it undermines the existing VC industry. It is potentially as revolutionary as "the share company" was in the year 1600.

chatmasta 9y ago

In the case of ethereum backed coins, every service does not really have its own coin, but rather a derivative of ethereum. As long as the coin is tradeable for general ETH tokens, it must fundamentally be pegged to the price of ethereum, even if it's traded separately on exchanges. There are obvious downsides to that, but it's a tradeoff for ease of development. You can create your own "coin" -- really just a (set of) smart contract(s) -- with simple tooling provided by the ethereum ecosystem. This is the real genius of ethereum; there is no "one use case" for it, but rather many, limited only by imagination. As more contracts are added to the ethereum ecosystem, ICOs funnel money into ETH, and ETH as a whole benefits from the ever increasing number of derivative services.

deleted 9y ago
[deleted]
joosters 9y ago
The technical details don't matter, all that's important is that coin X can't be spent on product Y without going through an exchange and paying conversion costs. It's plainly inconvenient and dumb. There's a reason why all real-world shops accept the local currency and not their own made up one.