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> 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 co

> 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.
      - pavel_lishin 9y ago
        Isn't this a bit of a Chesterton's Fence situation? There must be reasons other than "VCs are greedy!" for employees not being able to sell off their stocks immediately. The most obvious way to abuse this would be to join or create a startup, go through the ICO process, then sell off your shares, and, well, exit. Leave the company. You're rich, now - why keep working to build the product you (or your boss) promised to deliver?
  - tomc1985 9y ago
    > the buyers are liquid, Are they? It's hard to imagine there being enough buyers to match sellers if/when a coin hits a high peak, let alone if there is a collapse of confidence in the coin or product or its promoters
    - ringaroundthetx 9y ago
      There are ways to manage liquidity, even when your position is much greater than the posted or even average liquidity on the market. I've held positions in tokens upwards of 10% of the entire issuance and have been able to move in and out within a few minutes, I usually aim for ~5% of the last spot price. This is true of any market, just assume there is at least 1 rational actor in the market, what are they seeing that makes them so excited? Warren Buffet - before pivoting to the conservative investment baby boomer guru - bought illiquid discarded companies usually up to 51% of the equity and sold them on the public stock markets at mass profits. In 2017, the international crypto markets are way more liquid than the US equity markets were in the 1970s.

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.
    - pavel_lishin 9y ago
      Isn't this a bit of a Chesterton's Fence situation? There must be reasons other than "VCs are greedy!" for employees not being able to sell off their stocks immediately. The most obvious way to abuse this would be to join or create a startup, go through the ICO process, then sell off your shares, and, well, exit. Leave the company. You're rich, now - why keep working to build the product you (or your boss) promised to deliver?
- tomc1985 9y ago
  > the buyers are liquid, Are they? It's hard to imagine there being enough buyers to match sellers if/when a coin hits a high peak, let alone if there is a collapse of confidence in the coin or product or its promoters
  - ringaroundthetx 9y ago
    There are ways to manage liquidity, even when your position is much greater than the posted or even average liquidity on the market. I've held positions in tokens upwards of 10% of the entire issuance and have been able to move in and out within a few minutes, I usually aim for ~5% of the last spot price. This is true of any market, just assume there is at least 1 rational actor in the market, what are they seeing that makes them so excited? Warren Buffet - before pivoting to the conservative investment baby boomer guru - bought illiquid discarded companies usually up to 51% of the equity and sold them on the public stock markets at mass profits. In 2017, the international crypto markets are way more liquid than the US equity markets were in the 1970s.