9 ms·

ICO's of some form are unquestionably the future of raising capital for most tech companies up to a certain size (at least until ICO investors can consistently

ICO's of some form are unquestionably the future of raising capital for most tech companies up to a certain size (at least until ICO investors can consistently put in $1bil+). I'm saying this as someone who is living the ICO experience (https://airtoken.com https://airtoken.com). Compared to traditional angel / VC raising, this is hands down the best use case for blockchain so far. VC's and angel groups will become pre-sale stakers and stamps of approval for companies to boost the ICO, but the days of entrepreneurs spending months traveling around wining and dining the richest people in tech are over.

alphaalpha101 9y ago
I don't understand how these coins have value. Surely things only have value if they: 1) have some scarcity, and 2) have some useful purpose. I can see how these coins get scarcity, but what is their useful purpose? What can I do with FacebookKillerCoin or TwitterKillerCoin or EAGamesKillerCoin? If they're just essentially 'gift card currency' and the company will buy them off me in exchange for their products, why use a blockchain in the first place? Just call them loyalty points or whatever.
- pbhjpbhj 9y ago
  Monetary value isn't entirely founded on use-value of anything though. 'Coins' have value because a corpus of people has agreed it; you can exchange one for anything of you can convince someone else the coin has a particular value (which might just mean that it works as a stable exchange currency).
amluto 9y ago
Paraphrasing somewhat snarkily, you seem to be saying that selling securities of limited intrinsic value to as many clueless investors a as you can find is the future of fundraising. Screw Reg D, the SEC, any concept of selling only to informed investors, having some legal force behind your securities, etc. Why bother pitching to people who are actually qualified to review your claims and business model? IANAL, but I think the penalties for improperly selling securities are pretty severe, for good reason.
- seibelj 9y ago
  No, we are selling utility tokens which will be redeemable for mobile data, never did I say nor would I suggest that we are selling securities of any kind. As an entrepreneur, you can now raise funds to develop a product based on an idea - you get potential users excited, pre-sell access to a future product, and then use those funds to build the product. I can't begin to explain this to someone who has been locked into the traditional mindset. Everyone on HN knew about bitcoin before everyone else did yet most still missed out on 450,000% gains if buying in at $1. Sometimes the future is staring you in the face but you can't accept reality.
  - ameister14 9y ago
    So it's essentially just a mobile data pre-sale with fancy tech? Why is this better than crowdfunding in general??
    - seibelj 9y ago
      The tokens are immediately transferrable on the open market at floating prices. You aren't locked in for 5 years with your money stuck, and if you think the project will fail you can sell your tokens, unlike with kick-starter where you hope and pray they deliver.
      - JetSpiegel 9y ago
        Either a) the token is redeemable, and in that case why buy securities you don't intended to use (speculation is the only reason) b) or the company folds before delivering and the token is worthless, so by selling it you are just pushing the loss to a greater fool Either way, this is objectively worse than Kickstarter.
        seibelj 9y ago
        Let's say you give $50 to a kickstarter project, and in return you get some special benefit, say early access. If this was tokenized, as you follow the project, you could sell early access. If you thought it was less likely to happen, maybe you sell it for $40. If it was super exciting, and the founders capped how much early access there could ever be, maybe you sell at $60. This is the benefit that tokenization gives you. You don't get any say in the company, any stock, etc. - you get access to a product, and through the blockchain you can easily trade it securely and provably. People who buy diamonds, physical diamonds, may be speculating on them. Others may actually like the diamond. For whatever reason, they bought the diamond, and now own it, and can resell it. It isn't illegal to buy something in the hope it goes up in value. People do that all the time with videogames, cars, whatever. Now, let's say ownership of a diamond was moved to the the blockchain. Not only could you buy and transfer it easily, provably, securely - you could even buy 0.000000001 diamonds, or 100000 diamonds, just as easily. In my opinion, all of this is objectively better than kickstarter.
CPLX 9y ago
> I'm saying this as someone who is living the ICO experience As an old guy, I can say with equally "unquestionable" authority that you're going to look back on this statement and cringe one day.
- seibelj 9y ago
  As someone who has spent the last 30 days barely sleeping, I can say it was an experience!
  - gadnium79 9y ago
    As someone listens to someone talk about themselves as someone does, someone is somewhat silly
aetherson 9y ago
Unquestionably, huh?
sputknick 9y ago
ICOs are being over-used in the context of blockchain oriented companies. Tokens were never meant to be a fundraising/shareholder vehicle, they were designed aide distributed apps in their mission of decentralization. Tokens are meant to allow you to decentralize the operation of an app, not provide a means for fundraising. Augur is an example of a useful token, they issued a token as a means to decentralize the oracle for the markets that will be created on their platform. Their token (REP) obligates the holder to adjudicate market resolution on their platform in exchange for fees. Most of these ICOs are just mechanisms to raise money for blockchain based businesses.
- DennisP 9y ago
  That's one viewpoint, but token sales have been used as fundraising for several years. One of the earliest descriptions of a token sale on Ethereum is in the tutorials on ethereum.org; one quote: "Do you already have ideas that you want to develop on Ethereum? Maybe you need help and some funds to bring them to life." And of course Ethereum's own crowdsale in 2014 was a fundraising operation that made the whole project possible, and Augur itself used the money it raised in its token sale to fund development.
empath75 9y ago
Scamming gullible people out of their retirements is probably easier than doing hard work, that's true.
logicallee 9y ago
Hi! You write >ICO's of some form are unquestionably the future of raising capital for most tech companies up to a certain size But do not mention "in the fintech space" or even software companies - you just say "most tech companies up to a certain size." May I ask what the largest/most successful "traditional" tech company that used an ICO is? By "traditional" I mean that their tech has nothing to do with blockchains and they could have also just raised money on angellist, and today are just a normal tech company shipping some kind of a product, like a hoverboard. i.e. nothing related to ICO's or anything like that. Out of such 'traditional' tech startups (that just used it as an alternative to angel and VC money) what is the largest and most succesful one? (Or what are some of them.) I am not asking for anything related to blockchain or fintech as such companies are easy to find. Thank you.
- seibelj 9y ago
  This is early days, very early days. Give it a few years, and people won't bat an eye at raising capital via the blockchain. It's just more efficient and easier. I mean, if you like having to travel around, having tons of meetings and discussions, hoping your lead investor doesn't pull out and fuck up the whole round, by all means keep supporting the current system. It just is going to change, massively, in the coming years. There will be some sort of place for traditional capital but blockchain capital raising will hit every industry.
  - logicallee 9y ago
    I understand. I asked for the "largest/most successful 'traditional' tech company that used an ICO" (totally outside of fintech) -- a company shipping products, like a hoverboard or whatever. I take your response to mean that you don't know of a single ("traditional") tech company outside of fintech or blockchain-related technology that has used ICO's instead of angellist/VC's investors. But your response makes it clear that this will happen in the future. I hope I have this right? Thank you.
    - seibelj 9y ago
      Kik? Brave?
brndnmtthws 9y ago
I agree, but here on HN you'll get downvoted into oblivion for saying anything pro-blockchain. VCs (and other insiders) have long enjoyed the advantage of being the only ones that are allowed to participate in early funding, and thus reap the rewards. It leaves everyone else behind. This is one of several reasons why people who are already rich are the only ones who are becoming wealthier. The old system is no different from how ICOs work. The difference is that now everyone can participate, not just those who are wealthy and have the right connections (i.e., insiders). I don't think this will be the death of the crappy VC model as we know it, but I think that opening up the market to everyone is a wonderful thing.
- seibelj 9y ago
  I don't know why people intuitively hate blockchain here, I rarely comment about this stuff anymore, even though I have a trillion anecdotes that make me know something big is going to happen, and soon. HN is an echo chamber like anything else.
  - brndnmtthws 9y ago
    I think people naturally dislike what they don't fully understand, or that which does not confirm their biases, so many new technologies are ignored or ridiculed early on. You just have to brush off the haters. https://hbr.org/2012/09/ten-reasons-people-resist-chang https://hbr.org/2012/09/ten-reasons-people-resist-chang
  - Keeeeeeeks 9y ago
    No, I think it's a healthy dose of skepticism. Many applications for blockchain tech are impractical at best, leading to discussions about the ethics and legal implications of selling a token that quacks like a security via irreversible funding rounds. Most of the big things are either tied around vice or price. If an early adopter (or group of them, depending on your Spoofy theories) decide to manipulate the price enough to pump the price and create floors, they can. I haven't seen a killer app that specifically adds to people's lives in a way that doesn't provide liquidity to human rights violators (backpage, DNMs, kids/adults committing fraud, etc). Sure, there's Venezuela using and mining Bitcoin because their currency is unusable, but Bitcoin wasn't designed precisely for them. Shite companies love to prop up their use cases on developing country citizens (Coinbase with their 'African mothers will use us for businesses instead of M-Pesa' ), but the practical matter at hand is that most of these developing countries don't have stable enough internet and crypto-liquidity in a way that's conducive to using crypto on their phones. Where's the funding round for decentralized Wi-Fi balloons, or a legitimate competitor to M-Pesa? They're about as practical as another decentralized storage platform with minimal commits since the token sale and an ICO that raised a quarter billion based on hype
Obi_Juan_Kenobi 9y ago
When the majority of ICOs start to crash and burn (and the house of cards will fall), no one with a shred of legitimacy will want to be associated with the process. It's just too toxic, with too much room for bad actors to operate. I'm hugely bullish on Bitcoin and crypto in general, but ICOs are like a bad joke that won't die (look at e.g. https://icowatchlist.com/ https://icowatchlist.com/ and tell me that isn't a fucking farce). I'd love for ICOs to be able to democratize investing, but the information asymmetry is too large. At best, you enable tech workers to make some more money if they're smart and understand a particular business space. No, a 'blockchain powered' competitor to WeWork (i.e. Primalbase) and the billion other office-share companies isn't going to find any competitive advantage with Ether. None whatsoever. Yet they managed to fleece millions out of gullible investors. Tell me, do you honestly think that's a 7 million dollar idea? Oh, sorry, closer to 9 million when you count the non-public tokens. Late to the game in a super-saturated market that's 99% real estate? Have fun, I guess. At least your Airtoken thing doesn't reek of scam; there's something actually distributed and blockchain-y going on there. Perhaps you guys are completely legit; if so, kudos. I hope you don't get dragged down with the rest of the charlatans. But take off the blinders and take an honest look at what is going on.
- thecupisblue 9y ago
  Word. So many scams around and so many people buying just to "trade" and earn some money, it's making the space a huge stink for anyone interested in real crypto work.

alphaalpha101 9y ago

I don't understand how these coins have value. Surely things only have value if they: 1) have some scarcity, and 2) have some useful purpose. I can see how these coins get scarcity, but what is their useful purpose? What can I do with FacebookKillerCoin or TwitterKillerCoin or EAGamesKillerCoin? If they're just essentially 'gift card currency' and the company will buy them off me in exchange for their products, why use a blockchain in the first place? Just call them loyalty points or whatever.

pbhjpbhj 9y ago
Monetary value isn't entirely founded on use-value of anything though. 'Coins' have value because a corpus of people has agreed it; you can exchange one for anything of you can convince someone else the coin has a particular value (which might just mean that it works as a stable exchange currency).

amluto 9y ago

Paraphrasing somewhat snarkily, you seem to be saying that selling securities of limited intrinsic value to as many clueless investors a as you can find is the future of fundraising. Screw Reg D, the SEC, any concept of selling only to informed investors, having some legal force behind your securities, etc. Why bother pitching to people who are actually qualified to review your claims and business model? IANAL, but I think the penalties for improperly selling securities are pretty severe, for good reason.

seibelj 9y ago
No, we are selling utility tokens which will be redeemable for mobile data, never did I say nor would I suggest that we are selling securities of any kind. As an entrepreneur, you can now raise funds to develop a product based on an idea - you get potential users excited, pre-sell access to a future product, and then use those funds to build the product. I can't begin to explain this to someone who has been locked into the traditional mindset. Everyone on HN knew about bitcoin before everyone else did yet most still missed out on 450,000% gains if buying in at $1. Sometimes the future is staring you in the face but you can't accept reality.
- ameister14 9y ago
  So it's essentially just a mobile data pre-sale with fancy tech? Why is this better than crowdfunding in general??
  - seibelj 9y ago
    The tokens are immediately transferrable on the open market at floating prices. You aren't locked in for 5 years with your money stuck, and if you think the project will fail you can sell your tokens, unlike with kick-starter where you hope and pray they deliver.
    - JetSpiegel 9y ago
      Either a) the token is redeemable, and in that case why buy securities you don't intended to use (speculation is the only reason) b) or the company folds before delivering and the token is worthless, so by selling it you are just pushing the loss to a greater fool Either way, this is objectively worse than Kickstarter.
      - seibelj 9y ago
        Let's say you give $50 to a kickstarter project, and in return you get some special benefit, say early access. If this was tokenized, as you follow the project, you could sell early access. If you thought it was less likely to happen, maybe you sell it for $40. If it was super exciting, and the founders capped how much early access there could ever be, maybe you sell at $60. This is the benefit that tokenization gives you. You don't get any say in the company, any stock, etc. - you get access to a product, and through the blockchain you can easily trade it securely and provably. People who buy diamonds, physical diamonds, may be speculating on them. Others may actually like the diamond. For whatever reason, they bought the diamond, and now own it, and can resell it. It isn't illegal to buy something in the hope it goes up in value. People do that all the time with videogames, cars, whatever. Now, let's say ownership of a diamond was moved to the the blockchain. Not only could you buy and transfer it easily, provably, securely - you could even buy 0.000000001 diamonds, or 100000 diamonds, just as easily. In my opinion, all of this is objectively better than kickstarter.

CPLX 9y ago

> I'm saying this as someone who is living the ICO experience As an old guy, I can say with equally "unquestionable" authority that you're going to look back on this statement and cringe one day.

seibelj 9y ago
As someone who has spent the last 30 days barely sleeping, I can say it was an experience!
- gadnium79 9y ago
  As someone listens to someone talk about themselves as someone does, someone is somewhat silly

aetherson 9y ago

Unquestionably, huh?

sputknick 9y ago

ICOs are being over-used in the context of blockchain oriented companies. Tokens were never meant to be a fundraising/shareholder vehicle, they were designed aide distributed apps in their mission of decentralization. Tokens are meant to allow you to decentralize the operation of an app, not provide a means for fundraising. Augur is an example of a useful token, they issued a token as a means to decentralize the oracle for the markets that will be created on their platform. Their token (REP) obligates the holder to adjudicate market resolution on their platform in exchange for fees. Most of these ICOs are just mechanisms to raise money for blockchain based businesses.

DennisP 9y ago
That's one viewpoint, but token sales have been used as fundraising for several years. One of the earliest descriptions of a token sale on Ethereum is in the tutorials on ethereum.org; one quote: "Do you already have ideas that you want to develop on Ethereum? Maybe you need help and some funds to bring them to life." And of course Ethereum's own crowdsale in 2014 was a fundraising operation that made the whole project possible, and Augur itself used the money it raised in its token sale to fund development.

empath75 9y ago

Scamming gullible people out of their retirements is probably easier than doing hard work, that's true.

logicallee 9y ago

Hi! You write >ICO's of some form are unquestionably the future of raising capital for most tech companies up to a certain size But do not mention "in the fintech space" or even software companies - you just say "most tech companies up to a certain size." May I ask what the largest/most successful "traditional" tech company that used an ICO is? By "traditional" I mean that their tech has nothing to do with blockchains and they could have also just raised money on angellist, and today are just a normal tech company shipping some kind of a product, like a hoverboard. i.e. nothing related to ICO's or anything like that. Out of such 'traditional' tech startups (that just used it as an alternative to angel and VC money) what is the largest and most succesful one? (Or what are some of them.) I am not asking for anything related to blockchain or fintech as such companies are easy to find. Thank you.

seibelj 9y ago
This is early days, very early days. Give it a few years, and people won't bat an eye at raising capital via the blockchain. It's just more efficient and easier. I mean, if you like having to travel around, having tons of meetings and discussions, hoping your lead investor doesn't pull out and fuck up the whole round, by all means keep supporting the current system. It just is going to change, massively, in the coming years. There will be some sort of place for traditional capital but blockchain capital raising will hit every industry.
- logicallee 9y ago
  I understand. I asked for the "largest/most successful 'traditional' tech company that used an ICO" (totally outside of fintech) -- a company shipping products, like a hoverboard or whatever. I take your response to mean that you don't know of a single ("traditional") tech company outside of fintech or blockchain-related technology that has used ICO's instead of angellist/VC's investors. But your response makes it clear that this will happen in the future. I hope I have this right? Thank you.
  - seibelj 9y ago
    Kik? Brave?

brndnmtthws 9y ago

I agree, but here on HN you'll get downvoted into oblivion for saying anything pro-blockchain. VCs (and other insiders) have long enjoyed the advantage of being the only ones that are allowed to participate in early funding, and thus reap the rewards. It leaves everyone else behind. This is one of several reasons why people who are already rich are the only ones who are becoming wealthier. The old system is no different from how ICOs work. The difference is that now everyone can participate, not just those who are wealthy and have the right connections (i.e., insiders). I don't think this will be the death of the crappy VC model as we know it, but I think that opening up the market to everyone is a wonderful thing.

seibelj 9y ago
I don't know why people intuitively hate blockchain here, I rarely comment about this stuff anymore, even though I have a trillion anecdotes that make me know something big is going to happen, and soon. HN is an echo chamber like anything else.
- brndnmtthws 9y ago
  I think people naturally dislike what they don't fully understand, or that which does not confirm their biases, so many new technologies are ignored or ridiculed early on. You just have to brush off the haters. https://hbr.org/2012/09/ten-reasons-people-resist-chang https://hbr.org/2012/09/ten-reasons-people-resist-chang
- Keeeeeeeks 9y ago
  No, I think it's a healthy dose of skepticism. Many applications for blockchain tech are impractical at best, leading to discussions about the ethics and legal implications of selling a token that quacks like a security via irreversible funding rounds. Most of the big things are either tied around vice or price. If an early adopter (or group of them, depending on your Spoofy theories) decide to manipulate the price enough to pump the price and create floors, they can. I haven't seen a killer app that specifically adds to people's lives in a way that doesn't provide liquidity to human rights violators (backpage, DNMs, kids/adults committing fraud, etc). Sure, there's Venezuela using and mining Bitcoin because their currency is unusable, but Bitcoin wasn't designed precisely for them. Shite companies love to prop up their use cases on developing country citizens (Coinbase with their 'African mothers will use us for businesses instead of M-Pesa' ), but the practical matter at hand is that most of these developing countries don't have stable enough internet and crypto-liquidity in a way that's conducive to using crypto on their phones. Where's the funding round for decentralized Wi-Fi balloons, or a legitimate competitor to M-Pesa? They're about as practical as another decentralized storage platform with minimal commits since the token sale and an ICO that raised a quarter billion based on hype

Obi_Juan_Kenobi 9y ago

When the majority of ICOs start to crash and burn (and the house of cards will fall), no one with a shred of legitimacy will want to be associated with the process. It's just too toxic, with too much room for bad actors to operate. I'm hugely bullish on Bitcoin and crypto in general, but ICOs are like a bad joke that won't die (look at e.g. https://icowatchlist.com/ https://icowatchlist.com/ and tell me that isn't a fucking farce). I'd love for ICOs to be able to democratize investing, but the information asymmetry is too large. At best, you enable tech workers to make some more money if they're smart and understand a particular business space. No, a 'blockchain powered' competitor to WeWork (i.e. Primalbase) and the billion other office-share companies isn't going to find any competitive advantage with Ether. None whatsoever. Yet they managed to fleece millions out of gullible investors. Tell me, do you honestly think that's a 7 million dollar idea? Oh, sorry, closer to 9 million when you count the non-public tokens. Late to the game in a super-saturated market that's 99% real estate? Have fun, I guess. At least your Airtoken thing doesn't reek of scam; there's something actually distributed and blockchain-y going on there. Perhaps you guys are completely legit; if so, kudos. I hope you don't get dragged down with the rest of the charlatans. But take off the blinders and take an honest look at what is going on.

thecupisblue 9y ago
Word. So many scams around and so many people buying just to "trade" and earn some money, it's making the space a huge stink for anyone interested in real crypto work.