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> tokens aren’t just stand-ins for stock—they can be set up so that instead of a share of a company, holders get services, like cloud storage space, for example

> tokens aren’t just stand-ins for stock—they can be set up so that instead of a share of a company, holders get services, like cloud storage space, for example. How is that an attractive proposition? It means I get all the risk of buying stock in a new company, but none of the benefits. My money is gone if the company goes belly up, just like buying stock, but if the company does well, the best I'm ever going to get is some standard service. My token will never be worth more than whatever that service is worth.

wyldfire 9y ago
The most cynical among us might consider that shareholders are just "yet another bunch of creditors" in the queue if something goes wrong. Which doesn't seem much better than "the first customers for this crappy coin/service."
- rowyourboat 9y ago
  The difference is not in the worst case scenario - everybody loses all of their money if things go really wrong. The difference is in the best case scenario, which can be very attractive as a shareholder.
Deestan 9y ago
You could hope to resell the service for more than you initially paid for it in the ICO.
Spivak 9y ago
> My token will never be worth more than whatever that service is worth. Right, which is why ICOs seem to basically be digital commodity speculation. Still plenty of money to be made in that space. You're betting that the service will become more valuable over time rather than the company.
- BoiledCabbage 9y ago
  And there is zero financial regulation of "services" like there is financial regulation of companies. It's the equivalent of speculating on the value of an item in World of Warcraft (Or some other mmorpg). At any point in the future the company will just change the game logic rules to make it worth less and forge a new item out of thin air worth more to raise more funds. "Oh yes you have our A coins, but you need our B coins to do certain special transactions. Convert at this rate that's highly favorable to us. Or buy in to our B coins ICO and get in on the ground floor before we begin to phase our A coins out." Don't purchase things where the other party can redefine what you own as it suits them. "Buy this property from me, but at any point in the next 50 years I can come in and redraw the property boundary lines and keep what I carve off."
woah 9y ago
The token is not pegged to some dollar-valued fixed amount of that service. Using the air miles analogy, it's like instead of purchasing a fixed number of miles, you are purchasing some percent of the total miles that the airline will fly, and are free to sell those to people who want to travel later. It's theoretically a good investment because it will not be possible for anyone to fly on the airline without buying air miles from someone who participated in the ICO. For example, if you think that the market for filecoin file storage is going to be bigger than $200 million, then it makes sense to buy their tokens in the ICO.
hectorr1 9y ago
ICOs are a terrible idea for most business ideas today. But they also may enable new business models that haven't quite been figured out yet, especially in areas where network effects and adoption are key drivers of success. The question is what kinds of novel organizations can be built with this model, not how can these be slapped on existing ideas for a quick influx of cash.

wyldfire 9y ago

The most cynical among us might consider that shareholders are just "yet another bunch of creditors" in the queue if something goes wrong. Which doesn't seem much better than "the first customers for this crappy coin/service."

rowyourboat 9y ago
The difference is not in the worst case scenario - everybody loses all of their money if things go really wrong. The difference is in the best case scenario, which can be very attractive as a shareholder.

Deestan 9y ago

You could hope to resell the service for more than you initially paid for it in the ICO.

Spivak 9y ago

> My token will never be worth more than whatever that service is worth. Right, which is why ICOs seem to basically be digital commodity speculation. Still plenty of money to be made in that space. You're betting that the service will become more valuable over time rather than the company.

BoiledCabbage 9y ago
And there is zero financial regulation of "services" like there is financial regulation of companies. It's the equivalent of speculating on the value of an item in World of Warcraft (Or some other mmorpg). At any point in the future the company will just change the game logic rules to make it worth less and forge a new item out of thin air worth more to raise more funds. "Oh yes you have our A coins, but you need our B coins to do certain special transactions. Convert at this rate that's highly favorable to us. Or buy in to our B coins ICO and get in on the ground floor before we begin to phase our A coins out." Don't purchase things where the other party can redefine what you own as it suits them. "Buy this property from me, but at any point in the next 50 years I can come in and redraw the property boundary lines and keep what I carve off."

woah 9y ago

The token is not pegged to some dollar-valued fixed amount of that service. Using the air miles analogy, it's like instead of purchasing a fixed number of miles, you are purchasing some percent of the total miles that the airline will fly, and are free to sell those to people who want to travel later. It's theoretically a good investment because it will not be possible for anyone to fly on the airline without buying air miles from someone who participated in the ICO. For example, if you think that the market for filecoin file storage is going to be bigger than $200 million, then it makes sense to buy their tokens in the ICO.

hectorr1 9y ago

ICOs are a terrible idea for most business ideas today. But they also may enable new business models that haven't quite been figured out yet, especially in areas where network effects and adoption are key drivers of success. The question is what kinds of novel organizations can be built with this model, not how can these be slapped on existing ideas for a quick influx of cash.