10 ms·

Ray Dillinger: If I'd Known What We Were Starting

329 points by tim_sw 9y ago

a_d 9y ago
"What else ticks me off about this, is that there is absolutely nothing wrong with issuing stock in your company as tokens on a block chain instead of through brokers on a standard exchange. Just do it legally, for Pete's sake! Go to the SEC, or whoever the appropriate regulatory authority in your jurisdiction is, and get authorization to issue stock! Hire somebody to implement shareholder voting as block chain transactions. If the law in your area doesn't allow anonymous stockholders, then you need identified participants (and, inevitably, a Trusted system to assign or match IDs). It can work. It has advantages even. But after the meltdown that the scammers are bringing down on this whole form, it's going to be anathema, or even illegal." Ironically, the first "ICO" to do it with full compliance, useful tech and good business model, will be huge. There is demand for it. The other big opportunity is to come up with a framework that everyone can use to be compliant (e.g. An Ethereum with "compliance" mechanisms built into it will be a big "general-purpose" blockchain). It's hard to understand why ignore compliance, when being compliant is quite simply going to be much bigger, sustainable and "good business" than all scammers put together.
- wmf 9y ago
  The first "ICO" to do it with full compliance, useful tech and good business model, will be huge. Yes, Filecoin raised over $200M. But their troubles are still in the future. The ICO bubble may pop before any of their investors get liquidity. It's probably illegal for Filecoin to trade on any public exchange, so they need to create a "SecondCoin" exchange for qualified investors. And blockchain-based storage has some unsolved problems like low demand. Being compliant is quite simply going to be much bigger, sustainable and "good business" than all scammers put together. Any evidence of this? My impression is that 90% of ICOs wouldn't survive any due diligence.
- CJefferson 9y ago
  I can't imagine blockchains ever satisfying all legal requirements. At some point I expect some court to say "X shares were illegally transferred from person A, give them back". If we don't know where they went, it's impossible on block-chain to give them back, unless we assume the existence of someone who has the rights to make arbitrary changes, at which point there is no point having a blockchain.
  - lallysingh 9y ago
    Why can't you require that each wallet be signed by a party that identifies the person behind it? Then you find where the money went and you force them to give it back. But I think really the statement of interest is here: > ... at which point there is no point having a blockchain. Lots of people have different reasons for liking block chains. Their reasons may disagree with yours.
    - abakker 9y ago
      Financial transactions between real legal entities probably have no expectation that the transaction should be completely anonymous or trustless. Instead, they probably have expectations that the transaction mechanism can be trusted, and that they have legal recourse to make up the difference. Blockchains probably have very relevant uses, but using them to approximate our existing financial system doesn't seem to be that useful. All of our laws and the current system exist for a reason. I'd bet on supply chain as the corporate/real world workload that makes the most sense. the distribution of the chain actually provides a relevant service in those cases.
    - wyldfire 9y ago
      > Why can't you require that each wallet be signed by a party that identifies the person behind it? Then you find where the money went and you force them to give it back. And what if they refuse [despite consequences]? > Lots of people have different reasons for liking block chains. Their reasons may disagree with yours. I'd say the common/paramount feature is "decentralized, trustless ledger w/distributed consensus." Dillinger talks at length here about how "...the Trustless nature of Bitcoin was the main thing that convinced me Satoshi wasn't scamming." Yes, lots of private things calling themselves a "blockchain" exist. But those all submit themselves to some sort of authority/trust system. And it's likely the case that they do that in order to avoid the problem described. IMO it's anarchy [good connotation] vs rule-of-law. Crypto-coin/asset systems can be ruled by distributed consensus but this feature is mutually exclusive with state-managed systems. When they intersect or when they're forced to intersect, we end up with an imbalance/mismatch.
- grandalf 9y ago
  Compliance with what, the whim of officials in any nation?
  - abakker 9y ago
    Yeah, pretty much. You could also think of it as the decisions of the governments of people, who were chose to act in those people's best interests.
    - ShabbosGoy 9y ago
      Like China?
    - StanislavPetrov 9y ago
      > who were chose to act in those people's best interests. Are you seriously suggesting this is how politicians are chosen?
  - baq 9y ago
    That's usually called the rule of law and it's a hallmark of Western democracies.
    - grandalf 9y ago
      Following the whims of officials is quite different from the rule of law!
- abrichr 9y ago
  Apparently such a system has been developed by the Toronto Stock Exchange: http://business.financialpost.com/g00/news/fp-street/tmx-develops-blockchain-tech-for-shareholder-voting-to-boost-involvement-corporate-governance?i10c.encReferrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNhLw%3D%3D http://business.financialpost.com/g00/news/fp-street/tmx-dev... > TMX’s new proxy voting system prototype still needs regulatory approval before it can be tested live, the company said. Anyone have an idea of how long this might take?
  - Top19 9y ago
    Don’t know, but I can tell you Blackberry used to trade there before packing up their bags for greener pastures and switching to NYSE.
- paulddraper 9y ago
  > Ironically, the first "ICO" to do it with full compliance, useful tech and good business model, will be huge. We're a long ways off on all counts. Just look transaction rate: BTC: 4 trans/sec Etherum: 20 trans/sec Visa: 2,000 trans/sec I'm not saying it's impossible to improve by orders of magnititude, but I don't think it will happen next year or the year after that or the year after that.
  - deleted 9y ago
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- nerpderp83 9y ago
  I just announced notary chain.
- throwaway8184 9y ago
  [using a throwaway so I can say this] It always bugs me when I hear someone who I know knows better use a line like: "Just do it legally, for Pete's sake! Go to the SEC" -- as though this was a matter of dropping a postcard in the mail. I'm confident that these writers know better. The real situation -- as you can see in any of the stories about Blue Bottle's non-IPO, Hedosophia, etc -- is that "just do it legally" is rapidly approaching the regulatory singularity of "just get the NRC to license your new nuclear reactor design." Even for multibillion-dollar companies, "just do it legally" is becoming prohibitively costly. Compare to the 1990s, when sub-100M IPOs were not that weird. This has enabled VCs to earn enormous monopoly fees, originally as gatekeepers to the IPO process, now as gatekeepers to a gigantic secondary market in "unicorns." Lambos all around. As in taxi medallions, this bottleneck creates immense profits. Naturally, the spectacle of Uber versus the taxi mafia, or ICOs versus the VC mafia, creates a lot of passions. Especially among those with axes to grind. There is one big difference: Uber provides a consistently excellent transportation experience. Whereas most ICOs are straight-out terrible. Let's hope that the sheep get separated from the goats, as fast as possible. [/end imprudently-frank throwaway]
- AlenaSatoshi 9y ago
  I can't agree with "compliant = sustainable and good business". Having worked in the most regulated business - insurance, and being there when more consumer protection has been implemented, I can say that there was no drop in scams and complaints AT ALL. The fact that you have a license or a traditional VC money, doesn't ensure success or fair service. In fact, around 90% of VC funded startups fail too. Legal or compliant doesn’t mean "not scamming". It just means more expensive and hence restrictive.. It blows my mind that crypto-folks who promote inclusion and freedom call for regulation instead of finding new smart ways to deal with new problems. For example, Bitcoin resolved privacy and re-use of addresses with HD wallets. Problem with thieves - solved through hardware wallets. I'm sure we have the capacity to deal with upcoming issues without someone telling us what to do and actually preventing GOOD ideas to be done without having to sell your soul. I understand VC's interests here, but they also need to understand that their value will increasingly be in the experience, contacts and network that they have, not necessarily in their money. Having said all that, no, I'm not a fan of 99% of current ICOs. But still I don't cry on the shoulders of regulators. And those speculators who invest without any due diligence, usually with much lower $$ value than what it seems and with the vision of a 100x or 500x in a few months, well those will learn through experience. The market will clean itself from fraudsters.
dahart 9y ago
> Make sure they have the ... authority to issue stock (yes, that's what the coins on the block chain legally are, if they're selling them at launch) I hadn't thought about a launch of e-coins as stock. This is interesting and helpful, as someone who's only been lightly following blockchain and e-coin news. I have some fear of missing out, and Ray's perspective makes me think I've worried about the wrong things.
- 52-6F-62 9y ago
  I don't know if other people have any dramatically different thoughts on the matter, but if you don't want to miss out but don't want the blatant risk of dealing in ICO's, it seems somewhat reasonable (nothing is reasonable or save in cryptocurrencies, really) way to involve yourself then I'd suggest having a look at just purchasing some of the larger coins (eg Bitcoin, Ethereum, Litecoin) and sitting on it for a couple of years. Cost average your buy in, especially since it's dipped a little recently. Then again, only at an amount that you could lose and not regret it too much. I've been following the progression of the tech in general and have friends who try and play the ICO game, but it's just too fickle for me. I'm not ready to go full day trader over that stuff. However the long term trend (zooming out) tends toward: --- Minimal attention > growing attention > hype and burst > pop and settle > stagnation > return to attention, and start over --- repeatedly, and all generally on an upwards trend over the past ~6 years from what I can tell so far. Just speaking to the prices, here. Something different is happening with the ICOs and the ability to build upon the networks like Ethereum. It's hard to predict, and it's curious what all the calamity surrounding those gambles will amount to. I'm sure a few of the companies will stand out and remain, but most of it just seems so... poorly footed.
wmf 9y ago
I hate to even imagine how many billions of dollars of scams and failures and thefts have been perpetrated by abusing people's faith in and enthusiasm for that technology by now. And I have no idea how we could possibly have prevented it. If Bitcoin had stable value instead of a built-in boom-bust cycle then we wouldn't have crypto scam mania today. Dillinger praises Satoshi's honesty, but Bitcoin's monetary policy is "a blatant bribe to early adopters". https://www.gwern.net/Bitcoin-is-Worse-is-Better https://www.gwern.net/Bitcoin-is-Worse-is-Better
- zodiac 9y ago
  How would you propose making bitcoin "have stable value"?
  - wmf 9y ago
    https://blog.ethereum.org/2014/11/11/search-stable-cryptocurrency/ https://blog.ethereum.org/2014/11/11/search-stable-cryptocur...
    - zodiac 9y ago
      I'm really interested in the stablecoin space but I don't think it's realistic to expect bitcoin to have started out as such. Firstly bitcoin was already testing some unknown assumptions (mainly "is our PoW scheme secure and scalable?") and it would be too confounding to also test "is our chosen stability mechanism effective?". Secondly none of the solutions Vitalik mentioned are easy at all; you need decentralized measurement, and all the solutions he presented have problems. Broadly speaking, if it were really easy to create a stablecoin - so easy that you think Bitcoin could have started out as one - a good one should have existed by now, but there's no good one so far. Thirdly, all of Vitalik's solutions require a volatile coin, which would presumably have increased in market cap over time and be subject to boom-bust cycles, all of which you object to. I also think the only approach that would lead to an effective stablecoin (ie one with a good peg) is one that uses other cryptocurrencies, external to the stablecoin, as collateral (eg MKR's approach), and that requires things like bitcoin to exist.
agrnx 9y ago
Ray is Cryddit / Bear and posted some cool stuff on the forums- https://bitcointalk.org/index.php?topic=946236.msg10388435#msg10388435 https://bitcointalk.org/index.php?topic=946236.msg10388435#m... Semi-unrelated by Craig Wright who has (falsely) claimed to be Satoshi also claims Dillinger is his friend. Wright said Dillinger quit bitcoin due to the toxic drama. More likely Wright & his friend were early miners and not involved in the Satoshi persona.
Theodores 9y ago
On a more day to day level, a few years ago a lot of e-commerce pay-by-bitcoin options existed. You would not put this on the checkout next to PayPal because nobody was doing bitcoin then. What I don't understand is why this never took off. People know bitcoin through the news, it is not new. In this time Apple Pay has come along nicely but not bitcoin. Bitcoin has gone off on a tulips tangent. This seems at odds with what I thought the purpose was, being able to pay securely and without Visa getting their cut.
- rebelidealist 9y ago
  Due to the limited supply of 24 million BTC, Bitcoin is deflationary meaning it will go up in value as more people adopt it. Govt print fiat currency out of thin air to encourage the population to spend on the economy. Bitcoin as the opposit affect as people use it for a store of value and a hedge against fiat currencies.
  - deleted 9y ago
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  - icebraining 9y ago
    That limit will only be hit in 2140.
    - zghst 9y ago
      If it survives that long...
      - ojr 9y ago
        thank you for your trade analysis but since you have $0 in bitcoin, I assume, I would have to take it with a grain of salt
  - mattnewton 9y ago
    It's arbitrarily divisible, up to the limit of a float though right? So nominal prices can keep "decreasing" in bitcoin for a long time. Maybe that's just too much work to keep the prices reasonable? Edit: they can't actually be using a float for money though, right? So what is the actual limit of divisibiity?
wyc 9y ago
What really upsets me is that most of the whitepapers pumped out by ICOs today are emphatically not the way we best understand how sustainable new companies come into existence. Many contain big grandiose plans that stretch years and don’t admit the necessary network effects, new technologies, etc., for even modest success. An idea, a LaTeX installation, and WordPress landing page are a very low bar for raising millions of dollars, especially by today’s standards. With open source software and services like AWS and GCP, we should expect more. Startups by definition are organizations in flux seeking their scalable business models, and claiming to have all the answers upon inception is an exercise in hubris and/or grandstanding. The late Steve Jobs did say that customers don’t know what they want, but many of these ICO firms don’t even seem to take the first steps in talking to early prospects. 1999 is calling, and they want their 18-month growth plans, 50-page business plans, and million dollar war chests back.
- ColanR 9y ago
  That's probably an optimistic view of the motivations of a lot of the ICOs. Your comment reminds me of an HN thread from about a month ago (https://news.ycombinator.com/item?id=15072257 https://news.ycombinator.com/item?id=15072257). > How to make money in ethereum, from high to low risk ... 3. Even more profitable is kicking off your own ICO. Go through the checklist - fancy HTML5 theme that you can buy off of Themeforest and edit the HTML a bit for the landing page, create a Slack channel/Twitter account/subreddit, write a "whitepaper" that is easy enough for the shmucks you're targeting to understand, yet replete with enough pseudo-academic crypto jargon and irrelevant/unnecessary mathematical symbols to get the shmucks nodding their heads and pretending to understand how this particular algorithm/equation based on the "turing-complete ethereum blockchain" will "change the world" or "bank the unbanked" or, more importantly to them, appreciate 500x in value.
  - zghst 9y ago
    This is perfect
  - deleted 9y ago
    [deleted]
orsenthil 9y ago
Who is Ray Dillinger? Why should we trust him with this post?
- wmf 9y ago
  We're talking about Bitcoin so obviously you should trust no one. But most of this post is either his opinion or information that was already well-known, so I think we can get some value out of it even if we don't trust the author.
- AceJohnny2 9y ago
  A cursory search reveals guy who was involved in BitCoin from the very start. For example, here's an exchange he had in 2008 with Satoshi over the design of Bitcoin: http://satoshi.nakamotoinstitute.org/emails/cryptography/5/ http://satoshi.nakamotoinstitute.org/emails/cryptography/5/
  - optimuspaul 9y ago
    Wow, Satoshi was incredibly naive, dishonest, or just didn't have any idea how quickly it would get out of control.
    - just_one_time_ 9y ago
      Wow, these Core Trolls are everywhere, any chance to shit on Satoshi and push the new, Bitcoin is a Settlement layer agenda.
    - bsaul 9y ago
      Are you talking about the linked post regarding inflation ? because it seems to me satoshi was pretty right, by saying that bitcoins will get rarer and rarer even if miners mine more and more thanks to powerful machines. Rarer bitcoins means prices going down ( what costed 1 bitcoin before probably cost 0.001 bitcoin now), not up ( which is the definition of inflation).
      - 9y ago
koolba 9y ago
> Let's think about that for a minute. Would you buy stock in a business whose business plan was a giant marketing campaign to promote the value of the stock? This is a beautiful summary of the ICO ecosphere.
- deleted 9y ago
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- sp527 9y ago
  I think he was alluding to Multi-Level Marketing as well, which seems like an even more apt comparison.
  - wakamoleguy 9y ago
    It's an unfortunate allusion, though, as many people do buy into Multi-Level Marketing schemes.
- chi18 9y ago
  When I read it I was thinking, "Yes, along with many others, because that is basically the story of many, many public companies."
bitL 9y ago
When idealism hits unfettered human nature...
jancsika 9y ago
> He wasn't trying to line his own pockets at the expense of others. In fact I don't think I've ever encountered someone so completely uninterested in personal wealth. You know the old saw about being able to get a lot done if you don't care who gets the credit? Satoshi doesn't want the credit. Two years later he walked away and left the pseudonym behind. And hard as this may be to believe, it looks like he doesn't even want to be paid for it. As far as we can tell he mined approximately a million Bitcoins and has never sold a single one of them. That's rank speculation. Satoshi also didn't provably burn those millions of coins by sending them to a bunk address-- i.e. whatever the Bitcoin address equivalent is for "IF-I-HAVE-THE-KEY-TO-THIS-ADDRESS-THEN-THIS-HASHING-ALGORITHM-IS-BROKEN". Unless Ray is one of the authors of Bitcoin he has no idea whether Satoshi was interested in personal wealth, or died, or was tracked down by a security service, or something else entirely.
- rothbardrand 9y ago
  Its true, Satoshi could have burned his coins. There are several legitimate reasons not to do so-- one of which is that it might have indicated a belief that bitcoin was a failure, and such a shock in the early days would have been bad. If satoshi sometime shows up and starts moving his coins, that's fine by me. He deserves to be super rich, because what he created is revolutionary. Notice he said "it looks like he doesn't even want to be paid for it". But also realize, there's the satoshi coins, but there's no way to know how many other addresses he mined to, and that its quite possible he has 100k coins that have been moving since he disappeared and nobody knows they are his. Or he could have started mining after he disappeared or started investing cash to buy them after, and still be very rich.
fiatjaf 9y ago
I can't agree more with most of the article, but can't disagree more with the claim that everything is horrible, but would be fine and awesome if only done through the SEC. The whole idea of crypto-anarchy was to avoid the SEC from the beggining. Of couse there will be scammers, but some people, or some other form of organization, will appear and do the job that SEC should do (and, frankly, doesn't) but in a way that fits the new model. There are a lot of scams in the real world, and the government isn't capable of preventing them. In fact, the government itself is a giant scam, and you're not criticizing it.
fiatjaf 9y ago
Where can I find information on the per-coin blockchain protocol from 1995 Dillinger comments about in the beggining?
hartator 9y ago
Is Ethereum part of the fishy coins the author is describing?
- rothbardrand 9y ago
  Yes. Ethereum is the original ICO.
- SolarNet 9y ago
  I think he is implying they could do better as the founders and stewards of these systems. But I don't think he is directly calling them out.
_Codemonkeyism 9y ago
"I had created what I believe is the first digital-cash protocol ever to use block chains in any form - though it used them in a way very different than Bitcoin and its descendants. In that protocol each 'coin' had its own little chain that grew by one link each time it was transferred from one owner to the next. Seeing the idea come around again, in a very different form, was fascinating for me." No, that is not a blockchain, but I can see what you did there, blockchain inventor.

329 points by tim_sw 9y ago

a_d 9y ago

"What else ticks me off about this, is that there is absolutely nothing wrong with issuing stock in your company as tokens on a block chain instead of through brokers on a standard exchange. Just do it legally, for Pete's sake! Go to the SEC, or whoever the appropriate regulatory authority in your jurisdiction is, and get authorization to issue stock! Hire somebody to implement shareholder voting as block chain transactions. If the law in your area doesn't allow anonymous stockholders, then you need identified participants (and, inevitably, a Trusted system to assign or match IDs). It can work. It has advantages even. But after the meltdown that the scammers are bringing down on this whole form, it's going to be anathema, or even illegal." Ironically, the first "ICO" to do it with full compliance, useful tech and good business model, will be huge. There is demand for it. The other big opportunity is to come up with a framework that everyone can use to be compliant (e.g. An Ethereum with "compliance" mechanisms built into it will be a big "general-purpose" blockchain). It's hard to understand why ignore compliance, when being compliant is quite simply going to be much bigger, sustainable and "good business" than all scammers put together.

wmf 9y ago
The first "ICO" to do it with full compliance, useful tech and good business model, will be huge. Yes, Filecoin raised over $200M. But their troubles are still in the future. The ICO bubble may pop before any of their investors get liquidity. It's probably illegal for Filecoin to trade on any public exchange, so they need to create a "SecondCoin" exchange for qualified investors. And blockchain-based storage has some unsolved problems like low demand. Being compliant is quite simply going to be much bigger, sustainable and "good business" than all scammers put together. Any evidence of this? My impression is that 90% of ICOs wouldn't survive any due diligence.
CJefferson 9y ago
I can't imagine blockchains ever satisfying all legal requirements. At some point I expect some court to say "X shares were illegally transferred from person A, give them back". If we don't know where they went, it's impossible on block-chain to give them back, unless we assume the existence of someone who has the rights to make arbitrary changes, at which point there is no point having a blockchain.
- lallysingh 9y ago
  Why can't you require that each wallet be signed by a party that identifies the person behind it? Then you find where the money went and you force them to give it back. But I think really the statement of interest is here: > ... at which point there is no point having a blockchain. Lots of people have different reasons for liking block chains. Their reasons may disagree with yours.
  - abakker 9y ago
    Financial transactions between real legal entities probably have no expectation that the transaction should be completely anonymous or trustless. Instead, they probably have expectations that the transaction mechanism can be trusted, and that they have legal recourse to make up the difference. Blockchains probably have very relevant uses, but using them to approximate our existing financial system doesn't seem to be that useful. All of our laws and the current system exist for a reason. I'd bet on supply chain as the corporate/real world workload that makes the most sense. the distribution of the chain actually provides a relevant service in those cases.
  - wyldfire 9y ago
    > Why can't you require that each wallet be signed by a party that identifies the person behind it? Then you find where the money went and you force them to give it back. And what if they refuse [despite consequences]? > Lots of people have different reasons for liking block chains. Their reasons may disagree with yours. I'd say the common/paramount feature is "decentralized, trustless ledger w/distributed consensus." Dillinger talks at length here about how "...the Trustless nature of Bitcoin was the main thing that convinced me Satoshi wasn't scamming." Yes, lots of private things calling themselves a "blockchain" exist. But those all submit themselves to some sort of authority/trust system. And it's likely the case that they do that in order to avoid the problem described. IMO it's anarchy [good connotation] vs rule-of-law. Crypto-coin/asset systems can be ruled by distributed consensus but this feature is mutually exclusive with state-managed systems. When they intersect or when they're forced to intersect, we end up with an imbalance/mismatch.
grandalf 9y ago
Compliance with what, the whim of officials in any nation?
- abakker 9y ago
  Yeah, pretty much. You could also think of it as the decisions of the governments of people, who were chose to act in those people's best interests.
  - ShabbosGoy 9y ago
    Like China?
  - StanislavPetrov 9y ago
    > who were chose to act in those people's best interests. Are you seriously suggesting this is how politicians are chosen?
- baq 9y ago
  That's usually called the rule of law and it's a hallmark of Western democracies.
  - grandalf 9y ago
    Following the whims of officials is quite different from the rule of law!
abrichr 9y ago
Apparently such a system has been developed by the Toronto Stock Exchange: http://business.financialpost.com/g00/news/fp-street/tmx-develops-blockchain-tech-for-shareholder-voting-to-boost-involvement-corporate-governance?i10c.encReferrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNhLw%3D%3D http://business.financialpost.com/g00/news/fp-street/tmx-dev... > TMX’s new proxy voting system prototype still needs regulatory approval before it can be tested live, the company said. Anyone have an idea of how long this might take?
- Top19 9y ago
  Don’t know, but I can tell you Blackberry used to trade there before packing up their bags for greener pastures and switching to NYSE.
paulddraper 9y ago
> Ironically, the first "ICO" to do it with full compliance, useful tech and good business model, will be huge. We're a long ways off on all counts. Just look transaction rate: BTC: 4 trans/sec Etherum: 20 trans/sec Visa: 2,000 trans/sec I'm not saying it's impossible to improve by orders of magnititude, but I don't think it will happen next year or the year after that or the year after that.
- deleted 9y ago
  [deleted]
nerpderp83 9y ago
I just announced notary chain.
throwaway8184 9y ago
[using a throwaway so I can say this] It always bugs me when I hear someone who I know knows better use a line like: "Just do it legally, for Pete's sake! Go to the SEC" -- as though this was a matter of dropping a postcard in the mail. I'm confident that these writers know better. The real situation -- as you can see in any of the stories about Blue Bottle's non-IPO, Hedosophia, etc -- is that "just do it legally" is rapidly approaching the regulatory singularity of "just get the NRC to license your new nuclear reactor design." Even for multibillion-dollar companies, "just do it legally" is becoming prohibitively costly. Compare to the 1990s, when sub-100M IPOs were not that weird. This has enabled VCs to earn enormous monopoly fees, originally as gatekeepers to the IPO process, now as gatekeepers to a gigantic secondary market in "unicorns." Lambos all around. As in taxi medallions, this bottleneck creates immense profits. Naturally, the spectacle of Uber versus the taxi mafia, or ICOs versus the VC mafia, creates a lot of passions. Especially among those with axes to grind. There is one big difference: Uber provides a consistently excellent transportation experience. Whereas most ICOs are straight-out terrible. Let's hope that the sheep get separated from the goats, as fast as possible. [/end imprudently-frank throwaway]
AlenaSatoshi 9y ago
I can't agree with "compliant = sustainable and good business". Having worked in the most regulated business - insurance, and being there when more consumer protection has been implemented, I can say that there was no drop in scams and complaints AT ALL. The fact that you have a license or a traditional VC money, doesn't ensure success or fair service. In fact, around 90% of VC funded startups fail too. Legal or compliant doesn’t mean "not scamming". It just means more expensive and hence restrictive.. It blows my mind that crypto-folks who promote inclusion and freedom call for regulation instead of finding new smart ways to deal with new problems. For example, Bitcoin resolved privacy and re-use of addresses with HD wallets. Problem with thieves - solved through hardware wallets. I'm sure we have the capacity to deal with upcoming issues without someone telling us what to do and actually preventing GOOD ideas to be done without having to sell your soul. I understand VC's interests here, but they also need to understand that their value will increasingly be in the experience, contacts and network that they have, not necessarily in their money. Having said all that, no, I'm not a fan of 99% of current ICOs. But still I don't cry on the shoulders of regulators. And those speculators who invest without any due diligence, usually with much lower $$ value than what it seems and with the vision of a 100x or 500x in a few months, well those will learn through experience. The market will clean itself from fraudsters.

dahart 9y ago

> Make sure they have the ... authority to issue stock (yes, that's what the coins on the block chain legally are, if they're selling them at launch) I hadn't thought about a launch of e-coins as stock. This is interesting and helpful, as someone who's only been lightly following blockchain and e-coin news. I have some fear of missing out, and Ray's perspective makes me think I've worried about the wrong things.

52-6F-62 9y ago
I don't know if other people have any dramatically different thoughts on the matter, but if you don't want to miss out but don't want the blatant risk of dealing in ICO's, it seems somewhat reasonable (nothing is reasonable or save in cryptocurrencies, really) way to involve yourself then I'd suggest having a look at just purchasing some of the larger coins (eg Bitcoin, Ethereum, Litecoin) and sitting on it for a couple of years. Cost average your buy in, especially since it's dipped a little recently. Then again, only at an amount that you could lose and not regret it too much. I've been following the progression of the tech in general and have friends who try and play the ICO game, but it's just too fickle for me. I'm not ready to go full day trader over that stuff. However the long term trend (zooming out) tends toward: --- Minimal attention > growing attention > hype and burst > pop and settle > stagnation > return to attention, and start over --- repeatedly, and all generally on an upwards trend over the past ~6 years from what I can tell so far. Just speaking to the prices, here. Something different is happening with the ICOs and the ability to build upon the networks like Ethereum. It's hard to predict, and it's curious what all the calamity surrounding those gambles will amount to. I'm sure a few of the companies will stand out and remain, but most of it just seems so... poorly footed.

wmf 9y ago

I hate to even imagine how many billions of dollars of scams and failures and thefts have been perpetrated by abusing people's faith in and enthusiasm for that technology by now. And I have no idea how we could possibly have prevented it. If Bitcoin had stable value instead of a built-in boom-bust cycle then we wouldn't have crypto scam mania today. Dillinger praises Satoshi's honesty, but Bitcoin's monetary policy is "a blatant bribe to early adopters". https://www.gwern.net/Bitcoin-is-Worse-is-Better https://www.gwern.net/Bitcoin-is-Worse-is-Better

zodiac 9y ago
How would you propose making bitcoin "have stable value"?
- wmf 9y ago
  https://blog.ethereum.org/2014/11/11/search-stable-cryptocurrency/ https://blog.ethereum.org/2014/11/11/search-stable-cryptocur...
  - zodiac 9y ago
    I'm really interested in the stablecoin space but I don't think it's realistic to expect bitcoin to have started out as such. Firstly bitcoin was already testing some unknown assumptions (mainly "is our PoW scheme secure and scalable?") and it would be too confounding to also test "is our chosen stability mechanism effective?". Secondly none of the solutions Vitalik mentioned are easy at all; you need decentralized measurement, and all the solutions he presented have problems. Broadly speaking, if it were really easy to create a stablecoin - so easy that you think Bitcoin could have started out as one - a good one should have existed by now, but there's no good one so far. Thirdly, all of Vitalik's solutions require a volatile coin, which would presumably have increased in market cap over time and be subject to boom-bust cycles, all of which you object to. I also think the only approach that would lead to an effective stablecoin (ie one with a good peg) is one that uses other cryptocurrencies, external to the stablecoin, as collateral (eg MKR's approach), and that requires things like bitcoin to exist.

agrnx 9y ago

Ray is Cryddit / Bear and posted some cool stuff on the forums- https://bitcointalk.org/index.php?topic=946236.msg10388435#msg10388435 https://bitcointalk.org/index.php?topic=946236.msg10388435#m... Semi-unrelated by Craig Wright who has (falsely) claimed to be Satoshi also claims Dillinger is his friend. Wright said Dillinger quit bitcoin due to the toxic drama. More likely Wright & his friend were early miners and not involved in the Satoshi persona.

Theodores 9y ago

On a more day to day level, a few years ago a lot of e-commerce pay-by-bitcoin options existed. You would not put this on the checkout next to PayPal because nobody was doing bitcoin then. What I don't understand is why this never took off. People know bitcoin through the news, it is not new. In this time Apple Pay has come along nicely but not bitcoin. Bitcoin has gone off on a tulips tangent. This seems at odds with what I thought the purpose was, being able to pay securely and without Visa getting their cut.

rebelidealist 9y ago
Due to the limited supply of 24 million BTC, Bitcoin is deflationary meaning it will go up in value as more people adopt it. Govt print fiat currency out of thin air to encourage the population to spend on the economy. Bitcoin as the opposit affect as people use it for a store of value and a hedge against fiat currencies.
- deleted 9y ago
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- icebraining 9y ago
  That limit will only be hit in 2140.
  - zghst 9y ago
    If it survives that long...
    - ojr 9y ago
      thank you for your trade analysis but since you have $0 in bitcoin, I assume, I would have to take it with a grain of salt
- mattnewton 9y ago
  It's arbitrarily divisible, up to the limit of a float though right? So nominal prices can keep "decreasing" in bitcoin for a long time. Maybe that's just too much work to keep the prices reasonable? Edit: they can't actually be using a float for money though, right? So what is the actual limit of divisibiity?

wyc 9y ago

What really upsets me is that most of the whitepapers pumped out by ICOs today are emphatically not the way we best understand how sustainable new companies come into existence. Many contain big grandiose plans that stretch years and don’t admit the necessary network effects, new technologies, etc., for even modest success. An idea, a LaTeX installation, and WordPress landing page are a very low bar for raising millions of dollars, especially by today’s standards. With open source software and services like AWS and GCP, we should expect more. Startups by definition are organizations in flux seeking their scalable business models, and claiming to have all the answers upon inception is an exercise in hubris and/or grandstanding. The late Steve Jobs did say that customers don’t know what they want, but many of these ICO firms don’t even seem to take the first steps in talking to early prospects. 1999 is calling, and they want their 18-month growth plans, 50-page business plans, and million dollar war chests back.

ColanR 9y ago
That's probably an optimistic view of the motivations of a lot of the ICOs. Your comment reminds me of an HN thread from about a month ago (https://news.ycombinator.com/item?id=15072257 https://news.ycombinator.com/item?id=15072257). > How to make money in ethereum, from high to low risk ... 3. Even more profitable is kicking off your own ICO. Go through the checklist - fancy HTML5 theme that you can buy off of Themeforest and edit the HTML a bit for the landing page, create a Slack channel/Twitter account/subreddit, write a "whitepaper" that is easy enough for the shmucks you're targeting to understand, yet replete with enough pseudo-academic crypto jargon and irrelevant/unnecessary mathematical symbols to get the shmucks nodding their heads and pretending to understand how this particular algorithm/equation based on the "turing-complete ethereum blockchain" will "change the world" or "bank the unbanked" or, more importantly to them, appreciate 500x in value.
- zghst 9y ago
  This is perfect
- deleted 9y ago
  [deleted]

orsenthil 9y ago

Who is Ray Dillinger? Why should we trust him with this post?

wmf 9y ago
We're talking about Bitcoin so obviously you should trust no one. But most of this post is either his opinion or information that was already well-known, so I think we can get some value out of it even if we don't trust the author.
AceJohnny2 9y ago
A cursory search reveals guy who was involved in BitCoin from the very start. For example, here's an exchange he had in 2008 with Satoshi over the design of Bitcoin: http://satoshi.nakamotoinstitute.org/emails/cryptography/5/ http://satoshi.nakamotoinstitute.org/emails/cryptography/5/
- optimuspaul 9y ago
  Wow, Satoshi was incredibly naive, dishonest, or just didn't have any idea how quickly it would get out of control.
  - just_one_time_ 9y ago
    Wow, these Core Trolls are everywhere, any chance to shit on Satoshi and push the new, Bitcoin is a Settlement layer agenda.
  - bsaul 9y ago
    Are you talking about the linked post regarding inflation ? because it seems to me satoshi was pretty right, by saying that bitcoins will get rarer and rarer even if miners mine more and more thanks to powerful machines. Rarer bitcoins means prices going down ( what costed 1 bitcoin before probably cost 0.001 bitcoin now), not up ( which is the definition of inflation).
    - 9y ago

koolba 9y ago

> Let's think about that for a minute. Would you buy stock in a business whose business plan was a giant marketing campaign to promote the value of the stock? This is a beautiful summary of the ICO ecosphere.

deleted 9y ago
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sp527 9y ago
I think he was alluding to Multi-Level Marketing as well, which seems like an even more apt comparison.
- wakamoleguy 9y ago
  It's an unfortunate allusion, though, as many people do buy into Multi-Level Marketing schemes.
chi18 9y ago
When I read it I was thinking, "Yes, along with many others, because that is basically the story of many, many public companies."

bitL 9y ago

When idealism hits unfettered human nature...

jancsika 9y ago

> He wasn't trying to line his own pockets at the expense of others. In fact I don't think I've ever encountered someone so completely uninterested in personal wealth. You know the old saw about being able to get a lot done if you don't care who gets the credit? Satoshi doesn't want the credit. Two years later he walked away and left the pseudonym behind. And hard as this may be to believe, it looks like he doesn't even want to be paid for it. As far as we can tell he mined approximately a million Bitcoins and has never sold a single one of them. That's rank speculation. Satoshi also didn't provably burn those millions of coins by sending them to a bunk address-- i.e. whatever the Bitcoin address equivalent is for "IF-I-HAVE-THE-KEY-TO-THIS-ADDRESS-THEN-THIS-HASHING-ALGORITHM-IS-BROKEN". Unless Ray is one of the authors of Bitcoin he has no idea whether Satoshi was interested in personal wealth, or died, or was tracked down by a security service, or something else entirely.

rothbardrand 9y ago
Its true, Satoshi could have burned his coins. There are several legitimate reasons not to do so-- one of which is that it might have indicated a belief that bitcoin was a failure, and such a shock in the early days would have been bad. If satoshi sometime shows up and starts moving his coins, that's fine by me. He deserves to be super rich, because what he created is revolutionary. Notice he said "it looks like he doesn't even want to be paid for it". But also realize, there's the satoshi coins, but there's no way to know how many other addresses he mined to, and that its quite possible he has 100k coins that have been moving since he disappeared and nobody knows they are his. Or he could have started mining after he disappeared or started investing cash to buy them after, and still be very rich.

fiatjaf 9y ago

I can't agree more with most of the article, but can't disagree more with the claim that everything is horrible, but would be fine and awesome if only done through the SEC. The whole idea of crypto-anarchy was to avoid the SEC from the beggining. Of couse there will be scammers, but some people, or some other form of organization, will appear and do the job that SEC should do (and, frankly, doesn't) but in a way that fits the new model. There are a lot of scams in the real world, and the government isn't capable of preventing them. In fact, the government itself is a giant scam, and you're not criticizing it.

fiatjaf 9y ago

Where can I find information on the per-coin blockchain protocol from 1995 Dillinger comments about in the beggining?

hartator 9y ago

Is Ethereum part of the fishy coins the author is describing?

rothbardrand 9y ago
Yes. Ethereum is the original ICO.
SolarNet 9y ago
I think he is implying they could do better as the founders and stewards of these systems. But I don't think he is directly calling them out.

_Codemonkeyism 9y ago

"I had created what I believe is the first digital-cash protocol ever to use block chains in any form - though it used them in a way very different than Bitcoin and its descendants. In that protocol each 'coin' had its own little chain that grew by one link each time it was transferred from one owner to the next. Seeing the idea come around again, in a very different form, was fascinating for me." No, that is not a blockchain, but I can see what you did there, blockchain inventor.