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This isnt directly related to the article, but I have two questions about ICO coins I was hoping someone here could answer. I read that recently a group raised

This isnt directly related to the article, but I have two questions about ICO coins I was hoping someone here could answer. I read that recently a group raised millions of dollars in less than a minute to fund the creation of a new web browser. 1. How are coins valued when the underlying company is building a product it will never be able to, or never intends to monetize (eg if Wikipedia had an ICO). 2. If another company acquires this browser company, what happens to the coins?

AlphaWeaver 9y ago
The coins themselves are valued based on what people are willing to pay for them. In contrast, when a story claims "a company raised millions of dollars" it is typically talking about the currency Ether that was PAID to the company in exchange for the tokens. That is also worth what people are willing to pay for it, but because Ether has been around longer it has more of an established value. If the company is acquired, a number of things could happen. It's important to note that for the most part, the company doesn't control the coins. They simply publish a contract that provides for the tokens to function, but normally the administrative capacities of such a contract are limited once the sale is over. When administrative capacities do exist, they are typically controlled by one or more people controlling a particular private key. The owner of that private key will have control of the contract, so in order for a company transfer to transfer control, that private key would have to also transfer. (they'd probably want to redeploy the contract under a different key anyways since there would be no guarantee the old owner didn't still have a copy of the old key.)
- subroutine 9y ago
  Ok thanks for the responses. Say people paid a company called Microhard $30 million in Ether during their ICO for Microhard coins. Can Ether be readily be exchanged for $30 million USD? Assuming it can, and Microsoft acquires Microhard, and has no interest in crypto doesnt this leave a coin on the market with a name of a business that doesn’t even exist?
  - AgentME 9y ago
    >Say people paid a company called Microhard $30 million in Ether during their ICO for Microhard coins. Can Ether be readily be exchanged for $30 million USD? The trade volume of Ethereum was about $400,000,000 in the last 24 hours[1], so likely yes. Bitcoin and Ethereum are the two most popular cryptocurrencies. >Assuming it can, and Microsoft acquires Microhard, and has no interest in crypto doesnt this leave a coin on the market with a name of a business that doesn’t even exist? Yeah. That coin's value will probably drop fast given that its value was probably based on the anticipated value of it once its supporting product existed. [1] https://coinmarketcap.com/ https://coinmarketcap.com/
gobengo 9y ago
1) The organization selling the coins more or less says "hey who wants to buy these for $1 each" and somewhere between zero and lots of people buy them. Once I buy one, I can sell it to anyone else for any price. Then the invisible hand does its thing 2) Well the coins themselves can't really be changed. Any actually enforcable obligation on the purchased company wrt to those tokens would ostensibly be acquired as well I think the big risk with lots of ICOs these days is even if some discerning investors pass, there are still lots of folks buying in as described in #1. And a lot of times it's really unclear what leaglly enforcable obligations actually exist wrt #2.

AlphaWeaver 9y ago

The coins themselves are valued based on what people are willing to pay for them. In contrast, when a story claims "a company raised millions of dollars" it is typically talking about the currency Ether that was PAID to the company in exchange for the tokens. That is also worth what people are willing to pay for it, but because Ether has been around longer it has more of an established value. If the company is acquired, a number of things could happen. It's important to note that for the most part, the company doesn't control the coins. They simply publish a contract that provides for the tokens to function, but normally the administrative capacities of such a contract are limited once the sale is over. When administrative capacities do exist, they are typically controlled by one or more people controlling a particular private key. The owner of that private key will have control of the contract, so in order for a company transfer to transfer control, that private key would have to also transfer. (they'd probably want to redeploy the contract under a different key anyways since there would be no guarantee the old owner didn't still have a copy of the old key.)

subroutine 9y ago
Ok thanks for the responses. Say people paid a company called Microhard $30 million in Ether during their ICO for Microhard coins. Can Ether be readily be exchanged for $30 million USD? Assuming it can, and Microsoft acquires Microhard, and has no interest in crypto doesnt this leave a coin on the market with a name of a business that doesn’t even exist?
- AgentME 9y ago
  >Say people paid a company called Microhard $30 million in Ether during their ICO for Microhard coins. Can Ether be readily be exchanged for $30 million USD? The trade volume of Ethereum was about $400,000,000 in the last 24 hours[1], so likely yes. Bitcoin and Ethereum are the two most popular cryptocurrencies. >Assuming it can, and Microsoft acquires Microhard, and has no interest in crypto doesnt this leave a coin on the market with a name of a business that doesn’t even exist? Yeah. That coin's value will probably drop fast given that its value was probably based on the anticipated value of it once its supporting product existed. [1] https://coinmarketcap.com/ https://coinmarketcap.com/

gobengo 9y ago

1) The organization selling the coins more or less says "hey who wants to buy these for $1 each" and somewhere between zero and lots of people buy them. Once I buy one, I can sell it to anyone else for any price. Then the invisible hand does its thing 2) Well the coins themselves can't really be changed. Any actually enforcable obligation on the purchased company wrt to those tokens would ostensibly be acquired as well I think the big risk with lots of ICOs these days is even if some discerning investors pass, there are still lots of folks buying in as described in #1. And a lot of times it's really unclear what leaglly enforcable obligations actually exist wrt #2.