5 ms·

I know that ICOs get a lot of negativity on HN. Sure, a lot of them deserve it, but not all ICOs are started for the sole purpose of raising cash that they othe

by stoev 9y ago

I know that ICOs get a lot of negativity on HN. Sure, a lot of them deserve it, but not all ICOs are started for the sole purpose of raising cash that they otherwise wouldn't be able to raise. ICOs as a form of funding are equally likely to be manipulated as traditional VC funding following trends and hypes (one might argue that they ICO investors are even more gullible to dishonest founders since they are generally less experienced than VCs). However, certain ICOs are actually bringing products to market that would never otherwise exist. Some of them are trying to fundamentally change how some industries operate. Others are fundamentally improving blockchain technology. But in order for their products to operate they need enough stakeholders to make them viable. And this is where ICOs come in. There were many of us who believed that Tezos was one of those ICOs. Their product could still be greatly useful if executed correctly. Given that they have raised more money then they could ever have hoped for, it is incredible that they are being silly enough to embark on a public dispute between themselves and get involved in lawsuits with their investors. Just getting back to work and executing their initial vision (which they can do many times over with that amount of funds) seems like an obvious thing to do. They would lose a lot more money (or worse) by continuing on this trajectory. It is incredible how short-term greedy they seem from the outside. Or maybe I am missing some information that would explain this stupidity. I would love to know more.

fiatjaf 9y ago
I can't remember a single ICO that has brought anything useful to the market yet. You can say Ethereum, but it wasn't an ICO properly speaking. Even if it was, a single good example in hundreds isn't enough. Ripple didn't have an ICO, Bitcoin Cash didn't, Zcash didn't, Monero didn't, Stellar didn't.
- ashnyc 9y ago
  zrcoin did. the market is still young but it can be a powerful tool where traditional VC are not present.
- socratesone 9y ago
  Wabi seems to be doing it right: https://www.wacoin.io/ https://www.wacoin.io/
  - bpicolo 9y ago
    None of this product requires the blockchain though. They're applying RFIDs to baby formula. The currency is nothing but an unnecessary lock in
    - nerdponx 9y ago
      Well, you could use a generic blockchain to keep an audit trail of the label certification process. But yeah, special-purpose cryptocurrencies are just walled gardens in disguise.
- corv 9y ago
  Why wasn't Ethereum an ICO? Arguably that was the model for all other ICOs and the platform for the vast majority.
  - ddon 9y ago
    Ethereum had an ICO, back in 2014: https://blog.ethereum.org/2014/07/22/launching-the-ether-sale/ https://blog.ethereum.org/2014/07/22/launching-the-ether-sal...
- chrisco255 9y ago
  Qtum has shipped and met all its promises so far: https://qtum.org/en/ https://qtum.org/en/ Basic Attention Tokens are already integrated in Brave browser: https://basicattentiontoken.org/ https://basicattentiontoken.org/
  - def_true_false 9y ago
    BAT is a borderline scam. Previous discussion here: https://news.ycombinator.com/item?id=15722299 https://news.ycombinator.com/item?id=15722299
- deleted 9y ago
  [deleted]
- igorgue 9y ago
  Who was born first the chicken or the egg? And Ethereum did a crowdsale. On Counterparty and Ommi. It’s literally in the first paragraph of their Wikipedia article: >> Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Development was funded by an online crowdsale between July and August 2014.[5] The system went live on 30 July 2015, with 11.9 million coins "premined" for the crowdsale.[6] This accounts for approximately 13 percent of the total circulating supply
- noddy1 9y ago
  Ironically the only ethereum dApp which people actually use - EtherDelta decentralized exchange - was never ICO'd and makes piles of money. The incentives for token sales are to raise as much Eth as you can, spend as little of it as possible on the actual project while watching its value appreciate, then either have a product launch that semi-fails or have some good excuse why the project just couldn't work for some reason while minimizing the chance that people bring legal action against the project.
barkingcat 9y ago
I hold the opinion that if you need a public ICO to "get stakeholders" you already failed, or are already successful as a scam. There are a ton of ways to find and secure proper, reliable stakeholders who are committed to your technology or your cause/product. (Private ICO being one of the ways. Keep things under wrap, develop the technology, have a proof of concept, sell some product, and then MAYBE if it makes sense, go public.) A public ICO blasting across the internet when there is no product, no plan, and no real engineering already done is nothing but a cash grab, and I am not at all surprised that they are embroiled in lawsuits.
- pera 9y ago
  > A public ICO blasting across the internet when there is no product, no plan, and no real engineering already done is nothing but a cash grab, and I am not at all surprised that they are embroiled in lawsuits. Is this really a property of ICOs? the behavior you describe may be very common nowadays, but from what I understand there is nothing intrinsic in this kind of funding model to be necessarily like that. Maybe after a crash the market will get a bit more mature and start using public ICOs for real stuff, and I think that could evolve into something really interesting :)
  - barkingcat 9y ago
    It's not about the method (ICO), it's about the people and teams behind the ico's being 1) amateurs with no clue 2) very prepared scammers who have really nice fancy websites but no intention to at all to followup or honour the sale and 3) well meaning but totally immature ideas and teams who are doing a cash grab. This case sounds like #3 - where they have an idea, but immature company structure, poor legal structure, and no governance that is supposed to bind a team together - in this case they are fighting about the money ... As always - in the end it's all people. Public ICO is a tool, and it's really NOT the tool to use if you want to find a real base of support and well-intentioned stakeholders (who won't turn around and sue you the moment the ico completes :)
    - literallycancer 9y ago
barkingcat 9y ago
You are missing one very important detail: the people behind any and all ICO's (or any venture really) need money to eat, to pay mortgages, alimony, child support, and maybe even bribes, overdue tax payments, salaries and healthcare copays for their employees. Maybe they just want some money to blow in Vegas. They raised some money - they now want to extract that money. Obviously, they can't for some reason, either being blocked by investors or other members of their company who are disputing it (or want the money for themselves too). It's super transparent, and in the end, people are people. An ICO or blockchain, or any technology isn't going to change that fact.
hisabness 9y ago
what you're missing is why would people invest in an ICO then sue before the project is completely dead? just asking for regulation and trouble, while still losing your investment. i guess the attorneys will make money.
- noddy1 9y ago
  When the underlying value of the ETH/BTC has appreciated significantly, and the likely value of the Tezos token has plummeted, trying to extract core investment is reasonable. Personally I would do it quietly, with good legal backing, and as a single entity or with a small group of investors rather than a large class action - and reach an early settlement to get our own investment back without causing too much of a stir for other investors.
  - literallycancer 9y ago
    The value of the Tezos token can't be lower than the value of the raised funds now, can it? That would be like saying a company with 100k in cash is only worth 50k. Since the foundation kept most of the raised BTC and ETH, the funds appreciated at the same rate as if they were kept by the investors. The investors have tokens that represent shares of the funds raised. Those derive their value from 1. the money raised and 2. the technology being developed (that will be useful hopefully). Therefore, it would be very strange if the token was worth less than the share of funds used to raise it, XTZ "futures" price notwithstanding. "Futures" because they are just a pile of tokens bought by the exchange, and you can't sell your own tokens before release, so no way to get them into the exchange and no functioning market.
    - wmf 9y ago
      I suppose if the funds are earmarked for development only and can't be liquidated or used for buybacks then they're essentially already gone. If you assume that development has decreasing marginal utility (so spending $1B won't make Tezos much better than spending $200M) then I can imagine that investors would rather have their money back than have Tezos. Kind like how I'd rather have 1 BTC than my Trezor.

by stoev 9y ago

fiatjaf 9y ago

I can't remember a single ICO that has brought anything useful to the market yet. You can say Ethereum, but it wasn't an ICO properly speaking. Even if it was, a single good example in hundreds isn't enough. Ripple didn't have an ICO, Bitcoin Cash didn't, Zcash didn't, Monero didn't, Stellar didn't.

ashnyc 9y ago
zrcoin did. the market is still young but it can be a powerful tool where traditional VC are not present.
socratesone 9y ago
Wabi seems to be doing it right: https://www.wacoin.io/ https://www.wacoin.io/
- bpicolo 9y ago
  None of this product requires the blockchain though. They're applying RFIDs to baby formula. The currency is nothing but an unnecessary lock in
  - nerdponx 9y ago
    Well, you could use a generic blockchain to keep an audit trail of the label certification process. But yeah, special-purpose cryptocurrencies are just walled gardens in disguise.
corv 9y ago
Why wasn't Ethereum an ICO? Arguably that was the model for all other ICOs and the platform for the vast majority.
- ddon 9y ago
  Ethereum had an ICO, back in 2014: https://blog.ethereum.org/2014/07/22/launching-the-ether-sale/ https://blog.ethereum.org/2014/07/22/launching-the-ether-sal...
chrisco255 9y ago
Qtum has shipped and met all its promises so far: https://qtum.org/en/ https://qtum.org/en/ Basic Attention Tokens are already integrated in Brave browser: https://basicattentiontoken.org/ https://basicattentiontoken.org/
- def_true_false 9y ago
  BAT is a borderline scam. Previous discussion here: https://news.ycombinator.com/item?id=15722299 https://news.ycombinator.com/item?id=15722299
deleted 9y ago
[deleted]
igorgue 9y ago
Who was born first the chicken or the egg? And Ethereum did a crowdsale. On Counterparty and Ommi. It’s literally in the first paragraph of their Wikipedia article: >> Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Development was funded by an online crowdsale between July and August 2014.[5] The system went live on 30 July 2015, with 11.9 million coins "premined" for the crowdsale.[6] This accounts for approximately 13 percent of the total circulating supply
noddy1 9y ago
Ironically the only ethereum dApp which people actually use - EtherDelta decentralized exchange - was never ICO'd and makes piles of money. The incentives for token sales are to raise as much Eth as you can, spend as little of it as possible on the actual project while watching its value appreciate, then either have a product launch that semi-fails or have some good excuse why the project just couldn't work for some reason while minimizing the chance that people bring legal action against the project.

barkingcat 9y ago

I hold the opinion that if you need a public ICO to "get stakeholders" you already failed, or are already successful as a scam. There are a ton of ways to find and secure proper, reliable stakeholders who are committed to your technology or your cause/product. (Private ICO being one of the ways. Keep things under wrap, develop the technology, have a proof of concept, sell some product, and then MAYBE if it makes sense, go public.) A public ICO blasting across the internet when there is no product, no plan, and no real engineering already done is nothing but a cash grab, and I am not at all surprised that they are embroiled in lawsuits.

pera 9y ago
> A public ICO blasting across the internet when there is no product, no plan, and no real engineering already done is nothing but a cash grab, and I am not at all surprised that they are embroiled in lawsuits. Is this really a property of ICOs? the behavior you describe may be very common nowadays, but from what I understand there is nothing intrinsic in this kind of funding model to be necessarily like that. Maybe after a crash the market will get a bit more mature and start using public ICOs for real stuff, and I think that could evolve into something really interesting :)
- barkingcat 9y ago
  It's not about the method (ICO), it's about the people and teams behind the ico's being 1) amateurs with no clue 2) very prepared scammers who have really nice fancy websites but no intention to at all to followup or honour the sale and 3) well meaning but totally immature ideas and teams who are doing a cash grab. This case sounds like #3 - where they have an idea, but immature company structure, poor legal structure, and no governance that is supposed to bind a team together - in this case they are fighting about the money ... As always - in the end it's all people. Public ICO is a tool, and it's really NOT the tool to use if you want to find a real base of support and well-intentioned stakeholders (who won't turn around and sue you the moment the ico completes :)
  - literallycancer 9y ago

barkingcat 9y ago

You are missing one very important detail: the people behind any and all ICO's (or any venture really) need money to eat, to pay mortgages, alimony, child support, and maybe even bribes, overdue tax payments, salaries and healthcare copays for their employees. Maybe they just want some money to blow in Vegas. They raised some money - they now want to extract that money. Obviously, they can't for some reason, either being blocked by investors or other members of their company who are disputing it (or want the money for themselves too). It's super transparent, and in the end, people are people. An ICO or blockchain, or any technology isn't going to change that fact.

hisabness 9y ago

what you're missing is why would people invest in an ICO then sue before the project is completely dead? just asking for regulation and trouble, while still losing your investment. i guess the attorneys will make money.

noddy1 9y ago
When the underlying value of the ETH/BTC has appreciated significantly, and the likely value of the Tezos token has plummeted, trying to extract core investment is reasonable. Personally I would do it quietly, with good legal backing, and as a single entity or with a small group of investors rather than a large class action - and reach an early settlement to get our own investment back without causing too much of a stir for other investors.
- literallycancer 9y ago
  The value of the Tezos token can't be lower than the value of the raised funds now, can it? That would be like saying a company with 100k in cash is only worth 50k. Since the foundation kept most of the raised BTC and ETH, the funds appreciated at the same rate as if they were kept by the investors. The investors have tokens that represent shares of the funds raised. Those derive their value from 1. the money raised and 2. the technology being developed (that will be useful hopefully). Therefore, it would be very strange if the token was worth less than the share of funds used to raise it, XTZ "futures" price notwithstanding. "Futures" because they are just a pile of tokens bought by the exchange, and you can't sell your own tokens before release, so no way to get them into the exchange and no functioning market.
  - wmf 9y ago
    I suppose if the funds are earmarked for development only and can't be liquidated or used for buybacks then they're essentially already gone. If you assume that development has decreasing marginal utility (so spending $1B won't make Tezos much better than spending $200M) then I can imagine that investors would rather have their money back than have Tezos. Kind like how I'd rather have 1 BTC than my Trezor.