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Just because something is a good idea doesn't mean that it wasn't conceived or promoted specifically to scam people out of their money. Not speaking to Filecoin

by beager 9y ago

Just because something is a good idea doesn't mean that it wasn't conceived or promoted specifically to scam people out of their money. Not speaking to Filecoin or Tezos specifically, but if something is a really good idea, why not take VC money or bootstrap it?

berberous 9y ago
Many reasons. Here's a couple I can think of off the top of my head: 1) VC money comes with strings, and founders don't like to have the sword of Damocles hanging over their heads. (Although I think those founders are misguided, as I think most companies benefit from oversight). 2) ICO money is cheaper and plentiful. If it's available, why not take it? This is especially problematic when you have multiple companies pursuing the same idea. Take using the blockchain to create a data storage market. Filecoin raised $200mm+. Imagine they instead raised $3mm from VCs, and another competitor with less qualms raised $200mm. They would now have to compete with someone wayyyy better capitalized than they are. In the tech world, one company often wins the market. Being second could kill your company. Is Uber scamming middle east sovereign wealth funds because they are letting them invest on crazy terms, when they could just as easily start turning a profit or go public? I think a company has a duty to: (1) disclose things honestly, (2) warn people of the risks, and (3) consider the danger of raising too much public money on the success of their venture. Beyond that, if investors wants to dump cheap money on them, why is it a 'scam' to accept?
- jsloss 9y ago
  Totally agree. The liquidity that ICO's bring to founding teams is a huge plus. It's going to better incentivize smart people to work on big, interesting projects. And get paid well to do so.
  - vkou 9y ago
    Wouldn't it also incentivize talent-less frauds to work on big-sounding projects? Given the huge problems with current ICOs (Outright scams, or simply terrible investments), it seems that being smart or talented are not the qualities ICO 'investors' are looking for. I think the zeitgeist is that they just want quick pump & dumps.
    - jsloss 9y ago
      For now, you might be right. But parallels could be drawn to the first dot com boom, junior mining markets etc. So much of new innovation is funded by speculation and stories. Even the current public market interest in the blockchain space, regulated as is is, is mostly driven by a good story and a hope for the future. This is how things work, and given a longer time horizon, the market will sort it out.

by beager 9y ago

berberous 9y ago

Many reasons. Here's a couple I can think of off the top of my head: 1) VC money comes with strings, and founders don't like to have the sword of Damocles hanging over their heads. (Although I think those founders are misguided, as I think most companies benefit from oversight). 2) ICO money is cheaper and plentiful. If it's available, why not take it? This is especially problematic when you have multiple companies pursuing the same idea. Take using the blockchain to create a data storage market. Filecoin raised $200mm+. Imagine they instead raised $3mm from VCs, and another competitor with less qualms raised $200mm. They would now have to compete with someone wayyyy better capitalized than they are. In the tech world, one company often wins the market. Being second could kill your company. Is Uber scamming middle east sovereign wealth funds because they are letting them invest on crazy terms, when they could just as easily start turning a profit or go public? I think a company has a duty to: (1) disclose things honestly, (2) warn people of the risks, and (3) consider the danger of raising too much public money on the success of their venture. Beyond that, if investors wants to dump cheap money on them, why is it a 'scam' to accept?

jsloss 9y ago
Totally agree. The liquidity that ICO's bring to founding teams is a huge plus. It's going to better incentivize smart people to work on big, interesting projects. And get paid well to do so.
- vkou 9y ago
  Wouldn't it also incentivize talent-less frauds to work on big-sounding projects? Given the huge problems with current ICOs (Outright scams, or simply terrible investments), it seems that being smart or talented are not the qualities ICO 'investors' are looking for. I think the zeitgeist is that they just want quick pump & dumps.
  - jsloss 9y ago
    For now, you might be right. But parallels could be drawn to the first dot com boom, junior mining markets etc. So much of new innovation is funded by speculation and stories. Even the current public market interest in the blockchain space, regulated as is is, is mostly driven by a good story and a hope for the future. This is how things work, and given a longer time horizon, the market will sort it out.