5 ms·
ICOs are in a hype. But there is real value. First, they can be used to bypass a lot of (but not all) regulation. This is good, because the financial sector is
by Hermel 9y ago
ICOs are in a hype. But there is real value. First, they can be used to bypass a lot of (but not all) regulation. This is good, because the financial sector is overly regulated (and wrongly regulated). Second, there are applications that are not possible in the traditional financial system. For example, the smart contracts behind the Bancor system (another overvalued ICO) provide automated market-making on the blockchain. These smart contracts have a capital buffer no one can touch and that is used for completely transparent market making, thereby ensuring that you can always buy or sell shares. I won't go into detail, but it basically solves the liquidity problem for penny stocks.
In the medium run, I see ICOs as a light-weight alternative to IPOs, but not as a seed-funding instrument. This is non-sense.
- workthrowaway27 9y agoThe SEC isn't going to let them be used to bypass regulation.
- Sangermaine 9y ago>First, they can be used to bypass a lot of (but not all) regulation. It's entertaining that many seem to believe this for no apparent reason, but the SEC (and other regulators around the world) doesn't seem to agree.
- dmihal 9y agoThey allow you to avoid regulation if you avoid countries that regulate them like the US. A number of ICOs these days seem to forbid US investors.
- Sangermaine 9y agoThe US isn't the only jurisdiction cracking down on ICOs: European Financial Regulator Warns Investors On ICO Risks https://www.coindesk.com/european-financial-regulator-warns-investors-ico-risks/ https://www.coindesk.com/european-financial-regulator-warns-... Germany's Securities Regulator Warns ICOs Pose 'Numerous Risks' https://www.coindesk.com/germanys-securities-regulator-warns-icos-pose-numerous-risks/ https://www.coindesk.com/germanys-securities-regulator-warns... Japanese Financial Watchdog Issues Warning over ICO Risks https://www.coindesk.com/japanese-financial-watchdog-issues-warning-over-ico-risks/ https://www.coindesk.com/japanese-financial-watchdog-issues-... I can't imagine any developed nation won't end up regulating ICOs as securities. That might be a message to which it's worth paying attention.
- exelius 9y agoAgreed there is real value, but creating a shadow banking system that is governed by unregulated actors isn't the solution. What's to stop a sophisticated bad actor like say, North Korea from manipulating cryptocoin markets in order to scam a bunch of Americans out of US Dollars? I know there is some belief that they're behind the recent Bitcoin rally...
- s73ver_ 9y agoBypassing regulation is neither good nor valuable unless you're planning to scam someone.
- programmarchy 9y agoHow about Uber? Or unlicensed cosmetologists?
- s73ver_ 9y agoUber? You mean the super slimy company that has been set up to skirt labor laws?