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If you went to a Seed fund and tried to pitch them your idea (whitepaper) with no working prototype 99 out of 100 times you wouldn't get any funding. After you

by raiyu 9y ago

If you went to a Seed fund and tried to pitch them your idea (whitepaper) with no working prototype 99 out of 100 times you wouldn't get any funding. After you have your MVP then they will start asking you for traction. Again 98 out of 100 times not getting any funding. Here you can raise a tremendous amount of capital, given that the majority of seed rounds are $500k-$3MM, and with an ICO entities are raising tens of millions of dollars to build something that again has no actual working mvp to show usage. Doesn't really seem like a sound investment ;) Tokens have already been in use for a long time with chat sites, I suppose if one of them decided to re-create their tokens on the blockchain and offer an ICO they could make more money during this period than actually operating their service. At least that would have some basis in reality in that there is an existing site that is generating revenue, profit, and visitors.

Alex3917 9y ago
> Doesn't really seem like a sound investment. You're conflating the economics of currencies with the economics of companies.
- paulgb 9y ago
  It seems to me like the whole value proposition of ICOs is getting people to think of a currency as equity in a company.
  - pbiggar 9y ago
    I agree. But is explicitly not that. Often your currency is backed by nothing at all, with no potential for it to even be worth anything.
    - Alex3917 9y ago
      > Often your currency is backed by nothing at all, with no potential for it to even be worth anything. If enough people make Pascal’s Wager, then god effectively exists.
  - raiyu 9y ago
    Not necessarily. Companies still need to charge you for a service, so instead of buying something directly you buy tokens from them and then use them. That has been in use by companies for quite some time, just that the tokens were primarily used to actually work with the companies service, rather than trade them as an independent entity.
    - paulgb 9y ago
      I could see how that could work in theory (and I'll be excited if that's actually happening!), but aren't most of these ICOs for products that don't exist yet? It seems like the token buyers take on risk as if they are investors in the company without getting a stake in the upside.
      - raiyu 9y ago
        Any ICO from a newly formed company is entirely at risk. An ICO from Kik or Telegram is different to an extent in that there is already an entity behind it. Of course if there were no "blockchain" they would simply issue tokens like everyone has in the past, where you exchange money to get a token, that you can use in the app, and that token is locked into that app. So you can't use it elsewhere, but it still has some value as long as the app and users exist since you can sell your tokens to other people if you no longer need them, assuming that transferring of tokens is allowed / acceptable. But then it wouldn't be block chain, and it wouldn't get any hype =] Games have been using this for years and years, so there's really no difference here. One side likes to point out the internet bubble, the other side likes to say well look at the internet now. What's missed though is the massive companies that were built in the middle, that really changed our daily lives. Amazon, Google, Facebook, Apple, etc, these companies changed how we live our lives and then Banks and everyone else realized the benefits of offering connected services directly to a PC or a phone and again there were tremendous benefits to consumers and end users. At the moment, there is no benefit, outside of a large remittance and some tax avoidance that can be accomplished through cryptocurrency, and certainly there's no functional product company in the crypto space, outside of the exchanges which make money through people simply trading currencies, but returning no real value back to the world.
  - the_stc 9y ago
    It is completely disgusting. We started by calling our ICO an IPO and making a note that we are selling shares, not tokens. But people still want to see a whitepaper and hear about tokens. And despite clearly saying we accept physical dollars [cash] for payment of services, people still think we are selling tokens to buy stuff with and comment how little sense that makes. In the end, we decided to go along with the ICO terminology because it was too hard to fight perception. We still do the right thing: We're selling an unregistered security, shares in our company, and will pay dividends. In short though, people trying to do the right thing are punished, and the people that overhype and do the ridiculous approach are highly rewarded.
    - dna_polymerase 9y ago
      Exactly. People don't realize that the "product" (if you can call whitepapers that) is completely decoupled from the Token s value. Of course the product could indeed use the Token but they don't have to and it doesn't make sense in most cases either. I am wondering if 2018 will bring a deflation, maybe even a burst to the crypto bubble. It's all fairy dust right now anyway.
  - bottled_poe 9y ago
    Except most ICOs don't offer such equity - instead they offer a token of questionable value and/or utility.
- raiyu 9y ago
  Not really. Fiat currencies today are issued and backed by governments. When the government fails and the country falls into deep debt or other issues, they currency becomes devalued. So everything is ultimately backed by something to an extent. In this case if it's an ICO it is used for transact with this company on their product, which is the underlying backing. So if the company falls apart, it would stand to reason that the coin would drop in price, since it isn't backed by anything. Not saying they are the same, simply pointing out that there is a link. You can also look at the currencies of countries and their value compared to other currencies when they go through various economic turmoil.
  - acjohnson55 9y ago
    Agreed. The whole point of owning a token is the idea that some person will eventually demand it because they require it for something they want. Either some transaction in the token ecosystem, a dividend, or _something_. I find it really hard to believe most of these tokens will have long-term demand.
  - deleted 9y ago
    [deleted]
  - olivermarks 9y ago
    Fiat currencies are issued and backed by banks that lend that currency to nation state governments. There are only two countries left on the planet still in control of their currencies...Iran and North Korea.
    - JumpCrisscross 9y ago
      > Fiat currencies are issued and backed by banks that lend that currency to nation state governments There are three types of money: central bank reserves, physical currency and commercial bank money. The U.S. government (Fed and Treasury, respectively) directly controls the first two down to the cent. Commercial banks "make" the final one, but to get the right to do that they have to agree to Federal Reserve jurisdiction (internationally, this happens with central banks entering into swap agreements with the Fed, i.e. opening "accounts" with the Fed into which the Fed deposits U.S. dollars whose--since this needs to be said--quantities it gets to track).
regularhackerer 9y ago
It is like Kickstarter but with people feeling they will have some return to their investment instead of a product and some merch.

by raiyu 9y ago

Alex3917 9y ago

> Doesn't really seem like a sound investment. You're conflating the economics of currencies with the economics of companies.

paulgb 9y ago
It seems to me like the whole value proposition of ICOs is getting people to think of a currency as equity in a company.
- pbiggar 9y ago
  I agree. But is explicitly not that. Often your currency is backed by nothing at all, with no potential for it to even be worth anything.
  - Alex3917 9y ago
    > Often your currency is backed by nothing at all, with no potential for it to even be worth anything. If enough people make Pascal’s Wager, then god effectively exists.
- raiyu 9y ago
  Not necessarily. Companies still need to charge you for a service, so instead of buying something directly you buy tokens from them and then use them. That has been in use by companies for quite some time, just that the tokens were primarily used to actually work with the companies service, rather than trade them as an independent entity.
  - paulgb 9y ago
    I could see how that could work in theory (and I'll be excited if that's actually happening!), but aren't most of these ICOs for products that don't exist yet? It seems like the token buyers take on risk as if they are investors in the company without getting a stake in the upside.
    - raiyu 9y ago
      Any ICO from a newly formed company is entirely at risk. An ICO from Kik or Telegram is different to an extent in that there is already an entity behind it. Of course if there were no "blockchain" they would simply issue tokens like everyone has in the past, where you exchange money to get a token, that you can use in the app, and that token is locked into that app. So you can't use it elsewhere, but it still has some value as long as the app and users exist since you can sell your tokens to other people if you no longer need them, assuming that transferring of tokens is allowed / acceptable. But then it wouldn't be block chain, and it wouldn't get any hype =] Games have been using this for years and years, so there's really no difference here. One side likes to point out the internet bubble, the other side likes to say well look at the internet now. What's missed though is the massive companies that were built in the middle, that really changed our daily lives. Amazon, Google, Facebook, Apple, etc, these companies changed how we live our lives and then Banks and everyone else realized the benefits of offering connected services directly to a PC or a phone and again there were tremendous benefits to consumers and end users. At the moment, there is no benefit, outside of a large remittance and some tax avoidance that can be accomplished through cryptocurrency, and certainly there's no functional product company in the crypto space, outside of the exchanges which make money through people simply trading currencies, but returning no real value back to the world.
- the_stc 9y ago
  It is completely disgusting. We started by calling our ICO an IPO and making a note that we are selling shares, not tokens. But people still want to see a whitepaper and hear about tokens. And despite clearly saying we accept physical dollars [cash] for payment of services, people still think we are selling tokens to buy stuff with and comment how little sense that makes. In the end, we decided to go along with the ICO terminology because it was too hard to fight perception. We still do the right thing: We're selling an unregistered security, shares in our company, and will pay dividends. In short though, people trying to do the right thing are punished, and the people that overhype and do the ridiculous approach are highly rewarded.
  - dna_polymerase 9y ago
    Exactly. People don't realize that the "product" (if you can call whitepapers that) is completely decoupled from the Token s value. Of course the product could indeed use the Token but they don't have to and it doesn't make sense in most cases either. I am wondering if 2018 will bring a deflation, maybe even a burst to the crypto bubble. It's all fairy dust right now anyway.
- bottled_poe 9y ago
  Except most ICOs don't offer such equity - instead they offer a token of questionable value and/or utility.
raiyu 9y ago
Not really. Fiat currencies today are issued and backed by governments. When the government fails and the country falls into deep debt or other issues, they currency becomes devalued. So everything is ultimately backed by something to an extent. In this case if it's an ICO it is used for transact with this company on their product, which is the underlying backing. So if the company falls apart, it would stand to reason that the coin would drop in price, since it isn't backed by anything. Not saying they are the same, simply pointing out that there is a link. You can also look at the currencies of countries and their value compared to other currencies when they go through various economic turmoil.
- acjohnson55 9y ago
  Agreed. The whole point of owning a token is the idea that some person will eventually demand it because they require it for something they want. Either some transaction in the token ecosystem, a dividend, or _something_. I find it really hard to believe most of these tokens will have long-term demand.
- deleted 9y ago
  [deleted]
- olivermarks 9y ago
  Fiat currencies are issued and backed by banks that lend that currency to nation state governments. There are only two countries left on the planet still in control of their currencies...Iran and North Korea.
  - JumpCrisscross 9y ago
    > Fiat currencies are issued and backed by banks that lend that currency to nation state governments There are three types of money: central bank reserves, physical currency and commercial bank money. The U.S. government (Fed and Treasury, respectively) directly controls the first two down to the cent. Commercial banks "make" the final one, but to get the right to do that they have to agree to Federal Reserve jurisdiction (internationally, this happens with central banks entering into swap agreements with the Fed, i.e. opening "accounts" with the Fed into which the Fed deposits U.S. dollars whose--since this needs to be said--quantities it gets to track).

regularhackerer 9y ago

It is like Kickstarter but with people feeling they will have some return to their investment instead of a product and some merch.