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The bit that wasn't initially obvious to me is that these are all literally just investment rounds. They're just raising money and the "coin" is in many ways s

The bit that wasn't initially obvious to me is that these are all literally just investment rounds. They're just raising money and the "coin" is in many ways similar to a share. Except what they plan to do with that money is often very unclear, there's often very little in the way of any kind of guarantee or accountability and you'd be correct if you assumed they probably don't even have a business plan! If you're lucky you might be able to do some kind of blockchain related stuff to enforce voting, if they allow you to do such. Or you might be able to trade those tokens to someone else. Maybe.

bogomipz 9y ago
>"The bit that wasn't initially obvious to me is that these are all literally just investment rounds. They're just raising money and the "coin" is in many ways similar to a share." This is kind of where my understanding of ICOs falls short. My understanding was that ICO coins don't entitle one to any equity in the company just the coin: "ICOs are the Wild West of financing — they sit in a grey zone where the U.S. Securities and Exchange Commission (SEC) and many other regulatory bodies are still investigating them. The main problem is, though, that most ICO’s don’t actually offer equity in start-up ventures; instead, they only offer discounts on cryptocurrencies before they hit the exchanges."[1] If that's the case it's not like a share at all. Wouldn't it be more like a credit default swap or other derivative? [1] https://hbr.org/2017/03/what-initial-coin-offerings-are-and-why-vc-firms-care https://hbr.org/2017/03/what-initial-coin-offerings-are-and-...
- vannevar 9y ago
  Wouldn't it be more like a credit default swap or other derivative? It would actually be more like a tulip. https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania At least with a derivative, there is some kind of theoretical contractual value. Somewhere up the chain, there is something of value, say, a home mortgage, and you're making a bet on it. With ICOs, the coin is a vehicle for pure speculation. The only bet you're making is that the coin's value will go up, and the only way that happens is if other people make exactly the same bet.

bogomipz 9y ago

>"The bit that wasn't initially obvious to me is that these are all literally just investment rounds. They're just raising money and the "coin" is in many ways similar to a share." This is kind of where my understanding of ICOs falls short. My understanding was that ICO coins don't entitle one to any equity in the company just the coin: "ICOs are the Wild West of financing — they sit in a grey zone where the U.S. Securities and Exchange Commission (SEC) and many other regulatory bodies are still investigating them. The main problem is, though, that most ICO’s don’t actually offer equity in start-up ventures; instead, they only offer discounts on cryptocurrencies before they hit the exchanges."[1] If that's the case it's not like a share at all. Wouldn't it be more like a credit default swap or other derivative? [1] https://hbr.org/2017/03/what-initial-coin-offerings-are-and-why-vc-firms-care https://hbr.org/2017/03/what-initial-coin-offerings-are-and-...

vannevar 9y ago
Wouldn't it be more like a credit default swap or other derivative? It would actually be more like a tulip. https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania At least with a derivative, there is some kind of theoretical contractual value. Somewhere up the chain, there is something of value, say, a home mortgage, and you're making a bet on it. With ICOs, the coin is a vehicle for pure speculation. The only bet you're making is that the coin's value will go up, and the only way that happens is if other people make exactly the same bet.