8 ms·

This a great step in the right direction for the post-ICO-craze phase. Once we are over the bullshit utility tokens we can go back to building valuable companie

by gomox 8y ago

This a great step in the right direction for the post-ICO-craze phase. Once we are over the bullshit utility tokens we can go back to building valuable companies with a whole new way of funding them.

aphextron 8y ago
>we can go back to building valuable companies Like what? >with a whole new way of funding them. What's wrong with US Dollars?
- gomox 8y ago
  Crypto securities don't replace the US dollars. They replace the shares you're buying when you invest in a company. You are welcome to use US dollars for that if you want. Chances are depending where the companies are based, getting the money in USD to them could be tricky though. What company people are going to build is anyone's guess, but mine is that there's going to be a lot of them. Silicon Valley is only but a small dot on the face of the Earth. A lof of potential is going to be unlocked.
  - cinquemb 8y ago
    What's exciting to me about this is that it could enable trading of these crypto securities outside of typical brokers/exchanges, as well as derivative securities (ie. hold an index of crypto securities, rebalancing from in/out flows from those who buy/trade on the derivatives). Honestly, I can see an "regulated"[0] crypto securites derivative market being deeper than the underlying crypto securites themselves since they'll trade more OTC. [0] To the same degree that any government can regulate trade of their currency/debt on global markets.
  - pjc50 8y ago
    Shares provide ownership and voting. Tokens provide .. no legal guarantees of anything at all?
    - gomox 8y ago
      Not all shares provide voting, as I'm sure you are aware of. But essentially, the paper the shares are printed on doesn't provide any legal guarantees by itself either. The fact that ownership is tokenized doesn't prevent companies from issuing guarantees to token holders. See my comment on the comment next to yours for more: https://news.ycombinator.com/item?id=17255832 https://news.ycombinator.com/item?id=17255832
  - bjl 8y ago
    Explain how crypto-tokens are going to enable the vast amount of rights shareholders get in a company. Can crypto holders vote on the direction of the company, compel changes in the board, etc? If not, there's no reason for them to exist, because those rights are the entire reason one buys stock.
    - xur17 8y ago
      There's no technical reason why that can't be the case. Legally, I agree.
      - bjl 8y ago
        My point is, for anything like a crypto-security, you have to integrate with meatspace, which requires the introduction of legal agreements (because there's nothing about 0s and 1s in ledger that can compel company representatives to act in a certain way). At that point you've completely gotten rid of decentralization, and you might as well use a more robust, faster, and environmentally friendly centralized option.
        gomox 8y ago
        Conventional paper-type legal agreements exist already for this kind of thing, and will mature further as jurisprudence and experience are developed. They don't introduce much centralization that I can think of. They are mostly P2P agreements about the guarantees given to token holders. On top of that, smart contract mediated investments can have much more additional guarantees. Projects like Aragon are creating DAO governance UIs that are on-chain, usable (from a UX perspective) and transparent for token holders. They allow holders to vote on transfers of funds, or monthly capital allocation, with the possibility to withdraw funds if they deem the operation of companies irresponsible. This a programmable financial infrastructure: the tools are there to build whatever you can come up with in terms of governance. Besides DAO governance platforms, what will compel executives, for the cases where this applies, is the same thing that compels them right now: financial incentives, and the threat of prosecution. Are the guarantees comparable to those you get from a CEO on a NYSE traded company? Not by a long shot, this is the wild west right now. But in keeping with the "Internet of Money" metaphor from my other comment, lack of controls and accountability didn't prevent Wikipedia from displacing the Encyclopedia Britannica.
  - s73v3r_ 8y ago
    Why would I want a crypto token instead of shares, though? With shares, I have ownership in the company, and I have a number of rights. With a token, I have precisely squat.
    - gomox 8y ago
      See my replies to the other 2 comments adjacent to yours.
- hapnin 8y ago
  Binance made more money than Deutsche Bank last year. They funded growth with an ICO. > What's wrong with US Dollars? It's not a good store of value over the long haul: https://visual.ly/community/infographic/economy/purchasing-power-us-dollar-1913-2013 https://visual.ly/community/infographic/economy/purchasing-p...
  - aphextron 8y ago
    >”It's not a good store of value over the long haul” Well sure, but no one is storing their wealth in USD. You use it to purchase assets. What store of value can you purchase with BTC without first converting to USD? >”Binance made more money than Deutsche Bank last year. They funded growth with an ICO.” Concentrated more wealth, you mean. What, exactly, did they contribute to the economy? At the very least, banks provide liquidity. The furthest I can gather of any crypto company mission is “make money”.
    - gomox 8y ago
      Soon enough, potentially, tokenized securities that represent shares of anything you can think of.
      - vkou 8y ago
        The cost of tracking and trading securities tokens isn't the reason for why there aren't shares for 'anything you can think of'. Is this actually solving a real problem that someone has?
        gomox 8y ago
        I am in Argentina. I can do an investment on a company being founded in France tomorrow and cash out in 3 months on a secondary market to a buyer in Angola. The friction involved in doing this in a pre-crypto world makes it a non-starter. One of the reason VC has its characteristic geographical distribution is because exit opportunities are extremely localized. No more. This in turn unlocks a ton of talent-capital synergy opportunities for a myriad of projects outside of the large tech hubs.
- deleted 8y ago
  [deleted]
- mkirklions 8y ago
  >What's wrong with US Dollars? Its controlled by the Federal Reserve which is partly controlled by the government. Basically your USD is worth what the central bank says they are worth. A new war? Your dollar loses value. Out of control debt? Print more money. Bitcoin has 21,000,000 solutions ever ever ever.
  - jaredklewis 8y ago
    Uh, the US is at war now in Afghanistan and until 2011 was at war in Iraq. The USD is fine. If WWIII breaks out, I’m betting the Internet (in its current open and international form) will be an early casualty. How’s that going to work out for bitcoin exactly?
    - mkirklions 8y ago
      Speak for yourself, ive seen inflation numbers around 4% since 2001. The only reason consumer goods are the same cost is because the exponential increase in technology and productivity.
  - s73v3r_ 8y ago
    And that doesn't mean a thing for the value of an individual Bitcoin. Just like the USD, it's worth something because people say it's worth something.
    - mkirklions 8y ago
      The quantity is the big deal. Tomorrow there will be more USD than yesterday. This isnt true for BTC.
      - s73v3r_ 8y ago
        Considering BTC is infinitely divisible, that doesn't matter.
        mkirklions 8y ago
omarchowdhury 8y ago
You will come to see that the transfer restrictions imposed on securities will always leave room for utility tokens which do not fall under the same.
- gomox 8y ago
  Utility tokens are fine. They are just a waste of time in most cases, since they introduce a complex mechanic that is only needed for the purpose of monetizing the platform growth (therefore everything needs to be a "platform" where there are these security-like things moving around). I think a lot of the scare about securities is going to go away and a market will evolve with proper jurisdictions that are friendly to this. Keep in mind that most so-called utility tokens today fail the Howey test and 10 get issued every minute. Yet no one will list a self-proclaimed security token. The big difference, I think, is that the perception of wrongdoing is very different, even if the wrongdoing itself is very similar.
pwaai 8y ago
Except the 'new paradigm' still requires fiat banking and all of the same security laws you will expect. I think when SEC declares Ethereum as security by end of this year, it will be the end of ICO.
- gomox 8y ago
  It requires fiat banking less than you might think, depending on what you are doing and what jurisdiction you are in. I am in Argentina. I don't personally do it, but I know a lot of people that live on cryptocurrency salaries (not "crypto gains" but actual money paid to them periodically in a cryptocurrency). I find your last statement extremely unlikely. I think Ethereum has a pretty solid utility story (and I'm definitely not putting Ethereum in the "bullshit utility" bucket). Making Ether a security would severely handicap the US as a jurisdiction for what could eventually be a huge new industry. If you look at the statements from the SEC and CFTC chairs in congress this is stated pretty openly. I think a useful metaphor is to think of cryptocurrencies as the "Internet of money". Handicapping the Internet might have been possible before the Internet, but these days, people will find a way to operate businesses in new jurisdictions that are more friendly (because they will use the Internet to figure it out together). And crypto money might go to these jurisdictions just as fast, since it's not hampered by banking regulations. With that being said, it's hard to figure out the outcomes of such a complex landscape with so many forces at play. But there's my alternate view for you to consider.
  - pwaai 8y ago
    You need fiat banking to cash in and cash out. You are at the mercy of the fiat banking stakeholders. You can create any crypto currency but if nobody can buy it with cash or sell it for cash, it's worthless. SEC has already announced they are looking at Ethereum as security, insiders have already sold according to rumours, because they are being targeted by the SEC- Turns out if you sell tokens with expectation of investment returns, you've entered the danger zone unwittingly. According to my sources, the SEC has Vitalik in crosshairs. He's fucked...but he doesn't know it yet
    - 8y ago
hyprCoin 8y ago
My plan to sidestep these regulations is to take an existing cheap chain and launch a product on it, without consent or communication with stakeholders. I will buy a large percentage of the chain before doing this, of course. Maybe plug it into zrx so the conversion is automatic for the end user. Just another launch cost and I can avoid the SEC entirely.
- wmf 8y ago
  But then you don't get any funding? Unless you pump the coin in which case the SEC will still be coming.
  - deleted 8y ago
    [deleted]
  - hyprCoin 8y ago
    I generally don't seek funding for my apps. I instead just build them with a monetization path attached. What I would aim to do is to boost a crypto community coin with adoption. My monetization would be to sell the ownership I have of the coin when the dapp is in use. I don't know if it's legal according to the SEC. I would love some clarity.
- s73v3r_ 8y ago
  Do you think that the SEC won't still come after you? That they'll just go, "Drat, we must've been outsmarted!"
  - hyprCoin 8y ago
    I won't be creating an expectation of value. If I were to do this on ethereum, for instance, no one would bat an eye. It would be just another dapp.

by gomox 8y ago

This a great step in the right direction for the post-ICO-craze phase. Once we are over the bullshit utility tokens we can go back to building valuable companies with a whole new way of funding them.

aphextron 8y ago

>we can go back to building valuable companies Like what? >with a whole new way of funding them. What's wrong with US Dollars?

gomox 8y ago
Crypto securities don't replace the US dollars. They replace the shares you're buying when you invest in a company. You are welcome to use US dollars for that if you want. Chances are depending where the companies are based, getting the money in USD to them could be tricky though. What company people are going to build is anyone's guess, but mine is that there's going to be a lot of them. Silicon Valley is only but a small dot on the face of the Earth. A lof of potential is going to be unlocked.
- cinquemb 8y ago
  What's exciting to me about this is that it could enable trading of these crypto securities outside of typical brokers/exchanges, as well as derivative securities (ie. hold an index of crypto securities, rebalancing from in/out flows from those who buy/trade on the derivatives). Honestly, I can see an "regulated"[0] crypto securites derivative market being deeper than the underlying crypto securites themselves since they'll trade more OTC. [0] To the same degree that any government can regulate trade of their currency/debt on global markets.
- pjc50 8y ago
  Shares provide ownership and voting. Tokens provide .. no legal guarantees of anything at all?
  - gomox 8y ago
    Not all shares provide voting, as I'm sure you are aware of. But essentially, the paper the shares are printed on doesn't provide any legal guarantees by itself either. The fact that ownership is tokenized doesn't prevent companies from issuing guarantees to token holders. See my comment on the comment next to yours for more: https://news.ycombinator.com/item?id=17255832 https://news.ycombinator.com/item?id=17255832
- bjl 8y ago
  Explain how crypto-tokens are going to enable the vast amount of rights shareholders get in a company. Can crypto holders vote on the direction of the company, compel changes in the board, etc? If not, there's no reason for them to exist, because those rights are the entire reason one buys stock.
  - xur17 8y ago
    There's no technical reason why that can't be the case. Legally, I agree.
    - bjl 8y ago
      My point is, for anything like a crypto-security, you have to integrate with meatspace, which requires the introduction of legal agreements (because there's nothing about 0s and 1s in ledger that can compel company representatives to act in a certain way). At that point you've completely gotten rid of decentralization, and you might as well use a more robust, faster, and environmentally friendly centralized option.
      - gomox 8y ago
        Conventional paper-type legal agreements exist already for this kind of thing, and will mature further as jurisprudence and experience are developed. They don't introduce much centralization that I can think of. They are mostly P2P agreements about the guarantees given to token holders. On top of that, smart contract mediated investments can have much more additional guarantees. Projects like Aragon are creating DAO governance UIs that are on-chain, usable (from a UX perspective) and transparent for token holders. They allow holders to vote on transfers of funds, or monthly capital allocation, with the possibility to withdraw funds if they deem the operation of companies irresponsible. This a programmable financial infrastructure: the tools are there to build whatever you can come up with in terms of governance. Besides DAO governance platforms, what will compel executives, for the cases where this applies, is the same thing that compels them right now: financial incentives, and the threat of prosecution. Are the guarantees comparable to those you get from a CEO on a NYSE traded company? Not by a long shot, this is the wild west right now. But in keeping with the "Internet of Money" metaphor from my other comment, lack of controls and accountability didn't prevent Wikipedia from displacing the Encyclopedia Britannica.
- s73v3r_ 8y ago
  Why would I want a crypto token instead of shares, though? With shares, I have ownership in the company, and I have a number of rights. With a token, I have precisely squat.
  - gomox 8y ago
    See my replies to the other 2 comments adjacent to yours.
hapnin 8y ago
Binance made more money than Deutsche Bank last year. They funded growth with an ICO. > What's wrong with US Dollars? It's not a good store of value over the long haul: https://visual.ly/community/infographic/economy/purchasing-power-us-dollar-1913-2013 https://visual.ly/community/infographic/economy/purchasing-p...
- aphextron 8y ago
  >”It's not a good store of value over the long haul” Well sure, but no one is storing their wealth in USD. You use it to purchase assets. What store of value can you purchase with BTC without first converting to USD? >”Binance made more money than Deutsche Bank last year. They funded growth with an ICO.” Concentrated more wealth, you mean. What, exactly, did they contribute to the economy? At the very least, banks provide liquidity. The furthest I can gather of any crypto company mission is “make money”.
  - gomox 8y ago
    Soon enough, potentially, tokenized securities that represent shares of anything you can think of.
    - vkou 8y ago
      The cost of tracking and trading securities tokens isn't the reason for why there aren't shares for 'anything you can think of'. Is this actually solving a real problem that someone has?
      - gomox 8y ago
        I am in Argentina. I can do an investment on a company being founded in France tomorrow and cash out in 3 months on a secondary market to a buyer in Angola. The friction involved in doing this in a pre-crypto world makes it a non-starter. One of the reason VC has its characteristic geographical distribution is because exit opportunities are extremely localized. No more. This in turn unlocks a ton of talent-capital synergy opportunities for a myriad of projects outside of the large tech hubs.
deleted 8y ago
[deleted]
mkirklions 8y ago
>What's wrong with US Dollars? Its controlled by the Federal Reserve which is partly controlled by the government. Basically your USD is worth what the central bank says they are worth. A new war? Your dollar loses value. Out of control debt? Print more money. Bitcoin has 21,000,000 solutions ever ever ever.
- jaredklewis 8y ago
  Uh, the US is at war now in Afghanistan and until 2011 was at war in Iraq. The USD is fine. If WWIII breaks out, I’m betting the Internet (in its current open and international form) will be an early casualty. How’s that going to work out for bitcoin exactly?
  - mkirklions 8y ago
    Speak for yourself, ive seen inflation numbers around 4% since 2001. The only reason consumer goods are the same cost is because the exponential increase in technology and productivity.
- s73v3r_ 8y ago
  And that doesn't mean a thing for the value of an individual Bitcoin. Just like the USD, it's worth something because people say it's worth something.
  - mkirklions 8y ago
    The quantity is the big deal. Tomorrow there will be more USD than yesterday. This isnt true for BTC.
    - s73v3r_ 8y ago
      Considering BTC is infinitely divisible, that doesn't matter.
      - mkirklions 8y ago

omarchowdhury 8y ago

You will come to see that the transfer restrictions imposed on securities will always leave room for utility tokens which do not fall under the same.

gomox 8y ago
Utility tokens are fine. They are just a waste of time in most cases, since they introduce a complex mechanic that is only needed for the purpose of monetizing the platform growth (therefore everything needs to be a "platform" where there are these security-like things moving around). I think a lot of the scare about securities is going to go away and a market will evolve with proper jurisdictions that are friendly to this. Keep in mind that most so-called utility tokens today fail the Howey test and 10 get issued every minute. Yet no one will list a self-proclaimed security token. The big difference, I think, is that the perception of wrongdoing is very different, even if the wrongdoing itself is very similar.

pwaai 8y ago

Except the 'new paradigm' still requires fiat banking and all of the same security laws you will expect. I think when SEC declares Ethereum as security by end of this year, it will be the end of ICO.

gomox 8y ago
It requires fiat banking less than you might think, depending on what you are doing and what jurisdiction you are in. I am in Argentina. I don't personally do it, but I know a lot of people that live on cryptocurrency salaries (not "crypto gains" but actual money paid to them periodically in a cryptocurrency). I find your last statement extremely unlikely. I think Ethereum has a pretty solid utility story (and I'm definitely not putting Ethereum in the "bullshit utility" bucket). Making Ether a security would severely handicap the US as a jurisdiction for what could eventually be a huge new industry. If you look at the statements from the SEC and CFTC chairs in congress this is stated pretty openly. I think a useful metaphor is to think of cryptocurrencies as the "Internet of money". Handicapping the Internet might have been possible before the Internet, but these days, people will find a way to operate businesses in new jurisdictions that are more friendly (because they will use the Internet to figure it out together). And crypto money might go to these jurisdictions just as fast, since it's not hampered by banking regulations. With that being said, it's hard to figure out the outcomes of such a complex landscape with so many forces at play. But there's my alternate view for you to consider.
- pwaai 8y ago
  You need fiat banking to cash in and cash out. You are at the mercy of the fiat banking stakeholders. You can create any crypto currency but if nobody can buy it with cash or sell it for cash, it's worthless. SEC has already announced they are looking at Ethereum as security, insiders have already sold according to rumours, because they are being targeted by the SEC- Turns out if you sell tokens with expectation of investment returns, you've entered the danger zone unwittingly. According to my sources, the SEC has Vitalik in crosshairs. He's fucked...but he doesn't know it yet
  - 8y ago

hyprCoin 8y ago

My plan to sidestep these regulations is to take an existing cheap chain and launch a product on it, without consent or communication with stakeholders. I will buy a large percentage of the chain before doing this, of course. Maybe plug it into zrx so the conversion is automatic for the end user. Just another launch cost and I can avoid the SEC entirely.

wmf 8y ago
But then you don't get any funding? Unless you pump the coin in which case the SEC will still be coming.
- deleted 8y ago
  [deleted]
- hyprCoin 8y ago
  I generally don't seek funding for my apps. I instead just build them with a monetization path attached. What I would aim to do is to boost a crypto community coin with adoption. My monetization would be to sell the ownership I have of the coin when the dapp is in use. I don't know if it's legal according to the SEC. I would love some clarity.
s73v3r_ 8y ago
Do you think that the SEC won't still come after you? That they'll just go, "Drat, we must've been outsmarted!"
- hyprCoin 8y ago
  I won't be creating an expectation of value. If I were to do this on ethereum, for instance, no one would bat an eye. It would be just another dapp.