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What puzzled me is how comes blockchain startups did not sell their crypto for fiat just after their ICOs. I recommended this to several of my blockchain custo

What puzzled me is how comes blockchain startups did not sell their crypto for fiat just after their ICOs. I recommended this to several of my blockchain customers but none of them listened. I dont know if that was motivated by greed or something else. According to Game theory there is no benefit in not selling the crypto for fiat: if you raise lets say 10million during an ico (typical amount raised 6m ago), there isnt much you can do with 20M (i.e you keep the crypto and it doubles) that you cant do with “just” 10M. However, if the crypto crashes, and become 5M, you are going to have a hard time explaining to stake holders that 5M just disappeared... At worst you keep 10pct in crypto if really you want to keep some upside to crypto but thats it

plantain 8y ago
It took me a long time to realise, but these people really do believe in bitcoin/blockchains.
- tonyedgecombe 8y ago
  The easiest person to fool is yourself.
  - superkuh 8y ago
    If you haven't seen the need for an apolitical currency yet you probably never will. But maybe you're just all viewing this from the perspective of traditional speculators and haven't even considered it?
    - mdpopescu 8y ago
      It's fascinating how strongly we believe that now == how things should be. Humans have been using gold as a currency for thousands of years, and yet nowadays everyone seems to believe that nothing but state-backed paper can work as such - and anyone who wants (as you said) an apolitical currency is just weird.
      - twblalock 8y ago
        State-backed paper works so much better than gold-backed currency that it's difficult to find economists who advocate returning to the gold standard without being regarded by their colleagues as quacks. Gold currency can hardly be described as apolitical. It has been a major political issue in every country that adopted it. Political issues have included debasement and forgery of coins, bimetallism, deflation vs inflation, the legality of citizens owning bullion, the exchange rate between gold-backed paper money and actual gold, ships sinking while carrying loads of gold, countries stockpiling and transferring large amounts of gold back and forth under the Bretton Woods system, etc. Any "apolitical" system of currency will become political as soon as it is large enough for governments to take notice of it and start trying to regulate it. Any cryptocurrency that has disputes about governance or forking also has politics.
        hndamien 8y ago
        Everything you just listed here seems to have been solved by Bitcoin, including forking politics - which leaves the users in control (albeit with some political influence from lead devs) ultimately this appears to be a fair power distribution as it is economic nodes deciding the current consensus on the rules set - not miners. (For your list - no forgery, no metal debasement, no long term inflation and infinite divisibility, why shouldn't you be able to own real money? Why shouldn't market set exchange rates? No sinking ships, country stockpiling and transferring is all fair game but custody is easy for anybody to take an maintain.
        tboyd47 8y ago
        I think by "apolitical," they are referring to Bitcoin's property of being censorship resistant, not claiming that politics do not apply to it at all. I prefer to call it a "people's currency."
      - jsgo 8y ago
        I personally have no issue with someone wanting "apolitical currency" but it seems silly to chastise (not saying you're doing that here, seems closer to dancing close to that line but not going over) people for preferring the status quo. Why? If someone robs the bank that holds my money, it is insured and it is recovered. If a Mt. Gox happens with crypto, anything I have in it is gone. Also, there's some comfort in a stable currency (perhaps in the long run this would be achievable by a crypto-based currency but in its current iteration, I don't feel that to be true). So grand scheme of things, yeah, there's pros and cons to both. Personally, I'd prefer the vast majority of my currency to be state-backed vs the alternative. Regardless, I think the whole mining thing is consuming resources for consumption's sake so if the various coins that must be mined falter to the point that that behavior goes away, I'd be fine with this.
    - gbear605 8y ago
      Regardless of their eventual use, bitcoin fluctuates a lot, so you shouldn't trust it if you need to have the same amount of money in a year.
    - saati 8y ago
      Libertarian silliness isn't apolitical.
    - rchaud 8y ago
      > If you haven't seen the need for an apolitical currency yet you probably never will. I do see the need for such a currency. But if this one of the principles crypto enthusiasts believe in, why I do see so little being done to make it a viable medium of exchange? Did everyone just caught up in the gold rush and put their focus on seeing just how much fiat they could get for their BTC? In fact, in the past year I've seen less news about BTC and more about the hordes of offshoot alt-coins that appear to have been released for the sole purpose of separating speculators from their money.
- untangle 8y ago
  > It took me a long time to realise, but these people really do believe in bitcoin/blockchains. Best. Comment. Of. 2018. Especially since "these people" include some ostensibly smart cookies. I conjecture that these people were/are trying to elevate BC to the level of adtech (Google). Perhaps we have averted another black hole for the greatest minds of a generation.
seanwilson 8y ago
> What puzzled me is how comes blockchain startups did not sell their crypto for fiat just after their ICOs. I'm not sure what's puzzling: The startups who base their business around crypto believe crypto will rise in price. A crypto startup selling all their crypto because they think there's a high risk crypto will crash in value is also sending out a very bad signal to potential investors.
- yodsanklai 8y ago
  > The startups who base their business around crypto believe crypto will rise in price A startup may very well work on some blockchain technology while not believing that a particular cryptocurrency will rise in price.
  - vbs_redlof 8y ago
    But it is far less common to come across startups who believe this. Think of blockchain startups as the top 1% of the most optimistic investors who believed in the technology so much that they created companies around an immature infrastructure. Selection bias explains why they held even even after a 90% correction.
    - Banksy_is_Qanon 8y ago
      Yes, exactly. Blockchain startups are started by true believers in blockchain. Starting a blockchain startup is massively self-selecting for the truest of the true believers. If you didn’t believe in crypto you wouldn’t create a crypto startup. Telling a crypto startup owner to sell all their crypto, and then wondering why on earth they didn’t take your advice, is equivalent to telling an evangelist Christian to abandon their faith and then wondering why on earth they didn’t take your advice. Money is a religion, and CRYPTO IS A RELIGION within that religion. Crypto’s value comes from its buyers, and it’s buyers buy it because they take a religious leap of faith that its value will increase. So when you tell a crypto startup owner to sell all his/her crypto.... you pretty much offend them on the deepest possible level. You’re not just criticizing their business model, you're attacking their core beliefs and deepest religious convictions , you’re revealing yourself as a heretic and questioning their faith in Saint Nakomoto and no zealot likes that.
dustingetz 8y ago
What is even involved in finding a buyer for $10mm btc in usd and then getting that usd into a legal/compliant bank account? Sounds non-trivial. It's my understanding from some work I did for a crypto startup that there is approximately zero usd/btc liquidity, the apparent "usd liquidity" and "usd price" last year was actually dominated by tether-btc and tether-eth liquidity. There was not actually a functional usd/btc market at any point, at least not with liquidity necessary to justify a statement like "startup X holds $10m btc" and this whole thing is a bunch of twenty-five year old entrepreneurs learning about macroeconomics the hard way.
- cobookman 8y ago
  There's off exchange buyers and sellers of crypto who deal in orders of > 1M usd. It's fairly trivial to go from 10M BTC to 10M of a stable coin. Can't speak on how difficult it is to do 10M stable coin/btc to us bank
  - deleted 8y ago
    [deleted]
- tim333 8y ago
  The BTC/USD market on Kraken is pretty liquid. I think trading $10m wouldn't have been a problem if you spread it over a few days. They are trading $34m/day now and it would have been far more 6 months ago. Not sure what paperwork you need - as long as you could document the source was legit it would probably be ok. Also changing BTC/USDT would at least protected against the decline in value.
  - ac29 8y ago
    > as long as you could document the source was legit it would probably be ok. But how many of these ICO's actually did proper KYC/AML stuff? My guess is very, very few, making getting fiat money into a legitimate bank much more difficult.
    - 8y ago
merkaloid 8y ago
If you do that people will think you're exiting and your company will tank massively.
village-idiot 8y ago
True believers make terrible investment decisions.
a13n 8y ago
> if you raise lets say 10million during an ico (typical amount raised 6m ago), there isnt much you can do with 20M (i.e you keep the crypto and it doubles) that you cant do with “just” 10M. By that logic, why invest in anything ever?
- b_tterc_p 8y ago
  There’s an unstated assumption that investing 10M in crypto offers high risk of losing it all. The utility of losing 10M is worse than the utility of gaining an additional 10M- and much moreso when weighted with common sense probabilities.
Nasrudith 8y ago
Cynically the time to sell it is after the IPO for even larger gains with less responsibility. Since if you are behind a ICO and then start to sell yourself it is a clear pump and dump. After a company becomes big enough for an Initial Public Offering however it allows for a clean getaway without liability. You often notice start ups selling out after the growth starts to decline whether they are right or wrong about it - which at least lends some honesty to the transaction. If it goes bigger after the IPO they either missed out or gave it to more capable hands. If it goes kaput they either got out just in time or it got ran into the ground by the new guys.
tCfD 8y ago
In most if not all cases the answer is: they can't. The price of crypto, especially that of the ICO era, is propped up by the same individuals that would most want to sell it. It's their HODLing of the coin that keeps it illiquid enough to allow them to drive the price up to the ico target and beyond. By casing out they'd be selling largely to themselves + the thin wisp of actual rubes they've duped into believing there's any substantial buy support under the listed market price.

plantain 8y ago

It took me a long time to realise, but these people really do believe in bitcoin/blockchains.

tonyedgecombe 8y ago
The easiest person to fool is yourself.
- superkuh 8y ago
  If you haven't seen the need for an apolitical currency yet you probably never will. But maybe you're just all viewing this from the perspective of traditional speculators and haven't even considered it?
  - mdpopescu 8y ago
    It's fascinating how strongly we believe that now == how things should be. Humans have been using gold as a currency for thousands of years, and yet nowadays everyone seems to believe that nothing but state-backed paper can work as such - and anyone who wants (as you said) an apolitical currency is just weird.
    - twblalock 8y ago
      State-backed paper works so much better than gold-backed currency that it's difficult to find economists who advocate returning to the gold standard without being regarded by their colleagues as quacks. Gold currency can hardly be described as apolitical. It has been a major political issue in every country that adopted it. Political issues have included debasement and forgery of coins, bimetallism, deflation vs inflation, the legality of citizens owning bullion, the exchange rate between gold-backed paper money and actual gold, ships sinking while carrying loads of gold, countries stockpiling and transferring large amounts of gold back and forth under the Bretton Woods system, etc. Any "apolitical" system of currency will become political as soon as it is large enough for governments to take notice of it and start trying to regulate it. Any cryptocurrency that has disputes about governance or forking also has politics.
      - hndamien 8y ago
        Everything you just listed here seems to have been solved by Bitcoin, including forking politics - which leaves the users in control (albeit with some political influence from lead devs) ultimately this appears to be a fair power distribution as it is economic nodes deciding the current consensus on the rules set - not miners. (For your list - no forgery, no metal debasement, no long term inflation and infinite divisibility, why shouldn't you be able to own real money? Why shouldn't market set exchange rates? No sinking ships, country stockpiling and transferring is all fair game but custody is easy for anybody to take an maintain.
      - tboyd47 8y ago
        I think by "apolitical," they are referring to Bitcoin's property of being censorship resistant, not claiming that politics do not apply to it at all. I prefer to call it a "people's currency."
    - jsgo 8y ago
      I personally have no issue with someone wanting "apolitical currency" but it seems silly to chastise (not saying you're doing that here, seems closer to dancing close to that line but not going over) people for preferring the status quo. Why? If someone robs the bank that holds my money, it is insured and it is recovered. If a Mt. Gox happens with crypto, anything I have in it is gone. Also, there's some comfort in a stable currency (perhaps in the long run this would be achievable by a crypto-based currency but in its current iteration, I don't feel that to be true). So grand scheme of things, yeah, there's pros and cons to both. Personally, I'd prefer the vast majority of my currency to be state-backed vs the alternative. Regardless, I think the whole mining thing is consuming resources for consumption's sake so if the various coins that must be mined falter to the point that that behavior goes away, I'd be fine with this.
  - gbear605 8y ago
    Regardless of their eventual use, bitcoin fluctuates a lot, so you shouldn't trust it if you need to have the same amount of money in a year.
  - saati 8y ago
    Libertarian silliness isn't apolitical.
  - rchaud 8y ago
    > If you haven't seen the need for an apolitical currency yet you probably never will. I do see the need for such a currency. But if this one of the principles crypto enthusiasts believe in, why I do see so little being done to make it a viable medium of exchange? Did everyone just caught up in the gold rush and put their focus on seeing just how much fiat they could get for their BTC? In fact, in the past year I've seen less news about BTC and more about the hordes of offshoot alt-coins that appear to have been released for the sole purpose of separating speculators from their money.
untangle 8y ago
> It took me a long time to realise, but these people really do believe in bitcoin/blockchains. Best. Comment. Of. 2018. Especially since "these people" include some ostensibly smart cookies. I conjecture that these people were/are trying to elevate BC to the level of adtech (Google). Perhaps we have averted another black hole for the greatest minds of a generation.

seanwilson 8y ago

> What puzzled me is how comes blockchain startups did not sell their crypto for fiat just after their ICOs. I'm not sure what's puzzling: The startups who base their business around crypto believe crypto will rise in price. A crypto startup selling all their crypto because they think there's a high risk crypto will crash in value is also sending out a very bad signal to potential investors.

yodsanklai 8y ago
> The startups who base their business around crypto believe crypto will rise in price A startup may very well work on some blockchain technology while not believing that a particular cryptocurrency will rise in price.
- vbs_redlof 8y ago
  But it is far less common to come across startups who believe this. Think of blockchain startups as the top 1% of the most optimistic investors who believed in the technology so much that they created companies around an immature infrastructure. Selection bias explains why they held even even after a 90% correction.
  - Banksy_is_Qanon 8y ago
    Yes, exactly. Blockchain startups are started by true believers in blockchain. Starting a blockchain startup is massively self-selecting for the truest of the true believers. If you didn’t believe in crypto you wouldn’t create a crypto startup. Telling a crypto startup owner to sell all their crypto, and then wondering why on earth they didn’t take your advice, is equivalent to telling an evangelist Christian to abandon their faith and then wondering why on earth they didn’t take your advice. Money is a religion, and CRYPTO IS A RELIGION within that religion. Crypto’s value comes from its buyers, and it’s buyers buy it because they take a religious leap of faith that its value will increase. So when you tell a crypto startup owner to sell all his/her crypto.... you pretty much offend them on the deepest possible level. You’re not just criticizing their business model, you're attacking their core beliefs and deepest religious convictions , you’re revealing yourself as a heretic and questioning their faith in Saint Nakomoto and no zealot likes that.

dustingetz 8y ago

What is even involved in finding a buyer for $10mm btc in usd and then getting that usd into a legal/compliant bank account? Sounds non-trivial. It's my understanding from some work I did for a crypto startup that there is approximately zero usd/btc liquidity, the apparent "usd liquidity" and "usd price" last year was actually dominated by tether-btc and tether-eth liquidity. There was not actually a functional usd/btc market at any point, at least not with liquidity necessary to justify a statement like "startup X holds $10m btc" and this whole thing is a bunch of twenty-five year old entrepreneurs learning about macroeconomics the hard way.

cobookman 8y ago
There's off exchange buyers and sellers of crypto who deal in orders of > 1M usd. It's fairly trivial to go from 10M BTC to 10M of a stable coin. Can't speak on how difficult it is to do 10M stable coin/btc to us bank
- deleted 8y ago
  [deleted]
tim333 8y ago
The BTC/USD market on Kraken is pretty liquid. I think trading $10m wouldn't have been a problem if you spread it over a few days. They are trading $34m/day now and it would have been far more 6 months ago. Not sure what paperwork you need - as long as you could document the source was legit it would probably be ok. Also changing BTC/USDT would at least protected against the decline in value.
- ac29 8y ago
  > as long as you could document the source was legit it would probably be ok. But how many of these ICO's actually did proper KYC/AML stuff? My guess is very, very few, making getting fiat money into a legitimate bank much more difficult.
  - 8y ago

merkaloid 8y ago

If you do that people will think you're exiting and your company will tank massively.

village-idiot 8y ago

True believers make terrible investment decisions.

a13n 8y ago

> if you raise lets say 10million during an ico (typical amount raised 6m ago), there isnt much you can do with 20M (i.e you keep the crypto and it doubles) that you cant do with “just” 10M. By that logic, why invest in anything ever?

b_tterc_p 8y ago
There’s an unstated assumption that investing 10M in crypto offers high risk of losing it all. The utility of losing 10M is worse than the utility of gaining an additional 10M- and much moreso when weighted with common sense probabilities.

Nasrudith 8y ago

Cynically the time to sell it is after the IPO for even larger gains with less responsibility. Since if you are behind a ICO and then start to sell yourself it is a clear pump and dump. After a company becomes big enough for an Initial Public Offering however it allows for a clean getaway without liability. You often notice start ups selling out after the growth starts to decline whether they are right or wrong about it - which at least lends some honesty to the transaction. If it goes bigger after the IPO they either missed out or gave it to more capable hands. If it goes kaput they either got out just in time or it got ran into the ground by the new guys.

tCfD 8y ago

In most if not all cases the answer is: they can't. The price of crypto, especially that of the ICO era, is propped up by the same individuals that would most want to sell it. It's their HODLing of the coin that keeps it illiquid enough to allow them to drive the price up to the ico target and beyond. By casing out they'd be selling largely to themselves + the thin wisp of actual rubes they've duped into believing there's any substantial buy support under the listed market price.