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But the goal is to raise funds. Doing a traditional securities offering in the Seychelles doesn't raise funds for your blockchain project. A token offering rais

But the goal is to raise funds. Doing a traditional securities offering in the Seychelles doesn't raise funds for your blockchain project. A token offering raises funds, from a global pool of investors, without any legal resource for the investors. Like I said, this is an absurd amount of trust, and reputation is everything. It's simply a different model.

ashtonkem 7y ago
Dodging SEC regulations is a use case, although I’m dubious that you need crypto for it. But more to the point this use case is extremely narrow; dodging SEC regulations doesn’t provide a reason for said blockchain company to exist or attract investors in and of itself, it’s just a tactic available to them. If you used blockchain to raise money for a non-blockchain company, that would be understandable. But that’s not the pattern I’ve observed. Usually it’s “buy token that’ll have functional utility and future monetary value”.
- seibelj 7y ago
  I hear what you are saying. I work in this industry and am intimately involved with all of this. Let me try and explain differently. There are good reasons why a traditional stock, like Apple, would be valuable on the blockchain. Imagine Apple stock was just like any other token or cryptocurrency - it could be anonymously owned, traded on any exchange (including ones that just pop up out of nowhere), can be traded 24/7/365, and could be used as payment for coffee just as easily as cash. Clearly this is advantageous for some people who want this. From the perspective of a regulator, or citizen concerned of fraud, this is horrible! A nightmare! But to others, they prefer this situation. This is what a token is. It's like a traditional stock, but also all of the above. Plus it has utility according to however the project uses it. All of the tokens tend to match the same protocols (on Ethereum it's known as ERC20), so if a new service pops up ("Pay for Coffee with Token Service"), suddenly any new token can be used in it. It's like automated plumbing. You have to switch to the mindset of someone who is a "crypto native" person. They don't think like a normal person. They have different values and motivations.
  - ashtonkem 7y ago
    I think we’re starting to have two conversations in parallel, so I’ll do my best to keep this straight. It appears that there are two models; stocks on the blockchain, and tokens as item of utility. Stocks on the blockchain makes sense technically, especially for investing in risky non-crypto small companies. Tiny use case, but reasonable. I’m super dubious about paying with the crypto equivalent of stocks for purely social reasons; it introduces a lot of exchange risk and negotiation into the process of purchasing goods. One of the reasons money is good is that it creates a common unit of account; I don’t need to find a barista that’s interested in whatever stock I’ve got in order to buy coffee. Sure; I could sell or exchange that stock for something my barista wants, probably money, but the value to the consumers in question is getting pretty thin. I will say though that stock markets are probably the only model I’ve seen that fits cleanly into the blockchain model; stock trades pretty much stay in the stock exchange itself, eliminating the oracle problem. If blockchain latency could get lowered significantly, I wouldn’t be surprised to see stock markets on the blockchain. What I see much more of is the “token as utility” scheme. This is usually a blockchain startup offering some sort of token that has a planned utility once the company is operational. Kodak’s coin is on the top of my mind; the plan was that you could use the coins to license work on the chain and pay photographers. These utility coins always seem super shady to me, and the justifications on why the utility coin should have utility (and thus value) border somewhere between nonsense and insanity.
    - seibelj 7y ago
      Yes - stocks on the blockchain make sense. But through this plumbing, the barista wants USD. Imagine there is a coin the barista trusts is as good as USD (a "stablecoin"). Or imagine that there is a service in the background that has interfaced with the traditional credit card system as well as the blockchain, and does a bunch of functions really fast. Then, when the customer pays with a token, protocols just instantly convert it in the background to the exact amount of USD of the coffee. This stuff sort-of already exists. USDC is a US-dollar backed stablecoin https://www.coinbase.com/usdc https://www.coinbase.com/usdc and Uniswap https://uniswap.exchange/swap https://uniswap.exchange/swap is a decentralized algorithmic protocol for auto-converting between any 2 supported tokens. So if the barista takes USDC and you have some scammy token that few people want, you can instant-convert (well, "instant" in Ethereum is 15 to 30 seconds) from your token to the USD to the coffee. So what I'm saying is, you need to change your mind from buckets, where assets are only in one bucket. The token is not either a stock or a "utility" token. It's all of the above, simultaneously, and more as the plumbing keeps innovating. As long as someone, somewhere, is willing to purchase it for some price, it can function in a huge variety of ways.

ashtonkem 7y ago

Dodging SEC regulations is a use case, although I’m dubious that you need crypto for it. But more to the point this use case is extremely narrow; dodging SEC regulations doesn’t provide a reason for said blockchain company to exist or attract investors in and of itself, it’s just a tactic available to them. If you used blockchain to raise money for a non-blockchain company, that would be understandable. But that’s not the pattern I’ve observed. Usually it’s “buy token that’ll have functional utility and future monetary value”.

seibelj 7y ago
I hear what you are saying. I work in this industry and am intimately involved with all of this. Let me try and explain differently. There are good reasons why a traditional stock, like Apple, would be valuable on the blockchain. Imagine Apple stock was just like any other token or cryptocurrency - it could be anonymously owned, traded on any exchange (including ones that just pop up out of nowhere), can be traded 24/7/365, and could be used as payment for coffee just as easily as cash. Clearly this is advantageous for some people who want this. From the perspective of a regulator, or citizen concerned of fraud, this is horrible! A nightmare! But to others, they prefer this situation. This is what a token is. It's like a traditional stock, but also all of the above. Plus it has utility according to however the project uses it. All of the tokens tend to match the same protocols (on Ethereum it's known as ERC20), so if a new service pops up ("Pay for Coffee with Token Service"), suddenly any new token can be used in it. It's like automated plumbing. You have to switch to the mindset of someone who is a "crypto native" person. They don't think like a normal person. They have different values and motivations.
- ashtonkem 7y ago
  I think we’re starting to have two conversations in parallel, so I’ll do my best to keep this straight. It appears that there are two models; stocks on the blockchain, and tokens as item of utility. Stocks on the blockchain makes sense technically, especially for investing in risky non-crypto small companies. Tiny use case, but reasonable. I’m super dubious about paying with the crypto equivalent of stocks for purely social reasons; it introduces a lot of exchange risk and negotiation into the process of purchasing goods. One of the reasons money is good is that it creates a common unit of account; I don’t need to find a barista that’s interested in whatever stock I’ve got in order to buy coffee. Sure; I could sell or exchange that stock for something my barista wants, probably money, but the value to the consumers in question is getting pretty thin. I will say though that stock markets are probably the only model I’ve seen that fits cleanly into the blockchain model; stock trades pretty much stay in the stock exchange itself, eliminating the oracle problem. If blockchain latency could get lowered significantly, I wouldn’t be surprised to see stock markets on the blockchain. What I see much more of is the “token as utility” scheme. This is usually a blockchain startup offering some sort of token that has a planned utility once the company is operational. Kodak’s coin is on the top of my mind; the plan was that you could use the coins to license work on the chain and pay photographers. These utility coins always seem super shady to me, and the justifications on why the utility coin should have utility (and thus value) border somewhere between nonsense and insanity.
  - seibelj 7y ago
    Yes - stocks on the blockchain make sense. But through this plumbing, the barista wants USD. Imagine there is a coin the barista trusts is as good as USD (a "stablecoin"). Or imagine that there is a service in the background that has interfaced with the traditional credit card system as well as the blockchain, and does a bunch of functions really fast. Then, when the customer pays with a token, protocols just instantly convert it in the background to the exact amount of USD of the coffee. This stuff sort-of already exists. USDC is a US-dollar backed stablecoin https://www.coinbase.com/usdc https://www.coinbase.com/usdc and Uniswap https://uniswap.exchange/swap https://uniswap.exchange/swap is a decentralized algorithmic protocol for auto-converting between any 2 supported tokens. So if the barista takes USDC and you have some scammy token that few people want, you can instant-convert (well, "instant" in Ethereum is 15 to 30 seconds) from your token to the USD to the coffee. So what I'm saying is, you need to change your mind from buckets, where assets are only in one bucket. The token is not either a stock or a "utility" token. It's all of the above, simultaneously, and more as the plumbing keeps innovating. As long as someone, somewhere, is willing to purchase it for some price, it can function in a huge variety of ways.