23 ms·

The Ponzi Career

480 points by elsewhen 6y ago

jcpham2 6y ago
Thanks for this, it was an excellent read and these celebrity coins I personally was not aware of and that’s an interesting use case I never thought of.
andrewfromx 6y ago
Explains how people are selling ECR20 tokens with special rights to income from just one person. Also the right to message them. i.e. a fan can buy a token of a "celebrity" and get special inbox rights. But also upside if that person goes on to become very successful.
istjohn 6y ago
The unstated implication is that these investment vehicles are for suckers, as in any ponzi scheme.
- gruez 6y ago
  Unlike a ponzi scheme (which is guaranteed to be a loss overall), a ISA token could theoretically work out for all parties involved. The article mentions that lambda school's business model is based off it. The problem is that the market for such tokens is a market for lemons, and the amount of due diligence you have to do to weed out the scammers vastly outweighs whatever risk-adjusted-returns you can get compared to the s&p 500. It's the p2p loan craze all over again.
peytn 6y ago
How do you tackle issues with manipulation? Can’t I get together with my friends and wash trade each other’s tokens?
- gruez 6y ago
  At the end of a day it's still a token, so all the usual scams (eg. pump & dump) still apply.
  - peytn 5y ago
    Dang, I was hoping somebody would’ve come up with something by now before the SEC or whoever does.
- PragmaticPulp 6y ago
  Yes, wash trading should be assumed to be ubiquitous in the NFT space. It's too cheap and easy to create fake trades of NFTs to trust that transactions are all real. The tokens described in this article don't necessarily depend on the sale price of the NFT, though. Instead, these NFTs would represent the beneficiary of real-world contracts. Whoever holds the NFT collects the future income of the person, as enforced by a real-world contract. Of course, nothing stops them from wash trading these NFTs in an attempt to flip them.
airza 6y ago
The future outlined by these new and exciting investment vehicles is horrifying.
- nemo44x 6y ago
  It is but you wonder if the instability of a career is even more horrifying? It is essentially like a farmer selling futures contracts on their crop. The yield of the crop and market conditions at harvest time are so uncertain that trading upside for stability becomes a smart bet. So one might think to themselves that they don’t feel certain about their ability to generate income for the next 20 years and sell a claim to their existing and future incomes for a payment today which they can diversify into other investments and tap in the future if things unravel for a period. Of course the old fashioned way of doing this is putting part of your income into savings. But front loading savings has benefits like having a larger nut to start with and more time to compound.
  - airza 6y ago
    The entire line of thinking just seems to me like it is bending over backwards to avoid just... having income taxes and a social safety net.
    - nemo44x 6y ago
      I think it’s more like insurance than a social safety net. It’s also private instead of public and therefore by necessity, political, which is undesirable for many people. And I don’t think it’s in lieu of a social safety net. This would exist to stabilize a lifestyle. A social safety net would still exist for adults that can’t take care of themselves through government funded shelter and food and other things. I would expect a professional couple with plans of a family wouldn’t be able to (or want to) rely on the whims of government assistance. You’d maybe want to plan a lifestyle and getting up front money could have benefits. Similar to purchasing additional life insurance if you have kids.
bko 6y ago
> As I mentioned in an earlier piece, these tokens are not simply "certificates of ownership"; they can be pre-programmed to behave in a certain way (for example, pay a dividend each time a predefined event happens). I don't get how you can pre-program a contact to pay a percentage of your earnings. Ethereum is very restricted as to what you can program. I don't think you can just write "check stock price of X on CNBC, if X then Y..." Even if you could you would need to prefund it with Ethereum which would make the fund raising aspect kind of pointless. > In English, this meant Masmej was selling digital tokens under his own name ($ALEX). The token sale would sponsor his entrepreneurial journey. Owners of these tokens will receive certain rights over Masmej's future income and career decisions. It's just a promise to backers. I can't see how its enforced by a contract. It's no different than just having people send you money via PayPal and you promising to hit them back when you make some money. I guess easier to administer and track woh you promised? And I don't see how an income sharing agreement is a Ponzi scheme. A ponzi scheme is current investors paying out to previous investors. This is just a funding mechanism, selling equity instead of debt
- PragmaticPulp 6y ago
  > I don't get how you can pre-program a contact to pay a percentage of your earnings. You can't. Any agreement like this would still require a traditional, real-world contract to carry any weight. The contract would specify that the holder of the NFT is entitled to the benefits of the contract. Even in a hypothetical world where everyone gets paid on the Ethereum blockchain, the person could simply open up a second ETH wallet and collect payments there, because crypto wallets aren't people. The unspoken catch is that these contracts would likely include a provision that the NFT is null and void in the event that it's lost or stolen. People entering into contracts aren't eager to give up their rights to hacks when they can simply add a contractual provision that limits it. The NFT exists because it's a convenient placeholder to represent something that can be traded with commonly accepted (relatively speaking) tools. A real-world contract would still be necessary to put any weight behind these NFTs.
  - dharma1 6y ago
    You’re right, the personal tokens like one the from Alex are simply an IOU based on trust and reputation. Reputation systems are really interesting and can work for some things, but I’m not sure you could sell the equivalents of Bowie bonds on trust alone - and the whole point of smart contracts is that they’re supposed to be trustless. So I think investing in future gains of a real world entity who can simply start over under a new guise or decide not to pay, without being able to enforce the contract isn’t going to work. But I’m not sure connecting current legal entities/contracts to onchain versions will be the answer either in many cases.
JohnJamesRambo 6y ago
It’s just more top signals. There’s too much money floating around if people want to invest in nonsense like this. When equities correct from the current Shiller PE ratio higher than 1929 I think you will find less people want to invest in a career token for someone. https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe The Bowie Bond part of the post was fascinating by the way. Had never heard that story. He issued them in 1997 which is a high Shiller PE value also before the 2000 stock bust. Lots of money floating around looking for a home then too.
- xur17 5y ago
  I agree that there's a ton of money floating around / frothiness, but what's inherently wrong or ill-advised about investing in future cashflows of a person. Assuming you diversify across a bunch of people in a bunch of fields, this actually sounds better than some of the stuff people are investing in in the stock market.
  - SergeAx 5y ago
    Because having a share in an individual sounds very much like slavery?
    - jkhdigital 5y ago
      But it’s voluntary slavery, like BDSM play edit: man you people cannot take a joke
    - heartbeats 5y ago
      So does usury. You loan someone $40000 @ 5% APR and he spends it on education. If the loan is to be paid back in a decade, he has to cough up $416 per month. Unlike a mortgage, he can't foreclose on his education. Since he doesn't have any assets to sell, and is by law unable to get out of them through bankruptcy, his only choice is to work some amount of hours every month to pay off the loans. If that is not slavery, then surely ISAs are fine too? And if that is slavery, then how are ISAs any worse?
RichardHeart 6y ago
Bitclout mentioned here steals your keys. https://twitter.com/_prestwich/status/1379963871792799744 https://twitter.com/_prestwich/status/1379963871792799744 If you used a non unique seed with them, consider it compromised.
gibybo 6y ago
If you're interested in this concept, you may enjoy the novel "The Unincorporated Man" which is set in a future where everyone (except the protagonist) has personal shares traded on an open market. It's a bit thick on ideological propaganda of the extreme capitalist/libertarian type, but I found the exploration of the concept fascinating enough to get through most of it.
- citizenkeen 6y ago
  It launches a decent series with each book having different premises, as well.
- valzam 5y ago
  Very interesting book to read, highly recommend it!
- mtnygard 5y ago
  Thank you! I knew I'd read a novel with this premise but could not recall the name.
ChrisMarshallNY 6y ago
I enjoyed the piece. Personally, I want no part of it, but I think it might work well for people who are not me. I've always been "on my own." My life really is a series of watersheds, where I've been the only person to believe in me, before the event, and a whole bunch of folks seemed to believe in me, after the fact. Not a particularly good setup for selling "Chris-Tokens™." Not a bad thing, in the long run. It hurt like hell, the first few times, but I realized that I don't have the personal skills to "sell" myself (like being able to spew jargon, sound like I'm TED-talking all the time, or beat LeetCode tests), so I can't blame folks for not wanting to "invest" in me. It is what it is. I come across as a socially-awkward dork, so people don't take me seriously. I'm actually fairly good at what I do, but If I mention that, it comes across as "arrogant," despite the enormous ocean of hubris that pretty much defines today's tech scene. I don't really have the skill to "humble-brag." It taught me to live a conservative lifestyle, be Honest and Honorable, do top-shelf work, bust my ass, and not expect much from others. I couldn't rely on anyone else to clean up my messes, or get me out of jackpots. It has taught me to learn what I have needed to learn, despite active roadblocks being tossed out by "gatekeepers," and it also prevented me from getting mixed up with some truly awful disasters; both personal, and business.
- noservice99 6y ago
  I'm not trying to be rude and I enjoyed your comment, but you say you don't have the skills to humblebrag or sell yourself but you're doing it pretty well here
  - roghummal 5y ago
    You're not wrong and that your comment is dead is a great disappointment. That you created a throwaway to criticize something so obviously astroturf-y is understandable but, also, disappointing. HN is as much an echo chamber as any.
  - ChrisMarshallNY 5y ago
    I write fairly well. I’ve been writing for most of my life. Written presentation isn’t actually as valuable as you might think. It seems that people read a lot less, these days, than they used to. I’m told that YouTube videos and podcasts are more likely to garner attention, and I have a voice made for silent films, and a face made for radio. Also, even that writing skill has been greatly refined and improved over the last three years; since I left my last job. Funny. Deciding not to pursue employment seems to have helped me to improve some of the skills employers might actually notice (I consider them fairly “superficial,” but they are what tend to attract attention). I feel that the really valuable stuff, like an expert grasp of Apple development, running a geographically-distributed team for decades, and a long history of releasing high-quality, finished product, is not so obvious (or valued). I was talking, recently, with a former employee, who had gone through the interview process for a FAANG. He made it through the whole thing, and may get an offer, which he’ll likely decline (he took a job at a corporation that will probably treat him well, but won’t pay as much). What he described, sounded a lot more like a hazing, than a serious evaluation. I’m not about to put myself through that kind of crap for any amount of money. I have too much self-respect. I feel he made the right choice. He had basically made up his mind, fairly early in the process, and really went through the motions to learn and practice (he presents quite well). I feel that they missed out on a pretty damn good engineer, but maybe they weren’t really looking for what he offered. Being treated with respect by our employer is important. I always treated my employees with respect, and was able to keep the team together, under rather stressful conditions, for decades. Most of my team consisted of highly experienced and skilled engineers, with families and extracurricular lives. In the last couple of years there, we worked with an SV startup, and I got to see, up close and personal, what working in SV is like. I had been in a “silo” for a quarter-century. It was quite sobering. I feel that the industry has become incredibly vicious and downright mercenary, over the years. It’s always been a business, and competitive, but the zeitgeist is much nastier, these days, than it was, when I was younger. It’s kind of disappointing. Money has leached the fun from tech. I’m really sorry for the younger folks coming into the field. They won’t ever have that sense of wonder, adventure, and community that I enjoyed.
mattzito 6y ago
There’s literally nothing in this article that you couldn’t replace “token” or “coin” with “contract” or “membership” and have it work exactly the same. The idea of selling contracts against future income is interesting but putting the blockchain here is yet another solution in search of a problem.
- seibelj 6y ago
  It’s protocol-ized finance. Sure you can do it all old school, but that takes a ton of effort and makes your situation a unique snowflake. If you do it the way everyone has agreed on with tokens, all of your tokens plug into the existing infrastructure, is standardized, and makes the cost of capital go down. Why people continually can’t understand this, and keep saying “buh buh buh mysql and lawyer fees! No need for blockchain!” is a failure of imagination.
  - bradleyjg 6y ago
    Standardized contracts trade all day every day on exchanges all over the world. That’s how everyone doing legitimate business has agreed to do it. That’s where the existing infrastructure is. That’s where serious capital is. Tokens, on the other hand, are the favorite tool of scammers.
    - natchy 5y ago
      How is a large insurance company refusing to pay on a legitimate claim any less of a scam? I don’t think cryptocurrency is near mature enough to replace traditional contracts, but technology changes a lot in 5-10 years.
  - PragmaticPulp 6y ago
    > Sure you can do it all old school, but that takes a ton of effort and makes your situation a unique snowflake. Many of the situations required in this article still require real-world contracts to make them work. The crypto tokens are additive on top of the contracts, but they don't replace contracts. Someone could sell you an NFT that represents 15% of their future earnings over the next 3 years, but the blockchain can't enforce that. Even if we had all payments occurring on the blockchain, the person could simply create a new blockchain wallet and give their new address to future employers, claiming $0 earnings for their original blockchain address. The NFT itself is only valuable if supported by the weight of real contracts in the real world with real enforceability. Crypto tokens only stand alone when the crypto token itself is being traded. Actual value still requires consensus that the token is worth something (Bitcoin, Ethereum) or a real-world contract that stipulates that whoever holds the token has a claim to some actual rights or asset. It's likely that most of the real-world contracts for something of actual value have stipulations that the crypto tokens are null and void if determined to be lost or stolen. The crypto tokens are largely a distraction.
sgt101 6y ago
"Isn't this the same as traditional student debt or, worse, indentured servitude? Not really" Saying "not really" doesn't make something so. This is, literary indentured servitude. By definition.
- gcheong 6y ago
  By what definition? In the lambda school case you only pay back if you’re in a job that pays >50k/year, it’s a percentage of income, and it’s capped at 30k. Indentured servitude requires you to do basically anything for your indenture holder for no pay until you’ve paid it back. Student loans that cannot be discharged regardless of circumstance sounds far more like indentured servitude than an ISA to me so “not really” I think is a fair assessment.
  - ghaff 6y ago
    Yes. I'm not sure how making the payback variable as a function of salary up to some cap is something unacceptable while a fixed payment obligation is a run of the mill loan.
- cochne 6y ago
  No, by definition it is not, because the person is still earning a salary.
- bradleyjg 6y ago
  At least in the version that existed in early America indentured servitude allowed for coercion and there was no bankruptcy option. Whereas in modern law specific performance for personal service contracts are strictly forbidden and bankruptcy is out there.
  - Igelau 6y ago
    We got rid of debtor's prisons too, which is an improvement.
  - t0mas88 5y ago
    But student loans are exempt from bankruptcy, so in a way that particular investment in future earnings is a bit outside the modern protections.
caseyross 6y ago
Interestingly, there's nothing particularly novel about investing in a person's early career to reap late-career rewards. In America, it used to be that parents and employers would invest a lot of money in raising and training young adults, respectively. But more and more, there's less money available to support these programs. Given this situation, it makes sense that early-career people would have to look elsewhere for people willing and able to invest in them.
- robocat 6y ago
  > there's less money available to support these programs Incorrect. “Since 1980, college tuition and fees are up 1,200%, while the Consumer Price Index (CPI) for all items has risen by only 236%.” https://www.visualcapitalist.com/rising-cost-of-college-in-u-s/ https://www.visualcapitalist.com/rising-cost-of-college-in-u...
  - darkerside 6y ago
    And with the amount of federal and state dollars going into scholarships and loans, it's hard to say with a straight face that society isn't directly funding its most promising youth.
kingsuper20 6y ago
I've run into that with doctors now and again. You'll meet a younger doctor who complains heavily about student debt and how impossible life in the US is. I'll offer to write a check for the debt in return for a negotiated percentage of their income from now on. Silence ensues.
- PragmaticPulp 6y ago
  > I'll offer to write a check for the debt in return for a negotiated percentage of their income from now on. Silence ensues. Writing someone a check in exchange for their future earnings "from now on" is a terrible deal. You're essentially offering a loan that can never be paid back, yet requires payments forever. Loans are a good deal because the terms are known ahead of time, payments end when the principle is paid off, and the cost can be calculated. The idea behind ISAs is that they try to align the interests of the student and the educator, as the educator only gets paid proportionally to the students' future earnings. ISAs also have limits on how long they can collect from the student and thresholds that have to be met for collection criteria, as well as an upper limit on payments. What you're describing is just facetious and condescending to those with six-figure medical debt.
  - bradleyjg 6y ago
    > What you're describing is just facetious and condescending to those with six-figure medical debt. The point is that medical debt is a very good deal for the reasons you point out and because the doctor cartel in the US has forced prices up to dizzying heights. Yet people bitching and moaning about having borrowed $300k at reasonable interest rates for the right to earn many millions with almost no risk (when was the last time you met an involuntarily unemployed doctor?) don’t acknowledge that.
    - hundreddaysoff 5y ago
      FWIW, garden-variety West Coast ER doc here. Right now, I'm an independent contractor who makes ~$200/h. In a few months when my small company gets acquired, I'll be a W-2 who for various reasons will make ~$160/h before CA taxes. So, clearly not starving, and maybe even undeserving to be in the top 10--15% after working just ~24--36h/wk in night shifts. But won't make $$MILLIONS$$ and won't get as much as your average Googler with equivalent career experience to mine, I reckon. And also never made more than ~$50k in my life until my mid-30s. Doctor pay is facing a whole lot of downward pressure from health insurers, private equity, and other FIRE people recently. Part of the C-suites' strategy has been to open self-funded residencies where they pay their residents much less than they would have to pay the equivalent lifelong salaried PA. This, then, creates an "oversupply" (from docs' perspective) of trained docs and forces pay down. Personally I have no sentiment for the profession and do see how this could ultimately be good for patients. Unfortunately, in reality the FIRE people seem to just take all that cash for themselves and the patient is left paying the same amount or more than they did 20 years ago (via insurance or whatever you want to call it).
dyeje 6y ago
I am curious whether it is easier for a startup looking to get into this space to do their ISAs via traditional contracts or Ethereum.
- PragmaticPulp 6y ago
  Traditional contracts are required either way. Anything on the blockchain would still require a traditional real-world contract to back it up. For ISAs, there isn't really any reason to put it on the blockchain unless the company is trying to sell it. Even then, the NFT on the blockchain would only be representative of the ownership, which still depends on the real-world contract. The contract would likely have provisions that the NFT is null and void if lost or stolen, as no reasonable company would voluntarily give up protections for their assets.
_red 6y ago
>ponzi It's become increasingly common to see the word "ponzi" applied to what is just really a "speculative investment". Its a shame this is continually being done, because its a real destruction of language meaning. A "ponzi scheme" is an intentional act to defraud...using a portion of investor funds to pay other investors in hopes of attracting more and more investors. The conman then times his exit appropriately once some critical mass of investors rush in. A risky or speculative investment is just that. There is no intent to defraud. The continual lazy use of "ponzi" does lots of harm since it unfairly implies 'an intentional act to defraud'.
ausbah 6y ago
is this suppose to be good? this sounds awful. it just reads like finance and tech have eaten literally everything, down to a person's life I guess there is more "freedom"? but that seems to come at the cost of stability and more winner take all scenarios like a lot of this stuff isn't new, but the degree to which is seems prevalent reads dystopic
- tdeck 6y ago
  This is simply an example of an ecomonic/political system creating problems (in this case lack of capital needed to start a career), then creating "solutions" to those problems (debt, commodification of people as investments) that reinforce the system and enrich its key stakeholders.
  - jkhdigital 5y ago
    Yes, when you speak in broad enough generalities then you can make almost any statement unfalsifiable.
ramblerman 6y ago
I think the author explains perfectly the risk of the future where we see more and more winner takes all scenarios. But the conclusion seems a bit off. Basic income seems like the only recourse IMO
booleandilemma 6y ago
I can’t imagine having “shareholders” governing whether I’m allowed eat meat or not, or how much I should be exercising. You’re reduced to a slave, with many masters instead of one. No thank you.
lifeisstillgood 6y ago
Is it just me, but isn't an Income Share Agreement ... taxes? Is this just a failure of government to supply the upfront investment in its citizens so that they pay enough tax in ten years?
- 0x4d464d48 6y ago
  "Is it just me, but isn't an Income Share Agreement ... taxes?" No. Its profit sharing akin to how companies do so by issuing dividend paying shares. So far as the government is concerned theyre just looking out for their most important stake holders, wealthy individuals and monied interests, by keeping taxes extremelly low. Universities being underfunded to the point they need to raise tuition to the point where students need to take on crushing debt is a byproduct of that.
  - lifeisstillgood 6y ago
    I think we are violently agreeing? Profit sharing with your citizens is basically government. I think ...
    - 0x4d464d48 6y ago
      We agree that its wealth redistribution by anyother name. Certainly. The difference is that taxing is done in the name of public/government interest whereas profit sharing is done in the name of private/individual interest.
      - lifeisstillgood 6y ago
        what i am trying to say is that if a government supplied sufficient upfront investment in education (which is basically what's going on here) then no student would have an incentive to add an additional lieu on their future earnings. and governments should see education if their citizens as an investment repayable through future taxes
        5y ago
backtoyoujim 6y ago
I can foresee a nation-state utilizing these as a citizen credit score, and utilizing them to control behavior.
stereolambda 6y ago
A couple thoughts if we were to "scale" the income-sharing contract concept beyond a novelty: 1. If there is, say, a hundred or even ten possible candidates to pick from, due diligence becomes brutal. Health information, full social media dumps, detailed financial disclosures etc. Also rampant discrimination. If it is unregulated, it's basically what insurance companies would like to be doing but with no limits. 2. If it is for five years and with no big payout at the end, the value of such a contract (via discounted cash flows) is likely pretty low and accordingly would be the funding. Note that LambdaSchool owns the whole "equity" of a person (no splitting into X shares) and gives you a service (at scale) instead of cash, so it probably makes sense for them. 3. It would be fun to see the accounting sorcery possible for shielding and offloading your earnings to other entities, to pay your investors (?)... preferably nothing. Besides, people, as opposed to companies, are rarely truly profit-maximizing entities. Maybe in the second year your guy decides to be content with a mid-range salary and devote all his time to studying meditation. But hey, theoretically you could try to escape inflation with such a crazy scheme if the interest rates on "real" bonds would stay very low...
- ghaff 6y ago
  >gives you a service (at scale) instead of cash Yeah, this sort of payback scheme probably needs a few characteristics to make sense which apply in this case. - Incremental cost of a student is relatively low. So even if, say, 25% of the class doesn't pan out, they didn't cost you a lot that has to be somehow passed on to the other 75%. - Likelihood that graduates can get at least a workaday job at a decent salary are pretty decent. This probably wouldn't work for film school.
- jkhdigital 5y ago
  Indeed, due diligence is inherently not scalable. The world of finance has done everything in its power to overcome this constraint—basically all forms of risk pooling—but if nobody actually does the due diligence then you get stuff like NINJA mortgages repackaged into CDOs with AAA ratings on the senior tranche.
moonbug 6y ago
what a hideous vision.
arberx 6y ago
To call this a ponzi scheme is pretty disingenious, probably great for views/clicks though. At the core a ponzi relies on guaranteed return, paid for by other investors. Just because you might not like or understand how something works, doesn't mean it's a ponzi.
kristianc 6y ago
Each of these articles need to be treated with a degree of scepticism: in order to have a functioning market for any of these things - whether an NFT, a share of future earnings, or ‘BitClout’ - you need people who are willing to buy into the ecosystem. If there are not a steady stream of new entrants with new money coming to the market, the whole thing collapses like a house of cards. And you will eventually run out of people. Anyone seriously looking into BitClout should look into the recent story of FootballIndex in the UK. The Ponzi analogy is quite apt, and buyers into Ponzi schemes typically do not do well out of it.
martindbp 6y ago
The nicest thing I've ever been told came from my best friend, telling me he'd buy stocks in "me" if it were possible. It wouldn't have been a particularly good investment, but I guess he was on to something with that concept!
dharma1 6y ago
It’s hard to say if personal tokens will take off or not, but I’m almost certain many more things will be turned into financial instruments in the future. Almost anything that can have provable (current term is “on-chain”) revenue (future or current) can be “tokenised” and sold, bought and speculated on. Our definitions of employee, employer, nature of work and contracts, our definitions of companies, shares and financial instruments are arbitrary - we are just used to them. They will change. I can absolutely see a future where people work on (and own pieces) of many projects, revenue share is tied much closer to measurable value creation, and “tokenised” future cash flows in almost anything measurable and enforceable (ie. on-chain activity) have liquid markets from very early on.
pavlov 6y ago
> "By letting other people invest in you, you are incentivizing them to promote your own story and do their best to increase your tokens' value." In 1946, the US Supreme Court established the so-called Howey Test to determine if an investment opportunity is a security offering. These are the Howey criteria: "Under the Howey Test, a transaction is an investment contract if: "It is an investment of money; "There is an expectation of profits from the investment; "The investment of money is in a common enterprise; "Any profit comes from the efforts of a promoter or third party." IANAL, but these personal tokens seem to match every condition of the Howey test. I'd be extremely careful about conducting your own little security offering if you're resident in the US, or allow US residents to participate. It's worth noting that Alex Masmej, the person mentioned in the article, conducted his token offering while in France.
- jkhdigital 5y ago
  It’s also worth noting that Alex Masmej, the person mentioned in the article, has commented in this thread. And every time I see the acronym IANAL I pronounce it as “I, ANAL”. edit: Why would someone flag this??? It’s funny!
- ornornor 5y ago
  Mike Merrill has been doing this for a while (kmikeym.com) and didn’t seem to run in legal troubles. He’s in the US of A.
  - pavlov 5y ago
    That doesn’t mean anything. There were hundreds of ICOs in 2017, and the SEC only sued a handful of them. The rest were not different, they just lucked out of prosecution.
sturza 6y ago
If each individual would be treated like a public company, where others own a small part, it also makes sense for this individual to have a board. A group that protects the interests of both the individual and the investors. If this was true, decisions of the individual would have to pass the board and soon enough the individual would have their own advisors on what to do next: play a game of soccer with friends(injury risk) or go for a walk in the park. It's just fun to imagine a public individual's life.
angry_octet 6y ago
We went through the 2008 financiy crisis and this is what people think is a good idea? How long before people are trading options on risk weighted batch of people? Leveraged buyouts if whole specialties? Movement controls to enforce greatest P/E? "I'm sorry sir, you can't leave the country without presenting a Holiday Risk Bond. Perhaps a Virtual Vacay is more affordable?" And most of all: you, as an individual, have almost no information about the market, and are almost certain to get a bad price. Anyone who thinks they are good at this should practice buying a new car. Once you get to the final sale price, with no finance, demand another 9% off. If you can get that, and the car isn't a lemon, you're ready to negotiate for a well understood commodity. Selling people futures, when you've just given them capital up front with the goal of enabling higher returns, is less understood, though of course there are many immigrants who do just that. But already wealthy people? It seems much less certain.
- TimJRobinson 5y ago
  > How long before people are trading options on risk weighted batch of people? Lol I actually love this idea. Funding an ETF of people who want to move to SF to start a career in tech, or LA to start a career in acting. Diversify your risk and support some people with potential. Could have an acting school equivilant of ycombinator and you can invest in all each batch and get a return if some succeed. If we want a metiocracy this could help build it, by giving more capital to those who have potential but are disenfranchised by existing institutions.
  - angry_octet 5y ago
    Yes but remember 2008? All those loans that turned out to be sub-prime? All those complex risk products no one really understood? So, instead of Indian SWEs and 3rd sons of teachers you thought you were investing in for grad school, you're paying people to be swindled at Trump University and indentured training for long haul trucking. Meanwhile the YC30 talent bonds were sold to a select group of connected investors, and pension funds bought job lots of Invisalign techs from brokers making a steady commission.
- deleted 5y ago
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hwestiii 5y ago
I very vaguely recall the Bowie Bond issue being reported somewhere but confess to promptly forgetting it. Would have been interesting to have followed it in real time. It appears to have quickly lost news-worthyness. The future is like that a lot.
scotty79 5y ago
Lambda school seems like an example of perfectly aligned incentives. I wouldn't mind if private higher and trade education was required to only take in money through such setup. And if people deem less practical education necessary it should be funded from taxes only.
- t0mas88 5y ago
  The European system with higher income tax and heavily subsidised universities practically has the same result. Anyone (that is a permanent resident) can go to a top school, but you're paying it back the 40 years after with 50%+ income tax if you get a good job.
  - scotty79 5y ago
    Not really, because universities don't care if what the teach is useful in the job market because they get money from tax either way.
    - t0mas88 5y ago
      But just having any MSc / MA is greatly helping job market prospects, because every degree includes at the very least an understanding of scientific methods and statistics, and should have given you some critical thinking skills. For a lot of jobs having some kind of degree is a generic requirement without specifying in which field.
      - scotty79 5y ago
        Sometimes it does, sometimes it doesn't. Major complaint about paid US higher education is that for a lot of fields and universities what you get from them in the job market is less than tuition, often it's pretty much nothing. Not to mentioned yearsbof your life you've put into it. I think it's absolutely wonderful idea to align interests of educational institution with your value in the job market after you finish it.
scotty79 5y ago
Apparently there'll be Student Coin lauching soon. From what I understand it is supposed to be a platform built by students on ethereum that promises to make settingu up such personal IPOs super easy...
furstenheim 5y ago
I'm surprised it didn't mention the more extreme case of Mike Merrill https://www.wired.com/2013/03/ipo-man/ https://www.wired.com/2013/03/ipo-man/
- ornornor 5y ago
  I was surprised as well. He’s been doing this for a while. I remember buying shares in him a few years back.
gattr 5y ago
I'll mention the SF novel "Black oceans" [1] again. It describes a scheme where someone extremely driven and confident of success, but utterly poor, can make a deal with certain shady organizations, which - in case you don't make it and repay them in agreed time - will simply harvest you for (very valuable) organs. [1] https://en.wikipedia.org/wiki/Charne_oceany https://en.wikipedia.org/wiki/Charne_oceany
natchy 5y ago
> For example, if Elon Musk succeeds in landing the first person on Mars, his coin price should theoretically go up. And if, in contrast, he makes a racial slur during a press conference, his coin price should theoretically go down. Yes, and when people are making emotional/ideological financial decisions, I’ll buy the dip.
- peterburkimsher 5y ago
  Investors may use entrapment to cause people to make foolish decisions in order to buy the dip.
mollems 5y ago
The bit about monetizing one’s influence / reputation reminds me of Cory Doctorow’s novel _Down and Out in the Magic Kingdom_. https://craphound.com/down/Cory_Doctorow_-_Down_and_Out_in_the_Magic_Kingdom.pdf https://craphound.com/down/Cory_Doctorow_-_Down_and_Out_in_t...
mollems 5y ago
The bit about monetizing one’s influence / social “capital” reminds me of Cory Doctorow’s novel _Down and Out in the Magic Kingdom_ (which is a great read regardless). https://craphound.com/down/Cory_Doctorow_-_Down_and_Out_in_the_Magic_Kingdom.pdf https://craphound.com/down/Cory_Doctorow_-_Down_and_Out_in_t...
SergeAx 5y ago
> these [blockchain issued] tokens are not simply "certificates of ownership"; they can be pre-programmed to behave in a certain way (for example, pay a dividend each time a predefined event happens) For this to happen the blockchain gotta have a way to sync with events in the physical world. Moreover, all active blockchain nodes should have equal access to this data and get equal result at given time. This mechanism cannot be enforced by blockchain itself, so we are back to the issue of trust.
rusteh1 5y ago
I enjoyed this article, and had never heard of Bowie Bonds! But isn't the sharing of risk in exchange for value just the concept of a full time job in any country with labour laws? I work for a large multinational in a country other than America. I put up with additional bureaucracy compared to the life of a freelancer/contractor because I know that A) The company has a high chance of existing in 12 months B) I won't be fired without cause. In exchange the company is provided value in excess of my wage, training and other overhead costs. How is this different?
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anm89 5y ago
They might as well replace the word Ponzi with "thing I don't like" because what they are describing has zero connection to Ponzi schemes
alexmasmej 5y ago
Hey, Alex Masmej here. Just wanted to say that I had no choice because I had no money in the bank. During the start of COVID, I lost my only (and very first) source income at the time, and I lost all my savings in crypto (DeFi is dangerous even to crypto people like me). Financially, this ISA freed me instantly, and gave me a newfound legitimacy as a crypto innovator. This was by far the best way I could find to break out as an entrepreneur.
- maliker 5y ago
  Kudos to you. It’s a new and innovative technique, seems like it could help many more people, and you showed how it would work in practice. I thought being able to do the crypto trade directly on you website was a nice touch—definitely shows its easier and more accessible than the Bowie Bond example from the article.
- beervirus 5y ago
  How have things played out since the initial sale?
  - stirlo 5y ago
    https://defimarketcap.io/token/0x8ba6dcc667d3ff64c1a2123ce72ff5f0199e5315 https://defimarketcap.io/token/0x8ba6dcc667d3ff64c1a2123ce72... Market cap is now almost $1 million with a coin price of $0.15. Considering the initial offer was $0.002 per ALEX it seems like he's doing really well. Of course he's now running a NFT startup https://tryshowtime.com https://tryshowtime.com so perhaps the 15% share of his income has the potential to max out at the $100k return he offered. I don't think I'd bet against him at this point.
- jkhdigital 5y ago
  Glad I scrolled down far enough to see this! Need to upvote this to float it to the top...
- hycaria 5y ago
  You had no choice but go to the most expensive place in the world ?
jopsen 5y ago
Have people forgotten the classic way of investing in humans? Social programs. In Denmark part of my taxes goes to pay public pensions, and when I get old taxes will fund some pension for me. The public pension isn't huge, so yes, almost everybody has a private pension scheme too. My private pension is exposed to global stock performance over ~30 years. My public pensions is exposed to value of humans in Denmark in ~30 years. So in a way I do have exposure to some human investment :) This is also why it makes sense for my taxes to fund tuition for everybody.
- andxor 5y ago
  So Denmark would forcibly take more than half of my income to invest in stuff I don't have a say on, while no one is held accountable by competition and economic incentives. I'll pass.
  - tomglynch 5y ago
    Do you think taxes are necessary for a cohesive society?
    - andxor 5y ago
      Yes, of course, but not > 50%.
      - Kosirich 5y ago
        I'm not refuting your point but where did you get >50% from? You absolutely can get taxed up to 54% but for that you would need +200k (krona) per month.
        Vinnl 5y ago
        And also only applies to the amount above the threshold.
        5y ago
giantg2 5y ago
This basically happens already. The only way to get promoted is to make your boss look good. Basically pushing value up the pyramid, where people get paid more and "produce" intangible value (which of course is more prone to bias and promotion based on percieved contribution).
personjerry 5y ago
Can socialism be thought of as this "investment into each other" taken to the extreme? Where we put all our investment into each other, believing the future output of anyone is a net gain?
ipiz0618 5y ago
> For example, if Elon Musk succeeds in landing the first person on Mars, his coin price should theoretically go up. And if, in contrast, he makes a racial slur during a press conference, his coin price should theoretically go down. That sounds a lot like social credit system? I can't imagine a future where a small fraction of people not related to you can decide what you should do, even if they are not the government.
person_of_color 5y ago
This future sounds complicated. Is there a way to short complexity? Cash under the mattress?
xivzgrev 5y ago
This is fine and dandy in a 10 year bull market, but I don't think this is the solution for most folks. When the market turns south, money will fly to safety, and then slowly expand over the following years. It's not going to be safe to invest in stranger's careers during a downturn.
JackPoach 5y ago
The article is very interesting but it implies this will be mainstream. It won't or at least not likely to. I bet the examples in the articles are just about the only options out there (at least as far as the education goes). And for a good reason.
HuangYuSan 5y ago
This is a very good article.
hnxs 5y ago
Oof, I can’t take anything this author says seriously after his mention of Quibi in one of these articles. It didn’t lose to TikTok due to algorithms and luck, it lost because no one was interested in the content. The founders will blame that on covid, but I think they’re wrong. No one would have wanted it pre-pandemic either.
zjs 5y ago
Related: the idea of income pooling schemes amongst baseball players. "Income pooling is a concept for up and coming baseball players who would come together and contractually agree to contribute a small portion of their future earnings to the shared group. As their careers progress, even if only one person from that pool “makes it big,” everyone in that pool would receive a certain percentage of the income, thus creating a safety net for the rest of the players, ..." ([Forbes]) "Nobody has to pay a cent until they've made it to the majors and they've made $1.6 million. Then that guy has to kick 10% of his salary back to his pool mates." ([NPR]) [Forbes]:https://www.forbes.com/sites/igorbosilkovski/2020/06/26/meet-the-stanford-grads-who-just-raised-8-million-to-help-potential-baseball-and-business-superstars-make-money-even-if-they-dont-become-a-listers/ https://www.forbes.com/sites/igorbosilkovski/2020/06/26/meet... [NPR]:https://www.npr.org/2019/10/25/773532516/some-baseball-players-are-entering-income-pooling-agreements-to-fix-imbalance https://www.npr.org/2019/10/25/773532516/some-baseball-playe...
kmikeym 5y ago
instead of a pyramid scheme i like to think of it as an inverted funnel
qubit000 5y ago
US culture is already too self-absorbed focusing more on style than substance. Selling personal tokens to fund one's career trajectory will only create more extreme narcissism akin to unqualified/incompetent people running for office.

480 points by elsewhen 6y ago

Thanks for this, it was an excellent read and these celebrity coins I personally was not aware of and that’s an interesting use case I never thought of.

andrewfromx 6y ago

Explains how people are selling ECR20 tokens with special rights to income from just one person. Also the right to message them. i.e. a fan can buy a token of a "celebrity" and get special inbox rights. But also upside if that person goes on to become very successful.

istjohn 6y ago

The unstated implication is that these investment vehicles are for suckers, as in any ponzi scheme.

gruez 6y ago
Unlike a ponzi scheme (which is guaranteed to be a loss overall), a ISA token could theoretically work out for all parties involved. The article mentions that lambda school's business model is based off it. The problem is that the market for such tokens is a market for lemons, and the amount of due diligence you have to do to weed out the scammers vastly outweighs whatever risk-adjusted-returns you can get compared to the s&p 500. It's the p2p loan craze all over again.

peytn 6y ago

How do you tackle issues with manipulation? Can’t I get together with my friends and wash trade each other’s tokens?

gruez 6y ago
At the end of a day it's still a token, so all the usual scams (eg. pump & dump) still apply.
- peytn 5y ago
  Dang, I was hoping somebody would’ve come up with something by now before the SEC or whoever does.
PragmaticPulp 6y ago
Yes, wash trading should be assumed to be ubiquitous in the NFT space. It's too cheap and easy to create fake trades of NFTs to trust that transactions are all real. The tokens described in this article don't necessarily depend on the sale price of the NFT, though. Instead, these NFTs would represent the beneficiary of real-world contracts. Whoever holds the NFT collects the future income of the person, as enforced by a real-world contract. Of course, nothing stops them from wash trading these NFTs in an attempt to flip them.

airza 6y ago

The future outlined by these new and exciting investment vehicles is horrifying.

nemo44x 6y ago
It is but you wonder if the instability of a career is even more horrifying? It is essentially like a farmer selling futures contracts on their crop. The yield of the crop and market conditions at harvest time are so uncertain that trading upside for stability becomes a smart bet. So one might think to themselves that they don’t feel certain about their ability to generate income for the next 20 years and sell a claim to their existing and future incomes for a payment today which they can diversify into other investments and tap in the future if things unravel for a period. Of course the old fashioned way of doing this is putting part of your income into savings. But front loading savings has benefits like having a larger nut to start with and more time to compound.
- airza 6y ago
  The entire line of thinking just seems to me like it is bending over backwards to avoid just... having income taxes and a social safety net.
  - nemo44x 6y ago
    I think it’s more like insurance than a social safety net. It’s also private instead of public and therefore by necessity, political, which is undesirable for many people. And I don’t think it’s in lieu of a social safety net. This would exist to stabilize a lifestyle. A social safety net would still exist for adults that can’t take care of themselves through government funded shelter and food and other things. I would expect a professional couple with plans of a family wouldn’t be able to (or want to) rely on the whims of government assistance. You’d maybe want to plan a lifestyle and getting up front money could have benefits. Similar to purchasing additional life insurance if you have kids.

bko 6y ago

> As I mentioned in an earlier piece, these tokens are not simply "certificates of ownership"; they can be pre-programmed to behave in a certain way (for example, pay a dividend each time a predefined event happens). I don't get how you can pre-program a contact to pay a percentage of your earnings. Ethereum is very restricted as to what you can program. I don't think you can just write "check stock price of X on CNBC, if X then Y..." Even if you could you would need to prefund it with Ethereum which would make the fund raising aspect kind of pointless. > In English, this meant Masmej was selling digital tokens under his own name ($ALEX). The token sale would sponsor his entrepreneurial journey. Owners of these tokens will receive certain rights over Masmej's future income and career decisions. It's just a promise to backers. I can't see how its enforced by a contract. It's no different than just having people send you money via PayPal and you promising to hit them back when you make some money. I guess easier to administer and track woh you promised? And I don't see how an income sharing agreement is a Ponzi scheme. A ponzi scheme is current investors paying out to previous investors. This is just a funding mechanism, selling equity instead of debt

PragmaticPulp 6y ago
> I don't get how you can pre-program a contact to pay a percentage of your earnings. You can't. Any agreement like this would still require a traditional, real-world contract to carry any weight. The contract would specify that the holder of the NFT is entitled to the benefits of the contract. Even in a hypothetical world where everyone gets paid on the Ethereum blockchain, the person could simply open up a second ETH wallet and collect payments there, because crypto wallets aren't people. The unspoken catch is that these contracts would likely include a provision that the NFT is null and void in the event that it's lost or stolen. People entering into contracts aren't eager to give up their rights to hacks when they can simply add a contractual provision that limits it. The NFT exists because it's a convenient placeholder to represent something that can be traded with commonly accepted (relatively speaking) tools. A real-world contract would still be necessary to put any weight behind these NFTs.
- dharma1 6y ago
  You’re right, the personal tokens like one the from Alex are simply an IOU based on trust and reputation. Reputation systems are really interesting and can work for some things, but I’m not sure you could sell the equivalents of Bowie bonds on trust alone - and the whole point of smart contracts is that they’re supposed to be trustless. So I think investing in future gains of a real world entity who can simply start over under a new guise or decide not to pay, without being able to enforce the contract isn’t going to work. But I’m not sure connecting current legal entities/contracts to onchain versions will be the answer either in many cases.

JohnJamesRambo 6y ago

It’s just more top signals. There’s too much money floating around if people want to invest in nonsense like this. When equities correct from the current Shiller PE ratio higher than 1929 I think you will find less people want to invest in a career token for someone. https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe The Bowie Bond part of the post was fascinating by the way. Had never heard that story. He issued them in 1997 which is a high Shiller PE value also before the 2000 stock bust. Lots of money floating around looking for a home then too.

xur17 5y ago
I agree that there's a ton of money floating around / frothiness, but what's inherently wrong or ill-advised about investing in future cashflows of a person. Assuming you diversify across a bunch of people in a bunch of fields, this actually sounds better than some of the stuff people are investing in in the stock market.
- SergeAx 5y ago
  Because having a share in an individual sounds very much like slavery?
  - jkhdigital 5y ago
    But it’s voluntary slavery, like BDSM play edit: man you people cannot take a joke
  - heartbeats 5y ago
    So does usury. You loan someone $40000 @ 5% APR and he spends it on education. If the loan is to be paid back in a decade, he has to cough up $416 per month. Unlike a mortgage, he can't foreclose on his education. Since he doesn't have any assets to sell, and is by law unable to get out of them through bankruptcy, his only choice is to work some amount of hours every month to pay off the loans. If that is not slavery, then surely ISAs are fine too? And if that is slavery, then how are ISAs any worse?

RichardHeart 6y ago

Bitclout mentioned here steals your keys. https://twitter.com/_prestwich/status/1379963871792799744 https://twitter.com/_prestwich/status/1379963871792799744 If you used a non unique seed with them, consider it compromised.

gibybo 6y ago

If you're interested in this concept, you may enjoy the novel "The Unincorporated Man" which is set in a future where everyone (except the protagonist) has personal shares traded on an open market. It's a bit thick on ideological propaganda of the extreme capitalist/libertarian type, but I found the exploration of the concept fascinating enough to get through most of it.

citizenkeen 6y ago
It launches a decent series with each book having different premises, as well.
valzam 5y ago
Very interesting book to read, highly recommend it!
mtnygard 5y ago
Thank you! I knew I'd read a novel with this premise but could not recall the name.

ChrisMarshallNY 6y ago

I enjoyed the piece. Personally, I want no part of it, but I think it might work well for people who are not me. I've always been "on my own." My life really is a series of watersheds, where I've been the only person to believe in me, before the event, and a whole bunch of folks seemed to believe in me, after the fact. Not a particularly good setup for selling "Chris-Tokens™." Not a bad thing, in the long run. It hurt like hell, the first few times, but I realized that I don't have the personal skills to "sell" myself (like being able to spew jargon, sound like I'm TED-talking all the time, or beat LeetCode tests), so I can't blame folks for not wanting to "invest" in me. It is what it is. I come across as a socially-awkward dork, so people don't take me seriously. I'm actually fairly good at what I do, but If I mention that, it comes across as "arrogant," despite the enormous ocean of hubris that pretty much defines today's tech scene. I don't really have the skill to "humble-brag." It taught me to live a conservative lifestyle, be Honest and Honorable, do top-shelf work, bust my ass, and not expect much from others. I couldn't rely on anyone else to clean up my messes, or get me out of jackpots. It has taught me to learn what I have needed to learn, despite active roadblocks being tossed out by "gatekeepers," and it also prevented me from getting mixed up with some truly awful disasters; both personal, and business.

noservice99 6y ago
I'm not trying to be rude and I enjoyed your comment, but you say you don't have the skills to humblebrag or sell yourself but you're doing it pretty well here
- roghummal 5y ago
  You're not wrong and that your comment is dead is a great disappointment. That you created a throwaway to criticize something so obviously astroturf-y is understandable but, also, disappointing. HN is as much an echo chamber as any.
- ChrisMarshallNY 5y ago
  I write fairly well. I’ve been writing for most of my life. Written presentation isn’t actually as valuable as you might think. It seems that people read a lot less, these days, than they used to. I’m told that YouTube videos and podcasts are more likely to garner attention, and I have a voice made for silent films, and a face made for radio. Also, even that writing skill has been greatly refined and improved over the last three years; since I left my last job. Funny. Deciding not to pursue employment seems to have helped me to improve some of the skills employers might actually notice (I consider them fairly “superficial,” but they are what tend to attract attention). I feel that the really valuable stuff, like an expert grasp of Apple development, running a geographically-distributed team for decades, and a long history of releasing high-quality, finished product, is not so obvious (or valued). I was talking, recently, with a former employee, who had gone through the interview process for a FAANG. He made it through the whole thing, and may get an offer, which he’ll likely decline (he took a job at a corporation that will probably treat him well, but won’t pay as much). What he described, sounded a lot more like a hazing, than a serious evaluation. I’m not about to put myself through that kind of crap for any amount of money. I have too much self-respect. I feel he made the right choice. He had basically made up his mind, fairly early in the process, and really went through the motions to learn and practice (he presents quite well). I feel that they missed out on a pretty damn good engineer, but maybe they weren’t really looking for what he offered. Being treated with respect by our employer is important. I always treated my employees with respect, and was able to keep the team together, under rather stressful conditions, for decades. Most of my team consisted of highly experienced and skilled engineers, with families and extracurricular lives. In the last couple of years there, we worked with an SV startup, and I got to see, up close and personal, what working in SV is like. I had been in a “silo” for a quarter-century. It was quite sobering. I feel that the industry has become incredibly vicious and downright mercenary, over the years. It’s always been a business, and competitive, but the zeitgeist is much nastier, these days, than it was, when I was younger. It’s kind of disappointing. Money has leached the fun from tech. I’m really sorry for the younger folks coming into the field. They won’t ever have that sense of wonder, adventure, and community that I enjoyed.

mattzito 6y ago

There’s literally nothing in this article that you couldn’t replace “token” or “coin” with “contract” or “membership” and have it work exactly the same. The idea of selling contracts against future income is interesting but putting the blockchain here is yet another solution in search of a problem.

seibelj 6y ago
It’s protocol-ized finance. Sure you can do it all old school, but that takes a ton of effort and makes your situation a unique snowflake. If you do it the way everyone has agreed on with tokens, all of your tokens plug into the existing infrastructure, is standardized, and makes the cost of capital go down. Why people continually can’t understand this, and keep saying “buh buh buh mysql and lawyer fees! No need for blockchain!” is a failure of imagination.
- bradleyjg 6y ago
  Standardized contracts trade all day every day on exchanges all over the world. That’s how everyone doing legitimate business has agreed to do it. That’s where the existing infrastructure is. That’s where serious capital is. Tokens, on the other hand, are the favorite tool of scammers.
  - natchy 5y ago
    How is a large insurance company refusing to pay on a legitimate claim any less of a scam? I don’t think cryptocurrency is near mature enough to replace traditional contracts, but technology changes a lot in 5-10 years.
- PragmaticPulp 6y ago
  > Sure you can do it all old school, but that takes a ton of effort and makes your situation a unique snowflake. Many of the situations required in this article still require real-world contracts to make them work. The crypto tokens are additive on top of the contracts, but they don't replace contracts. Someone could sell you an NFT that represents 15% of their future earnings over the next 3 years, but the blockchain can't enforce that. Even if we had all payments occurring on the blockchain, the person could simply create a new blockchain wallet and give their new address to future employers, claiming $0 earnings for their original blockchain address. The NFT itself is only valuable if supported by the weight of real contracts in the real world with real enforceability. Crypto tokens only stand alone when the crypto token itself is being traded. Actual value still requires consensus that the token is worth something (Bitcoin, Ethereum) or a real-world contract that stipulates that whoever holds the token has a claim to some actual rights or asset. It's likely that most of the real-world contracts for something of actual value have stipulations that the crypto tokens are null and void if determined to be lost or stolen. The crypto tokens are largely a distraction.

sgt101 6y ago

"Isn't this the same as traditional student debt or, worse, indentured servitude? Not really" Saying "not really" doesn't make something so. This is, literary indentured servitude. By definition.

gcheong 6y ago
By what definition? In the lambda school case you only pay back if you’re in a job that pays >50k/year, it’s a percentage of income, and it’s capped at 30k. Indentured servitude requires you to do basically anything for your indenture holder for no pay until you’ve paid it back. Student loans that cannot be discharged regardless of circumstance sounds far more like indentured servitude than an ISA to me so “not really” I think is a fair assessment.
- ghaff 6y ago
  Yes. I'm not sure how making the payback variable as a function of salary up to some cap is something unacceptable while a fixed payment obligation is a run of the mill loan.
cochne 6y ago
No, by definition it is not, because the person is still earning a salary.
bradleyjg 6y ago
At least in the version that existed in early America indentured servitude allowed for coercion and there was no bankruptcy option. Whereas in modern law specific performance for personal service contracts are strictly forbidden and bankruptcy is out there.
- Igelau 6y ago
  We got rid of debtor's prisons too, which is an improvement.
- t0mas88 5y ago
  But student loans are exempt from bankruptcy, so in a way that particular investment in future earnings is a bit outside the modern protections.

caseyross 6y ago

Interestingly, there's nothing particularly novel about investing in a person's early career to reap late-career rewards. In America, it used to be that parents and employers would invest a lot of money in raising and training young adults, respectively. But more and more, there's less money available to support these programs. Given this situation, it makes sense that early-career people would have to look elsewhere for people willing and able to invest in them.

robocat 6y ago
> there's less money available to support these programs Incorrect. “Since 1980, college tuition and fees are up 1,200%, while the Consumer Price Index (CPI) for all items has risen by only 236%.” https://www.visualcapitalist.com/rising-cost-of-college-in-u-s/ https://www.visualcapitalist.com/rising-cost-of-college-in-u...
- darkerside 6y ago
  And with the amount of federal and state dollars going into scholarships and loans, it's hard to say with a straight face that society isn't directly funding its most promising youth.

kingsuper20 6y ago

I've run into that with doctors now and again. You'll meet a younger doctor who complains heavily about student debt and how impossible life in the US is. I'll offer to write a check for the debt in return for a negotiated percentage of their income from now on. Silence ensues.

PragmaticPulp 6y ago
> I'll offer to write a check for the debt in return for a negotiated percentage of their income from now on. Silence ensues. Writing someone a check in exchange for their future earnings "from now on" is a terrible deal. You're essentially offering a loan that can never be paid back, yet requires payments forever. Loans are a good deal because the terms are known ahead of time, payments end when the principle is paid off, and the cost can be calculated. The idea behind ISAs is that they try to align the interests of the student and the educator, as the educator only gets paid proportionally to the students' future earnings. ISAs also have limits on how long they can collect from the student and thresholds that have to be met for collection criteria, as well as an upper limit on payments. What you're describing is just facetious and condescending to those with six-figure medical debt.
- bradleyjg 6y ago
  > What you're describing is just facetious and condescending to those with six-figure medical debt. The point is that medical debt is a very good deal for the reasons you point out and because the doctor cartel in the US has forced prices up to dizzying heights. Yet people bitching and moaning about having borrowed $300k at reasonable interest rates for the right to earn many millions with almost no risk (when was the last time you met an involuntarily unemployed doctor?) don’t acknowledge that.
  - hundreddaysoff 5y ago
    FWIW, garden-variety West Coast ER doc here. Right now, I'm an independent contractor who makes ~$200/h. In a few months when my small company gets acquired, I'll be a W-2 who for various reasons will make ~$160/h before CA taxes. So, clearly not starving, and maybe even undeserving to be in the top 10--15% after working just ~24--36h/wk in night shifts. But won't make $$MILLIONS$$ and won't get as much as your average Googler with equivalent career experience to mine, I reckon. And also never made more than ~$50k in my life until my mid-30s. Doctor pay is facing a whole lot of downward pressure from health insurers, private equity, and other FIRE people recently. Part of the C-suites' strategy has been to open self-funded residencies where they pay their residents much less than they would have to pay the equivalent lifelong salaried PA. This, then, creates an "oversupply" (from docs' perspective) of trained docs and forces pay down. Personally I have no sentiment for the profession and do see how this could ultimately be good for patients. Unfortunately, in reality the FIRE people seem to just take all that cash for themselves and the patient is left paying the same amount or more than they did 20 years ago (via insurance or whatever you want to call it).

dyeje 6y ago

I am curious whether it is easier for a startup looking to get into this space to do their ISAs via traditional contracts or Ethereum.

PragmaticPulp 6y ago
Traditional contracts are required either way. Anything on the blockchain would still require a traditional real-world contract to back it up. For ISAs, there isn't really any reason to put it on the blockchain unless the company is trying to sell it. Even then, the NFT on the blockchain would only be representative of the ownership, which still depends on the real-world contract. The contract would likely have provisions that the NFT is null and void if lost or stolen, as no reasonable company would voluntarily give up protections for their assets.

_red 6y ago

>ponzi It's become increasingly common to see the word "ponzi" applied to what is just really a "speculative investment". Its a shame this is continually being done, because its a real destruction of language meaning. A "ponzi scheme" is an intentional act to defraud...using a portion of investor funds to pay other investors in hopes of attracting more and more investors. The conman then times his exit appropriately once some critical mass of investors rush in. A risky or speculative investment is just that. There is no intent to defraud. The continual lazy use of "ponzi" does lots of harm since it unfairly implies 'an intentional act to defraud'.

ausbah 6y ago

is this suppose to be good? this sounds awful. it just reads like finance and tech have eaten literally everything, down to a person's life I guess there is more "freedom"? but that seems to come at the cost of stability and more winner take all scenarios like a lot of this stuff isn't new, but the degree to which is seems prevalent reads dystopic

tdeck 6y ago
This is simply an example of an ecomonic/political system creating problems (in this case lack of capital needed to start a career), then creating "solutions" to those problems (debt, commodification of people as investments) that reinforce the system and enrich its key stakeholders.
- jkhdigital 5y ago
  Yes, when you speak in broad enough generalities then you can make almost any statement unfalsifiable.

ramblerman 6y ago

I think the author explains perfectly the risk of the future where we see more and more winner takes all scenarios. But the conclusion seems a bit off. Basic income seems like the only recourse IMO

booleandilemma 6y ago

I can’t imagine having “shareholders” governing whether I’m allowed eat meat or not, or how much I should be exercising. You’re reduced to a slave, with many masters instead of one. No thank you.

lifeisstillgood 6y ago

Is it just me, but isn't an Income Share Agreement ... taxes? Is this just a failure of government to supply the upfront investment in its citizens so that they pay enough tax in ten years?

0x4d464d48 6y ago
"Is it just me, but isn't an Income Share Agreement ... taxes?" No. Its profit sharing akin to how companies do so by issuing dividend paying shares. So far as the government is concerned theyre just looking out for their most important stake holders, wealthy individuals and monied interests, by keeping taxes extremelly low. Universities being underfunded to the point they need to raise tuition to the point where students need to take on crushing debt is a byproduct of that.
- lifeisstillgood 6y ago
  I think we are violently agreeing? Profit sharing with your citizens is basically government. I think ...
  - 0x4d464d48 6y ago
    We agree that its wealth redistribution by anyother name. Certainly. The difference is that taxing is done in the name of public/government interest whereas profit sharing is done in the name of private/individual interest.
    - lifeisstillgood 6y ago
      what i am trying to say is that if a government supplied sufficient upfront investment in education (which is basically what's going on here) then no student would have an incentive to add an additional lieu on their future earnings. and governments should see education if their citizens as an investment repayable through future taxes
      - 5y ago

backtoyoujim 6y ago

I can foresee a nation-state utilizing these as a citizen credit score, and utilizing them to control behavior.

stereolambda 6y ago

A couple thoughts if we were to "scale" the income-sharing contract concept beyond a novelty: 1. If there is, say, a hundred or even ten possible candidates to pick from, due diligence becomes brutal. Health information, full social media dumps, detailed financial disclosures etc. Also rampant discrimination. If it is unregulated, it's basically what insurance companies would like to be doing but with no limits. 2. If it is for five years and with no big payout at the end, the value of such a contract (via discounted cash flows) is likely pretty low and accordingly would be the funding. Note that LambdaSchool owns the whole "equity" of a person (no splitting into X shares) and gives you a service (at scale) instead of cash, so it probably makes sense for them. 3. It would be fun to see the accounting sorcery possible for shielding and offloading your earnings to other entities, to pay your investors (?)... preferably nothing. Besides, people, as opposed to companies, are rarely truly profit-maximizing entities. Maybe in the second year your guy decides to be content with a mid-range salary and devote all his time to studying meditation. But hey, theoretically you could try to escape inflation with such a crazy scheme if the interest rates on "real" bonds would stay very low...

ghaff 6y ago
>gives you a service (at scale) instead of cash Yeah, this sort of payback scheme probably needs a few characteristics to make sense which apply in this case. - Incremental cost of a student is relatively low. So even if, say, 25% of the class doesn't pan out, they didn't cost you a lot that has to be somehow passed on to the other 75%. - Likelihood that graduates can get at least a workaday job at a decent salary are pretty decent. This probably wouldn't work for film school.
jkhdigital 5y ago
Indeed, due diligence is inherently not scalable. The world of finance has done everything in its power to overcome this constraint—basically all forms of risk pooling—but if nobody actually does the due diligence then you get stuff like NINJA mortgages repackaged into CDOs with AAA ratings on the senior tranche.

moonbug 6y ago

what a hideous vision.

arberx 6y ago

To call this a ponzi scheme is pretty disingenious, probably great for views/clicks though. At the core a ponzi relies on guaranteed return, paid for by other investors. Just because you might not like or understand how something works, doesn't mean it's a ponzi.

kristianc 6y ago

Each of these articles need to be treated with a degree of scepticism: in order to have a functioning market for any of these things - whether an NFT, a share of future earnings, or ‘BitClout’ - you need people who are willing to buy into the ecosystem. If there are not a steady stream of new entrants with new money coming to the market, the whole thing collapses like a house of cards. And you will eventually run out of people. Anyone seriously looking into BitClout should look into the recent story of FootballIndex in the UK. The Ponzi analogy is quite apt, and buyers into Ponzi schemes typically do not do well out of it.

martindbp 6y ago

The nicest thing I've ever been told came from my best friend, telling me he'd buy stocks in "me" if it were possible. It wouldn't have been a particularly good investment, but I guess he was on to something with that concept!

dharma1 6y ago

It’s hard to say if personal tokens will take off or not, but I’m almost certain many more things will be turned into financial instruments in the future. Almost anything that can have provable (current term is “on-chain”) revenue (future or current) can be “tokenised” and sold, bought and speculated on. Our definitions of employee, employer, nature of work and contracts, our definitions of companies, shares and financial instruments are arbitrary - we are just used to them. They will change. I can absolutely see a future where people work on (and own pieces) of many projects, revenue share is tied much closer to measurable value creation, and “tokenised” future cash flows in almost anything measurable and enforceable (ie. on-chain activity) have liquid markets from very early on.

pavlov 6y ago

> "By letting other people invest in you, you are incentivizing them to promote your own story and do their best to increase your tokens' value." In 1946, the US Supreme Court established the so-called Howey Test to determine if an investment opportunity is a security offering. These are the Howey criteria: "Under the Howey Test, a transaction is an investment contract if: "It is an investment of money; "There is an expectation of profits from the investment; "The investment of money is in a common enterprise; "Any profit comes from the efforts of a promoter or third party." IANAL, but these personal tokens seem to match every condition of the Howey test. I'd be extremely careful about conducting your own little security offering if you're resident in the US, or allow US residents to participate. It's worth noting that Alex Masmej, the person mentioned in the article, conducted his token offering while in France.

jkhdigital 5y ago
It’s also worth noting that Alex Masmej, the person mentioned in the article, has commented in this thread. And every time I see the acronym IANAL I pronounce it as “I, ANAL”. edit: Why would someone flag this??? It’s funny!
ornornor 5y ago
Mike Merrill has been doing this for a while (kmikeym.com) and didn’t seem to run in legal troubles. He’s in the US of A.
- pavlov 5y ago
  That doesn’t mean anything. There were hundreds of ICOs in 2017, and the SEC only sued a handful of them. The rest were not different, they just lucked out of prosecution.

sturza 6y ago

If each individual would be treated like a public company, where others own a small part, it also makes sense for this individual to have a board. A group that protects the interests of both the individual and the investors. If this was true, decisions of the individual would have to pass the board and soon enough the individual would have their own advisors on what to do next: play a game of soccer with friends(injury risk) or go for a walk in the park. It's just fun to imagine a public individual's life.

angry_octet 6y ago

We went through the 2008 financiy crisis and this is what people think is a good idea? How long before people are trading options on risk weighted batch of people? Leveraged buyouts if whole specialties? Movement controls to enforce greatest P/E? "I'm sorry sir, you can't leave the country without presenting a Holiday Risk Bond. Perhaps a Virtual Vacay is more affordable?" And most of all: you, as an individual, have almost no information about the market, and are almost certain to get a bad price. Anyone who thinks they are good at this should practice buying a new car. Once you get to the final sale price, with no finance, demand another 9% off. If you can get that, and the car isn't a lemon, you're ready to negotiate for a well understood commodity. Selling people futures, when you've just given them capital up front with the goal of enabling higher returns, is less understood, though of course there are many immigrants who do just that. But already wealthy people? It seems much less certain.

TimJRobinson 5y ago
> How long before people are trading options on risk weighted batch of people? Lol I actually love this idea. Funding an ETF of people who want to move to SF to start a career in tech, or LA to start a career in acting. Diversify your risk and support some people with potential. Could have an acting school equivilant of ycombinator and you can invest in all each batch and get a return if some succeed. If we want a metiocracy this could help build it, by giving more capital to those who have potential but are disenfranchised by existing institutions.
- angry_octet 5y ago
  Yes but remember 2008? All those loans that turned out to be sub-prime? All those complex risk products no one really understood? So, instead of Indian SWEs and 3rd sons of teachers you thought you were investing in for grad school, you're paying people to be swindled at Trump University and indentured training for long haul trucking. Meanwhile the YC30 talent bonds were sold to a select group of connected investors, and pension funds bought job lots of Invisalign techs from brokers making a steady commission.
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hwestiii 5y ago

I very vaguely recall the Bowie Bond issue being reported somewhere but confess to promptly forgetting it. Would have been interesting to have followed it in real time. It appears to have quickly lost news-worthyness. The future is like that a lot.

scotty79 5y ago

Lambda school seems like an example of perfectly aligned incentives. I wouldn't mind if private higher and trade education was required to only take in money through such setup. And if people deem less practical education necessary it should be funded from taxes only.

t0mas88 5y ago
The European system with higher income tax and heavily subsidised universities practically has the same result. Anyone (that is a permanent resident) can go to a top school, but you're paying it back the 40 years after with 50%+ income tax if you get a good job.
- scotty79 5y ago
  Not really, because universities don't care if what the teach is useful in the job market because they get money from tax either way.
  - t0mas88 5y ago
    But just having any MSc / MA is greatly helping job market prospects, because every degree includes at the very least an understanding of scientific methods and statistics, and should have given you some critical thinking skills. For a lot of jobs having some kind of degree is a generic requirement without specifying in which field.
    - scotty79 5y ago
      Sometimes it does, sometimes it doesn't. Major complaint about paid US higher education is that for a lot of fields and universities what you get from them in the job market is less than tuition, often it's pretty much nothing. Not to mentioned yearsbof your life you've put into it. I think it's absolutely wonderful idea to align interests of educational institution with your value in the job market after you finish it.

scotty79 5y ago

Apparently there'll be Student Coin lauching soon. From what I understand it is supposed to be a platform built by students on ethereum that promises to make settingu up such personal IPOs super easy...

furstenheim 5y ago

I'm surprised it didn't mention the more extreme case of Mike Merrill https://www.wired.com/2013/03/ipo-man/ https://www.wired.com/2013/03/ipo-man/

ornornor 5y ago
I was surprised as well. He’s been doing this for a while. I remember buying shares in him a few years back.

gattr 5y ago

I'll mention the SF novel "Black oceans" [1] again. It describes a scheme where someone extremely driven and confident of success, but utterly poor, can make a deal with certain shady organizations, which - in case you don't make it and repay them in agreed time - will simply harvest you for (very valuable) organs. [1] https://en.wikipedia.org/wiki/Charne_oceany https://en.wikipedia.org/wiki/Charne_oceany

natchy 5y ago

> For example, if Elon Musk succeeds in landing the first person on Mars, his coin price should theoretically go up. And if, in contrast, he makes a racial slur during a press conference, his coin price should theoretically go down. Yes, and when people are making emotional/ideological financial decisions, I’ll buy the dip.

peterburkimsher 5y ago
Investors may use entrapment to cause people to make foolish decisions in order to buy the dip.

mollems 5y ago

The bit about monetizing one’s influence / reputation reminds me of Cory Doctorow’s novel _Down and Out in the Magic Kingdom_. https://craphound.com/down/Cory_Doctorow_-_Down_and_Out_in_the_Magic_Kingdom.pdf https://craphound.com/down/Cory_Doctorow_-_Down_and_Out_in_t...

mollems 5y ago

The bit about monetizing one’s influence / social “capital” reminds me of Cory Doctorow’s novel _Down and Out in the Magic Kingdom_ (which is a great read regardless). https://craphound.com/down/Cory_Doctorow_-_Down_and_Out_in_the_Magic_Kingdom.pdf https://craphound.com/down/Cory_Doctorow_-_Down_and_Out_in_t...

SergeAx 5y ago

> these [blockchain issued] tokens are not simply "certificates of ownership"; they can be pre-programmed to behave in a certain way (for example, pay a dividend each time a predefined event happens) For this to happen the blockchain gotta have a way to sync with events in the physical world. Moreover, all active blockchain nodes should have equal access to this data and get equal result at given time. This mechanism cannot be enforced by blockchain itself, so we are back to the issue of trust.

rusteh1 5y ago

I enjoyed this article, and had never heard of Bowie Bonds! But isn't the sharing of risk in exchange for value just the concept of a full time job in any country with labour laws? I work for a large multinational in a country other than America. I put up with additional bureaucracy compared to the life of a freelancer/contractor because I know that A) The company has a high chance of existing in 12 months B) I won't be fired without cause. In exchange the company is provided value in excess of my wage, training and other overhead costs. How is this different?

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anm89 5y ago

They might as well replace the word Ponzi with "thing I don't like" because what they are describing has zero connection to Ponzi schemes

alexmasmej 5y ago

Hey, Alex Masmej here. Just wanted to say that I had no choice because I had no money in the bank. During the start of COVID, I lost my only (and very first) source income at the time, and I lost all my savings in crypto (DeFi is dangerous even to crypto people like me). Financially, this ISA freed me instantly, and gave me a newfound legitimacy as a crypto innovator. This was by far the best way I could find to break out as an entrepreneur.

maliker 5y ago
Kudos to you. It’s a new and innovative technique, seems like it could help many more people, and you showed how it would work in practice. I thought being able to do the crypto trade directly on you website was a nice touch—definitely shows its easier and more accessible than the Bowie Bond example from the article.
beervirus 5y ago
How have things played out since the initial sale?
- stirlo 5y ago
  https://defimarketcap.io/token/0x8ba6dcc667d3ff64c1a2123ce72ff5f0199e5315 https://defimarketcap.io/token/0x8ba6dcc667d3ff64c1a2123ce72... Market cap is now almost $1 million with a coin price of $0.15. Considering the initial offer was $0.002 per ALEX it seems like he's doing really well. Of course he's now running a NFT startup https://tryshowtime.com https://tryshowtime.com so perhaps the 15% share of his income has the potential to max out at the $100k return he offered. I don't think I'd bet against him at this point.
jkhdigital 5y ago
Glad I scrolled down far enough to see this! Need to upvote this to float it to the top...
hycaria 5y ago
You had no choice but go to the most expensive place in the world ?

jopsen 5y ago

Have people forgotten the classic way of investing in humans? Social programs. In Denmark part of my taxes goes to pay public pensions, and when I get old taxes will fund some pension for me. The public pension isn't huge, so yes, almost everybody has a private pension scheme too. My private pension is exposed to global stock performance over ~30 years. My public pensions is exposed to value of humans in Denmark in ~30 years. So in a way I do have exposure to some human investment :) This is also why it makes sense for my taxes to fund tuition for everybody.

andxor 5y ago
So Denmark would forcibly take more than half of my income to invest in stuff I don't have a say on, while no one is held accountable by competition and economic incentives. I'll pass.
- tomglynch 5y ago
  Do you think taxes are necessary for a cohesive society?
  - andxor 5y ago
    Yes, of course, but not > 50%.
    - Kosirich 5y ago
      I'm not refuting your point but where did you get >50% from? You absolutely can get taxed up to 54% but for that you would need +200k (krona) per month.
      - Vinnl 5y ago
        And also only applies to the amount above the threshold.
        5y ago

giantg2 5y ago

This basically happens already. The only way to get promoted is to make your boss look good. Basically pushing value up the pyramid, where people get paid more and "produce" intangible value (which of course is more prone to bias and promotion based on percieved contribution).

personjerry 5y ago

Can socialism be thought of as this "investment into each other" taken to the extreme? Where we put all our investment into each other, believing the future output of anyone is a net gain?

ipiz0618 5y ago

> For example, if Elon Musk succeeds in landing the first person on Mars, his coin price should theoretically go up. And if, in contrast, he makes a racial slur during a press conference, his coin price should theoretically go down. That sounds a lot like social credit system? I can't imagine a future where a small fraction of people not related to you can decide what you should do, even if they are not the government.

person_of_color 5y ago

This future sounds complicated. Is there a way to short complexity? Cash under the mattress?

xivzgrev 5y ago

This is fine and dandy in a 10 year bull market, but I don't think this is the solution for most folks. When the market turns south, money will fly to safety, and then slowly expand over the following years. It's not going to be safe to invest in stranger's careers during a downturn.

JackPoach 5y ago

The article is very interesting but it implies this will be mainstream. It won't or at least not likely to. I bet the examples in the articles are just about the only options out there (at least as far as the education goes). And for a good reason.

HuangYuSan 5y ago

This is a very good article.

hnxs 5y ago

Oof, I can’t take anything this author says seriously after his mention of Quibi in one of these articles. It didn’t lose to TikTok due to algorithms and luck, it lost because no one was interested in the content. The founders will blame that on covid, but I think they’re wrong. No one would have wanted it pre-pandemic either.

zjs 5y ago

Related: the idea of income pooling schemes amongst baseball players. "Income pooling is a concept for up and coming baseball players who would come together and contractually agree to contribute a small portion of their future earnings to the shared group. As their careers progress, even if only one person from that pool “makes it big,” everyone in that pool would receive a certain percentage of the income, thus creating a safety net for the rest of the players, ..." ([Forbes]) "Nobody has to pay a cent until they've made it to the majors and they've made $1.6 million. Then that guy has to kick 10% of his salary back to his pool mates." ([NPR]) [Forbes]:https://www.forbes.com/sites/igorbosilkovski/2020/06/26/meet-the-stanford-grads-who-just-raised-8-million-to-help-potential-baseball-and-business-superstars-make-money-even-if-they-dont-become-a-listers/ https://www.forbes.com/sites/igorbosilkovski/2020/06/26/meet... [NPR]:https://www.npr.org/2019/10/25/773532516/some-baseball-players-are-entering-income-pooling-agreements-to-fix-imbalance https://www.npr.org/2019/10/25/773532516/some-baseball-playe...

kmikeym 5y ago

instead of a pyramid scheme i like to think of it as an inverted funnel

qubit000 5y ago

US culture is already too self-absorbed focusing more on style than substance. Selling personal tokens to fund one's career trajectory will only create more extreme narcissism akin to unqualified/incompetent people running for office.