Mastercoin, mentioned in the article, is now down to 85th place on Coin Market Cap.<p>Despite all this smart contract stuff, few of these "ICO coins" give the holders any authority over anything. It's not like 51% of the coin holders can fire management.<p>Ethereum now has half the market cap of Bitcoin, despite the total failure of the DAO, the one big application of the smart contract technology. See "Use Cases Of Ethereum In Different Sectors 2016".[1] It's been six months; what's actually working?<p>* Branche.io - payday loans. Got as far as the initial token offering 6 months ago. Then, nothing. Did they take the money and run?<p>* Iconomi.net - "digital asset management platform" - site says "Coming in 2017".<p>* Augur.net - prediction/gambling platform. Not yet operating for real, but there's a play-money beta.<p>* RexMLS.com - distributed real estate listing service. Was supposed to have test listings live in April 2017. Didn't happen.<p>* truststamp.net - distributed identity system to detect fake social accounts. "Connect your Social Networks. The more accounts you connect, the higher your potential Trust Score! Your account information is not stored and your privacy is protected." Not working yet. If it did work, spammers could defeat it by creating interlinked fake accounts on Twitter, Facebook, etc., which some already do.<p>* chainy.info - store misc. info such as URL shortening bindings on the Etherium blockchain. This seems to work, but isn't used much. If it caught on like tinyurl, the Ethereum blockchain would choke on the traffic.<p>* uport.me - "self sovereign identity". Still at "sign up for alpha".<p>* dynamisapp.com - supplementary unemployment insurance that checks LinkedIn to see if you're employed. Not working. Last blog update January 2016.<p>* ico.inchain.io - insurance against cyber hacks. Site not responding.<p>* ujomusic.com - some kind of music platform. Not working yet.<p>* peertracks.com - distributed music royalty system. Not working yet.<p>* singulardtv.com - distributed video payment system. 5000 Twitter followers! Not working yet.<p>* beyond-the-void.net - game with Ethereum contracts for in-game currency. Beta version downloadable. At least it's running.<p>* firstblood.io - e-sports where you can put up money on your play. Alpha available, no beta yet.<p>* etherplay.io - "Play games and win tokens" - "Coming Soon".<p>* akasha.world - distributed social network. There's a downloadable alpha.<p>* vdice.io - online gambling. Like Satoshi Dice, but for Etherium. "Coming soon".<p>* slock.it - the guys with the DAO and the IoT door lock. That didn't end well.<p>* electricchain.org - buy and sell solar power over the Ethereum block chain. Lots of PR. May actually be working on a tiny scale.<p>* lo3energy.com - another energy trading system. Lots of PR, no operating installations.<p>So that's what people are actually doing with Ethereum. Not all that much. Even the online gambling startups aren't fully operational.<p>[1] <a href="https://www.ethnews.com/use-cases-of-ethereum-in-different-sectors-2016" rel="nofollow">https://www.ethnews.com/use-cases-of-ethereum-in-different-s...</a>
Previously, we had a filter screening new altcoins (expletive deleted) in that you had to know enough about bitcoin to at least fork the repo, build it and make some modest changes to create a new namespace. We could see whether those coins are worth anything by looking to see if there was a novel PoW or other network changes, premine, etc.<p>Now, Counterparty and much moreso Ethereum have created an opportunity for anyone to mostly click through to a new asset/token and make claims about some abstract business idea. FOMO drives folks to invest in the pump-n-dump of the day. Very few of these have any real claim of value.<p>Please, tell your friends not to invest in these ludicrous scams.
I can't believe there is no mention of tezos here (<a href="https://www.tezos.com/" rel="nofollow">https://www.tezos.com/</a>).<p>Which currently has raised $123,317,760.00 in bitcoins and $68,709,765.86 in ethereum. Almost $200,000,000 raised for something that doesn't even exist yet, all so that the founders can create it.<p>It's basically $200,000,000 into a kickstarter. What the absolute frell is going on there I have no idea.
I've been investing in this space since 2012. "Investing" in the loosest sense of the term, because I was simply looking for ways to grow my bitcoin stash. It started out as a naive attempt at diversification. In reality, I had no clue what I was doing, lost a lot of bitcoin to scam investments, made some bitcoin on fruitful investments. I became diligent and conservative with my bitcoin over time and ethereum happened to be one of the investments I made in 2014. I look at my ethereum presale investment as dumb luck.<p>Long before the term ICO was coined (no pun intended), there were multiple markets for bitcoin securities dating back to 2012 - possibly earlier. I am referring to business ventures here, not clones of the bitcoin repo with a modified PoW mechanism or similar. There were many scams for every one legitimate venture. Many legitimate ventures eventually mutated into scams. Investors that started out as bitcoin maximalists were often crying to the SEC for help getting their bitcoin back. Some of those ventures run to this day.<p>The market was chump change back then. Tens of millions maybe. With ERC20 and ICO mania, we have front row seats for failure on a grand scale. The exuberance is terrifying to me given what I experienced years ago with bitcoin securities. For that reason I stopped making investments in May and started doing some real diversification. For many investors, ICOs will be their first taste of "a fool and his money are soon parted." For many projects who have conducted an offering, ICOs will be their first taste of what it's like when the SEC come knockin'.<p>I'm quite sure there will be some success stories a few years down the line, but they will be accompanied by a plethora of scams and all the media attention that comes with bad news. I think this form of funding is a vague peek into the future of project funding. Ethereum is not necessarily the specific answer, and the ICO framework will have to burn to the ground a few times before it evolves into something useful.
Rather than thinking about the businesses that currently are trying to get rich by doing ICOs, I'd like to point out that the idea of creating tokens out of thin-air, and having them obtain value purely by speculation, is an interesting system we should ponder more about.<p>We're now capable, thanks to these consensus systems, of creating tokens that have certain properties. For instance Bitcoin is a specific kind of token which is scarce - hence will work more like gold. Other tokens (perhaps Ether or Dogecoin) instead are not scarce at all, and new tokens continue entering the system all the time.<p>What's interesting about these systems is that we're converting money from the "real world" into this "speculation world". And purely because of speculation, real money is essentially being converted into this digital world.<p>In a very abstract way, we're essentially converting FIAT real-world money into these digital tokens that are hackable and can take on a myriad of different attributes.<p>To me this smells like the future - even though we're still far from it. Capitalism and the banking system we have created for ourselves is certainly not going to cope with the technological automations and the sheer amounts of jobs we're going to lose (hence automate) quickly.<p>Universal basic income is only part of the solution - but something like a world of tokens that behave in very different ways might be part of the solution as well. Even though we might not see the possibilities nowadays, to me it's very exciting to see how something can gain value simply because of speculation.<p>Perhaps in the future we'll have to redefine even what "money" is, or what "valuable" means. Again, if we're thinking about fully-automated societies, perhaps the idea of having a scarce token that only banks can create (our FIAT system) is not ideal. Perhaps the future is any kid creating his own token with some funky properties for his own videogame, and living off the "likes" he gets on some social network.
A: It's a scam, and it works by scamming people.<p>The text as written on this site describes a conspiracy to commit tax and securities fraud. I have no idea if it will ever be prosecuted as such, but that is what is being proffered here.<p>The subtext is that a bunch of finance quants read Cryptonomicon and think the blockchain is the answer to their dream of becoming the gangster bosses of the anarcho-capitalist hellscape from Snow Crash.
I think the cryptocurrency story is real, just like the internet story was real in 1999, but these ICOs show that the market is getting way ahead of the tech, regulations, business models, etc. I have a longer rant about it, here:<p><a href="https://twitter.com/jonst0kes/status/880806655067291649" rel="nofollow">https://twitter.com/jonst0kes/status/880806655067291649</a><p>(Sadly, twitter's threading model is now so broken that you have to do lots of clicking to get to the good back-and-forth dialogue in there.)<p>Anyway, I'm sort of toying with the idea of doing a kickstarter for a big explainer book on blockchain, cryptocurrencies, and DLT in general, which would basically be like my CPU architecture book ("Inside the Machine"), but for this topic. (I'm spending all my spare mental bandwidth right now on understanding this tech, mostly so I can think through shorting this space eventually, but I'm not convinced it's worth my time to try to explain it to the general public... a kickstarter would help me price that. I dunno though, I've never even backed anything on kickstarter so I'd have to spend a bunch of time figuring out how to set up a successful campaign, first.)<p>But to sum up, people I've talked to in this space think the ICO thing is a frothy mess, but it's also set to get worse as the general public gets more opportunities to buy in. A lot of these ICOs are built on top of ETH, and the path to USD liquidity is through ETH, so despite the platform's issues it seems likely that ETH is going to get much of the benefit of this bubble (and much of the negative impact when the bubble pops).<p>I'm keeping an eye on the upcoming ETH exchange-traded trust, and I think there will be an ETH ETF that will eventually launch and get bid up.
All the people crying "Scam!", I have a question for you:<p>How is this fundamentally different than pre-orders? It seems to me like these ICOs are selling future access to some software that hasn't been built yet. Game companies sell pre-orders to the public all the time to finance the development of the software.<p>(I don't have any money in cryptocurrencies, but the ICO seems like a good way to fund a seed round for certain types of software, as far as I can tell)
So I read half the article and still don't feel like I know what an ICO <i>is</i>. Only the 101 ways it's different from an IPO...<p>I understand that I could create a FrogCoin by cloning Bitcoin or Ethereum. And then I sell investors... what exactly?<p>Individual coins? Are coins not mined in this scenario?<p>Would FrogCoin be tied to some real world asset that makes them inherently valuable and/or practical?<p>Or are ICOs just gambles that maybe FrogCoin will be the winning currency? It can't be <i>that</i> stupid? Right?
I'm tired of these scams. Worst of all, tech guys are getting involved. We are like chemists going into drug manufacturing or physicists making A-bombs! But, of course, this is not much different than the plethora of iFart apps or brainless startups that steal money from investors, essentially, and then they crash like there's no tomorrow. At some point, HN didn't pay much attention to these, but recently there's a new wave of the crapto attack, and this no longer is my oasis from the world's bullshit that's echoed pretty much everywhere.
A lot of people are calling these things Scams. People arent wrong and to a certain degree they do attract the "quick buck" type to them. Keep in mind though that these are also very useful for companies to get the Digitial Currency and block chain into the hands of the masses without some of this money, which large parts of that may be burned, will yield some killer apps.<p>The people doing an ICO do it to raise a bunch of money, much like a kick starter campaign. The people buying an ICO buy it for a quick buck and a lot of times they end up selling these coins from the ICO for 10x, see BATs.<p>The allure for people starting a company is that you can raise millions and give 0% of your company away. Some people will scam, it's true maybe a lot will, but some will undoubtedly start something big and will want to do more than just scam.
FTA:<p><i>ICOs conclude once the coins or tokens are tradable in the open market.</i><p>This is a part that has eluded me thus far: how are the new coins tradable on the open market? I'm genuinely asking - most exchanges don't support all crypto coins, and certainly not the dozens of new ones being created. How does one invest in an ICO and then 'cash out'? I see the ROI stats on some of these ICOs but I'm curious as to if those investors are basically sitting on that ROI hoping it doesn't evaporate before they can sell. Can anyone provide insight here?
> So, is this the new revolution in fund raising or another pyramid that is soon to explode?<p>Everything is a pyramid. The question is just for how long it lasts. I mean there was a pyramid called monarchy that ruled the planet for a few centuries. There's capitalism which will be replaced by something else, maybe 20 years, maybe 500 years from now. Instead of worrying about the pyramid-ness of something it's much smarter to decide whether or not it is currently under- or overvalued and what the trend will be.<p>And here starts my opinion: I think crypto coins are currently way overvalued. They exist for longer now than most people spend in university. And yet a real market value hasn't been established yet. The one possible true market value, micro transactions, seems to have been overcome by simple small step technological evolution. It was a huge thing around 2010 that nobody could do, but now it's common to pay sub-dollar prices on all kinds of things online.<p>Also opinion: The reason why people are willing to spend so much money on ICOs is that they hope the bitcoin dream will repeat itself. And as is often the case: if the dream is strong enough, it seems to get fulfilled, because so many people pour their money and energy into this hope. But I don't see what there is besides the hope.<p>Many people will be disappointed when they find out there wasn't much besides their own self-illusions.
Surely this is a sort of top indicator.<p>I was at a social event recently and some remarkably non-technical people were talking about bitcoin. It reminded me an awful lot of the wall street adage about the shoeshiner/waiter/driver talking stocks...
Look at this gem of an ICO: <a href="https://humaniq.co/" rel="nofollow">https://humaniq.co/</a><p>WARNING: This site has been identified to potentially trigger vomiting for people with morals. Viewer discretion is advised.
The fact that this is on "fxempire.com" is really all you need to know, isn't it?<p>FX trading and daytrading are two forms of legalized gambling for the upper class, so it makes sense that the same crowd will be interested in cryptocurrency. Such people are generally aware they are speculators and participating in a high-risk activity, so, fine. But what I worry about is the "dumb money" that follows. I saw Twitter ads for a "Bitcoin IRA" today. If you're putting your retirement savings in Bitcoin...
While I think they're incredibly clever, I'm distrustful of cryptocurrencies and ethereum. So I'm putting ICOs into that basket as well. Still, they always garner a lot of attention, probably for their cleverness.<p>On the other hand, I'm very interested in Hyperledger (IBM Blockchain) [1] which gets scant attention here. Indeed this thread already has more comments than all of the Hyperledger threads combined.<p>Hyperledger is strongly influenced by ethereum and bitcoin. But instead of being slow (10 minute transactions), expensive (you're bidding for miners time), and anonymous (anonymous), Hyperledger is fast, cheap and identified.<p>And apparently boring.<p>[1] <a href="https://www.hyperledger.org/" rel="nofollow">https://www.hyperledger.org/</a>
Every new technology is feared at first.<p>I have $0 in Bitcoin or any other cryptocurrency and I was there in 2009 when Satoshi was marketing Bitcoin to those of us at the P2P Foundation. I have to say ICOs may be the killer application for a semi-perfect medium of speculation like Bitcoin.
> An IPO is a onetime sale with multiple intermediaries involved in the process of determining the conditions, pricing, etc., whilst ICOs can have multiple rounds of fund raising [...]<p>The rounds aren't really "initial" after the first one though, are they.
Much has been said about risks to investors buying into ICOs. What about risks to startups selling ICOs? Should every startup be fundraising via ICOs right now or risk missing the gravy train?
Usually this kind of blatant negativity would be down voted to oblivion but for some reason HN has a special place in it's heart for crypyocurrency haters.