
Kik could pave the way for more mainstream tech company ICOs - JumpCrisscross
https://techcrunch.com/2017/09/12/kik-ico/
======
JackFr
I don't think I'm stupid, but I still just don't get it...

I give you money, and in return I get...a token.

I can't eat a token. I can't live in it. I can't wear it. I can't buy
Starbucks with it. It doesn't promise to return me more dollars or tokens if I
hang onto it. It doesn't offer me any right to the governance or management of
the money raised. It doesn't offer me a claim of ownership of some portion of
an enterprise.

I read the article closely and its really just a lot nonsense. There is a lot
of handwaving and 'community blah blah' but it lacks a simple, straightforward
explanation of how these tokens are to be used.

I don't think I'm a stupid person, and I'm not trying to be obtuse. This just
doesn't make any sense to me.

As best I can tell, the transaction which best resembles an ICO is buying
chips from a casino. They have all of the qualities I describe above -- that
is they're not good for anything. They can be used to gamble in a casino
however. That is their sole usefulness. So I guess maybe that's how I should
be thinking about it.

~~~
WikipediasBad
>I can't eat a token. I can't live in it. I can't wear it. I can't buy
Starbucks with it. It doesn't promise to return me more dollars or tokens if I
hang onto it. It doesn't offer me any right to the governance or management of
the money raised. It doesn't offer me a claim of ownership of some portion of
an enterprise.

You can't do any of that with a lot of tech stocks actually either (ex: SNAP).
SNAP pays no dividends, offers no guarantee of paying future dividends, you
can't vote, you can't get more dollars if you hold on to it aside from the
fact that someone else might speculate on it in an exchange. In a certain
obtuse sense, newer tech stocks are becoming tokens and tokens are becoming
quasi-shitty securities while trying to dance around securities laws.
Honestly, I am not trying to troll, but I don't think there's any real
difference between SNAP stock and Kik tokens in essence aside from a piece of
paper saying that the SNAP stock is "stock" and the Kik token is a "token."

~~~
robbiep
SNAP is a traded equity listed on a regulated exchange that by its very nature
has significant liquidity. Very different in practice

~~~
WikipediasBad
Actually not at all different in practice. It's different in THEORY but
actually almost identical in practice. In theory, SNAP stock is legally
classified as a security and recognized by the United States government as
providing some kind of weird, abstract ownership of the Snap Inc organization
(although all classical markers of ownership are not present in the stock). In
practice, my post was pointing out it's basically as bad or even worse than a
token.

~~~
alexasmyths
It's not remotely 'identical' in practice.

Kik can do whatever they want with their currency, there's no oversight, no
transparency, no nothing.

\----> The _whole point_ of doing an ICO instead of an IPO is because they can
paper over and gloss over issues, avoid regulation and transparency, and take
advantage of wide-eyed and under-informed speculators.

It's just a way to leverage over individuals keen to make it big on
speculative mania.

If Kik were in a position to do an IPO - they would. But they can't. Because
they are slowly dying, and have almost no revenues. That doesn't sound like a
good position to be in. So how could they possibly raise money otherwise
without a lot of smoke and mirrors?

Why not simply 'raise a bunch of USD' and then 'pay developers' some of that
USD - instead of fabricated coins?

Because the terms of an ICO to them vis-a-vis 'investors' are incredibly
better.

Yes - an argument could be made that 'regulations are onerous and limiting and
create undue friction' \- and that's on some level a good point.

But this won't end well in the long run.

These ICO's are speculative mania. They'll be a 'good investment' for some,
but there's nary any actual value being created.

ICO's are 99% a 'net zero gain' scheme whereby a lot of money changes hands -
and it will go from 'dumb uniformed people to smart, informed, empowered and
slightly greedy' people.

The only long-run winner for these things are the Hedge Funds getting in
early, backing the ICOs, and then dumping their positions over time.

ICO's are not a financial innovation.

You can't create value out of thin air.

------
anovikov
Mainstream tech companies don't want to be accused of fraud, or even seen to
be somehow connected with fraud. Naturally they want to avoid ICOs, that
instantly undermines their credibility.

I talked to a guy who runs a successful ICO prepararion consulting, just told
him 'i am a successful developer who did these and those things, is there a
way to partner with you to make some leverage out of it?' and he told me that
there is nothing technical in what they do, that is a machine to make money
out of money, like, you bring in $150-$1000K and make $5-$10M on ICO with
minimal effort and luck needed, that's it. No programming needed, they copy-
paste all the minimal technical stuff needed. They never ask 'founders' if
they have any programming backgrounds or if they actually plan to build
anything, just to avoid embarrassment as everyone kinda knows they aren't.
More, usually they aren't even under their real names, which is sensible for a
criminal.

Everything blockchain-related is at best a Ponzi scheme and usually, outright
fraud, except the structures that provide technical means for these frauds,
like Ethereum itself.

And yes, these events make me feel that the next financial meltdown is coming.
There is already too much too easy money around. If blockchain was ready in
2009, that just couldn't happen.

~~~
WikipediasBad
>Everything blockchain-related is at best a Ponzi scheme and usually, outright
fraud, except the structures that provide technical means for these frauds,
like Ethereum itself.

Oh please. Quit your whining. Yes, there are criminals and fraudsters in
crypto trying to squeeze money and run since it's not regulated, but
"everything blockchain-related is at best a Ponzi-scheme"?? That's like saying
facebook stock is a Ponzi scheme because Peter Thiel got it 100,000x less in
price than the people who bought it today on the exchange.

~~~
anovikov
No, Bitcoin valuation is fine! Until some better crypto - which will really
solve scalability problem - replaces it.

What's not fine is that all or nearly all 'entrepreneurial' activity in
blockchain space is aimed at pulling money out of pockets of clueless people,
presenting it as 'investment', but really gambling. People who are building
nearly all projects just _know_ they aren't going to even start building
anything, they are just after collecting money. Those limited who do, have no
chance because their tokens will inevitably collapse too once this Ponzi
scheme explodes, people will just sell every kind of shitcoin when they know
it was a scam, and even 'investors' in those who aren't scams, will inevitably
lose money too.

~~~
dreit1
There are plenty examples of responsibly run ICO's. OMG for example.

------
theylon
IMO Kik messenger is a classic case of a company that had 5 funding rounds,
never really took off, and are now jumping on the blockchain bandwagon with a
'feasible' idea for a coin use case just to please their investors. I've been
following them for a while. They claim to have a lot of users but not once
they released DAU or MAU, only "Users" which they claimed to be 500mm
(registration with no verification). + They've had a range of different
scandals (child pornography, pedophila, just google it) which they are not
planning to solve.

*[https://www.crunchbase.com/organization/kik-interactive#/ent...](https://www.crunchbase.com/organization/kik-interactive#/entity)

------
lowglow
I think people need to be very careful about what assets they're selling with
ICOs.

Check out this framework put out by Debevoise and Plimpton[0] and make sure
you're NOT selling securities.

If your asset is a security, it won't have any liquidity because exchanges
must now be licensed to be a security exchange (which doesn't exist in crypto-
land yet), so there is no upside for investors. A lot of this is heavily
pulled from the SEC's investigation into the DAO[1].

If you're selling a token/coin as anything else, it seems the SEC is taking
these things by a case-by-case basis to determine if what type of asset class
they are.

If you're looking to ICO (pre-sale and launch) use management and KYC (Know
Your Customer) software[2]. It saves a ton of pain and suffering in the long
run.

And as always rule number one is: Don't commit fraud.

[0] [https://www.coinbase.com/legal/securities-law-
framework.pdf](https://www.coinbase.com/legal/securities-law-framework.pdf)

[1]
[https://www.sec.gov/litigation/investreport/34-81207.pdf](https://www.sec.gov/litigation/investreport/34-81207.pdf)

[2] [https://presale.synapse.ai/](https://presale.synapse.ai/)

~~~
seibelj
I guarantee you Kik spent at least $1mil in legal bills for their ICO, I
assume they know what they are doing

~~~
JackFr
I think you're optimistic. There's gonna be a lot of tears and recriminations.

------
noncoml
Reminder: kik is the company who demanded from a contributor to remove his npm
package with the same name and the whole sequence of events led to npm havoc.

[http://blog.npmjs.org/post/141577284765/kik-left-pad-and-
npm](http://blog.npmjs.org/post/141577284765/kik-left-pad-and-npm)

~~~
SippinLean
Pretty standard for a company to defend its trademark, indeed NPM sided with
them.

The article you link to places the blame for that "npm havoc" solely with the
contributor you mention.

>Under our dispute policy, an existing package with a disputed name typically
remains on the npm registry...

>In this case, though, without warning to developers of dependent projects,
Azer unpublished his kik package and 272 other packages.

>It was abrupt unpublishing, not our resolution policy, that led to
yesterday’s disruptions.

------
noddy1
Just for interest's sake, the Kin ICO has been a fizzer compared to many other
ICO's.

In the first 24 hours in which preregistered participants were eligible to buy
equal amounts of tokens only 20% was sold. Now, almost at the end of day 2
during which contributions have been uncapped, around 60% of the total has
sold.

Compared to other ICOs where they sell out within a minute or two, or where
whitelisted participants snap up 75% on day 1, this is pretty slow. I think it
probably won't reach the 75 million cap.

Here is why I didn't get involved: 1) They presold $50million tokens to
polychain capital, pantera capital and blockchain capital at a 30% discount
very recently. 1/2 of these tokens had no freeze and could be dumped on the
market at any time. Polychain capital has already shown that they are willing
to dump large amounts of tokens within days of an ICO if the price is right
last month with 0x project.

2) They are offering 1 trillion tokens but minting 10 trillion, allowing them
to basically dictate monetary policy. One of their employees even posted on
twitter that they don't want "too much" price appreciation, and if it occurs
they would intervene in the market (eg. dump more tokens into the market).

Come on. If you want me to buy your made up, meaningless, nothing token, don't
take the piss by selling it at a massive discount to hedge fund dumpers, and
don't tell me that you're going to control the price. If I'm going to take a
dumb risk, and it is a dumb risk, I want the possibility of some upside.

~~~
SippinLean
Isn't the fact that it didn't sell out in an hour a good thing?

Compared to other ICOs, the required pre-registering, first day buy limit and
other things made this much less hectic for potential buyers, vs say
Filecoin's one-hour window where you could actually participate. I'd like to
see other ICOs adopt some of the practices that Kin used.

------
modeless
> "we asked ourselves how do we answer the question about how we will become a
> profitable business [...] We didn’t have an answer we really believed."

So we decided to raise money from unsophisticated investors in an unregulated
market, where nobody asks such inconvenient questions!

Seriously, can you be any more devastatingly transparent? I predict that the
SEC will not look kindly on this.

------
vit05
I think that a mainstream company starting using Tokens and showing the
potential of Blockchain to others is more important than the ICO. In this
moment, we need a successful case of use of Tokens in large scale.

~~~
joosters
Doesn't this just show a company so desperate for publicity that they tried to
wrangle a blockchain between them and their potential customers?

------
keganunderwood
Just wanted to add that Kik is the evil people from the npm issue. Say no to
legal abuse. Say no to Kik.

If I have [https://foo.bar](https://foo.bar) I have full rights to
[https://foo.bar/kik/](https://foo.bar/kik/)

Any idea otherwise is absurd.

------
rmun
fraud and fraud.

The guy who managed the ICO, Daniel Peled [1], is a major fraudster [2]. Plus
just Google his name, he has another failed startup [3]. Wonder if his
investors know that he runs two shows at the same time...

1]
[https://kin.kik.com/papers/Kin_Whitepaper_V1_English.pdf?ver...](https://kin.kik.com/papers/Kin_Whitepaper_V1_English.pdf?version=1a9e783a4ccdf9936d1dd7d319fdeac4)

2]
[https://bitcointalk.org/index.php?topic=1585607.0](https://bitcointalk.org/index.php?topic=1585607.0)

3] [https://www.finextra.com/newsarticle/30743/body-blow-for-
pay...](https://www.finextra.com/newsarticle/30743/body-blow-for-paykey-as-
apple-orders-westpac-off-its-turf)

------
crypt1d
The amount of negativity towards the cryptocurrency space on HN is staggering.
Even worse is the fact that a lot of comments are coming from people who
obviously have no clue how the whole ecosystem works. I guess a lot of them
are bothered by the fact that ICOs allowed wealth to move in a direction
opposite of them. I honestly expected a lot more from this community.

Those of you that are not yet corrupted by the 'everything cryptocurrency
related is a scam' attitude: try to keep an open mind. Yes, there is a lot of
shady stuff going on, but that doesn't mean there is no potential in this
space. We are witnessing a creation of a new industry with tremendous
potential to change we do business. You should be excited!

~~~
danmaz74
I think the big problem is that most cryptocurrency proponents are anarcho-
capitalists, and most people here don't agree with that ideology. If for one
am fascinated with the technology, did some trading and some programming
stuff, but I'm afraid of cryptocurrencies allowing rich people screwing normal
people even more than now.

------
cft
How do you buy ICO tokens in Kik? Using Google Play In-app Billing and sharing
30% with Google?

~~~
SippinLean
I'm not sure what you're asking, you cannot participate in the ICO from the
app as far as I'm aware.

