
Bancor has lost more than half its value since June ICO - rayuela
https://www.bloomberg.com/news/articles/2017-11-01/shining-star-of-initial-coin-offerings-crashing-back-to-earth
======
joosters
I'm sure Bancor couldn't care less about their token price collapsing. They've
already got all of the "investors'" money.

In fact, they could just walk away right now instead of carrying on developing
the system. The brave new world of ICOs offers no protection against companies
failing to follow through on their ICO roadmap. Maybe Bancor could use the
token collapse as an excuse to quit now?

~~~
everdev
The SEC might say otherwise. There are plenty of civil and criminal options
for recourse if they simply "walk away".

~~~
Hermel
Ironically, it is the SEC and it's regulation that made Bancor structure their
ICO the way they did. To escape being classified as a security, you have two
options: either give the tokens away for free, or promise nothing. Most crypto
startups do the latter.

~~~
totalZero
Not quite. In the USA, classification as a security is usually determined
using a four-pronged legal standard called the Howey Test.

A security is:

1\. An investment of money,

2\. In a common enterprise,

3\. With an expectation of profits,

4\. Predominantly from the efforts of others.

Selling something without making any promises doesn't necessarily preclude
expectation of profits.

------
velcro
ICOs are more akin to angel/VC rounds than IPOs - you often invest in a idea
thats still not fully developed and might need 1-2 years to come out on the
market. The huge difference to traditional investing is that shares/tokens are
immediately tradable and small(ish) crypto investors have 0 patience to wait
those 1-2 years so they often sell early and crash the price to go looking for
another get-rich scheme.

Thats a curse of the ICOs - but also a benefit. As an investor you get to
assign value to something immediately and have the freedom to terminate your
investment (something very difficult with traditional angel/VC rounds) and
sell the tokens. Its also a fascinating marketing strategy - some of your
crypto "investors" are early adopters, promoters and users of your tech - even
more so because they're vested in it.

I'm not defending the ICOs (especially the over the top ones) - but lately
there are so many articles that don't really try to understand the concept.
And so many people automatically equating temporary loss of value with scams.
Internet and cryptos are moving at the speed of thought - but the rules are
still the same - startups need time.

In all fairness - Bancor is still a very young project. Also a fairly
promising one - many projects already using it:
[https://www.reddit.com/r/Bancor/comments/75b7us/list_of_all_...](https://www.reddit.com/r/Bancor/comments/75b7us/list_of_all_known_projects_committed_to_using/)

~~~
the_stc
Very few ICOs do right by investors. We're one of the few offering equity
positions and dividends. The law conveniently provides an excuse to them, see
Tezos even outright calling it a donation! As an EJC the laws don't apply in
the same way, so we directly offer shares in our startup.

Few ICOs are willing to do the ethical thing because they're just cash grabs.
Hire a small team to try to make your whitepaper vision into code. If it fails
and you were not too far fetch in using company funds, nothing bad will happen
to you. It's disgusting.

~~~
velcro
You could say the same thing about "traditional" startups though - investors
often invest just based on the combination of the idea, founders/team and
maybe an early prototype. If the startup fails - nothing "bad" will happen to
you either. Shares in a startup thats not publicly tradable don't really offer
you that much security.

Unless you've committed fraud - but - I've been following the ICO market
closely for the past 6 months and I can't remember any of the larger ICOs that
were outright scams. Many people and smaller projects/websites will of course
try to scam you online - but you should always do your own research and due
diligence still applies.

I'm not sure I'd agree that "very few ICOs do right by their investors". It
depends what you mean - there have been many successful projects out there
that made people money. But if you mean "flipping" i.e. buying into a ICO just
to try and sell it quickly for profit - that seems more difficult these days.
But it might also be due to the current BTC rally.

ICOs are of course still in wild west territory as far as regulations go -
there is a reason why Tezos calls it a donation. They don't want the
regulatory hurdle. In fact almost all ICOs these days force you to accept that
tokens are not shares in the company and don't "officially" entitle you to
anything.

~~~
jmkni
There's an ICO scam tracker here -
[https://etherscamdb.info/scams/](https://etherscamdb.info/scams/)

There seems to have been quite a few.

~~~
velcro
Note that this is a database of fake phishing websites that impersonate legit
projects (and try to steal your money) - its not a database of scamy ICOs. As
mentioned - there are certainly those too - but I don't remember any with
bigger/reputable projects lately.

------
dahdum
Bancor plummeted right after the ICO. It's still above it's all time low, so
it's not exactly a new thing.
[https://coinmarketcap.com/currencies/bancor/](https://coinmarketcap.com/currencies/bancor/)

There were plenty of warnings and research about how flawed their product is,
including here. The lesson, as always, is caveat emptor.

~~~
chroem-
Most alts are traded in terms of BTC. Bancor's dollar value has only ever gone
up because increases in the price of bitcoin have occasionally offset Bancor's
losses relative to BTC. Bancor's value relative to BTC has been monotonically
decreasing since its ICO, which is a feat unto itself.

------
emmab
Why do so many cryptocurrency projects seem so meta?

Platforms for creating platforms, coins for creating coins.

~~~
jononor
Easier to sell to people trying to make a quick buck than doing something
concrete that is directly useful. Why sell even shovels directly at the
goldrush when you can manufacture the shovels...

~~~
vkou
Or write a whitepaper about how you will build a factory that will build
factories to manufacture shovels.

I'm, ah, seeking investors.

~~~
sebleon
Or building GPU chips that accelerate deep learning algorithms that write
white papers about how you will build a factory that will build factories to
manufacture shovels.

Investors: I’ll accept check, btc, or pepecoin.

------
bandrami
The spot price has fallen by more than half; the value has held very steady at
zero.

------
decentralised
Bancor's been plagued with some technical problems that have been exploited by
miners and hackers to front-run their algorithm.

The explanation for the losses are related to the price stabilisation /
automated market making algorithm being exploited while in its early infancy.

I'm really sad at the reactions people on HN have to Blockchain businesses and
topics, but I am confident this is a case of horse-traders dissing on Ford
Model T. It's like the SV crowd is finding it hard to believe no one wants
another social media uber for X whatever now that the money and the spotlight
are shining on communities very far from your own.

------
danblick
Volatility in cryptocurrency-based securities? I am shocked, shocked.

~~~
tibbon
Compared to volatility in fiat currencies? I (perhaps incorrectly) assume you
live in a relatively stable and developed nation that hasn't seen
hyperinflation?

Should I base my views of fiat currency from things like the 79.6 billion
percent hyperinflation in Zimbabwe?

Neither is inherently volatile. Both can be, but it isn't a built-in trait of
fiat or cryptocurrency.

~~~
Fej
Perhaps cryptocurrencies _are_ inherently volatile. We don't know either way.

In any case, there is zero empirical evidence that they aren't, given that
there has not once existed a stable cryptocurrency.

~~~
tradersam
Yeah this is incorrect. USDT, although incredibly shady, is pegged to the
United States Dollar, and therefore a "stable" currency.

------
rublev
What? This is like every shit coin. Tons of them tank to near zero and
deflate. Anyone who thinks these coins are legitimate are fooling themselves.
They are built with one core requirement, do just enough to differentiate from
other coins, pump it, get out.

The average person can't understand 99% of the specs of these coins, it's all
speculation. The whole thing is a ponzi scheme.

~~~
Karunamon
Just because some ICOs can be scams is no reason to write off the entire
concept as a scam.

~~~
user5994461
The entire concept is a multi level marketing scheme.

~~~
whataretensors
No, not all of it. It only appears that way before looking into it more.

~~~
weej
Would love to hear more on legitimate use cases for blockchain (not being
sarcastic) that cannot already be solved by centralized database, merkle trees
and/or public key encryption.

~~~
rublev
I think they meant that concept behind an ICO are a scam not that blockchain
is.

~~~
weej
That's the problem. The investors for ICOs are backing on blockchain as if
it's some amazing new innovation that's "going to change the world".

~~~
mhluongo
It's just an incentive and control plane for other stuff. You still need the
other stuff.

~~~
weej
Yes, and I'm asking for legitimate "other stuff" that applicable for an ICO
and/or blockchain. Been waiting for a while on this one.

------
Arathorn
I did quite a lot of research into Bancor from a non-cryptocurrency-developer
perspective a few months ago (when looking at possible ways to launch a token
for Matrix - c.f. [https://matrix.org/blog/2017/08/22/thoughts-on-
cryptocurrenc...](https://matrix.org/blog/2017/08/22/thoughts-on-
cryptocurrencies/)) - and concluded that it's actually quite an interesting
idea (once it finally 'clicked').

From the normal dev perspective: the idea is that it removes the concept of
using a marketplace to exchange between currencies entirely; instead it
replaces the exchanges with an algorithm which gives a consistent global way
to calculate the FX rate at any given point. The formula used is
mathematically very simple: you allocate a 'reserve' of your currency to be
backed by a 'base' currency (by default, their BNT); and as folks buy and sell
your currency it algorithmically defines the exchange rate relative to the
base currency based on the total supply of your currency in circulation. So
rather than the exchange rate being determined by the human interactions of
traders, instead it's determined by a function of the current market cap - and
everyone is held true to using the same function because it's part of the
codebase that defines how the currency operates, running as a smart contract
on the Ethereum VM. From memory, the function itself defines the FX as being
proportional to the amount of token supply relative to the reserve, after
applying a selectable exponential damping factor.

The code is kinda interesting, as it ends up implementing some fairly scary
fixed-point exponentiation in such a way that it can run on the EVM with the
reversibility and predictable rounding errors which are required for small
transactions to cause tiny but 'correct' changes in the FX rate for that
currency.
[https://github.com/bancorprotocol/contracts/blob/master/soli...](https://github.com/bancorprotocol/contracts/blob/master/solidity/contracts/BancorFormula.sol)
has the gory details.

Now, the idea certainly does have some controversies, including:

* It requires some kind of common currency to be able to work, and Bancor positioned themselves as the common currency for that purpose (hence their ICO). That said, you could also chain together separate 'common' currencies though, or just access a Bancorified network of currencies via an old-style exchange.

* Whilst the formula used to calculate the FX seems sensible enough, it's not obvious it's the only (or optimal) solution, but it's very baked into the system. (Although the contract does have a backdoor to let it be upgraded in case of bugs or problems, which is a bit controversial in and of itself).

* It's an interesting question whether it's a feature or a bug that markets have a human function which can act emotionally/irrationally - rather than behaving 'perfectly' through the magic of a shared smart contract.

On balance, it feels like a very interesting system for managing small-scale
tokens - especially ones which need liquidity and stability beyond their
natural market cap. However, this is a slightly niche market which is still
evolving (relative to everyone who's running around trying to do as large an
ICO as possible), so it's perhaps not surprising that it's yet to take off.

(Disclaimer: I'm not working with/for Bancor, although have chatted to them a
few times.)

~~~
sgspace
It is rare to find someone actually contributing to a crypto currency
discussion, rather than just sharing their opinion. Insightful comment thanks!

------
dna_polymerase
> Bancor Chief Executive Officer Guy Benartzi said Sirer is making his claims
> because he is advising another company.

That really says it all. The CEO prefers to attack ad hominem instead of
responding to his very well substantiated arguments. Bancor is BS and a
perfect example of the whole ICO scam thing.

------
jondubois
Cryptocurrencies were created to allow people to opt out of society's current
power structures.

That might explain why Bancor, a cryptocurrency backed by traditional power
brokers doesn't work as a cryptocurrency.

------
virtuexru
Why not name the coin in the title? Bancor.

~~~
gumby
In this case the more general title is superior. I, for example, had never
heard of bancor so wouldn't have clicked on the article.

~~~
mason55
I mean, you could write "Bancor, One of the Most High-Profile Initial Coin
Offerings, Has Crashed 50%"

Then it's informative to readers who know what Bancor is and those who don't.

------
josephagoss
Most people in the scene were warning people away from Bancor due to the large
amount of money being raised. Generally large raises will result in a massive
fall regardless of the teams performance short term.

Also it was never clear how their token fit into the future of the
CryptoCurrency ecosystem.

It always seemed like an ICO-token without a purpose, looking to invent one.

Thing is most of these dapp ideas would gain a larger network effect and be
more efficient just by using ETH.

------
whataretensors
Ehh, my 3d printing stock fell to about 10% of its value. It happens in every
market - just make sure you are diversified... especially if you are investing
in high risk markets.

Edit: I'm probably getting downvoted because I'm comparing IPOs to ICOs. They
are significantly different and everyone should beware of scams.

~~~
conanbatt
More like the model you seem to explain is too naive and exploitative by
people just snake-oiling thousands of things, since by diversification you
sell all of them.

------
unabridged
So what, GRPN fell to 1/5 of its IPO price in its first year.

