
ICOs are Cancer - midas
https://medium.com/@michaelflaxman/icos-are-cancer-c404594f181b
======
dharma1
Cancer is a bad word for this for many reasons.

Word choice aside, I agree many ICOs are scams, and in general I think it's
not a great idea to give someone very large sums of money up front to build
something, with very few strings attached. The immediate global liquidity of
tokens is both good and bad. Having access to a lot of funding early on,
especially with no accountability, even with most well-intended projects often
leads to building the wrong thing, stuff people don't want or need, since
there is less pressure to validate the product (for instance via revenue).

I would like to believe self-regulation and peer pressure, once transparency
standards are established, will happen. De facto tools for governance and
transparency of token projects is something I think is sorely needed, and it's
something projects like Aragon - [https://aragon.one](https://aragon.one) \-
are building.

I think ICOs are an interesting way of funding certain types of projects that
would not be viable through traditional VC funding - certain types of open
source projects for instance. And I think we could see the token concept take
off in unexpected places. But I hope the cryptocurrency/token ecosystem will
move towards a more sustainable direction that generates real value for people
instead of the casino like atmosphere today.

~~~
dreit1
Thank you. ICO's fundamentally change the nature of global marketplace
dynamics. Whether its stocks, bonds, tokens, or whatever other digital asset,
it is now shown that these items can be traded by anyone, anywhere, and
anytime.

This is a fundamental shift in how markets have traditionally worked.
Accessible by few, siloed by regional boundaries.

This post comes off as another angry bitcoin maximalist, upset that blockchain
isn't being used the way they want it to be used

~~~
marcus_holmes
> ICO's fundamentally change the nature of global marketplace dynamics.
> Whether its stocks, bonds, tokens, or whatever other digital asset, it is
> now shown that these items can be traded by anyone, anywhere, and anytime.

Sorry, what? this is literally untrue, and pure bullshit.

Anyone can buy any of these at any time already. There are online marketplaces
that trade these things 24/7.

The only restriction is that a potential investor has to prove that they
realise that the value of an investment can go down as well as up. That, in
other words, they're not an idiot, and won't demand that the government "do
something about it" when their investment tanks.

Of course, because of that niggling little regulation, you can't spam everyone
with ridiculous promises of untold wealth if they'll only invest their life
savings in the latest ponzi scheme. Until ponzicoin came along, of course.

~~~
dreit1
"The only restriction is that a potential investor has to prove that they
realise that the value of an investment can go down as well as up. That, in
other words, they're not an idiot, and won't demand that the government "do
something about it" when their investment tanks."

So you're saying that isn't possible? Very few people in the ICO space are
demanding the government do anything.

Also live outside of the US and you'll realize how untrue your statement is.
You'll see very quickly that many services that deal with asset trading are
region locked (Robin Hood) for example

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chrisco255
ICOs are an all-encompassing term. They cross cut utility tokens, security
tokens, and new crypto currencies.

So an ICO for something like Filecoin, which is monetizing a storage protocol
built around IPFS, that's a utility token. There are plenty of legitimate ICO
projects out there that have either 1) already shipped 2) have a working beta
or 3) are risky but have strong teams. It doesn't take a lot of time to look
for them.

I'm not a lawyer, but security tokens and the tokenization of private
equities, and everything from startup shares to real estate to gold-backed
tokens, these are positive developments. Raising money for business IS hard,
and especially so if you're not one of the privileged tech elite in Silicon
Valley. Author seems to forget this.

Furthermore, there's other sectors of the economy too. Have you ever tried
raising money for a non-tech business? It's not easy. Money isn't exactly
abundant in these sectors. Blockchain/token fundraising has the potential to
bring more efficient capital markets to underserved industries and underserved
jurisdictions (including other countries with different securities
regulations).

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root_axis
Cancer sounds like a pretty fair description to me; a destructive mechanism
that sucks up tons of resources while turning the tables on something we
usually consider a good thing (growth). It's not literally a disease that
kills people.

Leaving out all the blockchain dogma and speaking purely from a technical
perspective, I do think ICOs _are_ pretty interesting in that they allow low-
tech people to spin up digital tokens that can be traded in a decentralized
manner. Of course, this is of dubious utility which is why close to 100% of
ICOs are scams, but it is pretty fascinating to think that the fundamental
primitives that emerge from a piece of open source software are capable of
facilitating billions of dollars worth of fraud.

Edit: to elaborate a little further, the use of the word "fraud" there is not
meant as a cynical jab, I think it is an uncomfortable fact and an ethical
indictment of blockchain software, but if we suspend those considerations for
a moment, I think it is interesting to think about the fact that the
fundamental "coin-like" behavior of the software actually works (for all its
extraordinary costs) and is such a tangible and captivating concept that it
has spawned what has essentially become a real-life cyber-punk religion. It's
kinda cool that it even exists. It'd be like if a malevolent AI emerged from
the internet bent on destroying humanity, it would actually be a really scary
situation but I think the HN crowd could not help but be somewhat amazed that
such a thing actually existed.

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siddhant
A bit off topic, but why is it a trend these days to use "cancer" for things
that have nothing to do with the disease? It sounds a bit insensitive.

~~~
knicholes
It's a metaphor. I personally think that "cancer" describes something that is
deadly, awful, and spreads. Instead of saying those three things, or maybe
more, it conveys the message to me more quickly.

~~~
mseebach
It's a really poor metaphor, though. ICOs are stupid, but really easy to avoid
(just don't put money into them). Certainly not "awful" in the way losing a
loved one to an early, excruciating death is. They're not deadly and they
don't "spread", at least not by any means remotely comparable to how cancer
spreads.

It's not like the author works with the metaphor, either. The word appears
exactly one time on the page, in the title. It's pure clickbaiting.

~~~
r00fus
> ICOs are stupid, but really easy to avoid

The cancer analogy is relation to the financial markets as a whole. Once
people make more and more money from ICOs, they reinvest and push aside other
more legitimate/productive forms of making money until there's nothing but ICO
activity - investors who didn't jump on get FOMO and add to the new tide.

------
api
One of the things that bothers me about the ICO world is that even those ICOs
that are not scams seem to mostly be trying to boil the ocean. I see a ton of
massively over-specced ICO projects with huge road maps about how they are
going to get somewhere very far away. That _somewhere_ is usually blah blah AI
blah blah smart blah blah IoT blah blah global blah blah blah-- in other words
a vague mirage that might not even exist.

This approach to engineering rarely if ever works. The first casualty of
contact with the enemy is the plan, and in engineering the "enemy" is the
problem domain and/or the market.

I see a lot of ICOs that have raised a lot of money that are going to spend
that money doing a ton of engineering to build the wrong thing.

This is the real reason ICOs are "cancer" insofar as cancer is a disease where
a bunch of cells over-replicate and over-metabolize and crowd out the body's
legitimate activity. ICOs are sucking all the air out of the room in terms of
not only angel and VC capital but also talent and trapping all those resources
in long death marches to nowhere. In the end we're going to end up wasting
vast amounts of capital building things nobody ever wanted or that solve
problems that only existed in the minds of their creators.

Meanwhile well-scoped competent projects trying to solve real world problems
are starving for capital if they don't have "block chain" or "AI" somewhere in
their name. I have actually seen investors' eyes glaze over after they ask if
something is using "block chain technology" and get an answer in the negative.

Last but not least ICOs are legally questionable. This means that if you want
to raise money this way you're exposing yourself to the possibility of
lawsuits and even _jail time_. In other words the investment climate is now
such that if you're not doing something _possibly illegal in many
jurisdictions_ you are not investment-worthy.

This isn't dot-com all over again. It's much, much worse. While I think
cryptocurrency tech is awesome and does have some fantastic use cases, this
bubble around it is indeed cancerous in the extreme.

------
cornoffering
This piece is maybe a bit extreme, but I agree that many ICOs are scams.

That's actually why (shameless plug) I made one that's sort of an anti-scam:
[https://initialcornoffering.com](https://initialcornoffering.com)

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peterstoziek
Cancer is a terrible disease which many have to fight with, and likely die
from. I had to fight it and luckily didn't die.

ICOs are a scam.

Learn the difference.

~~~
root_axis
Are we forbidden from the metaphorical use of words that reflect on a reality
that personally affected you or should we just abandon metaphors altogether.

~~~
meko
Perhaps we should stray away from accepting hyperbolic clickbait-y metaphors?
I'd personally take as roughly as much issue if the title said "ICOs are
retarded" instead. Its nonspecific & editorialized. This isn't reddit.

~~~
root_axis
What's with the anti-reddit virtue signaling? The quality of discourse on this
site is not so far removed from reddit, the only real difference is that this
site is much smaller with more aggressive moderation.

Regarding something as "cancer" is not the same as regarding it as "retarded".
Using the word retard that way is a pejorative slur that demeans the mentally
disabled by using their disabilities as an insult, calling something cancer
does not reflect at all on those who suffer from cancer.

Still, I think you make a fair point that the title is click-baity and
certainly inflammatory, my only disagreement is with the idea that metaphors
are off limits if the non-metaphorical meaning has personal significance to
some individuals.

------
cowpig
I see problems with a lot of the things this guy says.

> Access to liquidity for early investors. Would you buy stock in a company if
> the senior management was dumping that stock?

There are lots of cases where an early investor, or early employee, might want
liquidity on their holdings. For example, there are many cases of employees
being essentially "trapped" at their companies, waiting for an exit.

> Stock is effectively a claim on a company’s dividends and the governance
> ability to hire/fire management in search of better cashflows. Token holders
> waive all of their rights.

How many dividends have Facebook, Amazon, Apple, or Alphabet issued exactly?
And how many people have common shareholders hired/fired?

> Fundamentally Incompatible with the Legal System [...] Unless courts decided
> to cede their power (don’t hold your breath!), they will always be able to
> override the blockchain through blunt means like seizure of bank accounts,
> physical property and/or arrest of principals involved.

There are lots of tokens where this is the case, and I have to agree that ICOs
make no sense for those cases. However, if it's actually a decentralized
tokensale (e.g. cryptocurrencies, all DAOs)

> Lack of Basic Investor Protections

I think that, for a lot of (especially early) crytpo people, this is viewed as
a strength. While it's unsurprising that a professional investors is going to
miss the rules and customs that favour capital over all, there's a pretty big
movement of people who were frustrated watching banks devour billions of
dollars of taxpayer money in the form of bailouts, who've seen private capital
groups walking away with millions from failed investments, and who've seen
earnings for capital outpace every other form of income for the past several
decades.

> Bitcoin is the world’s first (and best!) censorship-resistant digital store
> of value, and has amazing potential to improve the world by helping
> individuals regain their financial sovereignty.

Gee, I wonder if the author owns any bitcoin lol

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dwags
google defines cancer as "a practice or phenomenon perceived to be evil or
destructive and hard to contain or eradicate." So we can get back on topic now

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KasianFranks
They're a cancer or disrupter to old ways of financing a startup. They're not
cancer if you have executed one yourself and if you understand how trading
vehicles work along with the capital markets. Wall Street is the real cancer.
Software engineering has never merged very well with financial engineering
except in the world of the quantitative analyst. It's all about how the
funding is used in the end. Some ICOs will actually be part of solving for
cancer. If you’d like to acquire accurate information on the structure,
performance and differences in ICOs, contact me kasian.franks@gmail.com

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seibelj
The single greatest risk posed by ICOs is the disruption of traditional
fundraising. I agree that many ICOs are scams / infeasible but “the genie is
out of the bottle” and having a new option for funding a company is certainly
a good thing. Not everyone can call up a VC and get a multi-million check
easily, although I know people who can do that. ICOs make fundraising much
more democratized and fair, and once we have better accountability many issues
will be solved.

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DEFCON28
No they're not. An innocent person can't succumb to an ICO the way anyone can
get Cancer.

This is just a very old story: "A fool and his money."

~~~
gruez
cancer isn't transmittable either

~~~
jmvoodoo
There are several forms of transmittable cancer in other species. Luckily none
in humans yet.

~~~
morio
HPV could be considered transmittable cancer. Some types of cancer only occur
because of an HPV infection.

