
What is an Initial Coin Offering? - omarchowdhury
https://www.technologyreview.com/s/608799/what-the-hell-is-an-initial-coin-offering
======
rowyourboat
> tokens aren’t just stand-ins for stock—they can be set up so that instead of
> a share of a company, holders get services, like cloud storage space, for
> example.

How is that an attractive proposition? It means I get all the risk of buying
stock in a new company, but none of the benefits. My money is gone if the
company goes belly up, just like buying stock, but if the company does well,
the best I'm ever going to get is some standard service. My token will never
be worth more than whatever that service is worth.

~~~
Spivak
> My token will never be worth more than whatever that service is worth.

Right, which is why ICOs seem to basically be digital commodity speculation.
Still plenty of money to be made in that space. You're betting that the
service will become more valuable over time rather than the company.

~~~
BoiledCabbage
And there is zero financial regulation of "services" like there is financial
regulation of companies.

It's the equivalent of speculating on the value of an item in World of
Warcraft (Or some other mmorpg). At any point in the future the company will
just change the game logic rules to make it worth less and forge a new item
out of thin air worth more to raise more funds.

"Oh yes you have our A coins, but you need our B coins to do certain special
transactions. Convert at this rate that's highly favorable to us. Or buy in to
our B coins ICO and get in on the ground floor before we begin to phase our A
coins out."

Don't purchase things where the other party can redefine what you own as it
suits them.

"Buy this property from me, but at any point in the next 50 years I can come
in and redraw the property boundary lines and keep what I carve off."

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cylo
I've always enjoyed Matt Levine's explanation of an ICO:

It's like if the Wright brothers wanted to sell you airmiles to fund their
invention and development of the airplane.

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staticelf
> What the Hell Is an Initial Coin Offering?

A fast way to lose money.

~~~
Cozumel
or make money. Depends which side you're on!

~~~
QAPereo
Either way it's gooing to be a great way to get in touch with the SEC from the
wrong end of the stick.

------
BoiledCabbage
Valid answers:

1\. A scam 2\. A fad / bubble 3\. An example of the reason why the SEC was
created and why securities are regulated in the first place. 4\. An efficient
way to lose your money

~~~
SippinLean
Do we have to make this comment on _every_ post about crypto on HN? Let alone
the 5+ clone comments on this very thread?

This article already addresses this: "The scene does seem ripe for swindles
and vaporware," but goes on to discuss it with more nuance. Perhaps we could
do the same?

~~~
morgancmartin
It's like it's 1992 and a bunch of Luddites are bashing this new thing called
the internet because it's unregulated. All the while, failing to realize that
the underlying technology has the potential to change the world for the better
in a major way.

What happened to the maker spirit of HN, I wonder? I used to think it was the
paragon of technological discourse, rather than simply a bunch of white collar
workers all cozy with their barely six-figure incomes who think they are the
beginning and end of innovation simply because they know how to string API's
together and use google.

It makes me think of this community's nearly unanimous stance that code
schoolers/bootcampers are bad hires and that a compsci degree is the end all
be all when it comes to making a hiring decision. It's obvious that the devs
who took a more traditional route feel threatened by the fact that learning to
build applications is not as difficult as they think it is. If it was, code
schoolers wouldn't be finding jobs in record numbers like they so obviously
are.

And sure, ICO's are risky. It is probably not wise to put your life savings
into one. So how do we make them less risky? What sorts of netsec lessons
learned over the past 30 years can be applied to them to make them less so?
How do we bring about the next major technological revolution and insure the
future is something to look forward to rather than fear?

This community as a whole needs to climb down from its ivory tower and realize
that innovative technology and ideas are what put them there to begin with.

I'm not saying we ought to blindly champion every new idea that pops up, but I
do think we could be using our experiences to contribute rather than burying
our heads in the sand and pretending that things can't or shouldn't change.

------
DickingAround
In most markets people have some understanding of the produce they invest in
or they choose not to invest at all. In the markets of ICOs, the percent of
money held by people able/willing to dive into both the technical and economic
side seems to be a small percentage.

I wish I could back up that 'presumption' with facts. But my only real
evidence is having seen maybe 3s ICO themselves and read accounts from people
investing in them. There is just no explanation other than that people don't
have the slightest clue what they're doing and have simply seen 'crypto
investments pay big!'

------
carrja99
An ICO is one thing and one thing only: a scam.

~~~
carrja99
To clarify, after YEARS in crypto, I have never seen a widely announced ICO
really do anything revolutionary or wind up sticking around beyond the initial
pump / dump and market manipulation period.

~~~
feelix
What about TenX? They have a debit card you can order now

~~~
omarchowdhury
How is that revolutionary? There are APIs that do this already.
[https://www.shiftpayments.com/](https://www.shiftpayments.com/)

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powmedia
The ICO craze seems like perfect material for the TV show Silicon Valley,
especially after FileCoin has become a real thing.

