However, when ICO's like this one keep happening where only 100 "accounts" own 99% of the ICO offering, you pretty much lose that argument of the tokens only being there for use of the platform. It's a private security sale, and I only see one way this will end. The SEC will make a case out of one of the ICO's 100%. They do not take advertising to unaccredited investors lightly.
My only suggestion, if you are involved in any way with an ICO (developer, investor on the team pre-ICO, etc.), either get out of the U.S. now and/or make sure all operations are happening outside the U.S. I was almost involved with a company doing essentially what these ICO's are doing (not blockchain/crypto currencies), and fortunately I figured it out before being involved, but it did not end pretty for them. Like the IRS, the SEC/others will come down hard, not a matter of if at this point, it's when and who gets the beating first. They love making cases out of someone to set precedent.
With the general public playing into an overbought token market fueled by Asian countries for the most part, the regulators/SEC will come down extremely hard on this.
I think investing in Ethereum/Bitcoin is fine, just know what you're doing, record your cost basis for when you bought it. And seeing first hand what the IRS does to people who avoid paying taxes, just make your life easy, when you exchange back to a currency that is considered a currency by the IRS, just pay your capital gains on it and move on with life. The IRS will catch up and many people will go to jail for tax evasion. Don't be one of them. Obviously, all this only pertains to the U.S..
Also for fun, if you really want to see the hysteria around the Ethereum price right now, check out r/ethtrader/ or even the Ethereum FB group. People are throwing their entire savings into this while not knowing anything about it besides everyone in the group hyping it up amongst themselves. It's really sad. Ethereum is now actively pumped heavily on MLM sites/blogs. It's beyond gross. I believe Ethereum is an amazing project and am worried that this hype fueled hysteria, once it collapses on itself, will give Ethereum a bad reputation. It is a great protocol.
The better version of requirements for accredited investors would be some sort of exam (hard enough to make sure you have solid knowledge about financial markets, financial instruments and risk/return relationship).
It is sad but many people would put their entire savings and next months rent into a risky investment that is not publicly traded on a regulated market and basically lose their money most of the time because they invest on hype and because their buddy told them.
If an accredited investor loses his money, the nobody feels bad because they had the money in the first place and the means to either hire somebody who knows what they're doing or be responsible themselves.
I'd be fine with zero regulation on it all together, as long as I, as a tax payer, don't have to bail out all the idiots will fall for ponzi scheme after ponzi scheme. But do we let them dye on the streets because they lost everything? Hence why the regulation is in place.
You are also assuming that being an accredited investor gives you access to better investments, which is not entirely true. Many accredited investors lose their lunch on investments. Look at the number of hedge funds that beat a market index fund, it's like 10%. Or look at VC firms where 1 investment makes up for the loss of 10 others. Many never do get that return and just lose money until they're out. The best investment definition varies widely, and in actuality, most accredited investors would be better off just investing in an index fund because believe it or not, they don't know what they are doing most of the time either. Which is why many investments are high risk. So a test would not help either.
If someone doesn't know how to manage miney they will lose it one way or another - be it forex, or or penny stocks. ICOs cannot possibly be worse than these legal things.
"We don't need the government to tell us what is toxic and what isn't. Let's people make their own decision about what they eat!"
Which I know sounds very attractive, but then 90% of the population will end up ingesting food with lead in it from China, or whatever.
if people want to throw in everything they have into speculative currency, then they will. someone's gotta put down the law to at least try and protect damage to the economy when everyone loses their shirts
I think it is both. The regulation is removing the upside risk as well as the downside risk. Many professional investors are investing to real stupid things and losing their money, it is not that difficult to find examples.
Or the boiler rooms & microcap fraud in the 1980s/1990s:
And yep, it was still happening even before the accredited investor criteria was relaxed;
The great depression started before the SEC existed and was a completely different world.
Back to my original question I asked if it was easy to find examples. I have no doubt that you can find a few since fraud happens. But I think you'll find it difficult to find more than a handful.
ericscc.com appears to be gone as well as any of the other prosper forums I've found links to. Not really familiar with the site so is it basically dead or moved out of p2p or something?
prosper.com itself is still in business. AFAIK they have pivoted to a much more conservative lending model. People who invested before 2010 or so generally lost money, some of them a lot of it, but the current model may be sustainable.
Gambling is different in that the user goes into it knowing that they have a negative EV. Lots of people lose everything gambling no doubt but while they may hope to win they know the likelihood is that they will lose.
Plus you can't raise more than a million dollars or so that way. And there's a limit per person, so instead of just sending ETH, everybody would have to go through the platform's KYC, and declare how much income/assets they have.
In the meantime, people in countries with more economic freedom than the U.S. can just deploy a couple pages of code, make some basic efforts to block U.S. investors, and be done with it.
Whether the code is already deployed, or depends on further development effort by the team, is one aspect of the Howey Test, according to Coinbase which released the results of some legal research on the subject: https://blog.coinbase.com/2016-12-07-blockchain-token-securi...
> What do BATs represent?
> BATs are tokens in a new Blockchain and attention-based digital advertising platform.
They are not refundable, nor are they securities or for speculation. There is no promise
of future performance. There is no suggestion or promise that BAT has or will hold a
particular value. BATs give no rights in the company and do not represent participation
in the company. BATs are sold as a functional good. Any value received by company
may be spent without conditions. BATs are meant only for experts in cryptographic
tokens and blockchain-based software systems.
Yeah reading /r/ethtrader it's 95% hype and 5% caution. I keep feeling conflicted for not buying in at ~$120-$130, and every day I think about whether I should buy in. But then I try to answer the question "what about Ethereum makes me believe it will be worth more than $(today's price) a year from now?" and I can't come up with anything other than speculation... Any advice?
Chinese capital controls has a huge amount of blame here. Because the Chinese government prevents the foreign exchange market from clearing at a lower price, there's tons of unmet demand for converting Renminbi to anything that isn't subject to such restraints. Similarly, on the demand side - there's folks that would be induced to sell their foreign assets at a higher price if it was allowed.
So essentially, there's a "you can use this to avoid capital controls on your Renminbi" premium on all sorts of things. Real estate in Vancouver. Cryptocurrencies. Chinese companies acquiring foreign subsidiaries with no real business purpose behind it.
With this process, it doesn't matter if BTC is trading at $1 or $1000. Chinese citizens can convert the maximum allowed from Renminbi to USD, buy bitcoins in USD, sell those bitcoins for Renminbi, and pocket the spread.
Brave got $35M, unless Ethereum crashes very soon.
Some parties can now set the price for advertising within Brave to whatever they want. If Brave becomes popular, they become rich. If Brave fails, they lost their money.
The set of technical users out there who will do anything and everything to avoid and block ads is not a valuable advertising space in any way, shape, or form.
If, for example, tens of thousands of people only had tens of dollars invested, they may be less interested in making Brave a successful platform because they have little financial incentive and little to lose.
In order to not be an "average person," you must make 200K+ in salary or have 1 million dollars in cash?
I'm not saying that ICOs are currently perfect by any means. There will be a NEED for some type of regulation and time for the market to figure itself out. Unless youre in the elite group of VCs or a very wealthy person, then you should be excited about the ability to be able to directly invest in a company. As far as voting rights, that can be implemented in the tokens.
This is still very new and one should assume that the current state of ICOs will change as people start figuring it out
In 2017 we will probably see the first rating agencies for ICOs, plus distributed ways of doing due dilligence. It is quite possible that in a few years the investors will be protected as much, if not more, as in traditional investment opportunities.
It will be a dofferent model though - you will have scamcoins for speculators, but also many ways of gathering information about the startups, much more accessible and sensible than the current system. This may lead to naive investors being protected/educated well enough.
Look at the internet right now. Imagine that in 1996 the government required a ton of red tape to launch websites, and would pose limits on who can access it (so your grandma woukdn't put her cc numbers on a scam site)... That's how the investment environment looks right now.
Instead what we did was to allow anyone access and publish, and fight scamming by prosecution, education and built-in browser security. People are still getting scammed on the internet daily, but it's kind of under control, and the benefits far outweighted the losses.
Yes, those limits are inherently non-average so by definition it works.
Using monetary wealth isn't a perfect proxy for sophistication or intelligence but it does correlate and allows for risk tolerance by the fact that there's enough income to fall back on.
It's possible we see companies in the future that exist solely on the blockchain and don't have a legal entity, and tokens effectively are shares in the company, with voting rights. But that's not what we have today.
This is a bit weirdly stated for this case, I believe. The Brave tokens have value because they offer advertising space in the browser. You're speculating on the value of that advertising space, not so much on an altcoin/token itself.
BAT tokens are already tradable on exchanges, and currently trading at 3x ICO price. The pricing is primarily speculative
Also I sorta doubt that Brendan Eich is a drug dealer :)
Either way, you've got income from selling digital goods for cryptocurrency, rather than cryptocurrency with no socially accepted narrative for possessing it.
Step one is recruiting some people to be a "customer" of your game. You give them $500 of dirty money, they go visit various retail establishments and buy $450 worth of pre-paid cards, then spend the balances on those pre-paid cards buying stuff from your game. Various banking institutions and app marketplace owners take their cuts, you wind up with clean money earned from selling premium coins to your "customers", which you then report as taxable income and use for whatever legal-market purposes you want.
So, the short of it is that it's a two-part scheme. Part 1 converts undocumented cash into pre-paid debit cards. Part 2 converts the balance of those cards into business income from selling digital goods. The receipt of cash gets offloaded to retail establishments that routinely handle such transactions. The delivery of goods is cheap and verifiable, and the payment for those goods goes through legitimate channels.
Compare to laundering money through a literal laundromat. If you double the sales through putting dirty money into the laundromat's cash deposits, you ought to be using twice as much power and water. Auditors can find that out. Selling twice as many virtual battleships, though? You've got customer accounts you've "delivered goods" to.
Was Tesla's model 3 preorder basically the same thing? They raised $400M dollars ($1000 down payment on 400k reservations) on future sales of a product not yet built.
Meanwhile, if Brave completely fails and the BATs become worthless, I don't think anybody's going to get refunded.
Except the ads they're planning on showing?
If he's chosen to be the CEO of a company again, then he's also chosen to put his social/political views on equality into the public sphere again.
I think it's ok to care about the beliefs and views of the officers and board members of a company.
Put aside blockchain, ICO, and browsers for a moment.
Imagine an app that shows ads, nothing more.
The users of the app are credited in tokens for viewing and/or clicking ads.
The advertisers pay tokens to show ads.
There is a middleman (presumably brave) who manages the ad marketplace and distribution (for a cut)
The users can then take their tokens (acquired viewing ads) and sell them on the open market, ultimately to further advertisers.
The tokens become a CPM backed currency.
The ICO is how you create an initial pool of tokens and establish an initial value.
Blockchain is used as a clearing house and ledger of transactions.
Brave happen to be using a browser as the vehicle for ads.
1. What effect does this have on the spyware/malware side current ads? As an advertiser, I pay some coins to show my ads. Are they still served from the same ad platforms they are today with all the tracking/spyware/malware/etc or are the ads served from some central Brave ad platform where all of that junk is rejected/stripped out?
2. What prevents one actor from buying up all of the tokens over time and opting to horde them rather than showing ads/paying out to users?
On 2, normal market dynamics. If tokens get hoarded, that increases the value of the remaining tokens. I assume that tokens can be split into arbitrarily small fragments.
There's also nothing stopping Brave from issuing more tokens (either indistinguishable from the original tokens, or a new type of token which is handled in the same way)
There is also scope for click/view fraud also
Even if the original token pool is a fixed size, they could choose to issue another token pool later, so different token types could have different values
Other parties could use the same token scheme for their advertising and not pass anything on to their users
The whole area is intriguing
I think many people have decided that regulation just ends up benefitting the established players at this point.
They used some kind of digital currency to purchase shares in an upcoming venture?
I'd love to try to explain this to my grandma
So if the Brave platform succeeds then you'll have a whole bunch of people who want to exchange cash for these "Brave Coins" so they can send micropayments. These early investors will hold all the Brave Coins and so they will get the initial influx of cash from people buying Brave Coins to use the platform.
Edit: Possibly the coins are being used by advertisers on the platform, not for micropayments.
The tokens paid for by the advertisers will then go into the pockets of these publishers, while a small portion will end up with users to compensate them for their attention spent viewing those ads.
Am I reading it wrong?
What advantages does it have over a different browser using ad- and tracker-blocking plugins, especially now that the Brave browser allows ads from these ad providers?
It seems that with this ICO, Brave users can also start earning tokens (ie. Basic Attention Tokens) when choosing to view ads on certain publishers' websites. If I'm not mistaken, this new model is targeted to launch by the end of 2017.
Firefox is dog slow (sorry FF), Opera crashes on me regularly, and I don't really trust any of the other 3rd party browsers.
Brave is basically Chrome with ad blocking.
URL for the lazy: https://play.google.com/store/apps/details?id=com.brave.brow...
Bitcoin is boring, but it's a real currency you can use. Move fast and break things is a bug not a feature. If you can't buy things with it, it's not a currency, it's Russian roulette.
We detached this subthread from https://news.ycombinator.com/item?id=14453783 and marked it off-topic.