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No, this is substantially worse than the late 90s.

In the late 90s there were a lot of very premature IPOs and a lot of money raised for bad ideas, but very few of them were total cranks or scams. I could in fact buy pet food on pets.com-- it just wasn't a viable business and wasn't well executed. The CueCat was a horrible business idea but CueCats actually did exist and you could in fact use them. (I used to have one! Kept it for teh lulz.)

Most ICO projects are complete and utter vapor consisting of nothing more than a stock bootstrap web site and a "white paper" that could have been generated by a Markov chain model using crypto and decentralized systems buzzwords. A few have a bit of code online that doesn't work. Of those that have shipped most of them are unusable, and of those that are usable I am only aware of maybe one or two that are at all interesting. Of those none are very compelling and none are things I couldn't do without.

There are literally no hits in this space. It's all junk, and most of it is outright scams. I'd be surprised if a single current generation coin ever actually delivers real ROI.

It pains me to say it too. This stuff is very much in the "I want to believe" category for me. But I've gone through them and that's what I see. It's depressing.

We've discussed an ICO here at ZeroTier and I've consistently come up against it. There is so much fraud here I don't want to go near it even if there might be good use cases. A lot of capital is sloshing around but I have both ethical and pragmatic problems with participating in a system so absolutely rife with fraud. I also don't particularly want to deal with SEC investigations.

Cryptocurrency on the other hand is useful. We have used Bitcoin to pay overseas contributors for open source work and consulting. The function for which block chains have become most known is so far the most useful and real.

The only upside is this: I find it satisfying that the scammers are gaming the "serious math/CS papers must be written in TeX" heuristic by writing their buzzword salad white papers in LaTeX. I hate lazy prejudiced heuristics like that.




The other key difference is that the 1990s startups were for the most part aiming to take advantage of a novel form of distribution rather than a novel means of fundraising.

Even though many of the nineties startups lacked the skill or timing to execute it, the advantage of replacing catalogues or human agents already using computerised reservations systems with an always-available, easily-updated website was huge, obvious and real as was the size of the future online advertising market. So there was every reason to believe that some internet companies would eventually become huge. By contrast, many ICO startups boast no tangible advantage or difference over the existing congested and conventional markets they purport to serve except for a novel funding method which allows their investors to trade any oversight or traditional legal recourse against the company for a theoretically liquid market to dump the "coins" in if the founders don't even attempt to deliver...


I'm betting many of these participants will get in considerable legal trouble. They are dealing in trackable cryptocurrency as opposed to hard cash. The paper trails are quite clear. If they were smart enough to only spend the funds on the project perhaps they just get hit with securities violations. If they instead chose to spend it on personal stuff, there will be Interpol warrants, extraditions, and prison time waiting.

Earlier in the year I began going through the list of alt-assets and ICOs. I appreciate how the lists of advisors (or whatever they are being called) are full of people with experience in completely irrelevant areas.

Cryptography is one of those areas where you really need to be good at what you do or your skills have a deeply negative value. To create some sort of cryptographic asset with a team devoid of cryptographers and people with deep software security experience is a joke.


Yeah I have this sense that the hammer is hovering over some of these peoples' heads and we are about to see mass arrests. Some of these are flagrant scams with very identifiable names attached to them. I'm sorry but if you raise capital for a venture it is not your money, and if you behave as if it is you are committing a crime.

If that does happen crypto will crash. The crash will bleed over into Bitcoin too because sheep.

In the long run it might be a good thing. Maybe ICOs will get re-invented as something more reputable. I know Naval Ravikant (AngelList) is involved in a project to create a reputable sort of ICO vehicle patterned after the SAFE and he has an excellent reputation. I feel bad for the people right now trying to do legitimate work in this space and having to compete with a bunch of obvious cranks and fakes.


> I do find it a bit satisfying that the scammers are gaming the "serious math/CS papers must be written in TeX"

Some don't even bother to do that. This is literally the white paper for one of the hottest cryptos out there right now :

http://docs.neo.org/en-us/

This is the codebase :

https://github.com/neo-project

The current net value of the entire circulation is about 3.7 billion, all of which was pre-"mined" and 50% of which is reserved by the creators.


I have a strong suspicion that some of these exist as fronts to move flight capital out of China, Russia, and other places that hemorrhage dodgy money.

There almost seems to be an inverse relationship between reality and funds raised. Here's one of the very few real ones:

http://sia.tech

They got nowhere near the funding, and most of it was conventional:

http://sia.tech/funding2016/

It's one of the few coin-backed distributed things that seems like it might be useful to the point that I may actually try it, and I've heard it actually does work.

Guess that's passe in these quarters.


I can agree with that. There isn't a whole lot of utility in individual ICO's. However if you look at ICO's in general the concept is pretty remarkable, ICO's essentially facilitate the "move fast and break things" mentality of Silicon Valley. If ICO's work over the next 10 years (after the crash and into the future) that's a pretty great tool that Silicon Valley now has, they can now surpass the SEC and having the burden of pleasing investors and most importantly posting quarterly profits and still raise all of the money that they need.

This goes back to my original point that there is value in cryptocurrency and the technology behind it. It's just going through a period of explosive interest and growth, which in turn is causing the technology to get better rapidly.

The multimillionaire investors are going to be made over the next 3 years. The next google could come out of an ICO in 10, it's just a matter of the market correcting itself once the hype wears off.


The SEC has ruled that some coins in ICOs are actually securities and are subject to the SEC rules[1] so they aren't going to really bypass the SEC at all. It's just a matter of time before things get ugly.

[1]http://fortune.com/2017/07/26/sec-icos/


The SEC may be slow-moving, but don't mistake that for having bypassed them.


I agree completely.

The sad thing is that this is actually very cool technology and I bet there are real use cases out there that could benefit from them. But the ones I have seen are not it. I wonder if Ethereum itself will also be punished when all these tokens come crashing down...


I'll launch an ICO for: "bot that writes ICO papers in LaTeX"


If you know LaTeX you could probably bill yourself out to ICO scammers to port their white papers.




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