> At the same time, it could mean working, for the first time, with investors who are not “accredited,” meaning high-net-worth investors — an idea that appeals to Altman.
I guess he sees blockchains as a vehicle to getting the regulatory framework he wants for securities, and (I assume) doesn't feel he can get for traditional stock.
> Added Altman of the appeal of ICOs in particular, “People are watching their friends get really rich and it’s making them [frustrated and wanting to get rich, too].”
> “One of the trends that bothers me about Silicon Valley,” he continued, is that “more and more of the wealth creation here is not available to most people, and I think that’s very bad in a society with already so much wealth inequality. If there’s a way that new technology can make it practical and possible to democratize this, I think that’d be great.”
I mean, he just said he recognizes it's a bubble. Doesn't a bubble usually suggest wealth transfer instead of creation? Of course it's frustrating to not get in on that money. It's even more frustrating when you see the situation as ethically gray, and here's Sam signaling that YC should jump on board.
Wow. Just wow. Looks like 2017 is the year when VCs publicly started adopting the pump-and-dump positions.
But you see us? We're 'good people'. Our companies are 'good companies'. We 'generate wealth'.
And an ICO is a great way to facilitate sales of stock a large, global, but ahem 'private' market."
So, yes in theory you could make a useful currency. But, nobody seems to be focused on low cost, ultra high transaction rates, anonymous transactions, etc. It's all pump and dump.
Is it ethical to want to bring in unaccredited investors to a market that's known for being scammy and overhyped?
It's to protect the middle class of course, though one can only wonder why the blatant double standard. I have no idea!
The "accredited investor" regulations are a sham, an unfair and artificial barrier to entry that ought to be removed. Yes, some people will get abused. This might even create local instability. But, that is clearly the long-term optima. Those who lose money to scams can leave it to law enforcement to do their job. Others who invest more they can afford to lose into bad apples will learn that you should always hedge risk. As a whole, society gets smarter when it is allowed to make mistakes, even costly ones. Smarter and less fragile.
Isn't gambling heavily regulated in the US to the point of being barely legal in many states? Isn't that basically how many Indian tribes make money - by being outside this regulation?
ICOs, on the other hand, is like entering a street shell game. Something non-regulated, where you are sure to get skinned.
Gambling is up front about the odds and the fact that they are stacked against you.
ICOs and scam investments are not.
The issue is not about allowing people to lose their money.
The issue is about Fraud, and people lying about what they are selling, as well as promising false returns.
Casinos don't promise you anything false, and transparently offer you provable odds.
After all, if someone is willing to violate the law, chances are they won't respect limitations regarding the eligibility of investors - which is, in fact, what we're seeing with ICOs.
Seems like just another example of the known results of Prohibition - prevent legal markets and you'll just have dark markets in which people get poisoned.
Regulating a company that may or may not believe their pitch about making their investors rich and whose probable failure may or may not be the result of them failing to even attempt to execute on it and/or their pitch deck being a pack of lies is incredibly complicated.
So it's left to investors that have the resources to do what would otherwise be the extremely laborious regulator's job of doing due diligence, sitting on boards to see what's going on and litigating malfeasance. Who also happen to have sufficient funds not to suffer if they don't.
Prohibition isn't really an appropriate comparison since there's an abundance of alternative places for the general public to speculate, and no reason to assume that the investment opportunities investment professionals won't touch would start offering consumers better returns than a casino if everyone could advertise an SEC stamp on their ICO after filling in a few forms.
Law enforcement rarely resolves securities disputes. It requires lawyers teeing up the evidence for courts and regulators.
Disclaimer: I am not a lawyer. Don’t do mean things with securities.
In practice, I'm seeing teams doing ICOs do shady things like change the terms halfway through raising capital, leaving early contributors with a diluted stake or teams that straight up don't deliver with no way for share(token?)holders to hold the team accountable - basically this kind of behavior seems a whole lot easier when you took small sums from thousands of nobodies instead of millions from a handful of deep-pocketed somebodies.
I question whether those risk-reward blends are appropriate for those without substantial excess capital. The current limits are somewhat arbitrarily placed, I agree, but someone with $50,000 in savings probably shouldn't be investing in start-ups.
I don't think it is easy to answer, clearly not allowing people to take risks is also taking away there freedom and chances for making a better living. Not allowing people to take risks (and consequently, start businesses) ultimately leads towards a communist worlds were people can only pick from a selection of government ordained jobs.
On the other hand, blockchain tech is very useful for distributed asset tracking; specifically corporate bonds and equity. It makes an incredible amount of sense for things like stock certificates and even shareholder voting. Having a tokenized, open ledger that is able to be analyzed by anyone is nothing but good for shareholders. I think that as long as shareholders are aware that they are buying equity in a company, cryptocurrency should be a viable way to do so.
What I do not think, however, is that these corporate cryptocurrencies should be exempt from all existing laws governing equity finance. It should be 1 share = 1 coin and leave it at that. The market can determine the value of the shares, and the company can create new ones whenever it wants (since it would control the "mining" pool).
That is what smart people do - they do things that work.
Why on earth would you decrease your success by 20-30%(I'm guessing) by using less appealing headlines?
Clickbait doesn't devalue the articles. It only presents problems for websites like HN, but here it is already moderated.
Because you respect yourself and your audience enough to be honest, even when dishonesty could attract more eyeballs to advertisements?
The purpose of a headline is to get more people to click so that they receive the value you've created. If your headline is a little less compelling - fewer people will receive the value, the world will be a little worse off. So if you believe in your ideas, and care about expressing them - you do whatever it takes to convey them successfully. Utilitarian ethics.
You know you are competing with a huge amount of clickbaity entertainment, so if the things you create are high quality, it makes sense to do things that won't predictably cause you to lose.
I understand your point of view and why you'd find this distasteful, and, personally, I don't use as much clickbait as I probably should. But my opinion on this stuff has shifted over time, so I just want to express it.
The second question is how they open up their business to new investors. It's a little tricky to raise money from retail investors, so I wonder whether this talk of an ICO is designed to skirt regulation. I know I sound very un-hip when I say this, but that regulation is there for a reason. The vast majority of investors don't have the background or knowledge to assess the risk of alternative investments.
It's not impossible for YC to market to retail investors, just more difficult. They should either raise money in the conventional way or not at all.
I share the instinctive response to a rule where "only rich people can X" but (1) Are startups such a great investment that unaccredited shlubs are substantially disadvantaged by excluion? (2) Do they have enough (risk tolerant) money to make a difference? (3) Will companies financed these ways be better in some way.
If we assume the bigger fraud-ish problems get solved, what is the big upside?
I can vaguely see an argument for something between kickstarter/patreon & NASDAQ enabling new kinds of things, but is there really something here. To put it more generally, why should people other than Sam Altman agree with him?
IPOs do have fraud but at least it is controlled a lot. To raise capital you need to be a specific person/company and you have a set of responsibility toward your investors.
For ICOs? Not really.
Financially, having the option to do X has a certain value, even if on average X isn't valuable. (If X has volatility)
Startups has a certain risk characteristic that is different that what you can find on the public equity market. Theoretically, an efficient market should dish out higher reward to compensate for higher risk and poor liquidity of investing in startups. It may be beneficial to individuals to use startups to diversify their overall portfolio.
Startups in general might not be a great investment. The subset of all YC startups might be.
Researching and investing in startups is fun and educational.
Number 2, writing off an asset, and furthermore, an entire asset class based on one instance of a transaction fee (a problem that is being actively worked on, might I add) is lazy and dangerous, to conflate this to "it is clearly inferior to US Dollars in every way. Bitcoin is a scam, block chain is all hype, and everyone involved with Cryptomania is going to look silly when the music stops and someone has to eat the soggy biscuit" is ridiculous and you haven't made any decent points. Your entire argument is based on conjecture and no technical information.
Do yourself a favour next time you decide to shoot Bitcoin and Crytpocurrency down, ask yourself if you've actually done due diligence on your opinion, or if you've settled for the lazy option.
PS: If you are that disgruntled, you're welcome to submit PRs.
Instead of coming off as condescending with a simple beratement of their first impression of using a cryptocurrency, why not try to use this as a teaching moment and say "hey, that sucks and I know it's confusing. The mining fee is actually because of X but we're working to make that not necessary / lower through Y".
If those of us in the tech industry want bitcoin and other cryptocurrencies to grow and prosper we can't just tell people they're dumb and to submit PRs if they don't like anything. This only reinforces their poor first impression and lacks empathy.
And you know man, I do understand that first problem, I actually went around my local city talking to business owners about their lack of understanding/knowledge of Bitcoin a while ago and tbh it struck me entirely as a communication/uptake problem. You are right though, I did come off obnoxious and you're also right in saying that it's not the right way to go about it.
Cheers for the reality check.
And to be specific, I used Coinbase to purchase my Bitcoin and then transferred it to an Electrum wallet and then to another wallet.
People have told me that you don't have to pay the $5 mining fee, but I did not see an option anywhere with those two wallets to avoid or substantially reduce the mining fee.
The transaction fee thing is a problem many people, in particular new users notice, and it's on the forefront of issues being solved by the community right now. In regards to your comments on 30 cent transaction costs, from what I understand, they are indeed on the path to this. If you are interested in seeing what this will look/feel like, buy a small amount of LTC, and send it to another wallet. I had many of the same issues you had with Bitcoin a few months ago, but as soon as I gave LTC a go I was blown away. This, for all intents and purposes, is what the BTC Core team intends to bring to Bitcoin. To give you an idea, transactions cost 2c on the LTC network, with a max time to completion of 2.5 minutes. When you first experience this, it's a great feeling.
Coinbase is always gonna be tricky, their transaction costs for buying BTC are, to put it bluntly, fucking horrendous.
In regards to your comments on not having to pay the fee, there are some wallets that allow you to pick the priority of your transaction, one that springs to mind is IndieSquare Wallet. Bear in mind this will affect the way your transaction goes through, speed wise.
Hope I actually answered your questions on this, sorry for my intial comment. If you have any more q's, just holla. I can either answer them, or get someone with more knowledge than I to answer them.
However, in the interest of getting you to fall in love with Crypto, please, buy a small amount of LTC, transfer it, pay the fractional charges and be blown away. If you aren't impressed by it, I will be surprised.
Also, how long would it take you to send money between the EU and USA? With Bitcoin it's pretty much instantly with only a flat $5-ish fee. Centralized options such as Paypal or Western Union are far inferior in this use case.
I didn't particularly care before, but the more and more I've read, the less sense it makes. At this point, almost all miners (people running the equipment that keeps the network safe and operational) have decided to switch to larger blocks, "hard forking". This will be fun to watch. The "core" people are insisting the miners rebrand and break backwards compatibility so it doesn't hurt their main, small block chain.
That's not to say these other solutions are terrible, when they end up existing. But artificially restricting Bitcoin and driving up fees while slowing transactions down seems basically petty at this point.
Bitcoin transfers are slow and expensive so it only makes sense for large transactions. For small transfers you should use a different altcoins.
$5 worth of Bitcoin to make a single transaction using Bitcoin!
it is clearly inferior to US Dollars in every way.
Bitcoin is a scam, block chain is all hype, and everyone involved
with Cryptomania is going to look silly when the music stops and
someone has to eat the soggy biscuit.
Here is an idea for your chores, make your own family coin on Ethereum, make an exchange rate that the family pays to the kids, etc.. (1 family coin for $1) then you now have a decentralized home currency that will cost a few cents to move.
Or if you're not interested in a funky project like that, just use Ethereum for now instead of BTC for micro transactions. I regularly pay 5 cents to move money around in Ethereum.
I do believe both BTC and ETH have bright futures.
Just because something is expensive, doesn't make it a scam. It is also important to note that Bitcoin is a free market. Unlike Apple which sets the prices of a Macbook, demand set the price for the bitcoin blockchain space.
Why did you assume that bitcoin transactions are free? or should be free?
Eh, maybe it means the p2p electronic cash doesn't need pitching. It is already there and successful.
People talk about bitcoin like it needs to be cheap, solve a problem, be non-volatile. The truth is, the crypto market is $100bn+ big and doesn't seem to care much.
So I've looked in other jurisdictions but I've had huge problems finding the right country to do it in.
The last time I tried I got scammed by a Corporate Service Provider in the Isle of Mann that went out of business about a month after I sent them $$.
If anyone is looking for a co-founder in this space, and is interested in having a chat, email is in my profile.
It would need to be regulated though - to reduce scams, and also because regulators wouldn't allow tokens that are securities (shares in a company) unless it's regulated. That part, to me, feels like it will take a long time - would require changing legislation.
Your implied point is true though. I'd trust YCombinator to pay out their tokens as long as they don't go bankrupt.
While it's all nice and fuzzy now, it seems to me that the recipients of the ICOs funds can do as they please with the money.
They are structured this way as an attempt to avoid the securities regulations.
It's an interesting solution to the problem. Securities regulations are setup so that investors have a chance at a return. They are intended to prevent the situation where companies raise funds, and don't return value to the investor.
So the sponsor of the ICO just says, no worries, we're not even promising an effort at returning value to investors!
It's unclear how this is going to play out from a regulatory point of view. It is clear, however, that the chance of these companies generating real value and returning it to the token holders is close to zero.
My guess is that most people putting their money down recognize, at least on some level, that they are joining a ponzi scheme. People love to gamble.
If you create a cryptotoken that has a real business purpose and sell it with the expectation that it will be redeemable for that purpose (basically selling gift cards for a service that doesn't exist yet), and a secondary market forms that appears to believe that the tokens are stock and trades them accordingly, are you guilty of securities fraud? What if you never actually develop that service, would that impact your case? If so, how do you distinguish between something that was a ponzi from the start and a mismanaged project that failed to deliver?
The investment could still have the same terms and conditions as a regular security, though. There was a big one recently that even required you to be an accredited investor to buy on the blockchain.
How do you imagine an ICO taking place without a blockchain? It seems like a contradiction in terms: the "C" means a blockchain token.
Uptime: Trading hours are a 19th century anachronism. Distributed infrastructure is more reliable.
Management incentive: By removing annual and quarterly investor relations milestones businesses are incentivized to move more quickly by creating a more fluid and transparent management and investor relations style.
National access: Being 'listed' on a 'market' is a huge hassle and comes with fiscal protection mechanisms such as requisite auditing which essentially (not completely) amounts to a mafia-esque pay to play fee. Why not just go international and skip the hassle?
Regulation: Of course, the financial services establishment will cry "Regulators! Consumers need protection! Only we, the few, the humble, the experienced, can save their financial souls!" but alas their track record is pretty shocking and regulators with any guts should encourage innovation with some oversight and involvement. The thing is, since blockchains are international regulators are nominally sidelined in a default approach. There should be a middle ground where they can perform basic services such as corporate registration, legal good standing, fair taxation and IP asset attestation, for example, without becoming intimately involved in day to day business.
Transparency: Instead of occasional, high level audits, if transparency is required why not require that in order to be blockchain listed, companies must either use a public blockchain or otherwise effectively real time (eg. daily batched reporting) to transparently manage their financial assets? This would provide superior transparency than the establishment, potentially with crypto levels of trust (thus auditors cannot be bought/make mistakes).
Fiscal restructuring: Being able to do stock splits and so forth could work very well on chains.
Conventional asset financial connectivity: Sooner or later you have to interact with the off-blockchain world. Gatekeeper financial institutions need to validate inbound capital by showing things like source of funds. This is nontrivial with anonymous blockchain inflows, and requires setting up a significant KYC process as per larger crypto exchanges.
Of course there are issues. If there is a gatekeeper to enforce due diligence then is it truly blockchain anymore or are you just doing rebranded ICO 2.0 and issuing your own tokens? I fear the latter. We must find a middle ground. The devil is in the details.
The ICO market may be bubbly and ridiculous, but at least it will make founders consider an alternative to traditional VC which may give more money for less equity.