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What is an Initial Coin Offering and How Does it Work?

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Re: What is an Initial Coin Offering and How Does it Work?

#61

Post by leovailati »

sillysaurus3 wrote: post #39
richardknop wrote: post #22

Earlier quoted context omitted.

Exactly my thoughts. This is pure gambling. Lots of people will end up losing money while a small amount of people will make millions from these scams.

True, though it's probably best to go further: Any money into any cyptocoin is pure gambling. Don't put any money in you can't afford to lose. If anyone is saying the word "investment" while talking about a cryptocoin, smile and nod while slowly receding in the other direction. As a gambling vehicle, cryptocoins are one of the finest ever created. But people should at least admit to themselves that it's not investing…

> It's different from the sort of value that a startup creates: at least a startup is trying to affect the world in a tangible way that can usually be explained in a couple of sentences.

I agree that it is different. Arguably, though, if Bitcoin gains enough traction, it would affect the world too.

Re: What is an Initial Coin Offering and How Does it Work?

#62

Post by empath75 »

richardknop wrote: post #22
wyldfire wrote: post #21

Previously, we had a filter screening new altcoins (expletive deleted) in that you had to know enough about bitcoin to at least fork the repo, build it and make some modest changes to create a new namespace. We could see whether those coins are worth anything by looking to see if there was a novel PoW or other network changes, premine, etc. Now, Counterparty and much moreso Ethereum have created an opportunity for an…

Exactly my thoughts. This is pure gambling. Lots of people will end up losing money while a small amount of people will make millions from these scams.

It's not even gambling. If you're not the one creating the ico scam, you are flushing money down the toilet.

Re: What is an Initial Coin Offering and How Does it Work?

#63

Post by jonstokes »

I think the cryptocurrency story is real, just like the internet story was real in 1999, but these ICOs show that the market is getting way ahead of the tech, regulations, business models, etc. I have a longer rant about it, here:

https://twitter.com/jonst0kes/status/880806655067291649

(Sadly, twitter's threading model is now so broken that you have to do lots of clicking to get to the good back-and-forth dialogue in there.)

Anyway, I'm sort of toying with the idea of doing a kickstarter for a big explainer book on blockchain, cryptocurrencies, and DLT in general, which would basically be like my CPU architecture book ("Inside the Machine"), but for this topic. (I'm spending all my spare mental bandwidth right now on understanding this tech, mostly so I can think through shorting this space eventually, but I'm not convinced it's worth my time to try to explain it to the general public... a kickstarter would help me price that. I dunno though, I've never even backed anything on kickstarter so I'd have to spend a bunch of time figuring out how to set up a successful campaign, first.)

But to sum up, people I've talked to in this space think the ICO thing is a frothy mess, but it's also set to get worse as the general public gets more opportunities to buy in. A lot of these ICOs are built on top of ETH, and the path to USD liquidity is through ETH, so despite the platform's issues it seems likely that ETH is going to get much of the benefit of this bubble (and much of the negative impact when the bubble pops).

I'm keeping an eye on the upcoming ETH exchange-traded trust, and I think there will be an ETH ETF that will eventually launch and get bid up.

Re: What is an Initial Coin Offering and How Does it Work?

#65

Post by empath75 »

jcoffland wrote: post #23

Usually this kind of blatant negativity would be down voted to oblivion but for some reason HN has a special place in it's heart for crypyocurrency haters.

I'm a strong believer in the promise of cryptocurrency, but 90% of these ico's are scams and the recent run up in ethereum and btc is just based on nonsense speculation.

Re: What is an Initial Coin Offering and How Does it Work?

#66

Post by ksahin »

BurningFrog wrote: post #48

So I read half the article and still don't feel like I know what an ICO is . Only the 101 ways it's different from an IPO... I understand that I could create a FrogCoin by cloning Bitcoin or Ethereum. And then I sell investors... what exactly? Individual coins? Are coins not mined in this scenario? Would FrogCoin be tied to some real world asset that makes them inherently valuable and/or practical? Or are ICOs just g…

Several years ago, ICOs were a way to crowdfund and distribute a new crypto currency. With your example you would sell "pre-mined" FrogCoin and there wouldn't be any real world asset that make them valuable, only speculation.

Today, most of the ICOs are made on the Ethereum blockchain, it's a way to crowdfund distributed/decentralized application and protocol. It's not about currencies anymore.

The tokens that are sold are "API keys" that will be needed to use the protocol / application.

Lots of things are good candidate to decentralisation : VPN, cloud computing, cloud storage, social media plateform, Quora, Reddit, HN, any service that make the bridge between users and take a HUGE commission : Uber, Airbnb ...

I don't know if any of these decentralized application will ever succeed but the business model / crowdunding model is evolving and in some area, like open source projects it makes lot of sense to create / use decentralized services.

Re: What is an Initial Coin Offering and How Does it Work?

#67

Post by EthanHeilman »

wwwv wrote: post #32
jcoffland wrote: post #23

Usually this kind of blatant negativity would be down voted to oblivion but for some reason HN has a special place in it's heart for crypyocurrency haters.

It's worthwhile to note that not a single once of the thousands of "ICO" things that have been launched in the last year have actually done anything of value. They all generate hype, raise money, and then give up and go to work on other things. It happens over and over again with no memory of the past failures, apparently. That said I wouldn't fault you for believing that a lot of the $xM raised in x ICO just turned…

>It's worthwhile to note that not a single once of the thousands of "ICO" things that have been launched in the last year have actually done anything of value. They all generate hype, raise money, and then give up and go to work on other things.

I agree that many ICOs are scams, but I disagree with your statement for the following reasons:

1. Most large ICOs have not been scams, but several have failed (see theDAO). Because you choose a short time horizon (launched in the last year) it excludes both successes like the Ethereum ICO and failures like theDAO.

2. We say "They all" however most of the larger ICOs have not been scams. I only need to provide a single counter-example: look at the Brave ICO.

>It happens over and over again with no memory of the past failures, apparently.

I'd be interested in seeing some examples? What ICOs over 5 million USD in the last year were scams? For the record I don't doubt you can find some.

Re: What is an Initial Coin Offering and How Does it Work?

#68

Post by richardknop »

Hermel wrote: post #59
richardknop wrote: post #20

Earlier quoted context omitted.

Call me when a single of these projects that raise a ton of money from ICOs actually delivers and becomes a success. So far we have seen a lot of no strings attached cash given away to people with just an idea who would never raise money from real investors. I think it's a ponzi scheme. As far as people selling ICO tokens for 10x price, only a small number of people can logically do that and it relies on influx of ne…

Ethereum raised 20000 Bitcoin giving away 2000 Ether per Bitcoin. Today, one Ether is worth 0.1 Bitcoin. That's a 200x return. Also, they created the most widely used Blockchain. Does that qualify as "delivered"?

Ethereum is interesting because it is basically a ponzi scheme which spawns new ponzi schemes (ICOs) on top of itself. I am only an observer of blockchain space (don't own any blockchain tokens) but afaik there isn't anything real aside from gambling apps and some prototypes hacked together for ICOs (without any real users) running on smart contracts.

So I think I wouldn't count such usage as it's all speculative until there is some mainstream application which actually uses smart contracts or public blockchain.

Most transactions on blockchains (Ethereum or Bitcoin) are just moving tokens between addresses on exchanges (either by bots or by gamblers who do it manually) or moving tokens to ICOs to create new tokens and then trading between different kind of tokens in order to gamble and hopefully make some money from it.

Re: What is an Initial Coin Offering and How Does it Work?

#69

Post by npongratz »

curiousgal wrote: post #51
erikb wrote: post #42

Earlier quoted context omitted.

Ethereum has the right play here though. They go to where the gold rush is and sell the shovels.

I think the exchanges are the ones selling shovels and am certain that they have a horse in that race; e.g. Kraken added support for trading EOS yesterday, started at $1 now it's at $4.16. With potential ROIs like that (all across the board) I am certain that Wall Street cowboys are all over this market. But at least we have the SEC to protec..oh we don't.

I find EOS especially hilarious. Per their own FAQ[0]:

"The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform."

And:

"We believe that EOS means different things to different people. We have received numerous amazing interpretations of what EOS stands for or what it should stand for so we have decided not to formally define it ourselves."

[0] https://eos.io/faq.html, last week's mirror: https://archive.fo/m3D1T

At least they're honest about it.

Re: What is an Initial Coin Offering and How Does it Work?

#70

Post by sillysaurus3 »

leovailati wrote: post #61
sillysaurus3 wrote: post #39

Earlier quoted context omitted.

True, though it's probably best to go further: Any money into any cyptocoin is pure gambling. Don't put any money in you can't afford to lose. If anyone is saying the word "investment" while talking about a cryptocoin, smile and nod while slowly receding in the other direction. As a gambling vehicle, cryptocoins are one of the finest ever created. But people should at least admit to themselves that it's not investing…

> It's different from the sort of value that a startup creates: at least a startup is trying to affect the world in a tangible way that can usually be explained in a couple of sentences. I agree that it is different. Arguably, though, if Bitcoin gains enough traction, it would affect the world too.

I put in an edit to clarify some thoughts on investing in coins. Basically, if you put in money and then don't touch the coins for years, that's investing. It's just so hard to have that mindset in this particular medium.
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