Despite S.E.C. Warning, Wave of Initial Coin Offerings Grows
nytimes.com
nytimes.com
When I tried to point out that the project should use some of that money to organize the software engineering aspect the founder got pissed off with me accusing me of trying to run the project. They had a second round and raised even more money (in addition to the insane capgains on their first round).
I check the github from time to time and it appears they've got at least 2 other devs involved and may actually bring a blockchain to market but this doesn't hide that fact that the project needed nowhere near the amount of money they raised. Hell they could've used a couple hundred grand from the first round and literally just paid a team of people to build the blockchain for them. did I get off of a gravy train? Yes. But there are more things to life than money.
Ponzi Ponzi Ponzi.
Any vendor will buy a good at say, $9 and sell at $10. In the US there are many pawn shops saying "We buy and sell gold!" - it's never at the same price.
#1: A smart gold trader will buy low, sell high.. they will buy more gold when prices are low and advertise to sell more when the price is high.
Brokering fees are not calculated in with the base prices, though it would be once it's time to calculate returns.
A market maker is the guy who's tying to capture the spread, but they don't really go around trying to get the public to buy and sell.
When it's so easy that any 20 year old backend dev can issue a token, you should already know that no ETH-based app should be worth more than the same business model applied to a fiat currency.
The project is a from-scratch smart contract blockchain: including a new contract language
Ding ding ding, winner! So many of these just have no point in being as companies, let alone as a token.
At The STC, we're going to end sex trafficking in just like Apple and Amazon (and now Google and Spotify) ended music piracy. To operate, we must be an extrajurisdictional company which makes cryptocurrencies a useful way to get investment and pay dividends. But we're not going to issue tokens -- only shares. Ethereum will help us keep track of share ownership and allow easy trading, but we're not a "blockchain company".
I hope we see a new wave of post-ICO companies using these technologies as a means to an end, not an end in and of itself. We're probably leaving money on the table by saying that and not hyping up tokens and tech. Oh well, we're going to create a valuable business instead.
Our main founder has had this idea for a while. But it wasn't until last year that cryptocurrencies showed they're going to be around and usable for non-geek users. This is crucial as it allows us to contract people (marketing, design, photography, transport, security, boarding, and on and on) without having to run risky front businesses to handle money or try to convince people that this strange internet coin money is useful.
The ICO craze annoys us because it blinds people to the real possibilities. It is our belief that within the next few months ICOs will need to measure up to ventures like our own and show true profit potential or at least some commonsense business fundamentals.
I can explain more in private (details in profile), or shortly we'll have more public details available and I can send you a link if you like.
But suffice to say that in the cities we operate, we will end up putting a significant dent in coerced sexual services.
[0]:https://bravenewcoin.com/assets/Whitepapers/Ethereum-A-Secur...
Mark my words: this will all come crashing down. I can't tell you when or why, but it's not sustainable. Probably it will happen in a way that makes the bitcoin nerds "right" in some sense of personal justice: the PRC will close the great firewall to bitcoin traffic, or backdoor the protocol in some unsupportable way. Or the SEC will shut it down somehow.
So sure: when the crash happens cryptocurrency "would have worked" if not for the meddling government. But it will fail nonetheless, and all those people (again, most of whom are not investors in scams like bitqyck) are going to lose all their "money".
Mark my words: this will all come crashing down. I can't tell you when or why, but it's not sustainable.
As always, the time horizon matters when talking about investments and sustainability. Given the right time window, everything works, and everything fails.
With crypto, if anyone leaves or growth stops the price simply goes down. It doesn't collapse. It's more like stock.
There are a lot of people in the blockchain space that believe deeply in the technology and are working to see it to fruition. There's plenty that see a quick buck and will leave their "investors" holding the bag. This cycle is not new and I don't think it means everything regarding blockchain is a scam. It's just very reminiscent of mid-to-late 90's Internet mania
That doesn't mean there isn't a ton of real value being generated here or that it doesn't have the potential to be at the scale it is now. It just might be too much, far too soon.
Building companies and innovating is hard, flooding capital to it will boost the value generated but you can't simply manufacture it artificially by throwing money at it unless there is real talent and business models underneath.
Just look at that Circle startup that raised a record seed round based on a nice sounding team and a half-baked idea. Too much money can actually hurt some companies chances.
And you can't really emphasise this too much when the company is a couple of developers, a handful of lines of code and an idea expressed on a WordPress marketing site, and complete strangers are chucking coins that can be converted to tens of millions of dollars of hard currency in return for a token conferring no rights whatsoever, because blockchain > legal systems that actually enforce fiduciary duties. Investors are usually keen to ensure founders can't just convert investments greater than "fuck you money" level into into yachts. But some ICO founders have already got a lot more, and even if they start with nothing but good intentions, they must wonder why they'd bother spending it building a company that in all probability won't be worth more to them.
I'd buy the yacht too.
People are raising money with 10 page vague 'white papers' with ideas that make no sense or are completely unworkable on the blockchain.
There is very little skepticism or research with these icos . Most of the commenters are trying to help the project and receive tokens in return, do tasks to qualify for free tokens ( bounties ) , or promote the ico so their token value increases
If there was a good way to short individual ico tokens it might bring some sanity
If you dump $5mm ETH on the GDAX ETHUSD market right now, the price would fall from $290 to $250[1].
[1] https://www.gdax.com/trade/ETH-USD (click “depth chart” in upper right corner)
Plus tokens don't even make sense most of the time. You can't buy a Tesla car with TSLA and you do not get dividends/trading with a car. And no one outside kids at Chuck E Cheese want to use venue-specific currency.
> The agency said that it would focus on coins that should be categorized as securities.
So there are all these people on the periphery just HOPING for their prophecy of a heavy handed government breaking the cryptocurrency rush.
They read the headlines.
They create the headlines.
They purposefully don't read the SEC report or consider any information to the contrary of what they are expecting.
Despite S.E.C. WARNING? This is an article about everyone getting smarter and restructuring their offering where necessary, and continuing to move forward.
Even the WARNING in the SEC's DAO report two weeks ago acknowledged that not all token offerings were securities. But detractors and regulated entities with a legitimate reason to be skittish, used it as the WELP SHOW'S OVER GUYS argument which is completely unfounded.
> Nick Morgan, formerly a lawyer in the S.E.C.’s enforcement division, said that the security label was likely to apply to any coin that an investor buys with the expectation that it will increase in value as a result of the efforts of the entrepreneurs who created it.
The SEC still answers to the courts, and this consolidation of capital will allow these new organizations to take it to the courts efficiently. The Howey test from the 1940s did not consider this kind of asset to ever exist. It isn't an end all be all, it is a test.
The SEC is not mandated by Congress to undermine interstate commerce, it is created to provide confidence. So far, they've been playing it smart.
"To me, it seems odd that people would pay millions of dollars to reserve space on a new cloud storage network, and obvious that they're really paying that money for a speculative investment."
"If you do an illegal securities offering, people who bought your securities have a right to get their money back. If token prices keep rising everywhere, this is not a big concern -- why would anyone want their money back when they have such valuable cloud storage? But if the ICO mania fades, expect a lot of lawsuits from investors who are shocked to learn that they were buying unregistered securities."
The gradient of opinions is just as abstract as the weeks before.
It would be a mistake to take that as canonical just because you respect that particular entrepreneur's non sequitur criticism of existing token sales. When the argument is that not all token sales are securities offerings, not even the SEC has made that mistake, and the argument is that new token sales don't have to be securities offerings, but they can be too.
Here is what the SEC will never get: they will never get investor protection from this asset class. Their entire regulatory framework is around that.
Congress can modify the SEC's mandate to support this. Congress can create a completely new agency and regulatory framework to provide for more applicable confidence and protections in this asset class.
The SEC will never ever ever use the Securities Act of 1933 and the Securities Exchange Act of 1934 as currently written to ensure a fair market of all cryptographic token issuances.
If the SEC categories an asset as a security, it has rule making powers over the trading of those assets provided an American buys or sells the asset, inadvertently or not. Many respected lawyers and lawmakers, as well as the SEC, say many ICOs look like securities.
Note that coins offered in ICOs being securities isn't a death knell to the concept. Just to the scammy elements of the market.
Disclaimer: I am not a lawyer. This is not legal nor securities advice. Don't be a dummy and treat Internet comments as anything but casual banter.
Yes, this is the crux of everything I've said, primarily that "many" has nothing to do with whats possible. Whether a future token sale chooses to register as a security or is completely exempt from securities frameworks because it is a product.
The "many" I refer to are the people get to decide, legally, whether it's a security or a product. The polite thing for the SEC to do would be to announce a new rule. The less polite route, though still completely legal, would be to prosecute under the Acts in an SEC court [1].
[1] https://www.wsj.com/articles/sec-fights-challenges-to-its-in...
"A bank that keeps very careful track of how much money it has, and who owes it money and whom it owes money, and sometimes does evil stuff with that knowledge -- that's fine, really."
You're supposed to know where the money is! That knowledge and reliability is the central function of the bank; getting the dumb spreadsheets right is more important than moral probity. A bank that keeps very careful track of how much money it has, and who owes it money and whom it owes money, and sometimes does evil stuff with that knowledge -- that's fine, really. A bank that sometimes forgets who owes what to whom is the real menace.
The quote in question was pointing out how bad the latest Wells Fargo scandal is. A bank that can't keep track of money is in serious trouble and is woefully incompetent. The banks ripping off customers but accounting for the profits are evil, but at least they are being competent.
The article specifically states "only three projects have said they are canceling or postponing the sale of coins because of the warning." It's not a doom and gloom article. It's just saying the vast majority of ICOs are (a) probably noncompliant and (b) doing nothing about it.
> the SEC still answers to the courts
The SEC is an independent agency [1]. Congress delegated to it the Congresses' powers to make rules in and around securities with the Securities Act of 1934, as amended [2]. Courts grant agencies, like the SEC, wide rule-making authority [3]. In any case, the SEC "answers to" the courts in the same way the Congress does.
> the SEC is not mandated by Congress to undermine interstate commerce
The SEC is a creature of the federal government. Its specific jurisdiction is interstate commerce. In fact, one way to get around some SEC rules (though not all--consult a lawyer before doing something stupid) is to exclusively conduct your business within a single state.
[1] https://en.wikipedia.org/wiki/Independent_agencies_of_the_Un...
[2] https://en.wikipedia.org/wiki/Securities_Exchange_Act_of_193...
[3] https://en.wikipedia.org/wiki/Exxon_Mobil_Corp._v._Saudi_Bas...
Dislaimer: I am not a lawyer. This is not legal nor securities advice.
Did you know that anything that is super obviously a security can be completely exempt if it matures or expires in less than 270 days? Its written right there. Turns out there is a huge market called "commercial paper" that takes advantage of this specifically. I personally had no idea about it until I read the law itself.
And there are lots of exemptions. Most of them are completely impractical for most of us.
The United States is a common law country [1]. Implicitly stapled to the law are rulings and SEC rules. TL; DR There are more requirements to the commercial paper exemption than just the 270-day tenor.
That said, you are generally correct–there are lots of exemptions to registration. For example, Regulation D provides a safe harbor within which almost all private-company stock is issued [2]. The trouble with ICOs, currently, is promoters seem to be overusing this "we're marketing a product, not a security" line. As a result, they're not taking advantage of these exemptions. Failing to qualify for an exemption is a difficult mistake to undo ex post facto. (The Filecoin ICO mentioned in the article does take advantage of one such exemption.)
[1] https://en.wikipedia.org/wiki/Common_law
[2] https://www.federalreserve.gov/bankinforeg/regdcg.htm
Disclaimer: I am not a lawyer. This is not legal nor securities advice.
> Disclaimer: I am not a lawyer. This is not legal nor securities advice.
Look, we know. Only armchair financial enthusiasts use those disclaimers, and you've made it painfully obvious and its a bit contrived.
Federal Reserve regulation D is not the SEC's regulation D that you talked about.
Regulation D is not an applicable exemption, neither is Filecoin's use of it, because the secondary markets where people are inevitably going to trade them have to be registered broker dealers to legally trade things that admit they are securities. Unlike private equity, there is nothing that functionally prevents people from trading cryptographic tokens, so it is better for now that the tokens themselves make sure they are NOT securities, not just 'exempt securities'. No matter what Filecoin did, there is still a major infrastructure problem that threatens to hamper all liquidity in this space, unless tokens are structured as products and distinct from the securities market.
We've been here before. The SEC tried to regulate commodities. The SEC tried to regulate commodities futures and commodities options. The SEC thought they were covered under the wording of the Securities Act of 1933 but ultimately that just made no fucking sense for commerce. So the people of this country and the representatives thereof created the CFTC.
And yet again, the SEC's frameworks makes no sense for this market, where assets can functionally be like a security, like a commodity, and like a currency simultaenously.
A new framework isn't out of the question. For new services and sales that happen to use cryptographic tokens, being unambiguously a product isn't out of the question. Being unambiguously a security isn't out of the question.
Filecoin appears to be using Rule 506(c) of Regulation D, a § 4(a)(2) exemption. Also, you don't need to be a broker-dealer to issue, buy or sell unregistered securities. (You do need to be one if you're doing those things with others' securities [1].)
> The SEC tried to regulate commodities.
Commodities-trading regulation predates the SEC by over a decade [2]. Every time securities law were written, commodities laws were rewritten [3][4] to explicitly carve commodities out from securities laws. Both agencies compete in the swaps market, due to their shared jurisdiction over securities-based swaps [5][6], but there are deeper reasons behind the CFTC's independence than it making "no fucking sense for commerce." (The short answer has to do with geography and the competing power centers of New York and Chicago.)
> A new framework isn't out of the question
I agree. But it will probably take an act of Congress to do this. In the meantime, some promoters are violating the law.
[1] https://www.sec.gov/reportspubs/investor-publications/divisi...
[2] https://en.wikipedia.org/wiki/Grain_Futures_Act
[3] https://en.wikipedia.org/wiki/Commodity_Exchange_Act
[4] https://en.wikipedia.org/wiki/Commodity_Futures_Trading_Comm...
[5] https://en.wikipedia.org/wiki/Commodity_Futures_Modernizatio...
[6] https://en.wikipedia.org/wiki/Dodd–Frank_Wall_Street_Reform_...
Disclaimer: I am not a lawyer. This is not legal nor securities advice.
I still find that entertaining, let me help you https://www.sec.gov/fast-answers/answers-regdhtm.html
Classic strawman, I wasn't claiming Regulation D required anyone to be a broker dealer to issue buy or sell an exempt unregistered security. The claim is that reselling it freely requires you to go through or be a broker dealer, unless all buyers are accredited investors.
No, anyone that doesn't want to be legally liable.
If the other person could reasonably believe they have gotten legal advice, or a client-attorney relationship was establishes, then you might be liable.
Before you say that this would be ridiculous to assume on an internet forum, be advised that many lawyers nowadays have websites, blogs, allow starting a client-attorney relationship over a public question board, and such situations on Reddit have existed before.
Disclaimer: I am not an attorney, this is not legal advice.
Here's their twitter: https://twitter.com/tez0s?lang=en
Here's their subreddit: https://reddit.com/r/tezos
Here's their website: https://tezos.com
It doesn't look like they have really updated anybody on what they're doing with $200,000,000 since their ICO closed.
We're all presumably working on our own startups here. Can you imagine getting $200,000,000 in seed funding without even starting on your project? Just absolutely WTF is going on there?
yet eths marketcap doesn't go down?
And part of how the money supply has billion-xed since 2000 and no one seems to notice
Between them they've raised $500m.
I'll have disagree with you on this
Futures for Tezos are already trading at 6x the amount people invested during ICO.
> It makes no sense.
In the short term it makes a lot of sense (600% ROI). In the long term: An Ethereum based on OCaml has an interesting potential.
> You have no guarantee that they won't just run off with the money
If the developers are not anonymous, while no guarantee, it makes it less likely. When you cross the road you also have no guarantee that the cars won't run you over. Some amount of trust is needed, whether for money or your entire life. Benefit of crypto is that you don't necessarily need to rely on trust. I doubt Tezos has contractual access to all the money they received, or are allowed to dump their shares as soon as it starts trading for real.
Uber - Order a taxi with your phone
Facebook - Connect with your friends online
Google - Find stuff on the internet
Wikipedia - An encyclopedia that anyone can edit
Amazon - Buy stuff online, without going anywhere
Tezos - ???
(And "Tezos is a new decentralized blockchain that governs itself by establishing a true digital commonwealth" doesn't count as an explanation).
I don't think it makes that much sense, after all, you could also create another language that compiles to Solidity, and that is verifiable.
I mean it is OK, just not as much of an improvement as they make it sound.
As I understand it, the source code of tezos itself is stored on its own blockchain. Any modifications to the source are proposed by and voted on by owners of the tezos currency (weighted by how much they own). Also, unlike Ethereum, smart contracts are stored as source code on the blockchain, rather than as compiled bytecode.
OTH, the market cap valuations these things are using is kind of ridiculous, since a 200 million sale of eth would crash it into oblivion.
I see this kind of stuff a lot in the "cryptocurrency" space. When I was reading about Waves, for instance, one proponent unironically proclaimed that "It's built on Scala, which is a better architecture than Ethereum".
I'm no Scala hater, but surely stuff like the implementation language isn't the most important variable in evaluating a new altcoin / cryptocurrency platform? This sounds a lot like hand wavy mumbo jumbo that's meant to convince non-technical "investors" to part with their cash / BTC.
Consider that not even the fucking inventor of Ethereum himself can write a contract without massive exploits.
Afaik Ethereum encouraged independent implementations of their PROTOCOL in different languages, also as a way to discover flaws in the protocol.
Ocaml as a selling point just sounds like an appeal to Noobs. Reading that was one of the reasons I decided to pass on the Tezos ICO.
There is a horrible counterparty correlation in this trade. If Bitcoin goes up, you're out your short and lose lots of money. If Bitcoin crashes, the exchange runs into problems and you probably lose your original investment. Balanced against those is the limited profit potential from a marginal drop in the price of Bitcoin.
There are failure modes that have plagued exchanges for centuries. Namely, when things go down (a) lots of activity happens in a short period of time, often leading to administration and technical failures, and (b) lots of people lose money which presages them (i) refusing to pony up and (ii) suing.
I seriously doubt that logic would work, because it's very possible that by the time you think the bubble clearly "popped", it has already reached the bottom. Not to mention that half the market is planning the same thing.
Good luck on the short . . . many hedge fund gods were "right" on the tech bubble but lost their shirts trying to short it before the exuberance subsided
I used the word "legitimate" because the parent to my post did. The way I see it there is nothing legitimate about any of these so-called currencies. They are probably all Ponzi schemes in the end.
There’s also the block reward halving process, which is separate, but in theory miners will still be incentivized to mine even after it hits 0, due to transaction fees. If not, well, the difficulty will go down until they are.
You don't even understand how mining difficulty works.
“The market can stay irrational longer than you can stay solvent.” (John Maynard Keynes)
Especially relevant to short selling
I agree that BTC has been in a bubble, but if I had ever acted on this hunch, I'd be so far underwater right now. There's no telling how long the rally might continue, nor where the correction will settle.
The other commenter made the astute observation that the less leveraged way to make this bet would be to go long on some competing asset.
We have gone from %90 negative a couple years ago on HN to about %50 negative today.
Of course, if one rules out the possibility that cryptocurrency is going to be a thing, then it's in a bubble by definition any time it's worth more than zero. This appears to be the underlying view of at least some commenters here.
When Bitcoin first hit $1000, many businesses started accepting bitcoin, even some hosters. Tipping bots became popular on forums, there were tutorials for old people on how to use bitcoin on TV and in the newspapers even, etc.
Now? I don't know a single business I use that offers bitcoin payments. All of them have removed it again. Bitcoin's actual value as currency has gone down massively.
Yes, it is used. A lot, even. But not as day-to-day currency.
Completely false. Occasionally you will read a newsstory about a merchant who stopped accepting BTC. But, as of today 160k+ merchants accept it, and there was never any large scale event where "all" of them stopped accepting it.
http://www.businessinsider.com/merchants-arent-accepting-bit...
Also this Morgan Stanley research note, and the reporting on it, is of laughable quality...
1) They don't release data: "Morgan Stanley, which based its usage analysis on the information, didn’t say which companies are using bitcoin."
2) They extrapolate from an insufficient number of data points: 3 companies in the top500 this year, down from 5 last year, accept Bitcoin. It's like saying Ferrari's market share is dropping because only 3 billionaires bought a Ferrari this year, down from 5 last year.
3) They attribute a quote to the analyst ("The disparity between virtually no merchant acceptance and Bitcoin’s rapid appreciation is striking,") when in fact it was a quote from Overstock CEO: https://cointelegraph.com/news/bitcoin-merchant-shunning-is-...
4) They claim Bitcoin's skyrocketing price is one of the causes of the decrease in payments. They present of course no facts to justify this theory, because it's false. In the past, anecdotal data reported by merchants has shown precisely the opposite: customers spend their newfound riches.
The complete opposite is true for shorting, not a bet I would make on any certainty level.
You run a small / theoretical risk of getting stuck in a short squeeze situation where you can't get out, but that risk varies substantially by security and there are often laws or mechanisms you can use to protect yourself.
Its how many operate.
I might be crazy, but your perspective isn't any more rational than mine :)
It will become a currency when most of it has been mined and it's in widespread use and there aren't billions of people who have never heard of it... the price will stabilize then.
It's an error to think that the only use of bitcoin is as a currency. (in the traditional sense)
I have literally only seen one use case where it makes more sense to use bitcoin than to use traditional currency exchanges and that is illegal markets.
The downsides (hard to use, one way transactions, high transfer costs due to low block size, super easy to get hacked and lose all your money...) all massively decrease it's value over traditional currencies. Illegal markets only put up with all of those downsides because companies/governments have specifically made it harder for illegal transactions to take place over traditional currencies.
Who decides what it is supposed to be? If serves as a place to store value, then it can do that regardless of what people think it is supposed to be.
Maybe bitcoin will never be used for smaller, more common transactions, and it will remain solely a store of value. But I think it is simply a matter of time before a solution is found to the technical problem of creating a cryptocurrency (or maybe cryptocurrencies) that can serve the purpose of handling many smaller transactions.
So far I have a 4.6% total return on trying to capitalize on the volatility. That's much less than if I had just held at the original buy. I'm going to keep doing it though to see how it works in long term flat and drop periods. When you hold yourself to rules, it also decreases maximum losses too. I see the strategy as a great way to make safe money relative to crypto.
Right now if the volatility and my returns hold for even just two years, it could be going from $500 to over 100K. It makes it really tempting not to increase the amount I'm playing with even slightly, but I have yet to see how the strategy fares on long term drops. I do have confidence it will perform well on long term flat periods though.
> So far I have a 4.6% total return on trying to capitalize on the volatility. That's much less than if I had just held at the original buy.
If you compare the returns between those two strategies (buy and hold vs mean reversion), make sure you include comparisons of their beta profiles. Their risk measures are going to be very different.
> When you hold yourself to rules, it also decreases maximum losses too.
Speaking of rules, do you have a maximum tolerable drawdown for the strategy, or a number of consecutive losses at which you stop loss or retire the strategy? In order to add more rigor to your work (and so you know there is an element of empirical strategy here instead of just luck), you should conceive a set of priors for the strategy that allow you to set a hypothetical win rate. If you deviate too far from the win rate, or too far from a drawdown as mandated by your risk management rules, you should shut down the algorithm pending a review of its inputs and retire it if it's no longer working.
> Right now if the volatility and my returns hold for even just two years, it could be going from $500 to over 100K.
There are a few hypotheses implicit to your thought here:
1. Market volatility for the target cryptocurrency will remain functionally stable for the next two years,
2. Your strategy will remain functionally stable for the next two years,
3. There is sufficient liquidity to allow you to continually compound your trading strategy's assets with its returns for the next two years, from an initial outlay of $500 to over $100,000, without hitting capital constraints along the way.
Those are all testable hypotheses (which, technically, you're involved in doing), and I can't tell you if they're realistic. I wouldn't count on all three of them being correct though.
Could you elaborate on the beta profiles part? I can't say I'm very knowledgeable there. Assume I know very little about formal risk measurements.
As far as the rules I referenced, I have a max single loss but have yet to set a stop loss/retirement point. This strategy evolved pretty loosely based on the idea of capitalizing on the volatility and part of the reason it's an experiment is that I'm okay with losing the $500 if it comes down to it. It's still incredibly risky, which I am aware of. Part of the reason I'm hesitant to put in a retirement point is that I can see losing a significant chunk in certain scenarios (this algorithm is not yet automated, though it very well may be soon, which would mitigate this) that would still be less than the long term gains. For example, given the returns, the strategy could still perform well taking occasional hits of say 20% in one day infrequently (read a few times a year). If/when this algorithm is automated, I will certainly be building in stop loss constraints.
Fully agreed on the hypothesis and not counting on them at all, but I think they aren't incredibly unrealistic. I carefully chose two years in the post above because I don't see the volatility lasting much longer than that. Right now the strategy is incredibly liquid, and I don't see that part of it changing given the micro focus. No hold so far has lasted longer than 24h, and when this is more formalized, I see a hold time limit (as a function of loss/gain) being used to keep the lost opportunity cost down. I think the tuning will likely occur mainly over the next month or two, and after that I'll likely either stop or let it run.
Overall, I would still categorize this much more as a personal test than a scientific one. We'll see how formal it gets.
- craziness is only going to increase: people have realised they can create money out of thin air with an ICO, or fork of an existing coin
- authorities will take a while to catch up and make arrests
- a lot of people will be taken for suckers
- crypto prices will continue to rise, including both halves of the bitcoin fork
- I'm not going anywhere near this madness
Something to consider is that most of the ICO buyers would prefer to exit to BTC rather than exit to fiat currency. Possibly an ICO crash would make BTC go even higher.
Actually, short BTC please.. I need more fuel for my long position :]
It's also littered with the corpses of "very good investments" that will "make you rich quick".
Without any securities standing behind Bitcoin but the promise that it will go higher, it comes down to gambling. Everybody hopes that another fool will come around and pay more than they did before. Bitcoin represents nothing but a currently 150GB large database of transactions. There are no machines (that are useful outside of Bitcoin), no IP, just a few million hashsums on a lot of computers.
It combines the following to achieve this [ hashing algorithms as proof of work, public key cryptography, solution for byzantine generals, game theory incentives to secure network and transactions ]
The result is something that is both digital and scarce so it is a novel way to store value digitally.
The point is that cryptos' values are based on widespread long term confidence. That is something that can be replicated. But, it's not as easy as hitting [fork this repo] on GitHub. At least 900 fizzled forks have demonstrated that.
Except the fact that anybody can start his own cryptocurrency and therefore there is no upper limit.
"When your hairdresser starts discussing it, it is time to get out..."
https://blogs.cfainstitute.org/investor/2014/02/10/top-anecd...
> Out of the leading 500 internet sellers, just three accept bitcoin, down from five last year.
http://www.businessinsider.com/merchants-arent-accepting-bit...
My impression so far is no but I could be wrong.
It's not illegal today, but it will be soon enough, and when you piss off powerful people they find a way to shut you down, one way or another.
1) Set up mining software.
2) Start running it on your own machines and mine enough tokens for ICO.
3) Sell tokens. Profit. ??
Are investors at some point invited to run the mining chain on their own machines? Surely they don't just trust that the company raising money will do manage the accounting on their own.
[0]: https://theethereum.wiki/w/index.php/ERC20_Token_Standard
Doesn't matter. Delaware law has allowed contributions "in kind," e.g. with labour. When something goes wrong, the promoter has to pay cash restitution, penalties and, often, legal fees.
Disclaimer: I am not a lawyer. This is not legal nor securities advice.