Avoiding being scammed in ICO “pump-and-dump” schemes

Not sure what you and sibling comment are getting at. Noone is forcing you to participate in cryptocurrency ICO's, just like noone was forcing anyone to participate in dot-com stocks back in the day. In both cases it was perfectly avoidable.

That would have been excellent investment advice in 1997

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.

> 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 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.

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"

Bitcoin as a currency doesn't solve any problems for people in developed countries. For the 5 billion plus who are underbanked due to lack of access or government red tape, it solves a big problem. Maybe you live in a country where there is hyper inflation like Venezuela or Argentina, or you are a female in Saudi Arabia and you cannot open a bank account, or you need to purchase prescription drugs online because you cannot afford it. Bitcoin is not perfect, but it actually solves problems for some people. We mostly buy Bitcoin in the west as speculation.

I think the real value of crypto will come when the market is stable enough that people feel comfortable leaving their money in crypto instead of cashing out (avoid the commissions). Get paid in crypto, buy goods and services in crypto, and never have to deal with cash or banks. I think a great use for crypto is microtransactions which are cumbersome using cash (literally coins) or expensive using credit ($0.30 transaction fee).

You are paying for privacy. There is no company to sell your buying habits. There is no company the government can demand turn over your purchasing history.

I think this is biggest difference. Selling things that there is no real intent to actually make the systems. The other issue is that a real company could get sued and you'd be able to track the real assets bought with the ill gotten gains. With these ICOs, I'm not sure how you track the money to even know who to sue.

I like your way to define it better, because it also provides an inherent way of avoiding (more, probably not all) scams.

Don't buy stuff for the sole purpose of hoping for profit. Things you buy need to have intrinsic value. The least thing you have is a logical reason why someone else would buy it for more. And in that case early adopters of ICO-scams are doing it the smart(er) way. Because they buy coins for less than the offering price and can guess from marketing hype what they may get on offering day for it.

I think nobody wants to ignore the second part.

However I don't agree with the good intention, bad intention part. In truth we all want to make the world better and we all want to gain from it. While there are few really predatory offers, many are just basic human selfishness+ignorance. It's the difference between taking someone's purse and finding that the cashier gave you too much change. The second part is not really evil, but it's very likely to happen. So you better count twice before handing out your money.

What's the point of this comment? You know, this is exactly the same attitude every MBA suit has towards any new startup, until it's successful of course, then it starts praising them.