China's Central Bank Bans ICOs
techcrunch.com
techcrunch.com
Seriously, these securities rules keep people like me from investing in AirBnB and Uber (two that I caught very early and wanted into)... but we can all go to Vegas and lose $100k in a single weekend. But putting $10k into Uber's seed round is somehow a crime I need to be protected from? Truth of the matter is this is the essence of capitalism-- it is my right to invest in Uber's seed round and Uber's right to have me as an investor (if they consent), whether I am "accredited" or not. This is basic "Freedom of association" which underpins everything from gay marriage to the right to refuse service to barefoot people.
Also, of course, I've lost my own $10k on more than one occasions starting companies. (And I've made much more as well.) Why do I need protection from myself? Especially when the terms of that protection are written by people who don't know what SHA256 is.
No, these regulations mainly keep the middle class and the not-quite-wealthy-enough from investing in the highest upside opportunities. I know it's better to put $10k into 10 different seed rounds than $100k into one seed round. I don't need to be accredited to know that.
And I've certainly lost a lot more than that (and made even more) in the stock market using complicated options strategies involving multiple legs and expirations-- I'm the very definition of a sophisticated investor....
.... but I can't be trusted to give a startup $10k?
This is what regulation tends to do, which people don't seem to get -- it raises the bar keeping the little guy out.
Once again, the rich get richer and the poor and middle class have less opportunity.
PS-- To those responding: Yes, I have heard "but what about the grandmas? won't anyone think of the grandmas???" before. I'm acutely aware of the history of this type of regulation in the USA. Ultimately this stuff keeps grandmas poor.
You should all read G. Edward Griffens "The Creature from Jekyll Island". It's a history book about money, but it's not in the least dry.
Government always has an excuse, usually a claim to be helping or protecting people, when it violates our rights.
Keeping me out of Uber's seed round is a violation of my rights.
You're still free to give your friend 10k for a startup.
It's to prevent boiler room style organizations that quite effectively convince people without much information that an investment is sound when it's not.
You're still free to give your friend 10k for a startup.
It's because of that
But ultimately, wanting to die on the ICO hill is a bit odd. I thought it was fairly clear (at least, it was fairly clear to me) that the whole "industry" is mostly powered by hype -- which leads to people being swindled out of their money. Wanting to protect a completely unregulated industry's ability to fool people into wasting their money doesn't seem like a sane or sustainable position (that's how economic crashes happen).
> Keeping me out of Uber's seed round is a violation of my rights.
First of all, this is a story about China. Second of all, it's a story about ICOs and not non-ICO startups. Third of all, is it also a violation of your rights to not be able to fund companies in countries that are at war with your country (which I assume is the US)? Is it a violation of your rights to not be able to fund illegal activity? I'm just trying to gauge at which point does your view on "the inalienable right to invest in anything" stop short? I would expect that China is trying to come to a decision about whether ICOs should be made illegal or more regulated.
Secondly, you think its "fairly clear to [you]" that these ICOs are scams. I am sure some are, but I know for a fact that many are not. I am quite capable of telling the difference (as a blockchain engineer.)
The presumption that every startup failing is "people being swindled out of their money" is very odd one for a discussion forum run by y-combinator.
Is y-combinator being swindled when an investment fails?
And you're still sidestepping the point:
It's my right to apply my own discernment to what are good and what are bad investments. Not people who don't know the difference between SHA1 and SHA2.
The average Joe and Jane on Instagram/Twitter/FB can simply not tell if it's a scam or not what e.g. Paris Hilton is advertising.
Heck, I'm a sw dev too - and I have a hard time figuring out why some of the ICOs need their own token at all. Simple offer what you sell (e.g. legal services for a certain market) directly and let them pay as they wish. Absolutely no need for a blockchain to achieve things.
Ah, so you're the only source of truth that I can trust in this discussion, since no study can be trusted? Awesome.
Can you answer my question about at which point do you think "freedom to invest in an enterprise" should not be allowed? I'll quote my question again:
> Third of all, is it also a violation of your rights to not be able to fund companies in countries that are at war with your country (which I assume is the US)? Is it a violation of your rights to not be able to fund illegal activity? I'm just trying to gauge at which point does your view on "the inalienable right to invest in anything" stop short?
You speak in terms of rights and that's one debate to have. But evaluating the material harm in this situation, the notion that this denies upward economic mobility in a significant way seems overstated.
People disagree about what rights people have and what rights governments have. Simply prefixing the word rights with a phrase like "innate," "fundamental," or "inalienable" to make it seem beyond debate is just sophistry.
Let's say, hypothetically, that someone is not as good as you at stock picking, and they make extremely bad investment choices, added and abetted by an army of "wolves of wall street" all selling penny stocks that "are guaranteed to go big".
Once they arrive at their 0% ROI at retirement stage, don't they rely then on a government-provided safety net for various survival needs? Shouldn't the government then have a say, or at least some interest, in decreasing the probability of such extremely bad choices?
If you were to tell any of your progressive friends about Reg-D, but framed it as written by "the 1%" - they'll naturally think the law is unjust and shouldn't exist.
I think this has less to do with political flavor and more to do with critical thinking skills. Unless Reg-D also bans gambling at Vegas and throwing your money down a well - then it comes up short of it's protectionist goals. But it definitely succeeds in protecting qualified investors from "unqualified" investors.
I agree that there is a lot of collectivism in politics, and that "the 1%" rallying cries are mostly a way of controlling a group of people into opposing things they are uninformed about. So discussing anything as being written by "the 1%" is never going to lead to useful discourse. But I don't see why any of that matters.
Also "any of [my] progressive friends"? I don't understand why you're being hostile. I don't really associate with people based on their politics, it makes it too easy to have an echo chamber (or a shouting match). Not to mention that wasn't the point of my comment, it was to ask GGP to expand on their views.
> I think this has less to do with political flavor and more to do with critical thinking skills.
Then why mention (what you assume are) my politics at all?
> Unless Reg-D also bans gambling at Vegas and throwing your money down a well - then it comes up short of it's protectionist goals.
I think gambling should be better regulated, and I think that defrauding people to "throw money down a well" shouldn't be legal. I don't care if you, of your own volition, decide to throw your money down a well (though it actually does cost your country money to re-print said currency). What I do care about is someone trying to defraud you. But this is a complete straw-man, securities laws are about fraud not about being stupid with your money.
I'm not authoritarian, but pretending like regulation over speculative investments are not going to help any unexperienced investors is just ridiculous.
Any grandma or grandpa who's been putting a decent amount from each paycheck into US equities for 50 years is going to be very wealthy today - but is probably not truly a "sophisticated investor". They're a prime target to get ripped off.
By contrast, a bright young software engineer a few years ago who picked up early on Airbnb or Uber could potentially be a "sophisticated investor", but would be excluded because of his or her net worth.
I really am not sure what an ideal proxy would be. I used "grandma/grandpa" and "bright young software engineer" in my example, but I don't think age or occupation would be good proxies either. Perhaps some sort of investor qualification exam?
Regardless, the completely-unregulated ICO market is a separate issue from private equity more generally. We should be careful conflating the two.
Reading tip: Antifragile by Nassim Nicholas Taleb
This isn't about me getting mine.
This is about the fact that the regulations deny you a chance to join me.
http://www.investopedia.com/articles/entrepreneurship-small-...
It sounds like "Why are there laws that prevent fools from giving their money to me?"
The more replies I read, the more I'm convinced these regulations are working exactly as intended: to protect the innocent from free-for-all sociopaths.
What do you think the Chinese government has to gain from these regulations? Protection of the consumer? This is China we're talking about here.
Peek your head into /r/ethtrader. You will find people putting their retirement savings, mortgaging houses, etc and these people aren't technically savvy and can be easily taken for a ride. While you might have good apples, there are going to be tons of bad apples, people just coming with a white paper and asking for millions of dollars. Coming back to your question, the rich don't need protection as its ok to lose money when you are rich. The 'not rich' need protection as if they lose all their savings, it will seriously harm their lives.
And a lot of those non-"savvy" people have outperformed me, for instance by buying ETH at the ICO.
You guys keep presuming that the only choice is "people losing all their money" and that these regulations stop that.
The reality is, these regulations keep the poor people poor, not keep them from losing all their money.
As I have pointed out, you can go to Las Vegas and lose all your savings in a weekend.
That dog don't hunt.
Personally I belong to the side where I'm willing to give up some personal freedoms for a better collective life, that includes saving very stupid people from very stupid decisions that might affect the rest of their lives (and their families').
"Tu quoque" is actually a pretty useful heuristic for analyzing whether a party's stated goals for a policy align with its actual ones.
Makes sense why you feel this way.
What I will say, is no one stopped you from investing in Uber, besides Uber. Tomorrow I can go out and sell half my C-Corp to a friend. Legally, no one is stopping me, besides me and my contract(s). My company isn't publically traded, and as such, I haven't released shares to be bought and sold.
That being said, if you're talking about "accredition" - that shouldn't stop you from being able to invest in a friend's or aquantences company. At least until you have 35 of said people..
Which I agree is B.S., at the same time - it's just a way to ensure you don't get massive companies like Uber getting billions of funding and providing no services. It's an attempt at curbing a dot-com-esqu bubble. Overall, I do think this is government over reach, but I do see the point.
There are ways around that FYI, for example there isn't a reason a financial advisor couldn't invest on your behalf.
1. Libertarianism sweeps negative externalities under the rug. Air quality, noise pollution, the costs to society when an elderly person goes bankrupt. The counter arguments are thin. If you don't ban building in a flood plain, people will build in the flood plain. Then the flood will happen and we'll all be worse off.
2. Libertarianism is inefficient because it demands that people become experts in a wide, wide array of topics in order to be healthy and financially secure. Sometimes becoming an expert in a topic is to experience it. For example, I used to be addicted to nicotine. It's one thing to explain with words how addictive it is, it's another to actually be addicted. By introducing a bit of a nanny state we can use laws and taxes as a kind of cross generational memory and save people from having to learn some of the lessons we had to learn.
3. Libertarianism doesn't address the concept of power. It pits the whole world through the lens of rights when there are other concerns like foreign citizens owning portions of companies critical to our national security or owning large portions of our media.
4. Libertarianism underestimates how much work the state puts towards fighting international crime. We use the financial system to track where mafias hide money and how they organize their money laundering schemes.
The problem with leaving libertarianism is that after years of thinking about everything through the lens of rights and the individual one is left with the question "well, what matters then?" and the answer is difficult, but here is my best shot:
The world is one of consequence. So when think about policies we should be concerned with our ends, but we should choose our ends as if we didn't know who we were in the world beforehand.
So my answer is roughly "consequentialism tempered by individual / human rights".
You don't get to buy into Uber's round because they aren't a public company. If they become a public company they have to open their books. Why? Because widespread fraud happened before this and it wasn't just to little old grandma. Sorry about the violation of your rights, but if I didn't know who I would be beforehand, this is what I think would lead to the best average outcome.
As for the middle class not being able to invest in the best companies, I agree with you that we should change some of our regulations. I agree that the rich are getting richer because not enough companies are going public. Let's fix the regulations that empower investment banks at the expense of the entrepreneurs and potential investors, and while we're at it let's raise taxes on the super rich and close their loopholes.
But at the same time let's acknowledge something else: The middle class and the poor have it best in countries like Sweden or Switzerland or Canada where we have more government not less. Where we have more international cooperation not less. Where we have more "collectivism", more education, more consumer protections, more environmental regulation, more investment into research.
And yes we also have rights too, but they're not these absolute mathematical truths and it doesn't mean we should let a bunch of people skirt fiscal regulation by raising a bunch of money anonymously with ICOs.
Public spending to GDP ratio [1]:
Sweden 51
US 42
Canada 42
Switzerland 34
No 1 is a good argument against libertarianism. A counter-argument is that more libertarian-style decentralized decision-making would mitigate negative externalities and the "common good tragedy". Research suggests [3] that negative externalities can be managed in smaller communities; smaller government also makes it harder for parasitic organisations to suck out money. Pollution can also be taken care of in the court system rather than regulation.
Before advancing an "how would X work?" argument, you should consider whether X really works better in other systems. Last time I checked, there was a ton of flooded houses in Houston, plenty of people smoke, and there is quite a bit of organized crime (a popular one in Sweden is "assistance compensation" paid out by the government to people who take care of sick relatives at home. Who would ever think about abusing it?? Surely not the mafia and IS). No-one is claiming that liberty will produce a perfect world, but that it's the morally right thing. As a bonus it would also likely produce better outcomes (on average) than what we have today.
[1]: https://en.wikipedia.org/wiki/Government_spending#As_a_perce...
[2]: https://www.theguardian.com/world/2017/jul/18/switzerland-pu...
The US overspends on its military and mismanages its spending on healthcare. If Sweden's welfare / education / state has collapsed since I lasted checked it out, I'll update my views, but I certainly haven't seen rising illiteracy or poverty like we see in the US.
This has left "startups" like this "company" YayYo, which raise money from TV commercials stating that they'll become the next Uber.
http://www.businessinsider.com/yayyo-ipo-ads-tv-ramy-el-batr...
What about Quirky, Homejoy, Zirtual, Secret, Grooveshark, Rdio, Leap, Theranos, Sprig, Beepi, ...
The stuff they are going to count "on the blockchain" is too cheap to count! Well, and blockchain transactions are kind of expensive and slow. See the problem?
le·git·i·mate adjective adjective: legitimate ləˈjidəmət/ 1. conforming to the law or to rules. "his claims to legitimate authority"
so, it's great to have a learned opinion on filecoin's tech, but its irrelevant to the discussion of whether filecoin is a legitimate business
Currently, I work at Neufund where we want to do exactly what you described: open access to broad range of investment opportunities for everyone by using cryptocurrencies. Check it out! https://neufund.org/
Almost any ban can be said to be done to protect people.
Cant have them reading some books for their own good!
"Ultimately this stuff keeps grandmas poor."
Again, completely off topic to the post. But, when you talk about 'regulations', you should be making yourself clear, because you're covering massive territory and calling it all 'bad' with that statement, which is certainly not true.
He describes how a return to sound money through Bitcoin and perhaps a new gold standard, as well as reducing these sorts of regulations you describe would enable a renewed prosperity of the middle class.. for a whole host of reasons worth reading in the book.
2) In that alternate reality, what advantage did your money have over YC, Andreessen Horowitz or Benchmark money? Were you able to connect founders to top government decision makers, or bulk up their growing management team with hard-to-get candidates? If the answer is "yes", you could've been awarded advisory shares in Uber and AirBnb without being a qualified investor (a gift is a gift, after all). But since more likely the answer is "no, my money is no different than money from a joe schmoe down the street", you will likely be required to overpay for a ridiculous valuation at seed stage. What effect would that have on your portfolio as a whole?
I believe prices are inflated because of ICOs. People are buying tokens counting on ICO hype to increase their value so they can flip their initial invested principal with 2x/3x/4x return.
Without ICOs this speculative technique will not be possible so we will see how many people are actually interested in buying these worthless tokens because they believe in their "features", rather than speculate on their price.
I wonder though if the speculation will just move from China to other countries though and the bubble will continue until there is more action by regulators around the world against this.
Being interested in tokens for their "features" not the price is very archaic. This also does not happen with stocks anymore: People hold for a few months/days/minutes, then sell, they don't sit on stock for many years like we used to.
My guess: China will allow ICOs after drafting up proper legislation and regulation. It would not benefit China's economy to blanket ban a new emerging technology. They just want to prevent crypto as a way to move money out of China, take a cut of the profit.
Another guess: Regulation will be good for established players (like Ethereum and 2016/2017 ICOs), but bad for speculators and newcomers. It will thus shoot past its intended goal of protecting investors: Those who like to gamble with money they can't afford to lose will find other get-rich-quick schemes unrelated to crypto. In Las Vegas you are actually sure to eventually lose all your money.
my guess: China will not allow ICOs but maybe after 10 years or so, blockchains and smart contracts will quietly infiltrate boring business use cases and financial services. especially if they can turn it into a centralized tool for control.
what better authoritarian tool could there be than a centralized ledger of all economic transactions, run by the government. in the name of reducing fraud/laundering/crime you could have absolute visibility and regulatory control on all economic activity.
EDIT: spelling
i dont drink the blockchain kool aid myself as a silver bullet for every problem, read IBM's hyperledger marketing materials and they try to make a case for centralized permissioned blockchain. ymmv.
but if millions of your citizens are using blockchains, as an authoritative regime, you probably will want to control its use. you arent particularly interested in the best tech solution to a problem. just control.
and lest anyone think i am abusive of china, i fully expect the US to highly regulate the hell out of this eventually ... if not now under the Tweeter in Chief, when the Dems get control again.
ICOs are among the few remaining opportunities to achieve liquidity for large BTC/ETH account balances.
For example if it's used as pre-sale (i.e. currency that will be used in product for a future product) then that's likely legal in most places, if it's used as a proxy for equity then it's likely illegal in most countries (most countries prohibit unregulated share offerings to non-sophisticated consumers).
Although in some cases ICOs might get considered as gambling if the purpose is primarily considered to be for speculation rather than whatever the underlying product is.
in short, any "product" can be a security if there is even a hint of speculative investment activity (and a motivated prosecutor)
really it is less about logic and definitions...this audience wants to parse things and recompile. in law and moreso in regulatory affairs, it is far more about guiding behavior by carrots or sticks to a particular philosophical/moral/politial/economic subjective end goal
You got a link to that how? How does that work with Schengen?
It NOT GIVE a work permit in EU and of course not give a permission to travel in schengeng.
It's simply an ID card. The main difference is that: - Normally in other EU countries for have an ID card for services, you must live there, while with e-residency you can do have and do all the stuff remotely. - It's pretty useless, you can google it and see how had a lot of hype, but in real case uses, it's useless (example: yes you can open a company remotely, but if you don't live in estonia, is a mess with taxes...and having an e-residency, doesn't give you a valid visa for live+work there...so often you can't move to estonia to work, even if you have a company opened in estonia)
Pheew, I thought I was the only one with this opinion, given the hype there is about this thing all over the net.
To me the whole stuff seems a lot like the plans of the gnomes in South Park (but in five steps):
1) get an e-residency (please read as "pay us some little money")
2) establish an Estonia company (please read as "pay us some more money")
3) open a bank account in this or that bank (please read as "give our friends a little more money")
4) ?
5) Profit.
The only practical use I can see is to create a new sort of Double Irish:
https://en.wikipedia.org/wiki/Double_Irish_arrangement
but aimed to the single/poor instead of large corporations, but it has to be seen how the EU will take the idea ...
https://medium.com/e-residency-blog/estonia-could-offer-estc...
Previous (few) comments on HN:
While users would always be able to use their own forks, the gov would only allow taxes and retail trade to happen with their branch, thus de-legitimizing user forks and reducing their utility (and hence value).
Also given that most cryptocurrencies are only pseudonymous, means they could "follow the money" and quite easily charge someone for handling a disallowed cryptocurrency. This is why I feel Monero is undervalued compared to BTC - as Monero has greater utility for Bitcoin's original mainstream activity: online black-market purchasing.
What?
To a relative outsider, a lot of the current movement in the crypto-currency space seems to be about amplifying the holdings of those who already hold. The BCC fork, for instance, effectively gave current bitcoin holders an overnight boost in the 15-20% range.
ICOs appear to be a way to finance things in a kickstartetr type way, only with instantly trade-able coins in the form of a new crypto-currency, with buy-in conducted in ether. These provide a new speculation vehicle, often/usually totally divorced from the underlying activity of the company.
Both of these things neatly skip any sort of bootstrapping phase that might be inherent to a new crypto-currency, and serve insiders and the already crypto-wealthy rather than newcomers or those outside the existing bubble. The whole thing seems very tenuous, and speaks very much of an "in-crowd".
So true. That bootstrapping phase has been reduced to dream up a whitepaper and that's basically it. All what comes afterwards to pump the launch is clever marketing (I've seen Google ads, FB ads, celebs on Twitter etc etc). I cannot understand why it is legal to behave like that.
ICO (Initial Crypto-Token Offering) refers to financing through the issuance of encrypted tokens (Crypto-Token).
People should really learn to define acronyms before using them in all writing mediums. I don't care if the author has used the term 10,000 with colleagues, he should still define them upon their first use in the article body.
I read the whole article wondering what on earth it meant. Then I went on Wikipedia which is usually pretty good with TLAs (Three Letters Acronyms).
So I made a point in reading the whole article just to figure out if they were at least defining it loosly...
there's that:
>ICOs involve raising funding by creating and selling new crypto tokens — commonly based on Ethereum — to investors
Which is not really in depth. It got me wondering if the person writing it understood what it meant.
Please don't do that when you write, always assume the person you're writing for doesn't know what you're talking about.
The US doesn't have to ban ICOs as most of them are securities and unregistered selling of securities is already illegal.
You know we're talking about the same SEC that didn't saw the real estate bubble coming in 2007/08 (size > trillions, CDOs are obviously fine) or the dotcom bubble in 2000 (size > trillions, they approved the IPOs, right)?
If so, please give me reasons (instead of opinions or references to SEC "authority") as to why the ICOs in a 175 bn market are "dangerous".
The risk is that the teams may way under-estimate how much work it is (And I think that's what's going to cause them to fail)
but they are a lot more ambitious than you are characterizing.
https://davidgerard.co.uk/blockchain/icos-magic-beans-and-bu...
Look up the EOS fine print. They took down the PDF, but I kept a spare:
https://davidgerard.co.uk/blockchain/references/EOS%20Token%...
TODO this evening: write up a blog post on the ICO for (I am not making this up) synthetic rhino horn dick pills.
These days ICOs are cloning the same smart contract template and just making small edits to it.
Most of the time they barely have any other code than just the slightly edited smart contract template and white paper which is also pretty much a copy paste with buzz words relevant to their niche.
And based on that they are raising millions of dollars.
Of course there are couple of exceptions of projects that actually seem to have some tech foundation (like Sia for example) but these are rare. Scam copy cats without any tech are majority of ICOs.
Their reasoning is "we have an idea, let's raise millions of dollars and we will hire bunch of devs to write the software". Mostly founders are non technical "idea people" so I would doubt their ability to even know if their idea is feasible.
Projects which start with strong technical foundations and don't try to raise money to build their tech (putting cart in front of the horse) are the solid ones. Projects which have no tech and raise money first, those are not likely to succeed imho.
For example? What ICO idea is not a previously failed startup? Distributed file storage that's been built a few times and each time turned out to be painfully slow and impractical? An iOS and Android port of the wallet software? Yet another browser?
(https://news.ycombinator.com/item?id=15077117)
You can build an altcoin in basically no time, on-demand using a web frontend. How hard the shell company piece is I have no idea.
It really doesn't take a lot of talent or hard work to launch a coin from your garage these days.
I think that's kinda why people are welcoming this move - there's a lot of trash coins and trash ICOs with no hope of anything ever coming from them, with a relatively low input of time and effort. But because they offer trade-able tokens and some of them might take off, and at least some of them might get a hype-cycle and increase in value whether there's any underlying value or not, and it's all new, shiny, crypto-magic-money...
It's the equivalent of banning startups to protect investors from stupid/malicious founders, which has obvious negative effects on the economy. And with crowdfunding making its way to startup investment, it's not a reach to compare the two.
In other subthreads I am saying why I think the ban on ICOs might be welcomed, even if it could take the good down with the bad. I'm not arguing in any thread for an outright ban on digital currencies.
Evidently it doesn't really though, because we're in a stage where these are magic, and people are investing based on a little bit of hype which becomes self-sustaining.
There are lots of altcoins out there, most with not much value, but slowly trickling along. And there have been lots of ICOs of dubious value.
I obviously don't know what it takes to persuade you, personally, to invest. But it seems not to take much for the crypto-currency world at large to dive in right now.
To give them credit people have made many times their money buying and reselling but it would be idiotic to let this madness continue.
Why? Inevitably the fools will just run out of money.
This "problem" seems to take care of itself.
Then it becomes our problem again.
I'm not sure this is qualitatively different to a ban, really.
Either way, bans or forcing provision for retirement etc, you're taking the position that someone else does know best, and that they need protecting from their own spending behaviour. After that it's just a matter of degree.
But of course I don't accept their underlying argument at all. Just making the point that even if one did, their solution is not optimal.
I also don't really consider it a trade-off - regardless of a social safety net, we ought to be restricting borderline scams. A lot of people aren't very smart, or are only smart in very specific directions. And they don't know they're not that smart. They can be taken in, scammed and fleeced, and this creates a problem not just for them but for lots of others too. This is why we restrict things like pyramid schemes.
As for those not capable of fending for themselves in a free market: maybe it would be a better idea to have a new class of citizen that, after passing a rationality test, is allowed to buy/invest-in whatever they want, while making the rest of the population in some sense wards of the state, with safety guards on their smartphones and PCs, and a state-appointed counseler greenlighting all of their financial transactions, or at least all of the entities they are allowed to transact with.
As for token sales, you can't categorise them all as borderline scams. It depends on the token sale.
Almost all citizens are badly informed and easily taken in by one thing or other. We look after each other in various ways. Civil safety nets and criminal law are part of those.
>> As for token sales, you can't categorise them all as borderline scams. It depends on the token sale.
Indeed, and many of them are without substance, riding the wave of interest in ICO tokens, and are borderline scams. I did not say all are, but enough that regulation in this space is more or less inevitable, and will be warmly welcomed by many.
There are a f*ckton of laws around IPOs and share trading, for good reasons.
Regarding looking out for each other with bans on dangerous goods/services, I have no problem with a voluntary program that people enroll in to be looked after in this manner. We could have a state-backed coop that we voluntarily cede some of our rights to for a predetermined amount of time (e.g. 5 years), and over that timeframe, we are obliged to use the government's software guards on our smartphones/PCs, that prevents us from transacting with entities not on the government's whitelist.
But people should be able to live without those protections if they so choose. Accepting anything otherwise is accepting a servile existence for oneself and everyone else.
Yet without such things we end up with millions in penury, risking starvation, because they never thought they'd be the one to hit hard times.
As for the rest, yes I get that you're a libertarian. I'm not. I understand its appeal, but it's a recipe for literal social darwinism, with those who are poor, unlucky or ill getting to die, free, in the streets.
And even if we could save the poor with such acts, it seems like a very shortsighted approach that can't possibly be sustained over any significant timescale, given it depends on ignoring the will of an entire segment of the population. What kind of society could we possibly hope to create with such an adversarial approach?
There are not enough jobs at the bottom half of the economy for this.
We'd also have hoards of people starving in the street, as humans are not good at long term planning, or risk assessment.
So yeah, I'm all for "moral hazard".
http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic...
The context was unsophisticated investors were being exploited without appreciating the risks involved. They thought they were investing when they were essentially gambling and the underlying security was essentially worthless.
It basically said "we are watching this space" which will frighten anybody who knows that the SEC isn't in a hurry to investigate.
They can get you for things from years past (IIRC 10), so they don't have to rush things.
China nowadays has even more reckless capitalism than that in the US, and the gap between the rich and the poor is expanding incredibly fast.
Second, the truth is the capitalism in China is even wilder and more libertarian in a sense than that in the US. It's just that the central authority still acts quickly enough. The rich people are still basically in the same bunch, whether it's the officials or the businessmen, and the gap between the rich and poor is widening ridiculously fast.
Venture Capitalists are all on board with a technology that forces them to compete with the masses during seed rounds...
and existing companies are all about upstart competitors having an easier way to get capital early on...
\s
You are quite mistaken here, from the top of my head, Tesco (late 90s) and Monzo (very recent) are 2 examples, and I'm not even into finance.
http://www.computerweekly.com/news/450400615/Digital-only-At...
>The bank was the brainchild of Anthony Thomson, who set up Metro Bank in 2009, which was the first new banking organisation to open in the UK since the end of the 19th century.
>In April 2016, Atom launched its banking app after regulators lifted a restriction on its authorisation.
Anyway, there's well over a hundred banks listed, and around forty building societies, so there's hardly a lack of competition.
When the coalition came in, one of Osborne's first acts was to push the banking regulators to issue more banking licenses, due to that 100 year+ stagnation. Since the coalition, there have been a variety of new licenses issued, so the problem is now resolved.
Given we're in a thread talking about ICOs and tech startups, I would side with you and say this is an irrelevant classification and the claim is wrong. :-P
Still interesting though, but given the veritable plethora of recently founded remote-only banks of various innovativenesses, I wouldn't say excessive regulation is to blame, if we think this is a Bad Thing.
All that real estate that is now occupied by bank branches can be give to some other businesses that actually need physical space (fashion/clothes, sports, restaurant, gyms etc) to use it more efficiently.
The only reason I had to go to a physical branch this year was to change my address and that is only because my old bank where my main account is doesn't have a way to do this online (seriously I don't understand why is it so difficult to make this a feature of online banking...).
I am using Monzo as my secondary bank and once they give me current account later this year, if it works smoothly and there are no issues I might get rid of my old bank account.
Then there are also other banks like Tesco/Sainsbury's which are definitely not 100 years old. More like started in 90s (but perhaps these reused some old banking licenses from other banks so don't count as "new").
Especially lately there has been a boom in fintech and lots of new challenger banks are appearing and getting banking licenses so that claim is definitely not true today, perhaps it was true a decade or two ago.
So that claim might have been true few years ago before fintech boom started. Lots of new digital banks already got or are in process of getting banking license.
Banking industry in U.K. is getting shaken up currently, lots of fintech challengers.
The point is ICOs are akin to scams. And there should be a regulations around it.
Solution: regulate the stock market.
Problem: cannot sell things we want to sell.
Solution: Derivatives.
Problem: CDOs cause massive economic damage.
Solution: don't do that.
Problem: cannot sell what we want to.
Solution: Etherium.
...
>Solution: regulate the stock market.
If people want to trade the price of a digital token into bubble territory, that's really their business. No one else is forced to buy up that token. Which governing authority will know it's a bubble anyway? It's not like it's possible to know if something is overvalued. If it were, one could reliably short every bubble and make a profit, and in fact do so so much and at such scale that their market shorting prevents bubbles from ever forming (since a short adds pressure on the sell-side).
That doesn't like a problem for people who can fill a ~20 million ICO in half an hour, do they need to work (=be trusted) ever again?
Anyway, has there been any verified ICO scams yet? Seems to me like it's not much different from startups promising BS/bad ideas to gullible VCs who end up losing millions. In this case, ICOs are selling these ideas to the little guy through crowd funding which is different but the little guy usually invest a few bucks in these ICOs so if the ICO fails to delivers it's not as big a deal unless one invests his/her life's saving in said ICO but then that's a pretty risky idea one needs to take responsibility for.
By your approximation I should be dead by now. The salient point is that it's my human right to associate with whomever I please.
Many humans will do anything it takes to make a profit and not care about who they are screwing over. If you think that's okay that's fine, but then go to Somalia and see how a lawless country works in practice.
Food safety in particular was mandated by populae request. I cannot wrap my head around free market believers like you who apparently think that humans are omniscient beings who have access to all information about every product and every seller they encounter so they can make informed purchasing decisions. That's just bullshit. You are a religious cult at this point.
There is no chance that supermarket shelves would be stocked with toxic/fraudulent food products in our world of secure private property rights, with or withouy food safety regulations. There is an elaborate chain of private interests involved in food production/distribution that would self-organize to prevent such an outcome. McDonalds uses higher standards for its beef than the USDA for example. Automobile manufacturers have higher safety standards than regulations require.
>>That's just bullshit. You are a religious cult at this point.
I recommend some introspection.
I hope you realise that todays "strict" food safety laws were born out of a world where people did exactly what you say they wouldn't. They cut bread with sawdust to make money. They skimped on hygiene. They advertised other meats than they used etc etc etc. Today these things have real consequences. You're saying we should just let people do that? I cannot fathom what drives you to that position.
"Oh, but people won't buy their products as soon as they have been ousted as being cheats" yeah well. People don't buy Nestle products even though they use child slavery and caused mass malnutrion of poor children? It's just so naive to think that this actually happens.
We can mostly agree what is good and bad, but as soon as you have to pay 20 cents extra for fairtrade bread that goes out the window. You know it.
>Somalia's during its civil war didn't work because there was no central authority providing security and preventing raiders from pillaging markets, so markets didn't have the opportunity to become highly developed.
So there was no central authority and therefore the system failed. Isn't a weaker central authority what you want? Governments generally want stability, and guess what. Regulating markets helps stability.
Anyway, this discussion is pointless if you cannot see that total free market idealism is as extreme as pure communism and equally flawed. The optimum is somewhere in the middle.
I believe people will screw each other over no matter what system you use. In a regulated economy people will screw other people by lobbying for regulations that protect their industry from competition. In other words, centralized control via regulatory guardrails doesn't preclude exploitation: look at the opioid epidemic for example. It can in large part be traced back to doctors prescribing opioids as a result of pharmaceutical marketing. The industry is highly regulated and thus profitable for the pharmaceutical giants. The Drug War has been going on for a hundred years and drug abuse is worse now that it's ever been. I doubt that we would be any worse off in terms of drug abuse with a free market in drugs, and I'm sure there would be more competition and lower costs for drugs.
>>I hope you realise that todays "strict" food safety laws were born out of a world where people did exactly what you say they wouldn't. They cut bread with sawdust to make money. They skimped on hygiene. They advertised other meats than they used etc etc etc. Today these things have real consequences. You're saying we should just let people do that? I cannot fathom what drives you to that position.
People do that today as well. With a mandatory safety standard, you can probably raise quality in the short term, but there is a trade-off, in increasing costs and reducing innovation.
Regarding cost: it's not a given that reducing the incidence of food fraud is always worth the increase in food costs. I know it's not a intuitive idea, but sometimes the public welfare effect of increasing costs outweighs the public welfare effects of increasing quality. In a free market people will make a decision on what trade-off is best for them based on their own circumstance. Because it really does depend on the circumstances. Someone who values food safety more than low prices can always opt to buy a reputable label with a strong reputation for food safety. But for others, the lower cost of less reputable brands is more important for them than minimizing the risk of contracting foodborne illnesses or ingesting harmful additives.
With regard to innovation, regulation harms it because it replaces diversity with uniformity. Imagine a thousand food producers, each producing food of varying quality. With regulations, you get them all to use the same food safety procedures. This might mean that 70% of them raise their standards, but it also means the 10% creating innovative ways to maintain high quality standards at lower costs will stop exploring these avenues.
A modern day example would be how Uber found a more cost-effective way of assuring a high quality taxi service with its rating system than the regulatory approach of the medallion system that municipalities use. Taxi regulations, by imposing uniformity in procedures (the licensing process) on the taxi sector, caused the procedures used by taxi companies to stagnate and not evolve for decades. The quality difference between Uber and the regulated taxi services is night and day.
One other point I'd add is that the effect of reducing the rate of innovation is compounding. Over the long run, of 50-100 years, society will lose out immensely from trading recurring increases in innovation from a competitive free market for a one-time boost in quality from imposing a uniform standard for quality assurance.
The greatest force for improved quality and increased affordability is, in the long run, competition between entities free to innovate without the artificial constraint of mandates on their procedures.
Another reason to oppose regulations against the free market is that regulations are subject to being shaped by special interests, who may deliberately push for them to be onerous to stamp out smaller competitors. Many small farmers blame food production regulations for the demise of their sector and the growing dominance of industrial farming.
>>So there was no central authority and therefore the system failed. Isn't a weaker central authority what you want?
Not categorically. I want a strong authority maintaining security and the right to freely contract, but I want that authority to not use its power to infringe upon those same contracting rights.
>Anyway, this discussion is pointless if you cannot see that total free market idealism is as extreme as pure communism and equally flawed. The optimum is somewhere in the middle.
Just like people will always abuse the system. People hae learned to do this, especially in the US. Your solution is simply to make it easier for companies to screw people. Why don't people boycott companies TODAY when they do this? If they did, then I might support your argument. The fact is that there is no evidence for people doing this.
>People do that today as well. With a mandatory safety standard, you can probably raise quality in the short term, but there is a trade-off, in increasing costs and reducing innovation.
If they do they are thrown in jail. Now usually the people really responsible are not because of a failing legal system. That problem is not solved by just letting them do it and get away scot free.
Regardings costs. Peopme are so amazingly bad at making decisions as a group. It is mathematically provable that if everyone acts in their own best interest everyone can easily be worse off as a result. This assumes everyone is a rational actor, and we know that people are not even close to that which makes it even worse.
>The greatest force for improved quality and increased affordability is, in the long run, competition between entities free to innovate without the artificial constraint of mandates on their procedures.
>A great many industries were kickstarted by government subsidy. Another reason to oppose regulations against the free market is that regulations are subject to being shaped by special interests, who may deliberately push for them to be onerous to stamp out smaller competitors. Many small farmers blame food production regulations for the demise of their sector and the growing dominance of industrial farming.
This is indeed a problem, but your solution is essentially to just let companies do what they would otherwise be have to lobby for. Most lobbying cases are for laxed regulation or to allow companies to get away with monopolistic practices.
>Not categorically. I want a strong authority maintaining security and the right to freely contract, but I want that authority to not use its power to infringe upon those same contracting rights
We can argue the word "freely" then. I don't believe people freely enter contractual relationships when one side has a clear power advantage and actively tries to manipulate you.
And by the way, it's not a fallacy to appeal to moderation when overdosing kills you.
Since you believe that everyone should make their own decisons and we should just live with that. Perhaps you should consider that the system we have to day was born out of people making their decison to not have 100% libertarianism because they were smart enough. By your logic this would be all the reason you would ever need.
At some point you just have to realise that the requirements necessary for the system you want to outperform what we have are opposite to how people actually behave in real life. I hope you are young, then it is fine to be a bit idealistic. We all realise why things don't work sooner or later.
In the previous comment I explained why I don't think this will make it any easier, on the balance, for companies to screw people over. Please go over my previous comment again as I explain what I see as the trade-offs of more regulations, and how they are slanted toward people being screwed over more.
>If they do they are thrown in jail.
If they're caught. And that applies to a world without food regulations as well. Just because there's no regulatory requirement to have the food certified by the USDA doesn't mean it becomes legal to sell goop marketed as milk. That's still fraud, because it's a violation of basic contracting law:
https://en.wikipedia.org/wiki/Implied-in-fact_contract
>>Regardings costs. Peopme are so amazingly bad at making decisions as a group.
I disagree completely. I think the market is a marvellous way to bring our collective intelligence to bear to guide product development, and is resulting in consumer food purchases becoming healthier and consumer options becoming more diverse over time. Consumer choice is the reason organic foods have seen their market share grow so much over the decades. It's the reason product diversity in supermarkets has grown so much. People are willing to pay for quality, and as society becomes more prosperous, we'll see more value-added food of higher quality.
>>>A great many industries were kickstarted by government subsidy.
Government subsidies can indeed kickstart an industry by bringing about advances in basic science and by incubating new industries, but that's not relevant to the debate of whether we should be restricting market choices with regulations, and whether industries will evolve faster with or without such regulations.
>>This is indeed a problem, but your solution is essentially to just let companies do what they would otherwise be have to lobby for. Most lobbying cases are for laxed regulation or to allow companies to get away with monopolistic practices.
My solution is to let the companies be regulated by consumer choice. Seems like the least corruptible and best incentivized system of development for an industry.
As for monopolistic practices, I endorse public funding of public options in monopolistic sectors, instead of regulations that violate the right of private market participants to act freely.
>We can argue the word "freely" then. I don't believe people freely enter contractual relationships when one side has a clear power advantage and actively tries to manipulate you.
A court of law, made up of a jury of our peers, should be determining what contract was entered into freely, not a sweeping snap judgement about an entire class of contracts without looking at the specific details of each case.
I strongly disagree with your notion that any agreement between parties of unequal wealth levels is nonconsensual, and I believe any court of law would disagree with you as well, as being inconsistent with established and legal understandings of consent.
I think one should take ideology out of these considerations and defer to the courts on issues of contract law. That's essentially what I'm endorsing by promoting the free market.
>>Perhaps you should consider that the system we have to day was born out of people making their decison to not have 100% libertarianism because they were smart enough. By your logic this would be all the reason you would ever need.
I don't believe people are smart when it comes to macro issues like economics, and thus I believe they collectively impose incredibly destructive economic policies like socialism, anti-free-market regulations, etc. through the political process, which lets the mob forcefully impose its will on everyone.
The economy is too complex for any one person to understand, so what people often do is oversimplify it with ideological notions about evil corporations, and how regulations written by some legislature can allegedly make them act in the public interest, which in reality is nonsense, and ignores how agents in the economy actually operate, and what incentives actually drive positive and economically productive behaviour.
I believe the complexity of the economy can only be addressed in a decentralized fashion, through the spontaneous emergence of market supply chains and prices, that represent the collaborative coordination of economic resources by a diverse set of parties each acting based on localized information, and who through their market actions, contribute that localized knowledge to public information resources about the larger economic picture.
It's important to try to help the average person understand that the market does work in the long run for most areas of the economy, and not to buy into the siren call of centralized and simplistic government solutions.
A state power isn't going to let some random currency come in and compete with their sovereign currency rules.
It's a bit silly to come in and dismissively say "the state will regulate it anyway" when the whole point of the technology is that it technologically prevents central actors (like a state) from interfering.
It's a bit like saying "nah, the MPAA and RIAA will shut down filesharing." Nope. They shut down Napster (which was centralized), but BitTorrent works just fine thank you very much and the media industry has fundamentally changed as a result.
More likely society evolves in the face of bitcoin to integrate or at least mitigate it rather than fight it, just like music delivery is chiefly now by streaming subscription services rather than album sales.
Go try and turn your Bitcoin into cash and then tell me how true this statement is.
Also I do local bitcoin transactions just fine thank you very much.
Therein lies the rub and the crux of my point. A government WONT LET IT see enough adoption that you can subvert the sovereign monetary system.
I think you underestimate how big of a deal it would be to move 100% of commerce off of the USD. Nations go to war for less.
By making convertibility to Yuan illegal. This is trivially easy to do and enforce, making the entire Bitcoin marketplace a black market for any transactions on the mainland. So your life would get real hard real quick the moment you try to turn Bitcoin into Yuan. Oh, that's ok you'll just do ALL your transactions with bitcoin. Ok so any shop owner that makes it even slightly known that they take bitcoin will be arrested. Too easy.
Forget big C communist ideology at the state level, you mess with provinces and their ability to collect money and you'll go down hard fast.
Then I remembered how it felt in 2000 where all you needed was a website for pet food and folks would throw money at you.
What they've done is very gentle soft-touch stuff. They've been calling ICO promoters and strongly suggesting they get their legal ducks in a row.
https://davidgerard.co.uk/blockchain/2017/09/01/the-sec-told...
Protostarr - who hadn't consulted a lawyer at all - shut down and returned the money; BenjaCoin went "actually we're good" and has argued such to the SEC.
The SEC's approach is considerably softer-touch than most people expected - but despite the rantings of crypto paranoiacs, the government is not in fact there to harsh your mellow. Point 3 of the SEC’s mission statement is "facilitate capital formation" - they explicitly see their job as helping you get rich! But of course, point 2 is "maintain fair, orderly, and efficient markets," and point 1 is "protect investors".
I don't see why projects such as "useless etherum token" https://uetoken.com/ should be banned.
You may want to ban trading the token to prevent money laundering but that would apply to all crypto coins.
Did they actually do an "ICO" or was it showing as "finished" from the get-go?
Let's find out!
30 seconds later.
https://web.archive.org/web/20170627123240/https://uetoken.c...
https://etherchain.org/account/0xbe5c1c298d0088886146a906cdf...
So they did but apparently nobody sent them any money, unless they also used some other addresses.
Another 60 seconds after that.
Actually they have a link on the current https://uetoken.com leading to https://etherchain.org/account/0xbe5c1c298d0088886146a906cdf... with 23562 txns total at the moment. Wonder if any of it was legit and if he got any money out of it.
250USD as in yesterday.
I think ICOs can be extremely beneficial for teams to raise money. But a lot of people buying these tokens do not understand what they're getting in return. I'd like to see it become easier to actually own equity or a % of a company's revenue by holding tokens. Hopefully these future regulations will build trust in the ecosystem by minimizing scams and providing clarity. More trust yields more people converting fiat -> crypto... which should yield a healthier less volatile ecosystem.
Case in point, NEO is probably one of the scammiest so-called "crypto" offerings out there
Like what? Every partnership or "tie" that I've ever heard of ends up being a rumor bordering on outright falsehood - like Microsoft (x2). 2 out of 3 ICOs they had announced prior to the ban ended up being delayed by 6 months or more, quite likely due to platform immaturity.
> good development
For an alpha / early stage crypto project, maybe. However they lack all the features that NEO actually brags about and the codebase is an untestable C# mess where core modules are more or less opaque to everyone but the main developer. It's a security nightmare waiting to happen, and a usability nightmare in the moment : building & publishing the simplest dapp on the platform is basically a non starter right now.
> plenty of evidence of delivering on their roadmap
Again, like what? The platform doesn't actually do anything yet. It basically consists of a few centralized servers and a centrally mined (and centrally owned) token. They're nowhere close to even delivering on dBFT itself, let alone high-concept stuff like mapping physical goods to a "digital identity".
> That's already better than most crypto-currencies.
Not if you compare it to other "currencies" in anything close to the same price range. Its valuation is far and away driven by clever marketing and uninformed speculation.
People assume, or just like to believe, that as Bitcoin adoption grows, the advantages of Bitcoin will far surpass fiat and people will gradually start moving to it as a de facto currency. This will/would be an organic process, likely to last a few decades at least.
Actually I just noticed that the Wikipedia page on the gold standard has a section about bitcoin: https://en.wikipedia.org/wiki/Gold_standard#Gold_standard_an...
[1] At those who bother to think about the long term economic consequences of Bitcoin instead of just trying to Get Rich Quick.
The gold standard is a system where paper currency is backed by a guarantee that it is redeemable for a given amount of gold. Of course the govt can rescind this promise at any time.
What Bitcoin fans want is something more akin to gold coins, where the value of the currency is independent of any state.
I think the pro and cons of the gold standard (as listed by Wikipedia) seem to apply fairly well to the Bitcoin economy.
The key book nailing down every dot of this is "The Politics of Bitcoin" by David Golumbia. https://www.amazon.com/dp/1517901804/
I worked for my money, I paid huge amounts of taxes on them. Why is it ok for somebody to come and tell me what I can and can't do with them, and then telling me it's in my best interest to not be allowed to invest them.
While all but the most radical libertarians will concede that some level of regulation is required, nearly every collectivist I talk to implies that permitting any level of individual human agency would turn the world into a Mad Max hellscape.
^ I assume this is how supporters of such laws think about the issue.
Would you dispute that even (otherwise) smart people can and do get taken in by dodgy financial schemes?
Regulations are there for good reasons...
If people really don't want the responsibility of freedom we can bring back indentured servitude, where people sign away their rights.
I suppose we should drop all laws about fraud really, why should we ban people from freely transacting with "microsoft" support services who just want to help them with their computer?
>> an securities sale that doesn't ask them for their ID, and thus doesn't meet securities regulations
Perhaps it's just not a good idea to have such a thing? Or perhaps the seller side of the equation, where you can't run an ICO without being registered and regulated, is needed.
I know, this circumscribes some of the allure of the whole area - that it's free of regulation, that it democratises finance etc etc. But like other avenues in life, perhaps we are being shown why the regulations exists in meatspace in the first place.
BTW I'm not trying to argue that all regulations and government actions are correct and useful, I'm very sympathetic to the idea that we are over-governed and over-regulated, in lots of ways. But perhaps not here.
>>Perhaps it's just not a good idea to have such a thing? Or perhaps the seller side of the equation, where you can't run an ICO without being registered and regulated, is needed.
I don't believe we should be limiting other people's right to privacy and to exchange digital tokens (not guns or tanks) under any circumstance.
I think accepting the right of society to impose these limitations on individuals is accepting servility for everyone, and I find that enormously dangerous and harmful.
And no, we don't relate on that, and we disagree that the effect is limited to the individual (see "the Great Depression, causes of") or that the individual should have to bear all risk of their actions at all times. Fundamentally I suspect we disagree on what sort of society we want to live in.
We also disagree on the economic causes of events like the Great Depression.
Also I did mention we could bring back an option to voluntarily cede one's own freedom, for those that don't want to bear the responsibility of living with the consequences of their own bad decisions, so I don't think our disagreement is exactly how you've characterised it. It's more like we disagree on whether we should prevent people from having the option to live freely.
Is BSD more free because it places no restrictions, or is the GPL more free because it guarantees freedom to those further on in the chain?
I'm not going to attempt an answer because it's the stuff of decades of internet flamewars. Similarly I don't think that libertarian freedoms are necessarily the only definitions, particularly as they seem to enshrine ownership of land and property as absolute, which come at a cost to the freedoms of others to make use of land or possessions. (I'm not looking for a debate on why that may or may not be right or wrong, simply to establish that what makes someone or something the most free is not 100% clear cut)
So no, we can't really agree on a definition of free or freely.
I don't feel this discussion can proceed constructively anymore.
free·dom
ˈfrēdəm/
noun
the power or right to act, speak, or think as one wants without hindrance or restraint.
"we do have some freedom of choice"This whole discussion would be much easier with an example.
I have spent quite a lot of time debating cryptocurrencies with people and explaining why they could be useful. But with ICOs I find myself on the other side of the fence. I have yet to find a white paper that isn't either useless or impossible.
> and thus doesn't meet securities regulations
In this context "doesn't meet regulations" more often than not means "we lie about what we will use the money for". I'm not sure that's a good idea.
It is impossible to be serious in a space dominated by liars as they will outcompete you every time.
>I'm not sure that's a good idea.
But if someone thinks it's a good idea, we should forcibly deny them the right to invest their own money in it? I simply don't understand the justification for such a strong-arming intrusion.
>It is impossible to be serious in a space dominated by liars as they will outcompete you every time.
Reputation is a very real and powerful thing in the marketplace. In the long run scammers and other unscrupulous types cannot compete against honest providers who deliver. And by the way, I'm fine with going after confirmed scammers. I'm not okay with centralizing/banning an industry to preemptively prevent scams.
>>It is impossible to be serious in a space dominated by liars as they will outcompete you every time.
And making the point that the space will be dominated by the competent and honest in the long run if left to its own devices.
My comment was explaining why I believe that would be the long-term outcome.
Thanks for the link though, that was an interesting read. I was aware that "Caveat Emptor" was a bit of a libertarian tenet, and that people like to rely on things like reputation to enforce good trading practice, but that is an interesting explanation of why a libertarian may be against any and all government interference in even blatant fraud.
For instance, a law against DUIs make sense, it's so you don't kill people. A law requiring seat belt wearing - not so much.
Secondly, if there is a crash, the best thing to do is nothing. Let the people who invested poorly get wiped out-- it's better for the economy. (There are examples of this too- crashes that happened before the federal reserve which were much worse than the 1929 crash, but which are forgotten to history because they didn't create Great Depressions because there was no Federal Reserve to "bail out the system")
The bailouts of 2008 were the worst thing that came out of that. Government shouldn't be bailing out these businesses, especially after those businesses made billions getting below cost money from that same government.
IT's not really economics you're talking about here but the corruption in the system.
Bailouts are part of the game-- thats how they scam us. Bailouts don't protect us (that's the con.)
For an excellent history of money and the last 100 years of bailouts and how this exact same thing has been done dozens of times already-- check out G Edward Griffens "The Creature from Jekyll Island" -- it's a history book about money, but it's anything but dry.
I agree, though I think at the root it's created by people investing irrationally and the wisdom of crowds that comes with it. Part of that can be mitigated by good regulation.
> Secondly, if there is a crash, the best thing to do is nothing. Let the people who invested poorly get wiped out-- it's better for the economy.
This is quite a harsh and risky thing to say. It is the fair solution, however sentiment and trust plays a big role in economics. If big(ger) banks had failed back then it would have been much worse for everyone.
> Bailouts are part of the game-- thats how they scam us. Bailouts don't protect us (that's the con.)
I think the scam actually happens through the years prior to the bailout, when institutions close their eyes to the bubbling up of the economy. Once the crash moment is reached there is not much left to do.
Thanks for the book reference, I have a very long flight tomorrow and I was actually looking for some books!
[1] https://stratechery.com/2017/tulips-myths-and-cryptocurrenci... [2] https://medium.com/@adam_selene/tulips-and-other-myths-c7f69...
https://en.m.wikipedia.org/wiki/Panic_of_1837
https://en.m.wikipedia.org/wiki/Panic_of_1857
https://en.m.wikipedia.org/wiki/Panic_of_1873
https://en.m.wikipedia.org/wiki/Panic_of_1884 (bonus https://en.m.wikipedia.org/wiki/Depression_of_1882-85)
> Let the people who invested poorly get wiped out-- it's better for the economy. (There are examples of this too - crashes that happened before the federal reserve which were much worse than the 1929 crash, but which are forgotten to history because they didn't create Great Depressions
Of course there were panics and corrections before the federal system - as rothbardrand mentioned, they didn't create events as bad as the depression.
The "bonus" you mentioned lasts 3 years, where as the great depression: "started in 1929 and lasted until 1941" (src: https://en.wikipedia.org/wiki/Great_Depression). Note: "The Depression of 1882-85 was not inaugurated by financial disaster or mass panic, but was rather an economic downturn that came about through a protracted and gradual process".
Compare that to https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 and tell me where the line between "market corrections" / "downturns" and "financial disaster" / "mass panic".
But showing evidence is needless: the federal reserve _necessarily_ aggravates the business cycle by promoting mal-investment. This was Murray Rothbard's mentor Ludwig von Mises' great work "Human Action" (https://en.wikipedia.org/wiki/Human_Action), specifically Chapter XX section 8, "The Monetary or Circulation Credit Theory of the Trade Cycle" - (full text is online here: https://mises.org/library/human-action-0/html/pp/818). One of the key tenants of Austrian economics and in particular the work of von Mises is that it is deductive from pure logic, rather than from experimental or statistical observations. Austrian economics is more akin to biology than psychology.
The Panic of 1873 was a financial crisis that triggered a depression in Europe and North America that lasted from 1873 until 1879 (1897 (!) in Britain)---6 years.
The 1882-1885 depression included a year when "an estimated 5% of all American factories and mines completely shuttered during the 12 months running from July 1, 1884, to July 1, 1885".
The panic of 1893 included a depression that extended to 1897, a couple of years with 12-14% unemployment, with peaks somewhere around 17-19% and 25% in Pennsylvania, 35% in New York, and 43% in Michigan, and included the panic of 1896.
Keep in mind two things: these occurred in the 19th century, when the United States was largely, perhaps almost completely an agrarian country, and that when banks fail (a common occurrence in many of these), you don't get your money back out.
The Great Depression is called that because it was the biggest, but it was hardly a completely new and unique thing.
[Now, as to Austrian economics, if "it is deductive from pure logic, rather than from experimental or statistical observations", I would think it had more in common with mathematics than either biology or psychology. Or perhaps alchemy.]
The OP and I are saying that the federal reserve _exaggerated_ the depression. Your pointing to much smaller prior events is a non-starter.
And yes, biology is not free of observation, my point was that it is more closely associated with deduction rather than statistical inference - but yes, mathematics would be even closer an analog - if I had said that a mathematician would have argued that some economists use statistical inference - goes on ad nauseum.
Still not sure what you're trying to say, but yes, there was a business cycle before a necessarily large increase in mal-investment and there were necessarily larger cycles after said investment.
This isn't hardship, just put your money somewhere else.
ICOs gave a level playing field and produced a resulting boom.
Most people don't even know what a cryptocurrency is.
You know what they say about forgetting history...
The middle classes (or lower class) aren't really allowed to invest in business because it's really risky (see: Great Depression). When 1 rich person loses $1 billion, that's sad. When 100000 grandpas lose $10000, that's a national tragedy.
On the contrary, North Korea seems like a collectivist's paradise. Total state control with omnipresent regulation. I wonder what the punishment for trading cryptocurrencies looks like there.
Not all of us are like that... What's happening here is people are butthurt cause ICOs are more successful and friendly to funders, so they took a very bad deal with the traditional investment route so everything negative against ICOs they are happy.
The HN community just like Reddit is just a bunch of children.
I'm all for shutting down assholes tricking people, but at what point does it begin/end?
Short incomplete list off the top of my head of organisations tricking people out of money with scams:
* Most (if not all?) nootropics
* Prosperity gospel
* Nutritional cereal
* Other low fat/diet food stuffs
* Fashion
* Art
* Diamond industry
* etc etc
What's missing is recognition of the historical precedent of regulating what people can/cannot do with their money in the USA and China's proposed plans to follow suit.
Before the JOBS Act, for 70+ years the American Securities and Exchange Commission was very specific about what non-accredited investors could do with their money. [0]
While China does not have an "accredited investor" status, its version of the SEC put forth a proposal in 2014 that would create accredited investor regulations almost exactly in line with the American SEC's regulations. [1]
Intent may be worth looking at here.
China sites terrorist financing and money laundering as problems with ICO's. I don't know the veracity of that concern, but I do know that citing terrorism, child pornography, prostitution/human trafficking, etc. are nearly impossible to argue against and thus can be used as a means to pass regulations/legislation that is rife for abuse (see the USA Patriot Act).
On the other hand, China banned exchanges allowing people to buy bitcoin in Yuan back in 2013, but today support for buying bitcoin has returned (from the article).
It seems both China and America (via the SEC) are trying to figure out what to do with ICOs. Regulation seems inevitable, but each country has thus far taken a different tact.
Does any of this make regulating/banning ICOs right or wrong? I don't know, but that seems like a different debate.
[0] https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967...
[1] https://www.crowdfundinsider.com/2015/10/75384-crowdfunding-... (See "Challenges: Policy and Regulatory Challenges) section)
You can maliciously use your paper money right there in your leather wallet to do all sort of criminal activity, should we ban regular money too?
Are you okay with laws about how money is earned? Why? If yes, why are you not okay with laws about how money is spent?
There are a vast number of regulations imposed on how you spend your money is spent in any government. Do you categorically disagree with them or are you okay with some of them?
EDIT: Every time a thread pops up like this, Hacker News seems to decide it's time to reinvent socioeconomic policy from first principles. Often libertarian principles. I'm trying to inject basic questions in here because much of the comment-response activity in the thread seems to be reactionary debating without substantive proof or rebuttal.
Outrage is fine! Your opinions are (probably) fine! But please try not to use personal opinions as axioms. Deconstruct your reasoning just a bit folks.
So I would be okay with laws about how money is earned, if there's a third person being impacted (pollution, for example), and i am okay with laws about how money is spent if there's a third person being impacted (idk, hiring a assassin)
Of course when one of the two consenting parties does something outside of the contract (false advertising, fraud, etc.), it should also be unlawful.
Everything else someone does to limit my choices/actions I do disagree.
But i will try to answer the best i can.
When i go to the bank, i may be participating in bank run, and i may the reason the bank collapses, and then the economy. My action of going to the bank does not usually causes that. But if you attempt to ban me from going to the bank because i may cause a bank collapse, it will certainly cause more harm then good.
And that's how we should look at the problem. The reason i have a principle that people should not interfere with my freedom to do as i chose (as long as i don't harm others), is because i believe that it will provide the best outcome possible, not the other way around.
That does not mean that there's no law that prevents two people of making a voluntary transaction that can give a better outcome than everything open. But it's just impossible to really know. The same reason your questions are hard to answer, if i disregard the principle, it will be hard to make such laws. So someone has to decide what becomes law, and what does not, and when that happens, those law will be imperfect, and you will have people who will benefit from some laws, and some who will be harmed. People harmed will not care so much for this imperfect and unfair system, and might as well ignore such (or other laws). People will also have incentives to make such laws, as they can benefit from it.
And you will never get a general agreement that such law will really do more harm than good, because people will have different views of that, rightly so. The law that prevents me from investing, may protect me from a bad decision, but will also prevent me from a good one. But as i am able to decide to get out of my house every day, and risk losing my life on a car accident, i should be able to decide what to do with what is mine. Even if some protection does look nice on paper, i do not believe i need to be protect from myself in a way that will limit my choices. If someone wants their choices be limited, just make it optional, and I will be able to decide if the protection is good or not. I doubt most people will really care about what people in the government think it is the right choice.
> how does that respond to my point?
You just asked an individual to justify why its not okey for govt/people to interfere between two consenting adults.
But then I think the debate would turn into battle of axioms which is pointless.
The question should be, can/how would people with contradictory political axioms co-exist ? I think its not possible, people can only vote with feet and hope for best. Political debate is not an intellectual debate like scientific/programming debate but war with real losses and HN now is a battlefield.
The crypto markets right now are in a free fall as a result of the panic. This is a ban on ICO's, not a ban on cryptocurrency. People don't realise how instrumental China is in the crypto world, quite crazy. I am taking this opportunity to buy up promising alt coins like TenX ($pay) which are all incredibly unvervalued right now as a result of the drop.
As we learned with Bitcoin, panic is temporary and eventually things will bounce back. We are entering a brave new world with cryptocoins as they reach the mainstream.
> We are entering a brave new world with cryptocoins as they reach the mainstream.
You can't have both. decide
It's really easy to just say all these ICOs are scams but we have not seen many outright scams.
I have seen a lot of very young enthusiastic teams promising things that it would be very hard for them to deliver on.
And I imagine every Silicon Valley VC can see the same thing about their pitches.
How do you know which are scams and which aren't? There's no objective measure.
So basically this is banning the middle class from investing in the next massive technology cycle.
Reserving it once again only for VCs and accredited investors. Keeping the little guy out and making the rich richer.
I don't really understand why it is appropriate for someone else to tell me how to spend my hard earned money? Isn't that what freedom of choice is about? Even if I'm being manipulated into a scam, it is still MY choice.
Let people spend their ICO money the way they spend their votes. Its basically the same form of manipulation anyway.
We all make choices like this daily on regular basis. However, its apparently appropriate to be scammed into various political promises, product descriptions, etc. But its not okay to be part of this 'ICO lottery' because one can easily be scammed? Give me a break.
This is not a new concept. The same regulations apply if you start telling your friends that you're smart and that they should let you manage their money for them.
u mean like a 'friends and family' investment round? ;)
Very good HN very good.
Here on Hacker News we had a staunch defender of ICO's, who was saying "ICO's of some form are unquestionably the future of raising capital for most tech companies up to a certain size".
In response to that wide claim, I asked the following question which I'll quote part of: https://news.ycombinator.com/item?id=15121111
>May I ask what the largest/most successful "traditional" tech company that used an ICO is? By "traditional" I mean that their tech has nothing to do with blockchains and they could have also just raised money on angellist, and today are just a normal tech company shipping some kind of a product, like a hoverboard.
Here was their response which I'll quote: https://news.ycombinator.com/item?id=15121451
>This is early days, very early days. Give it a few years, and people won't bat an eye at raising capital via the blockchain. It's just more efficient and easier. I mean, if you like having to travel around, having tons of meetings and discussions, hoping your lead investor doesn't pull out and fuck up the whole round, by all means keep supporting the current system. It just is going to change, massively, in the coming years. There will be some sort of place for traditional capital but blockchain capital raising will hit every industry.
If you think about it, that response to my question really says it all.
(Upon my folowup, they did name two software companies.)
I tried to click on the Forbes, TechCrunch, recode, and Adweek links, but actually they're not links; that section is empty. The empty section is included to imply that there has been media coverage by these sources (or any other ones), but it is just an inactive placeholder that uses their greyed-out logos without permission to imply some kind of coverage. Clicking anywhere in that empty section does nothing.
Why does the page include an empty "latest media coverage" section that is completely empty (but includes famous news brand logos)? You and I both know why - it's obvious.
That might be fine for companies that are bootstrapping their own future: "imagine if we had something here." But this is why I didn't ask about such companies, but instead about companies that already have done that bootstrapping.
A lot of money has traded hands in ICO's. Has a single traditional tech startup that is shipping some kind of real product (hoverboard, whatever) totally unrelated to blockchain, been built as a result?
that being said this does feel a lot like a throw back to 2014 and earlier with "China bans bitcoin"
Can you actually picture in your mind a criminal preparing to do something criminal and stopping because it's actually illegal too?
A lot of folks will lose their investment/money.
And if you think "stability and sanity will return" to a still mostly unregulated market, you are pretty naive.
I'd even say for stability and sanity to return, they had to be there at some point in the first place which they didn't. :-)
China will make some announcement in the future that softens or reverses this one, and we'll see a spike in crypto prices.
Hopefully there will be some sane regulation (or at least guidance) on ICOs to make it more difficult for scammy types to use ICOs as tools to bilk unsaavy "investors" (which includes most humans).
Will be very interested to see in the next couple of years how many of these projects still exist.
And about as useful.
- They have recent communist history/lack experience of crashes/associated fraud.
- Traditionally they actually worship money - By burning fake money.
- MLM scams are popular (at least in Taiwan).
- When I watched a video by Andreas - that Bitcoin guy - the audience (in US) was disproportionately east Asian.The Asian financial crisis was all these things.
Burning hell money is a symbolic offering to the deceased, not an act of worshipping money itself. Or do Westerners "actually worship flowers" because we place them on graves?
Still it is a bit more than that. Flowers are merely a gesture/ritual whereas burning money is an attempt to send money to the afterlife (if my understanding is correct), which inevitably does elevate it somewhat in the minds of believers. I feel the original point is partially intact, in that they definitely do have superstitions surrounding money e.g. red packets ... etc.