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.
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.
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.
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.
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).