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Yeah, but the IPO Snap had to go through is heavily regulated to protect investors. ICOs are the wild-west.

I would argue that's a feature not a bug: the ease with which to potentially attract support. Similar to how kickstarter functions there is a lot of community feedback in the crypto world. If you want to you can find a ton of research on various ICO projects. Finally it's up to the investor to decide. The 24/7 liquidity and global aspect helps, in that the price exploration/valuation occurs continuously without opening price gaps.

With human nature people will take advantage of others who won't or can't know better and get excited by and react to hype. I think it's society's responsibility to prevent people from scamming others out of money - which is generally what stable economies do. I'm not saying blockchain doesn't have a great potential in utility, just not structured with how the popular ones (Bitcoin, Ethereum's Ether) have been incentivized - a stable crypto-asset would allow for utility without unreasonable or insane wealth transfer from occurring.

Absolutely agree. But society has to ways of making sure that there will be a minimum of fraud: let unelected regulators do the job or have a broad range of third party services/companies internationally issue advisories and reviews/audits. The answer to this of course is political/philosophical and crypto in general follows a philosophy of having the market i.e. Private solutions figure it out. That's especially more feasible as it's a global phenomenon.

This has been done before.

History repeating itself.

The easy ability for corporate entities to dupe smaller investors is the oldest scheme in the book.

The 1929 crash was dependent on it.

The 2000 crash was dependent on it - it was largely due to the fact that 'online investing' caused a flood of small-time money into the markets pushing up prices. When the 'smart money' decided to end it, they pulled out ahead of the dumb money and left others holding the bag.

The housing crisis had elements of this as well.

There is definitely an argument to be made that 'regulations hold people back' - surely - but without them there is a 100% guarantee that things will go sour.

And when I refer to 1929 - that's not even going back that far.

The entire history of economics is about this - the 'quandary' of why supposedly rational markets crash and burn so often. It's seems a rather apparent explanation would be the asymmetry of information (and greed) between some actors, and others.

SNAP is a traded equity listed on a regulated exchange that by its very nature has significant liquidity. Very different in practice

Actually not at all different in practice. It's different in THEORY but actually almost identical in practice. In theory, SNAP stock is legally classified as a security and recognized by the United States government as providing some kind of weird, abstract ownership of the Snap Inc organization (although all classical markers of ownership are not present in the stock). In practice, my post was pointing out it's basically as bad or even worse than a token.

It's not remotely 'identical' in practice.

Kik can do whatever they want with their currency, there's no oversight, no transparency, no nothing.

----> The whole point of doing an ICO instead of an IPO is because they can paper over and gloss over issues, avoid regulation and transparency, and take advantage of wide-eyed and under-informed speculators.

It's just a way to leverage over individuals keen to make it big on speculative mania.

If Kik were in a position to do an IPO - they would. But they can't. Because they are slowly dying, and have almost no revenues. That doesn't sound like a good position to be in. So how could they possibly raise money otherwise without a lot of smoke and mirrors?

Why not simply 'raise a bunch of USD' and then 'pay developers' some of that USD - instead of fabricated coins?

Because the terms of an ICO to them vis-a-vis 'investors' are incredibly better.

Yes - an argument could be made that 'regulations are onerous and limiting and create undue friction' - and that's on some level a good point.

But this won't end well in the long run.

These ICO's are speculative mania. They'll be a 'good investment' for some, but there's nary any actual value being created.

ICO's are 99% a 'net zero gain' scheme whereby a lot of money changes hands - and it will go from 'dumb uniformed people to smart, informed, empowered and slightly greedy' people.

The only long-run winner for these things are the Hedge Funds getting in early, backing the ICOs, and then dumping their positions over time.

ICO's are not a financial innovation.

You can't create value out of thin air.

It's not weird or abstract. It's totally concrete -- the markers of ownership (dividend, voting rights) are missing but there is still ownership of the enterprise. If SNAP is sold, they are entitled to their share.

Liquidity may not be as different as you think. Volume on SNAP was $360M today; top ICOs are in the same order of magnitude. OMG was $67M, Qtum was $147M. (Bitcoin was $2B)

And they are traded globally 24/7. That's quite a difference from being traded in one stock exchange during business limited hours via a layer of brokers.

That's an interesting point re volume. But it still smells too much like 'Disney dollars' or similar - and I mean particularly in the instance of kik where they are looking to create an economy within their app developers. It's the same horse wearing different colours and it's not the sort of thing I would be rushing to get into (and I say this as a BTC participant at the 3c mark)

I agree to some extent -- I think the SNAP offering was a little ridiculous, and serious asset managers seem to agree.

But one significant difference is that SNAP shareholders have a residual claim on the assets of enterprise. In the event of a sale of SNAP (takeover or merger), they must be compensated. In the event of a bankruptcy they get whats left after all the other creditors (though that's presumably gonna be 0.)

There is still a HUGE difference between the two.

Owning a stock entitles you to a share of current/future assets/profits of the business.

Even in the case the business is not making money you can still hope for future profits or at the very least in the remunerative sale of an asset.

And no, you don't necessarily need dividends, cash on the balance sheet is very real and there's plenty of ways it can end up in your pockets other than dividends.

>Owning a stock entitles you to a share of current/future assets/profits of the business.

Can you provide me with some concrete examples of famous, high profile tech stocks like facebook and snapchat giving a "share of their current/future assets/profits of the business" to stockholders? As far as I know, there is no promise of current or future assets that they will pay out or distribute to shareholders barring legal actions and demands of liquidation, forfeiture etc all of which are not part of the simple "stock owning experience" that can be used as a counter example here.

>And no, you don't necessarily need dividends, cash on the balance sheet is very real and there's plenty of ways it can end up in your pockets other than dividends.

Please do tell me how cash on facebook's balance sheet can end up in my pocket if I own FB common stock? What are some concrete examples that could happen. Then, how about some concrete examples that have actually happened?

>Can you provide me with some concrete examples of famous, high profile tech stocks like facebook and snapchat giving a "share of their current/future assets/profits of the business" to stockholders?

https://www.microsoft.com/en-us/Investor/dividends-and-stock...

I'm not talking about dividends. I made that extremely clear. A lot of companies pay zero dividends and also make it clear they have absolutely no plans of paying future dividends either so there is no expected value of future profits that peg the stock price. There is no rights of voting or any kind of classical definition of "ownership" pegged to the stock. Look at SNAP, hundreds of millions of dollars of volume is traded per day of SNAP on exchanges. If I removed the ticker name from my post, would you think I was talking about a token or stock?

It happens all the times, take a share buyback for instance.

A company uses its cash reserves (generated by operating profits or assets sales) to purchase back some of its own shares.

As the same 1 share entitles you to a bigger percentage of the business (the number of total shares has decreased), the stock price is pushed up.

After that you can immediately put money in your pocket by selling the appreciated shares you own.

To give you a specific example Apple has a buyback program open since a while. But it's a common practice really.

Fair example, but that's also not what I meant. The price of SNAP, FB, or GOOG stock isn't correlated with a potential buyback of only a small amount of shares back. That doesn't seem to be where the value is pegged. I don't think SNAP has done or is expected to do a single buyback in the foreseeable future. Hundreds of millions of dollars of SNAP volume is traded on exchanges per day. Where does that value seem to come from? My argument is that it comes from the same abstract consensus that makes tokens have the same behavior on exchanges, and literally just that. Nothing more. I know you won't agree, but I think you have an outdated view of what a stock really is. Newer stock offerings in tech like FB and more and more like SNAP are behaving like tokens rather than classical stocks. They show no properties of classical ownership aside from being registered with the SEC as a security.

>After that you can immediately put money in your pocket by selling the appreciated shares you own.

Ya, you can sell them to someone else. The same way you can sell the token to another speculator. This statement of yours does not establish a substantiative difference between tokens and stock.

> I think you have an outdated view of what a stock really is.

Yeah many people tend to believe that "everything has changed" every once in a while.

There are records of claims like that since the mid 17th century and continously thereafter.

The way I see it things tend to repeat themselves and never really change in the stock market. A more historical point of view could be eye-opening, at least it was for me.

> That doesn't seem to be where the value is pegged.

It is in a way or the other. In case of Apple there's a pretty direct evidence, in other cases it's more indirect.

You could see it as a floor price. Companies can be valued way more than the value they produce/own but it's difficult that they are valued less than that.

Cannot say the same of a token.

> The same way you can sell the token to another speculator.

The whole point here is that you DO NOT have to necessarily rely on other people expectations to make/loose money with a stock.

You DO have to with a token. That's the difference between speculation and investing.

Why is that? Say a company keeps on generating profits and making buybacks yet the price keeps on falling: it won't be long before it gets noticed by people with enough resources who can take control and distribute dividends.

This inefficiency is so easy to exploit that de facto the market just aknowledges the value pushing the price up.

Yes of course you can also treat a stock as a token and just speculate on it, just base your decisions on what other people will think that the others will think that you'll think etc.

But you don't have to ! You do have a choice, which a token doesn't give you.

"Can you provide me with some concrete examples of famous, high profile tech stocks like facebook and snapchat giving a "share of their current/future assets/profits of the business""

Yes.

Facebook. Google. Microsoft. Amazon.

--> A company does not need to pay dividends in order to 'return value to investors' <---

This is a common misunderstanding of valuation.

--> Whether a company pays dividends or not is technically irrelevant <--

The only real relevance in 'share buybacks' is the ability of the corporation to generated yield from that cash, more than the investor could otherwise. I.E. A large, doddling company who is sitting on tons of cash, but generating very little yield, would be urged to pay dividends. Companies like Amazon, which can generate more yield from re-investing - should do that.

Key point: stock ownership implies ownership of the assets - so whether it's in Amazon's bank account or in yours - it doesn't matter - if you own stock, you 'own' that money.

The only question is - do you want Amazon to 'keep investing' (because they are good/bad at it) or do you want the money transferred to your account (because maybe you can do better).

The increase in value of the stock is economically/technically the same thing as a 'dividend payment'.

The money from facebook's balance sheet doesn't end up in your pocket because they have a use better for it than you. If they can earn $1.1 on every $1 in their balance sheet then it's in your interest that it's not landing in your pocket. Dividends are paid out because companies have excess profit that they can't further invest to make more revenue. You as an investor can then redirect the money to another company X that badly needs it as opposed to facebook directly investing in company X.

A token has no value.

It's inconvenient to acquire entire large companies and then liquidate them. So what we do is we divide the company into a million little pieces of paper that cannot be liquidated if you don't own all of them. Of course you are now mad that you can't liquidate your share but unless you owned all shares you couldn't liquidate them previously either. Nothing has changed in this regard.

Except ownership of miniscule parts of companies is now a whole lot easier and quicker. It's no longer a privilege of people with a multi billion networth!

So you're comparing to Kin being like a stock, why do they call them crypto-currencies then?

I don't think anyone that is well versed and highly accurate in the crypto realm calls these currencies. In fact, the proper term is token or appcoin. Not much except Bitcoin and similar forks/spinoffs (Monero, Dogecoin, Litecoin etc) are currencies.

" why do they call them crypto-currencies then?"

They call then 'crypto currencies' because they are 'totally cool' and 'trendy' and full of 'hype and future' - to gloss over the actual facts of what they actually are, in financial terms.

Where there is undue investor sentiment, and an inability to map the real meaning of the financial instrument - then those issuing whatever-it-is have significant leverage.

The biggest story of the 2010's will relate to the fact that most in 'tech' are viewing crypto-currencies from a technological perspective, while not having sufficient background to see their relevance as financial instruments.