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It seems like in most cases, the tokens are being used as a way for the developers to get funding to implement their project without the bureaucracy and costs of doing a real IPO.

That would be fine on its own, but they're almost all pretending this is not the reason for it, and that the token is necessary. This is an obvious lie in nearly every case when you dig into the details. Nearly every dapp that has its own token can be cloned to use Ether without any detriment to the product.

Absolutely right, the tokens are just a stepping stone to getting the [distributed] app off the ground. It's a great model! If you believe in the utility of something you can fund it very early on and reap great rewards, or at least root great endeavors on.

How so? Can't you just do the same thing staking Ether instead of yet another ERC20 token?

Yes agreed, in several cases this summer I thought I was doing well with ICOs until I did the math and realized I would have done at least as well by just holding the ETH.

And this here is why we’re in a bubble.

I don't really follow your logic, considering I was referring to over 6 months ago.

But I do agree we're in a bubble.

If the owners do that, they don't get to flip the 70% of coins they withheld after the price inflates.

I somewhat fail to see how they could ever serve as a real payment utility. If they have some actual application utility, then you'd have to dynamically adjust costs based on the speculative cost of acquisition so your application costs aren't wild, and then it's still nothing but a speculation-driven currency. Isn't that just nuts? It's a built-in catch-22

Na you're looking at it as if you're moving currency from some valued mint to a non-valued mint and that's not the case, we're transforming capital from one ecosystem to another, just like Britain Pounds Sterling to the USD, when you move into the new token ecosystem you now are presented with new ways to use your token. MOST of these systems will not create _value innovation_ but some select systems will and those tokens will actually gain in value faster than the backbone currency [meaning the ivy of your token could grow faster than the tree of ETH/BTC because your innovation has value in addition to being a useful transaction vehicle].

Yes many tokens are being used as shares and trying to circumvent securities law.

not just "Many" , All of these 1400 coins listed on this site except couple of them are "being used as shares to circumvent securities law"

https://coinmarketcap.com/

>Yes many tokens are being used as shares and trying to circumvent securities law.

Tokens are actually mostly not shares. You dont own the company that issues the tokens. Everybody likes to think that it is, though.

There are a few, like Modum, that are really nothing but unregulated shares. Most of them are unregulated less-than-shares.

The term "shares" is used here in loose sense, all these are coins/tokens .

All these companies behind this coins/tokens have no "paid" employee or assets and no legal registration ( for the coin itself) so there is no meaning to "shares" . There is nothing for ownership rights in the sense of share .

> A blockchain ensures that some sequence of agreements was made in a way that everyone can trust. If everyone keeps their secret keys secure and solely in their possession, then no activity can be forged on the network by any significant likelihood. Anywhere this concept has value, a blockchain has value. That's all there is to it.

Note an important caveat -- a centralized third party can also provide such a service. So you have to further subdivide the space into use cases where the blockchain has to compete against such services, and use cases where a public ledger is desirable in and of itself.

Well said.

Wealth is built through control, while a distributed ledger rejects control by design. Now distributed ledgers have utility, but that does not necessarily mean they will create business value for entrepreneurs and investors.

It's almost like how regulation has value in society, but regulation is decidedly not profitable and businesses usually reject it.

> distributed ledger rejects control by design

Assuming you convince 1) 100,000 miners your blockchain has value, such that 2) the distribution of control is spread out among those miners uniformly. Both of which is a pretty big assumptions.

More and more newer projects don't need those miners. It's still in question if they really offer the same security, but between masternode chains (security by having the "mining" done by people having to hold a large share of the coins so tanking its value would hit them hardest), dPoS (delegated Proof of Stake, every coin is a vote and you vote for a pool of "miners"), DAG where everyone has to do PoW for other txs to confirm their own, and other ideas, there are some interesting things. (I say "miner" but for those newer ones, the proof of work is often minimal to non-existent.)

If you can boil that down into an understandable statement appropriate for airing to on the radio or a finance television show, i'd be interested.

Otherwise, it seems like you just tried to do a "grapeshot" with tech jargon & lacking a main point.

There are alternatives to requiring a massive amount of miners. Some alternative cryptocurrencies implement those alternatives.

Happy? ;)

I imagine that exactly wouldn't be very convincing to those audiences now, would it?

I can either give you entry points for what to search for or I can give you the gist of it. If you want neither maybe you should ignore my comment instead.

My point is that your point in it's current from is essentially un-communicable, to non-advanced technical users.

> "Wealth is built through control"

Centralised wealth is built through centralized control.

Distributed wealth is built through distributed control.

Distributed how?

Produced how? by work?

Bitcoin distributed the vast majority of its wealth to aprox less than ~1000 individuals.

  Best estimates are that there are about one million 
  holders of Bitcoin;  47 individuals hold about 30 percent, 
  another 900 hold a further 20 percent, the next 10,000 
  about 25% and another million about 20%, with 5% being 
  lost.  So 1/10th of one percent represent about half the 
  holdings of Bitcoin and 1 percent close to 80 percent 
  (http://www.businessinsider.com/927-people-own-half-
  of-the-bitcoins-2013-12). The concentration of Litecoin 
  ownership is similar 
  (http://litecoin-rich-list.blogspot.com).  
  Most of the big wallets have been in place from early on, 
  so sitting back and watching your capital grow has been a 
  very successful strategy.


  The distribution of Bitcoin holdings  looks much like the 
  distribution of wealth in North Korea and makes the 
  China’s and even the US’ wealth distribution look like 
  that of a workers’ paradise

https://bitcoin.stackexchange.com/questions/86/is-it-possibl...

http://www.businessinsider.com/bitcoin-inequality-2014-1

More to the point, assuming a currency medium has a finite supply - once produced and distributed, all future generations are at a catastrophic disadvantage simply for arriving at the wrong time.

It should also be noted the term deflationary is often used to represent Bitcoin or other cryptocurrencies when in fact the supply continually inflates every 10 minutes.

What many advocates conveniently omit from disclosing is the algorithm produced the supply very rapidly for very low effort to the early adopters. Not only does the production supply require more work for later adopters, but more users compete for the limited block rewards which decrease as time goes on.

It's not exactly Ponzi scheme, or a Pyramid scheme.

It's a Satoshi Scheme

... or a "Nakamoto Scheme" https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

The initial windfall can only be spent once. The important difference between distributed finance and traditional finance is that the former has no gatekeepers that provide their controllers with recurring economic rent. Both mining and staking are competitive industries that require productive activity by their participants.

A central bank can extract 2-10% of the money supply's worth of economic rent every year in perpetuity, and the beneficiaries of regulatory barriers to entry can extract similarly enormous amounts of economic rent on a recurring basis (e.g. the Big Three auditing firms have profit margins of up to 50%, thanks in large part to regulatory barriers to competing with them) and public choice theory tells us that this economic rent will be disproportionately distributed to the political and professional elite who control government budgets, manage banks, navigate the regulatory process, and most importantly of all, know the right people to pull the right strings.

> Both mining and staking are competitive industries that require productive activity by their participants.

Validators also charge rent for their services, which especially in the case of miners, is a staggeringly inefficient use of electricity.

Of course they charge for their service, but 'economic rent' is a term used in economics to denote value generated by other economic participants and extracted by a non-producing party. Miners are producing most of the value they are capturing. The portion of their earnings that is 'economic rent' is not nearly as large as that of the beneficiaries of the traditional monetary and financial system.

Every system deserves critique and improvements.

Mining and staking algorithms have so far been measurably distributed disproportionately to a tiny minority of users. PoS is ironically manipulative in its own way, where an exchange or early adopter who controls a large sum will simply exponentially accumulate the newly minted coins.

For a algorithmic solution in software to persist beyond a fad like beanie babies or baseball cards, it necessitates a model which puts all users on equal footing for access, work, and production.

A small minority doing the mining does not imply rent seeking. Specialization through division of labour would produce the same result.

In any case I'm not saying they are perfect or that they permit zero rent seeking. What I'm arguing is that for reasons I've articulated, the current crop of cryptoeconomic platforms are much less rent-seeking than traditional financial platforms and systems.

Therefore, all other things being held equal, meaning that if we're only comparing on the grounds of how much rent-seeking they permit, I believe it is likely that it would improve public welfare if they supplanted the current monetary and financial system.

People also seem to forget that the Bitcoin whitepaper is pretty clear that Bitcoin itself is an experimental idea. I have never understood the "fixed supply" fetishism.

Fortunately there are many other blockchain projects out there. Bitcoin will have its position in history as the first and most influential, not as the most useful.

I have never understood the "fixed supply" fetishism.

I have never understood why people dismiss the issue as unimportant. Any new coin that uses a scarcity model similar to Bitcoin's (which is almost all of them) should be immediately criticized and forced to prove its suitability as a currency sufficient to meet the demands of the market it's hypothetically supposed to serve someday.

Consider Monopoly. The entire game is based around the the dynamics of an economy that grows faster than the money supply[0]. As the economy grows (via house and hotel upgrades), it becomes harder and harder for players to maintain a usable amount of money due to the higher rent charges on upgraded properties. When they're unable to pay a charge, they are declared bankrupt and must leave the game. As players leave the game, the economy slows and shrinks again, but the deflation is still sufficient to bankrupt all but one player.

You can run a simple experiment to test this dynamic. Play the game with "house rules" that give $500 to anyone who lands on "free parking." When I was a kid, we played this way. The resulting inflation causes the game to never end. Another, more interesting option would be to allow players to borrow money from the bank, and see how long that would extend the game. Maybe even tune the lending terms to see what works best.

Any "currency" with a fixed supply will encounter this problem. Divisibility does not help, as the problem is what payments wealth-creators will accept for their goods and services. If none of their target audience can afford to pay using crypto, but CAN afford to pay using local currency... they're going to use the local currency every single time.

[0] https://boardgamegeek.com/thread/426022/inflation-game-monop...

The "fat protocol" meme you're talking about has already come and gone.

It was only a valid hypothesis when there's only a single dominant chain. Not anymore. It's becoming more apparent that there will be multiple chains, which means these chains compete for usage, so naturally "all the value aggregate to fat protocols" is not valid anymore.

So you're right, the "fat protocol" should not be the norm. And it's really cool to see the landscape progress in this direction even though just last summer everyone took for granted that "fat protocol" will be the norm.

p.s.

There are so many "startup people" who are too lazy to delve deep into how the tech actually works, who just read some medium blog posts and watch some youtube videos and think they know everything. These people end up producing shallow content that's basically a parroting of what they read online.

To people who actually have touched the code and building on these technologies, these things are so obviously outdated.

> A blockchain ensures that some sequence of agreements was made in a way that everyone can trust. [...] The rest is fairy dust and noise.

Amen. "Blockchain" is today's fad just like the "nanotech" mania of yesteryear. That doesn't mean there aren't advances and opportunities, but it feels like 90% of the people promoting it can't even give a high-level explanation of why it's a good fit for their use-case.

> For example, why would be want a "fat" protocol?

This may seem weird, but bear with me: I think this is like people talking about intellectual property (copyrights, patents, franchises, etc.) The underlying idea is that you can create some core framework which everyone wants to use (or can't avoid) and that therefore you can collect rent (or at least sew up an incredible starter bonus) making it more consequential than the individual pieces.

The current internet is (perhaps thankfully) a contrast, where nobody (AFAK) is making big bucks off of TCP-IP/HTML/Browser licensing fees.

They actually can and fairly well IMO. What seems to be a bigger problem is that people don't want to accept that that has value.

A friend of mine told a great story about how some Koop aid drinkers were pitching blockchain internally for internal chargeback for services.

So you’d use your corpcoin to rent cubes and get pens from the facilities folks, and trade coin to get servers, etc. the idea had traction until the accountants revolted.

Didn’t Ronald Coase win the Nobel prize in economics for basically pointing out why this was a bad idea? [1]

[1] https://en.m.wikipedia.org/wiki/Coase_theorem

Oof. It's hard to know where to even start poking holes in that. Like whether everybody's OK storing the data all across the world, versus running a tiny internal network that can be taken over by a disgruntled employee.

It would take as long or much longer to become well versed in all the nitty-gritty details of TCP/IP, DNS, etc. than it would to gain a solid understanding of Ethereum.

I have to agree to this as I have written software to implement at least one networking protocol. On the contrary, I still haven't been able to wrap my head around Ethereum.

I'm sure most of us know that TCP/IP and all the other networking protocols are thin by design, for good reasons. Speed and reliability. It seems strange to write a connection-oriented protocol (TCP) that runs on a connection less protocol (IP) but this design is efficient and serves the purpose.

Calling the current bloating in blockchain protocols as a dramatic paradigm shift is an exaggeration. From what I see, the current blockchains protocols are bloated (as compared to TCP/IP) because they are encapsulating the application logic within themselves so as to achieve decentralization in a highly secure manner. (Based on my frugal understanding). It's a new way of doing things, perhaps not necessarily a paradigm shift. Note to self - Understand blockchain in depth, may be it is a paradigm shift.

Upgrade cost of network complexity: The Internet has smart edges ... and a simple core. Adding an new Internet service is just a matter of distributing an application ... Compare this to voice, where one has to upgrade the entire core. - RFC3439 (2002)

From http://github.com/globalcitizen/taoup

> In any other context in technology, "fat" anything is considered bad. Technologies are supposed to be "thin", simple, efficient, and composable.

I'd rather use a fat client than a thin one:

Thin client: Primarily just a display. No local processing, or effectively none. Controlled from outside.

Fat client: A processor with a display attached. Nontrivial local processing. Controlled by me.

Maybe fat clients are inefficient. Maybe I'm not thinking right. I still want control.

"Technologies are supposed to be "thin", simple, efficient, and composable." -- good aphorism for evaluating protocol schemas and suchlike.

> Anywhere this concept has value, a blockchain has value.

Sure, and that's several trillion dollars per year worth of the global GDP.