Half of ICOs Die Within Four Months After Token Sales Finalized
bloomberg.com
bloomberg.com
It's weird because people compare it to the early days of the Internet... but the early Internet was useful from its beginning: you could at least send messages and files across the network, which was incredibly useful to academia and the military and was orders of magnitude more efficient than any alternative.
Now, all we see is rampant fraud and a complete disregard for the environment [0] with no gain in efficiency. It's high time we hold "crypto-anarchists" accountable for these issues.
[0] The Ethereum network consumes more electricity than Iceland https://digiconomist.net/ethereum-energy-consumption
How is running an ICO not useful to people? Get lot of money with only doing a lousy whitepaper, drive ferrari and live luxury life rest of your life. No joking, many people can't imagine anything better.
Sounds easy!
It's worth noting that at its peak when CryptoKitties transactions hogged the Ethereum network and made it barely useable, CryptoKitties had only 14k users.
If I would build a system that gets DoS'd with 14k users I would get fired faster than the latest startup burns through VC money.
I was thinking about combining CryptoKitties and Second Life type breedable animals to make collectable ponies you could go play with and show off in virtual reality.
But no.
Exactly why so much wealth was created by the Internet boom. The wealth came from utility that already existed, just needed to be harnessed to its fullest potential. ICO scams are based on generating wealth first and hoping that utility follows at some undetermined time in the future.
It's all snake oil. Maybe snake oil can be useful to someone at some point in time, but until then it's still just a scam.
My superpower: Taking things literally. Still more useful than the last 10 ICOs. And my bad jokes aren't as bad for the environment. 10k joke-coins pre-ICO and 2 downvotes for that one for me!
We had three innovative ideas in the financial sector - certificate of debt, compounded interest and book money. And now the fourth - trolling idiots to risk their retirement money because they want to get rich "with that computer money my son told me about".
r/memeeconomy but irl, if you will.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1026931/?&utm_m...
You don't appear to actually understand what the phrase "snake oil" means in English. It doesn't mean "snake oil isn't useful".
It means: during in the 1800s Chinese immigrants to American used snake oil (from the Chinese water snake; the one in your link) as a cure-all. Unscrupulous "snake oil salesmen" would sell what-they-called-snake-oil-but-actually-wasn't. Or it used rattlesnake oil instead of water snake oil.
Here's a 90 second video that says the same thing: https://www.youtube.com/watch?v=LaDsOJATX3A
Incidentally I'm pretty sure water snake oil is not actually a cure-all anymore than rattlesnake oil is.
I couldn't get people to sign mine share contracts with me to support the operating costs, I ended up spending most of it on my power bill, food, and my therapist (that sounds like it's a joke, but it's not). At the time my tiny run-of-the-mill software consultancy barely kept it's head above water. This thing actually put me deeply in the red. Texas summers. heh.
All the people I offered those mine shares to have called me this year thinking I was on to something! I wasn't on to something, I lucked into a situation and did something with computers that I liked. I didn't hold shit. I regret nothing. After the 2014 crash, everyone was saying "I told you so!" and I had some bills to pay. Jokes on them, I had a blast.
I really love what blockchain can do for consensus. I love that ETH can be used for address resolution outside of DNS. I love what is happening with IPFS. There is so much growing out of this that is good.
A partner in my mine got me on a call a year and a half ago with a friend of his from Bloomberg. The call was (from my perspective) supposed to be about my AR GIS platform. It turned out the dude was specifically a crypto journalist and had a stake in a Puerto Rico "Crypto Hedge Fund". Whatever that is. To his surprise, I had no opinions on hot coins!
Unlike the internet, the first "killer app" for this was about literally printing money. It's not a fair comparison. The real work that is happening with decentralized systems around this stuff is happening quietly. How many of you are listening to podcasts about DNS? People want to get rich quick. Sharks love to eat people that want that. It's a shame people got shucked.
Last year when people decided to give me calls about it, especially friends and family, my response was "How much do you know about cryptography? How much do you think you understand this stuff? I barely understand it. In my opinion, no one really understands what we are doing or what we are capable of with it. That doesn't make it an investment. Stick your money in an index fund."
Depends on when "early days of internet" is defined? The internet could be seen as an evolution of ARPAnet https://en.wikipedia.org/wiki/ARPANET which was defined in the mid-1960s and took years to deploy and probably decades to evolve to the usefulness you describe.
ETH network is moving to a Proof-of-Stake consensus algorithm which will reduce it's electricity impact: https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQs
And meanwhile, there are other blockchains, like Qtum, that are already Proof-of-Stake and run Ethereum VM and create blocks on Raspberry Pis, for minimal energy consumption: https://github.com/qtumproject/qtum/wiki/Installing-Qtum-on-...
Blockchains have been around for 10 years now and every year they cause bigger problems without actually solving any.
Being able to transfer value between two parties without having to trust anyone has value. We can argue about how much value, but it's non-zero.
There is a lot of trust involved in a cryptocurrency transfer. You have to trust your technical competence to securely mount your wallet. You have to trust the wallet you're sending money to is the wallet it's supposed to go to. You have to trust the person you're sending money todo what you're paying them to. You have to trust the network to maintain the value and convertibility of the currency you're sending and receiving. Et cetera, et cetera
In practice, nobody wants to do these things. So we see centralization at exchanges. Precisely in the way people not wanting to handle cash use banks.
That's clearly not the point. The transfer itself does not require trust. That's the value.
Cash transfers and barters are trustless. Wires are trustless (in being reasonably irrevocable) in a manner similar to cryptocurrencies (i.e. if we ignore the plumbing). Cryptocurrencies solve for trust in the most reliable part of the trust chain while exacerbating every other element of transaction risk.
Yes, but they require physical presence.
> Wires are trustless (in being reasonably irrevocable) in a manner similar to cryptocurrencies (i.e. if we ignore the plumbing).
Irrevocability is not the same as trustlessness. Your transaction is still being intermediated by an entity that can choose to appropriate your funds otherwise.
> Cryptocurrencies solve for trust in the most reliable part of the trust chain while exacerbating every other element of transaction risk.
I think I agree with this statement literally. The question is what price are we paying for that reliability? And does blockchain offer an alternative tradeoff that we might like better?
The frequency of each of coins being stolen from wallets, being lost by exchanges or pilfered by ICO frauds is far, far higher than anything happening at proper banks. Blockchains are a neat technology which should have never been marketed as a currency.
What does that have to do with what we're talking about?
Generally speaking, if my things get stolen, "it was stolen by X and not Y" is not a value-adding rebuttal. It is actually counterproductive if X (e.g., a cryptocurrency thief) is harder to gain recourse against than Y (e.g. an FDIC-insured bank).
That's certainly true. But the issues around people losing their coins and having their keys stolen can be solved by better UX and application security. Essentially crypto transmutes the problem domain, from a people problem to an application design problem. It's still a problem. It still needs to be solved, but the domain-transfer allows it to be solved cheaply at scale in a way that the human one can't be.
In other words, i'm making the claim that the issues you cited are not essential properties of blockchains, merely transient properties of their present implementations and UX. If you want to make the case that they are in fact central, i'd be happy to listen to that though.
End financial services users repeatedly choose convenience and risk guarantees over self-management. This isn't something which can be papered over with a saucy UI, particularly when the tangible benefit is difficult to describe. ("Decentralization" isn't a benefit, it's an attribute.)
Totally agree. In a hypothetical crypto dominated world, most people would still use centralized services to store their money. But they'd have the ability to opt out if and when they choose.
The problem with this vision is those people using centralized services see no benefit. They are better off sticking with the status quo.
Cryptocurrencies make sense for people who wish, for philosophically reasons, to control their own money. That vision doesn't require a "crypto dominated world." It does, however, require shrinking the vision from "re-imaginging the financial system" to "solving a need for a small group of devoted people." That's okay, and if that's how crypto were marketed it would (a) be more honest but (b) come with a lower value.
Narrowly, yes, that's true. But I think there's a broader context to consider than that. Our current financial system is architected around these financial centers of gravity. Blockchains represent an alternative to that structure. Yes, there will still be intermediary institutions, but they will not have the same fundamental centrality that the current ones do. I think this is an important change, and one that is likely to lead to other changes that will be more directly appreciated by consumers and the broader economy than the philosophical self-sovereign money issues.
1) cheaper financial services 2) broader financial services 3) real-time financial services 4) access to financial services regardless of location (or nation) 5) decentralized applications fully integrated with financial services
The average Joe doesn't need to control their own private keys in order to gain these benefits.
But think of it this way. What would be more difficult, for an organization or company, today?
A) start your own bank B) start your own key management service
A) make an application that accepts payments as low as $0.01 B) make an application that accepts payments as low as .001 ETH
A) create a new protocol layer on top of the banking system B) create a new protocol layer on top of Ethereum
---
Today, we rely on perhaps at most a few dozen companies (PayPal, Stripe, VISA, MC, etc) to build interfaces with our banking system.
There is no "app store" for banking system financial services. It's hard, hard work to build anything on top of that archaic system.
Blockchain makes currency an internet-native construct. Which has profound implications that we are just beginning to see the very earliest examples of.
If a million people want to deal with each other without any trusted party to intermediate, then they have to keep a million ledgers and agree on a protocol for reconciliation. Once you've conceded over a million-fold factor of inefficiency, being cheaper doesn't seem plausibly within reach. I don't see the details as mattering much; it's the big picture that doesn't make sense.
Existing solutions also evolve and has become cheaper, faster and more accessible. Sure there are exceptions like political dissidents but that's relatively small group. If you would like to solve this issues on large scales like Venezuela than solutions would be mostly political rather than technical.
The fact that nobody understands how human institutions work is an advantage, because it prevents malicious actors from subverting them. Whenever someone figures out how institutions work, they destroy them and civilizations fall, so they evolve to be incomprehensible. So "transmuting the problem domain" seems like a bad move to me.
Unless it's an Mt.Gox situation.
I think at that point it becomes fair to ask: what is the likelihood that I am going to lose money unexpectedly to my credit union, or my recipient to her bank? And then by comparison, what is the likelihood that I or my recipient are going to lose money to coin theft, exchange failures, fluctuation in valuation, or other things inherent to dealing with blockchain transfers?
Rightly or wrongly, I think many people would rate potential losses higher with blockchain solutions than with USD wire transfers. I know I would.
You're totally right. But let me flip the question around a little bit. What would our financial system look like if we didn't have to place so much trust in our intermediaries?
It's not that banks aren't trustworthy. They are. They're extremely good stewards of the public trust, for the most part. But the fact that we place so much trust in them has systemic effects that are stifling to innovation. And I think that's what blockchains may allow us to overcome.
Large banks have a lot of money to buy influence; that's the source of their systemic risk.
But you can do wire transfers at small banks and credit unions.
I think risk is associated with stores of value. "I rob banks because that's where the money is." So we move the stores of value from banks to blockchain exchanges and hot wallets, and the risk moves accordingly. Now, instead of the risk being borne by organizations with decades or centuries of experience mitigating it, backed by the Fed, it's borne by people who barely understand the wallet software they downloaded, and Magic: The Gathering card traders who aren't as smart as they thought they were, and people who are absolutely definitely sure that smart contra--oops, let's just "fix" that.
So what you describe as centralized stores of trust stifling innovation can also be described as centralized stores of risk mitigating loss. And I think that's pretty much what we've seen so far.
Personally I trust those entities much more than some shlocky fly-by-night crypto exchange.
To each his own, I guess.
You aren't trusting an exchange when you send a transaction on the blockchain.
This is true, but exchanges have become the de facto on/off ramp for cryptos. If I want to acquire bitcoin without mining, how am I going to do it other than buying from a centralized entity?
Edit: As I post this I remembered that Paradex, a decentralized exchange for ERC20 tokens built on 0x, was recently acquired by Coinbase[1], the largest centralized crypto exchange, who in turn might soon be acquired by Facebook[2]
1. https://www.reuters.com/article/crypto-currencies-coinbase/c... 2. https://www.independent.co.uk/life-style/gadgets-and-tech/ne...
Sure, that's true. But once you own them, they're yours to do with as you please. You can also buy them from someone peer to peer if you really want to onramp in a 'decentralized' way.
Now we're back to no advantage over cash or bartering.
This makes it seem like you can onramp via an exchange and still maintain all the benefits of decentralization. If I don't onramp in a decentralized way then there will also be a centralized entity with tremendous power.
Why do I care about limiting the options to blockchain?
They have a strong business interest in not doing so. Because the identity of the entity is known, and thus subject to reputation loss.
Don't you need to trust nodes that they'll pass down and/or include process your transaction, and that they'll do so in a timely fashion? Which seems just like trusting that, say, your bank or the Mastercard servers will process your transaction properly? Not to mention the more mundane aspects like the fact that you still need to trust that your ISP won't cut off your access to the network, etc...
To me the value seems to be that nobody can forge a transaction based on your currency (or whatever it is you have), not the idea that you somehow don't need to trust anyone when you do transfer value.
Yes, but their incentives are structured to align with yours in that scenario. You are trusting them to act in their own interest.
Hence we circle back to exactly what I said in the last line of my comment: https://news.ycombinator.com/item?id=17493508
> To me the value seems to be that nobody can forge a transaction based on your currency (or whatever it is you have), not the idea that you somehow don't need to trust anyone when you do transfer value.
What I meant is that the capability that "nobody can forge a transaction" and "don't need to trust anyone" are actually the same thing. You are forced to trust your bank because your bank could forge a transaction on your behalf. You trust them not to do this. That is the nature of your trust in them. Blockchain eliminates this weakness, and it is in that sense that you do not have to trust a 3rd party.
If this is really what you're saying, then you've completely changed your argument 180 degrees to match that of me and the above commenter (which is cool!), because earlier you said the exact opposite. Specifically, when the above commenter said "you have to trust the network to maintain the value", you rebutted that that "is clearly not the point. The transfer itself does not require trust. That is the value." Now that you've concluded that the actually is trustless storage rather than in trustless transfer, yes, I think we are in agreement!
Notwithstanding the above, by the way, it simply isn't true that "I am forced to trust my bank because they could forge a transaction on my behalf". It's actually the opposite... I don't trust my bank for precisely that reason. Rather, as I stated above, the reason I nevertheless end up ultimately trusting my bank is that I trust the government will have my back if the bank decides to screw me over illegally. Again: it has nothing to do with the bank's capabilities or lack thereof, and everything to do with the legal system.
> I don't trust my bank for precisely that reason
Yes you do, unless you don't have a bank account. The fact that you presumably have a bank account with a non-zero balance is evidence that you trust them not to steal your money.
Good point. Although I would draw a different conclusion. Your point assumes this new technology is for direct human consumption. For me decentralisation, smart contracts and "the internet of money", along with AI, will allow autonomous agents operate and interact without human intervention. That will be transformative.
The value of a currency is based on nothing more than trust. It’s because people trust a (crypto)currency that it has a value; trust is the very thing that makes a dollar bill having more value than a random piece of paper.
Yes, email was used for business purposes in the 80s...but it took a long, long time for the internet to reach mass adoption and maturity. Decades.
Meanwhile, Ethereum was launched in 2015. Unless you think the tech has hit an evolutionary dead end...that it's not going to go any further, I think it's incredibly ignorant to criticize this nascent technology based on where it's at today.
Sure, Ethereum will definitely have more things built on it, and attract new users and in all likelihood become more user friendly. But if you can write or evaluate bulletproof code, resolve oracle problems and trust the token's value to remain stable you can automate some transactions without third parties isn't a proposition as obviously universally appealing once bandwidth and adoption is there as anyone can be given access to anything that can be shared on a computer anywhere, any time.
"Usenet gained 50 member sites in its first year, including Reed College, University of Oklahoma, and Bell Labs,[5] and the number of people using the network increased dramatically; "
"UUCP networks spread quickly due to the lower costs involved, and the ability to use existing leased lines, X.25 links or even ARPANET connections. By 1983, thousands of people participated from more than 500 hosts, mostly universities and Bell Labs sites but also a growing number of Unix-related companies; the number of hosts nearly doubled to 940 in 1984. More than 100 newsgroups existed, more than 20 devoted to Unix and other computer-related topics, and at least a third to recreation"
Sites participating in Usenet were using UUCP, which also allowed email.
Because the example you said about the internet (from loading webpage to video streaming) does sound amazing. What's the "parallel" for crypto that you see?
This sums it up better than I could. The wrenching of power away from centralized authorities and organizations (which we have seen abuse us and our privacy mercilessly for their gain) to decentralized applications with no middlemen, that are free of censorship, and can not be "stopped."
In your example of the early internet (too slow to load webpage, to streaming video), you described a direct benefit you experienced personally (you needed to access a piece of content and it got that to you fast)
But when you use crypto, you said it's revolutionary because it "wrenches power from centralized authorities". That is not a direct benefit you experienced personally. That description is a high-level concept.
So, it's hard for me to see the parallel.
How is there still this much FAD in cryptocurrencies considering their terrible scaling technology and economic solutions?
So without a bank, who's going to loan you money? Because unless you're donating pennies from hundreds of thousands of people, it's going to be an entity with a fair amount of $CURRENCY, so basically a bank.
What if you were able to do micropayments efficiently on the web?
What if many contractual agreements between parties were settled on blockchain, and monies held in escrow disbursed automatically based on pre-programmed rules?
And centralized solutions will always be faster.
Meanwhile, the banking system itself is not centralized. It's quite slow to settle monetary transfers from bank-to-bank.
Right now, Lightning Network is live on BTC's chain. It's instant, near free, and yet it's decentralized.
Most crypto-things have this idea that they servers validating transactions have to be compensated and that anyone can do this validation. (validation == mining)
Having a few well regulated entities do all the mining is a centralized system that can be verified externally. Without all the cost of decentralization. And with the added security that validators are trusted entities.
Business payments are delayed not because there is an underlying fault in the payment systems (wire transfers are nearly instantaneous, at least within the country), but because businesses sit on payments.
A new technology isn't going to solve this problem. Businesses like to hold onto invoices as long as they can get away with it.
I don't think the ICO's are being compared to the Internet itself, but to the many early attempts at building webapps on it that ultimately collapsed in the dot com crash. That's what most ICOs are.
That really depends on where you put 'beginning'. But more to the point, blockchains are useful now, just like the internet was. They're just not useful for all the things that are being promised (yet). Also, just like the internet wasn't.
> Now, all we see is rampant fraud and a complete disregard for the environment [0] with no gain in efficiency.
People never tire of pointing this out. Yet it completely ignores the fact that there are solutions to this problem that are in the works, and have been planned for a long time.
There are lots of problems with the crypto space. Fraud is rampant. Energy consumption is wasteful, temporarily. It's also not clear that dis-intermediating human institutions is actually what we want to do. But if you think it's all a fraud, or that there is no value, then you're just not thinking very hard.
Exactly. The early internet was full of promises of taking over retail. None of that worked, at first. Instead the internet was useful for messaging and putting up personal websites. All the responsible people at the time kept whining -- how is it going to make money??
Well, people kept working on it. For years. Business cycles came and went. Eventually the promise worked out.
Timeframe? The early Internet was pretty non-commercial and the commercial services were generally proprietary and/or run by telecoms (Minitel, Prestel). There were a lot of failures in the 99/00 boom, but Amazon was founded in 1994.
> how is it going to make money
Ironically the question was more "how am I going to give you my credit card safely, given that cryptography is a technology subject to US export control".
What? This is nonsense alternate history.
The early Internet had active, useful messaging long before anyone thought it would be useful for "retail". The arrival of commercial spam on Usenet was a shock to everyone. And personal websites came before the dot-com craze.
Online shopping was not a "promise" on which the Internet and its predecessors were built, it was merely one of an uncountable amount of use cases on top of an already useful thing.
In the early days, there were always way more users that wanted to get on the Internet at more times than possible. The scale of the Internet was never capped by interest or potential applications, but by available funding and technology. To me, that sounds like the opposite of cryptocurrency.
$6.00 an hour, outside of business hours, for 300 baud access to CompuServe.
Don't forget The Source as well...man did I ring up some outrageous bills back then ugh.
The first electronic computers were purpose built to crack wartime codes [1][2]. The problem preceded the technology.
Colossus was a computer, although it's very unlike anything today because it isn't a stored programme computer. So it's more like one of those LCD watch games from the 1980s, it could do something else than what it's doing now, but only by literally taking it to pieces and rewiring it.
But your main point is spot on. In the mid 1940s several machines including Colossus are built mostly by military groups and these fulfill different criteria for bring a "computer" as we'd understand it. But by 1950 companies are already selling these new "computers" for commercial use. The US Federal Government bought several in 1951.
Just because it's a technology doesn't guarantee it will be as successful as other technologies.
2. Of course the effect on the environment will continue to be pointed out: Ethereum's energy consumption is growing and the use cases are nowhere to be seen. So far, "plans" in the cryptocurrency space never go as expected. Satoshi didn't expect persistent forks and altcoins, for example. Vitalik advertised Ethereum as a "world computer" but it can barely stand when only 14k users are trading cartoon kitties on it. He also said Ethereum's "code is law", until he changed his mind and forked the network due to a hack. Please excuse skeptics for holding accountable those that do not have a history of consistent and successful results.
Thereby allowing use and feature development to proceed hand in hand. That synergy between makers and users is wholly non-existent in the crytocurrency space, which is primarily focussed on flipping a quick buck.
People use cryptocurrency too. For value transfer, and to a more limited extent, for dapps like Augur. You seem to be criticizing the delta between the lofty hopes for it and it's actual usage. The early internet did not have such lofty hopes, so its growth was more organic. If you take away the pipe dreams from crypto, you have a remnant skeleton that i'd argue very much resembles the early internet.
> Of course the effect on the environment will continue to be pointed out: Ethereum's energy consumption is growing and the use cases are nowhere to be seen. So far, "plans" in the cryptocurrency space never go as expected. Satoshi didn't expect persistent forks and altcoins, for example. Vitalik advertised Ethereum as a "world computer" but it can barely stand when only 14k users are trading cartoon kitties on it. He also said Ethereum's "code is law", until he changed his mind and forked the network due to a hack. Please excuse skeptics for holding accountable those that do not have a history of consistent and successful results.
So, I said there are plans for solving the energy consumption issue. And your counter-argument is what, exactly? That sometimes people didn't foresee everything that might evolve? Help me understand the argument that you're making here.
Soooo, buying drugs and illegal gambling? Sure, I'll give you that one.
My argument rephrased: "Because cryptocurrency investors have repeatedly made claims that don't pan out, we can be reasonably skeptical and concerned about their energy consumption until they actually fix it or at the very least provide peer-reviewed scientific analysis on how it will be fixed."
Yes, although also remittance payments, and some usage in places with unstable currencies like Venezuela. Hard to gauge how much, though.
> My argument rephrased: "Because cryptocurrency investors have repeatedly made claims that don't pan out, we can be reasonably skeptical and concerned about their energy consumption until they actually fix it or at the very least provide peer-reviewed scientific analysis on how it will be fixed."
While that is, in the abstract, a fair argument I don't think there are actually that many examples of it in practice. Vitalik didn't claim Ethereum would be a world computer right away. He's always been clear and explicit about the scaling roadmap. I don't think the promises of the core devs of Ethereum or Bitcoin have been overstated or unmet. If you believe otherwise though, i'd be happy to listen to your argument.
Bitcoin not only thrives here and allows you to bypass the whole craziness with the economy by using exchanges like localbitcoins.com where somebody would deposit the amount of bitcoin you sold to your local bank account. This way you just keep your money in bitcoins if you want. This is specially true with miners.
Meanwhile, no doubt some are using crypto to supplement their incomes/savings as well.
No,“can” and “are legally allowed to” don't, technically, mean the same thing.
Furthermore how does that allow you to pay for food, water, utilities, or even fuel for your car?
Shipping Fedex/DHL in Venezuela isn't nearly as reliable as shipping in the United States. Nor is it cheap.
Energy and gas are super cheap in Venezuela (38 cents a gallon). I'm not sure where you're going with your argument there.
You can hold crypto as a hedge against the Bolivares, convert to fiat as needed, just like any other fungible asset.
The other part is that we Venezuelans never walk anywhere. Going somewhere without a car feels dangerous. Oh and in big cities, if the car is armored the better. Plenty of shops now to convert your SUVs.
"Authorities have .. permitted trading of bitcoin in Venezuela, though they have heavily fined and detained people who use computers to earn bitcoins by auditing online cryptocurrency transactions. Such “mining” operations use immense amounts of electricity, which is heavily subsidised in Venezuela — meaning the state essentially winds up paying for the process."
"few businesses openly advertise that they accept cryptocurrency out of concern they will be extorted. It’s still difficult to make many purchases in Venezuela with bitcoin"
https://www.news.com.au/technology/online/venezuelans-seeing...
Well, why is this so easy for you to brush aside?
If indeed blockchain tech can successfully subvert bad public policy, isn't that pretty remarkable in its own right?
https://eips.ethereum.org/EIPS/eip-1011
There you go. Read it then make your arguments against it. If not, then shut-up.
"I'll believe it when I see it"
People forget that in the early days of the Internet and its predecessors, most computers were still bigger than a washing machine, mostly available only to universities and big or specialized corporations, and data lines were limited to bandwidths many orders of magnitudes narrower than today.
The Internet had an inherent hard limit on scale and availability simply by the technology that was available at the time. Not only did the Internet then grow with the available technology, filling it out, its very nature provided a great lever to all research and development, leading to the exponential advancement of information technology that we live in today.
There is no comparison, at all.
All technology is limited by what is available at the time. I am nowhere near as bullish as I used to be on “blockchain” but I still think it can have a huge impact. If the internet democratized informatiom the blockchain has the potential to democratize finance and some types of information. The internet had all kinds of crazy scammers during the dotcom era. I think there is still potential here and while the shape isn’t super obvious I think it’s not worth betting against. Im no koolaide drinking crypro cargo cultist but I am optimistic it will solve some problems and be a net positive.
What's your evidence for this?
Even major Bitcoin advocates say it's no longer useful as a payment system: https://avc.com/2017/08/store-of-value-vs-payment-system/
Bitcoin's total TPS is circa 2-3. [1] And presumably a small fraction of that is actual money transfer. In contrast, M-Pesa, a digital money system that started about the same time and has millions of users, has 100x that volume and is growing rapidly. [2]
So I'm entirely skeptical that it's better for any significant market than even legacy money transfer methods, let alone trying to compete with newer tech.
[1] https://www.blockchain.com/charts/transactions-per-second
[2] https://www.mobileworldlive.com/money/news-money/m-pesa-reac...
I've used it for that. People use it on darknet markets for value transfer. I have seen many people claim to use it in Venezuela, though I can't confirm that (one of them posted in this thread [1]).
> Bitcoin's total TPS is circa 2-3. [1] And presumably a small fraction of that is actual money transfer. In contrast, M-Pesa, a digital money system that started about the same time and has millions of users, has 100x that volume and is growing rapidly. [2]
That's no longer true. The lightning network increases that to effectively infinite TPS. The infrastructure of nodes isn't that great yet, but it is now possible in principle for Bitcoin to scale to an essentially arbitrary throughput.
> So I'm entirely skeptical that it's better for any significant market than even legacy money transfer methods, let alone trying to compete with newer tech.
That's a fair skepticism. Though not due to slowness/throughput, as that problem is solved. And not due to environmental concerns, because that problem will be solved (in Ethereum, not Bitcoin). The legitimate objections to cryptos I see are:
1. It's not clear that decentralization, uncensorability, and irrevocability are really properties that people need. provides a value anyone really need.
2. Deflationary assets are subject to boom/bust cycles that can be toxic to modern economies. Crypto assets tend to be deflationary, and as such may not, over the longer term, serve effectively as global currencies.
I think those two points are the core of any serious objection to crypto. I believe that in the case of #1, the architectural change it would induce in our financial system is worthwhile, and consumers will feel the effects of that rather than the benefits currently stated for crypto. As for #2, it's a legitimate concern, and it may ultimately make them untenable, but we'll just have to see.
But you share one of the habits that makes these discussions so frustrating. You substitute marginal examples and handwaves at the future when asked for clear present evidence.
The Lightning network might possibly one day increase capacity to infinite TPS. It doesn't yet, and reasonable people think it never will. E.g.: https://reddragdiva.tumblr.com/post/175418385308/why-the-lig...
I am saying that based on the evidence I find, despite 10 years of enormous free advertising, approximately nobody uses it today for money transfer when compared with other money transfer options. Do you have clear evidence otherwise? Not anecdote, not what it possibly does, but actual evidence?
Such is unfortunately the nature of all predictive discussion. I don't think i'm being any more speculative than anyone discussing say, autonomous cars, or similarly 'somewhere on the horizon' technologies.
> It doesn't yet, and reasonable people think it never will. E.g.: https://reddragdiva.tumblr.com/post/175418385308/why-the-lig....
There's a decent bit going on in that link, but point by point:
> 1. it doesn’t work. the software is absolute dogshit. buggy as hell.
This is just saying the current iteration is buggy. That's no counter-argument to the concept.
> 1.5. it can’t work. the mesh network problem
The difficulty of this problem depends on the number of relevant nodes, and the way you structure the network itself. He even cites a good example - BGP. He claims that BGP works because the nodes trust each other, but regardless of them trusting each other, they solve the mesh network problem. That trust is not integral to the solving of the mesh network problem.
> 2. the whole idea is dumb. nobody wants a network of prepaid channels.
Now this sounds like a decent argument. Except that, one could argue that your bank account and credit card are simply prepaid channels. If the LN gets up to scale, and if it achieves sufficient node liquidity that you can pay essentially anyone...then I don't see how this prepaid channel differs in any way from a traditional bank account.
> 3. the LN solves a problem that doesn’t exist. the idea is to make transactions fast again
The LN may or may not cause merchants to adopt Bitcoin for payments. But it definitely solves the more narrow "Bitcoin doesn't scale" problem.
> 4. the LN is coin-agnostic - so it isn’t an excuse for bitcoin’s unscalability
This doesn't even logically follow. It's just a complete non-sequitur. The LN is an excuse for Bitcoins not scaling yet. The LN can also be used to scale other coins. It may be that people prefer those other coins once they've achieved scale.
> Do you have clear evidence otherwise? Not anecdote, not what it possibly does, but actual evidence?
It's extremely hard to get data for something like that. But the clearest cut case is darknet markets. Cryptocurrencies are definitely actually used there for real commerce.
Also, "people use cryptocurrency for value transfer" is not a forward-looking statement. It's a statement of what people do now. And this comes out of you saying, "blockchains are useful now".
You're handwaving right now. You can't know which part of the distribution you're in until it's over. I've provided quite a bit of evidence, as well. There are some forward looking statements for which there is no hard evidence, but only because there cannot yet be any.
> Also, "people use cryptocurrency for value transfer" is not a forward-looking statement. It's a statement of what people do now. And this comes out of you saying, "blockchains are useful now".
They do use it for value transfer right now.
> They do use it for value transfer right now.
Money launderers do. KGB agents do. A variety of other criminals do. But I have yet to see evidence that a significant portion of ordinary people use it for value transfer in preference to either traditional means or modern, non-blockchain digital ones.
So yes, you are technically correct on a narrow interpretation of a single sentence. But you are so far wrong in terms of the meaning of that sentence in the broader discussion. For the purposes of evaluating Bitcoin's commercial utility, effectively nobody uses it. If you have data otherwise, let's see it.
The same applies for comparisons with the early Internet. Pre-web, lots of non-technical people used it for practical purposes because it provided superior utility over other options. That doesn't appear to be true for money transfer for Bitcoin. Even prominent Bitcoin advocates have given up on that. E.g.: http://avc.com/2017/08/store-of-value-vs-payment-system/
This stuff is so early. A lot of the really enabling infrastructure doesn't exist, and won't exist for years. Most builders have no idea what the true strengths and limitations are. It'll get there, but it's not a 2020 type of get there. Maybe 2025.
Cryptocurrency is the first time we could really escape that.
As for infrastructure, things like the lightning network will provide scalability, things like starks and bulletproofs can help both privacy and scalability, decentralized exchanges help accessibility.
> He also said Ethereum's "code is law", until he changed his mind and forked the network due to a hack.
It is ultimately a decision of the miners. They have the power to choose to upgrade or not. As for the decision to fork, it was done via voting. The decision was for the interest of the Ethereum project's success. Being a maximalist and losing sight of the goals is not desirable. But as a miner, you have the choice to not upgrade the Ethereum client you are using. And those who did not now became 'Etherem Classic'. Sure everyone should be a skeptic and hold accountable, but not to the degree of being unreasonable. One should understand why they desired to fork before making conclusions.
Honest question: for what?
I've yet to hear a use case where blockchains are actually solving a problem, other than "buy things on the black market".
How long do we have to wait to find a valid use case for blockchains? It's been 10 years now and we're still asking the same question.
Putting ethical concerns aside: these are very large market segments. Cryptocurrencies may be overvalued but there's definitely a real use case. It's just not a use case that governments, banks, or conventional VCs like.
I feel like all the claims to the effect that cryptocurrencies have no use case are ignoring the obvious.
And I think the hidden story of the "war against terrorism" has probably been a sustained effort to crack down on informal money transfers, and something like cryptocurrency is an inevitable response to the decline of traditional methods.
Here are some use cases that I think are potentially legit:
- Value transfer
- Prediction markets
- Asset trading/custody (not just cryptoassets, I mean, potentially real estate, equities, etc. can be tokenized)
- Venture capital that is more transparent and open (the ICO space is obviously not there yet, but I think it can move in that direction)I guess you could have a 3rd party that has to verify everything ( government ) but then you are basically back to just doing it with a paper deed at the courthouse.
a really neat case for this would be lost items. if each cellphone had its IMEI and your keypair associated you could prove you owned something lost. or if found someone could look you up to return it. you could buy a game or software once and never have to worry about a serial key.
Right now, getting into the 'trusted financial institution' list is extremely difficult. It's a slow, incremental process that takes decades of good behavior and careful stewardship. Part of the reason it's so difficult and so heavily regulated is because of how much trust we place in these institutions. If we did not have to trust them so much, it would be easier to become one. It would have less need for regulation. Incumbents would be weaker, and the industry as a whole would therefore be healthier. This is sort of an abstract point, but I think it's the truest sense in which blockchain may change the world: by commoditizing trust.
(1) all of these can essentially require transparency + encryption (i.e. git + signatures), not the whole blockchain,
(2) hence can be had without the huge energy losses (that come from many nodes (re-)computing the same result over and over, and
(3) centralisation is a feature most people want, because it helps resolve conflicts (à la Vitalik's centralised resolution of the DAO conflict).
That's just empirically not true. You need to timestamp transactions in a BFT way for all those examples. No way around it.
> hence can be had without the huge energy losses (that come from many nodes (re-)computing the same result over and over, and
You can get this with Proof of Stake. But you do need a BFT timestamping mechanism.
> centralisation is a feature most people want, because it helps resolve conflicts (à la Vitalik's centralised resolution of the DAO conflict).
Citation needed. Centralization has upsides and downsides. It will take time to figure out how to do decentralization well.
No, for most things what you really need is a happens before relationship. Git does that better, since it supports multiple timelines (branches) that can be resolved (merged) cleanly if there are no conflicts (double spends).
What about when there are, though?
How long do we have to wait to find how to do decentralization well? It's been 10 years now and we're still asking the same question.
https://hackernoon.com/ten-years-in-nobody-has-come-up-with-...
SISTER: Any interest in learning blockchain development? I'm getting into that world and will need someone reliable. Plus, I'll be able to expose you to projects and get you consulting gigs. I know you have your new job and all it's demands. Timing prob isn't good but figured I'd check in anyway.
ME: No thanks. I know the blockchain technologically is a thing but every application of it I've read about (e.g cryptocurrencies) looks like a scam perpetrated by people who think the problem with society is being social, misunderstand the history and purpose of the Federal Reserve system, and/or believe the idle rich deserve to be richer. I understand there's a lot of stupid money washing around in those circles. Just make sure you're playing with somebody else's money.
SISTER: I have no interest in the ICO crypto currency application. I'm more into the smart contracts. Id like to apply it to healthcare (help end the opioid crisis). Or the credit reporting agencies...get rid of them and allow individuals to control access to and use of that information. So many applications that are just beginning to scratch the surface. My MBA thesis project is using blockchain to help end the opioid epidemic through better diagnosis of individuals more prone to addiction or just getting it to sell on the streets.
ME: I've seen some discussions of using blockchains for things like certifications or logistics. They've all seemed kinda hand-wavey to me. Like yes there may be some minor efficiencies to be gained by moving to a new tracking/trust system. But the real issues will still be the humans at the ends of the transactions. I'm not sure how the blockchain fixes that. But maybe you can persuade me. Fortunately, the technology itself is over my head. I've seen some python tutorials I could probably dig up for you. But I don't have time myself to try to pick it up.
SISTER: The ledger platform we are currently planning to use (hyperledger by IBM) has some free training but apparently you need a basic understanding so I'm sure it will be way over my head.
ME: I hate to be cynical (j/k I love it) but I'm sure that's the point. IBM would love to convince the next generation of MBAs they need Hype(r)ledger™ and its attendant battalion of IBM consultants to reimplement a table or two that someone in the org already has working like a charm in a simple spreadsheet.
SISTER: Well duh...they're for profit public businesses. I would be worried if that wasn't their reason. That doesn't mean that the applications hosted on their platform aren't practical or solve a problem that prior technology couldn't. 90 people die every day from opioid overdoses ... what if your technology could reduce that number to even 80? Profits are secondary. Check out blockmedx.com when you have a second.
So there you have it I guess: blockmedx.com
So patients are encouraged to sell their prescription records to "interested parties" in exchange for chits they can use to buy prescription drugs. Sounds altruistic to me!
What's a cancer patient going to do when they lose their crypto-opioid wallet password?
Seems with all the rampant fraud that it's the developers that aren't thinking very hard.
Seriously: Where is the actual value of crypto currencies?
I can see specific (limited) applications for the blockchain.
But you assert that people (who may have thought long and hard about the utility of crypto currencies) are lazy thinkers.
At the very minimum you could provide an argument instead of throwing around insults.
This is a great use case for the blockchain but you may have missed it if you only read Techcrunch articles about CryptoKitties.
Where is blockchain 'useful' for any common practice?
It does not. In 1995 the Internet was useful for 30m people. In 1985 it was useful for 30,000. Email was better than paper mail from the get-go. Networked file transfer was way better than mailing magtapes or CDs. Remote terminal connections were way better than driving or doing long-distance dialup. The Internet was not the wonder it is today, but from very early on it had clear practical use.
> But more to the point, blockchains are useful now, just like the internet was.
Not really. I ask regularly here, and so far there's approximately no commercial use case where blockchains are better than some other technology. The main exceptions being hype, fraud, speculation, and some light financial crime like money laundering and capital control evasion. If you have some examples, I'll of course read them with interest.
My personal bet is that blockchains will be like XML: a technology that was going to be The FUTURE for a while, got put into a bunch of things (often generating large consulting revenues), and then quietly dropped later as people discovered that there were better alternatives for almost every practical use case.
https://trends.google.com/trends/explore?date=all&geo=US&q=x...
(Or less, perhaps, in that I suspect the peak was earlier.)
But yes, I'm sure it's in plenty of Y2K-ish enterprise systems, spreading like kudzu.
My point is the extent to which that is different from the peak of XML's hype cycle, which was circa 2000. Then, XML was everywhere. E.g., eBay circa 2004 would render data internally as XML, which would get passed off to multiple Rube Goldbergian XSLT transformation layers on its way to becoming HTML. Or I did some work at a bank around then, and their internal architecture was very XML-heavy. There was no good reason for this, and from what I see JSON now dominates.
I note though that your examples were all created when XML's hype cycle was in full swing, and many have enterprise roots. I'll be interested to see if projects created today end up using XML even for the document-creation cases for which it was intended. JSON is also a way to represent large tree-structured data, and I wouldn't be shocked to see it take over most of the data sharing just because that's what everybody knows.
You see that now. But in 1985 most people thought email was silly, if they knew about it at all. Why replace the mail? The mail is fine. It's only when you look back on it, with modern eyes, that you see how great it was.
> Not really. I ask regularly here, and so far there's approximately no commercial use case where blockchains are better than some other technology. The main exceptions being hype, fraud, speculation, and some light financial crime like money laundering and capital control evasion. If you have some examples, I'll of course read them with interest.
I stated some above. But i'll copy/paste:
- Value transfer
- Prediction markets
- Asset trading/custody (not just cryptoassets, I mean, potentially real estate, equities, etc. can be tokenized)
- Venture capital that is more transparent and open (the ICO space is obviously not there yet, but I think it can move in that direction)
> Why replace the mail? The mail is fine. It's only when you look back on it, with modern eyes, that you see how great it was.
These statements may support your argument, but they have no basis in reality.
Moreover, the "most people" standard does not apply. I'm not asking what "most people" think about Bitcoin. I'm asking for evidence of delivered value to early-adopter audiences. In 1985 any crowd of tech people could tell you why email was better. It would have been easy to find non-technical academic staff who were excited about email, as many of them had been using (mostly non-Internet) email for years at that point. Neutral observers could easily be shown that it was valuable.
> I stated some above. But i'll copy/paste:
No, what you stated above was hypothetical. None of those are areas where blockchains are demonstrated to be better than commercial alternatives for any significant audience.
Ten years ago, even five years ago, I would have given you a pass for selling the amazing possibility rather than any actual facts. Sorry, but time's up on that. I'm asking for proof of traction, not further hype.
It is often the case that:
Securities lawyers and traditional venture capitalists don't want a world where regulatory agencies and traditional venture capital can be routed around.
Those in financial law enforcement don't want the trend toward total financial surveillence, euphemistically called instituting anti-money-laundering controls, reversed.
More generally, those with a major economic or ideological investment in government-funded programs don't want people to have financial privacy that makes enforcement of the income tax more difficult, or to see an alternative to central bank issued currency, which gives governments the power of seignoriage, gain traction.
The utility of cryptocurrency is clear: sending value from point A to point B electronically without depending on an intermediary that can extract rent or surveil/censor the transaction.
So if the best cryptocurrency early-adopter audience is people who are harming society, then you've pretty much guaranteed that cryptocurrencies will remain societally marginal.
In the case where criminals profit from harm, the criminals may personally experience utility from Bitcoin, but the total net utility is negative. E.g., if I steal your new $30k car and sell it to a fence for $10k paid in Bitcoin, I have experienced a $10k gain. But since you experienced a $30k loss, net utility is negative. Ransomware, often seen using Bitcoin, is another example of net negative utility.
In the case where the exchange in question is low harm, we generally see society evolving toward legality. E.g., marijuana has been declining in illegality, so the need for evading state detection declines too. There are now multiple marijuana storefronts within walking distance of my house. Bitcoin doesn't help them.
I suppose you could say I have an investment in government, which I call "being part of a modern, civilized community". So I do object to Bitcoin's money-laundering potential on those grounds, and also deny that aiding freeloaders in tax evasion is much in the way of "real utility", any more than any other tax evasion scheme.
Even if we're willing to call Bitcoin's financial crime usage "real utility", I don't think it's "real" for the purposes of this discussion, which is about comparison with the early days of the Internet. The comparison is only meaningful if the early "real utility" is indicative of future utility for a broader audience. That was obviously the case for something like email (which 90% of Americans now use) or online shopping (80%). But there's no particular reason to think 80-90% of people will be excited about risking IRS penalties and jail time for tax evasion or money laundering.
In the context that you made the argument in, which is consumer demand for cryptocurrency, the type of utility we're talking about is utility for the user.
>>In the case where the exchange in question is low harm, we generally see society evolving toward legality. E.g., marijuana has been declining in illegality, so the need for evading state detection declines too. There are now multiple marijuana storefronts within walking distance of my house. Bitcoin doesn't help them.
Marijauna stores would benefit tremendously from a widely used cryptocurrency. Legal marijuana shops have enormous difficulty getting bank accounts.
The government pressured payment intermediaries into stopping donations to Wikileaks a few years ago. Cryptocurrency was a vital lifeline for the organization during the blockade.
Craigslists recently shut down its personals section, due to FOSTA. Adult entertainers are having their PayPal and Patreon accounts closed. Venezuela's economy has been totally destroyed by its government's interventions. Areas of China are being turned into an Orwellian dystopia: https://www.hrw.org/news/2018/02/26/china-big-data-fuels-cra...
Your claim that ways of circumventing centralized control of financial transactions is growing unnecessary is totally unfounded.
>>I suppose you could say I have an investment in government, which I call "being part of a modern, civilized community".
So to clarify, you're not part of any of the groups I mentioned earlier?
>>But there's no particular reason to think 80-90% of people will be excited about risking IRS penalties and jail time for tax evasion or money laundering.
Filesharing is used by millions of people, and it is illegal. There are many countries in which taxes are widely avoided, so we also know that happens. In some countries circumventing govermment control is a matter of survival.
Cash, by its very nature of being fungible and untrackable, makes anti money laundering laws almost useless, and cash is used the world over.
Your idea of a global surveillance state to enforce taxes on private transactions and to track criminals as the only way to coordinate the use of resources and prevent crime is not the only future open to mankind, and you yourself obviously don't believe it is or else you wouldn't put so much effort in trying to discourage the use of cryptocurrency.
We could go to a future where law enforcement needs a warrant to know the content of a transaction, and where taxes are levied on immovable property, instead of being tied to private economic activity, and a strong civil liberties and economic argument could be made that this would have total net utility.
And it's not just circumventing centralized control by governments. Private financial intermediaries track their users' financial activity extensively.
On top of all of this, simply having a mechanism to transfer value electronically through an immutable protocol provides utility in avoiding rent-seeking by large trusted third party intermediaries who've attained large network effects.
The idea that there is no conceivable utility in avoiding payment intermediaries that can censor/surveil you, except to commit crime, let alone crime that is socially harmful, is preposterous.
I agree some governments do bad things and would also like less of that. I just don't think Bitcoin solves any of those problems. China may indeed be turning into a digital surveillance state, but that makes digital currencies like Bitcoin ineffective given that they depend on a free and open internet.
I also agree that some countries are only haphazardly governed, with tax evasion as common. But I don't think there are many countries like that that a) don't have perfectly good ways already to evade taxes, b) have reliable electrical grids and internet grids, and c) have sufficient economic activity to make them trendsetters for the global economy. Is Bitcoin used beyond the level of anecdote in Venezuela? Possibly. Will that matter to the adoption of Bitcoin in most of the world? No.
I'm definitely not saying that there's no conceivable utility in cryptocurrencies. I'm saying that there's approximately no practical, demonstrated utility aside from some light financial and commercial crime. My main problem with the Bitcoin promoters is that the only thing they have is theoretical, imagined, conceptual utility. Selling the dream was fine 10 years ago. But at this point the reality is pretty clear.
China can't stop people in its borders from using cryptocurrency. Neither can Venezuela, where it is currently helping at least some people survive. Electronically transmittable information is just too hard to contain, even without an open internet.
With the greater utility that comes from a larger userbase and greater liquidity, and technological upgrades like better scalability, it's easy to imagine cryptocurrency helping a lot of people, who are currently repressed by major institutions like governments, protect and increase their wealth, leading to a free-er and more prosperous world.
>>My main problem with the Bitcoin promoters is that the only thing they have is theoretical, imagined, conceptual utility.
There are other, better cryptocurrencies than Bitcoin. But I do agree that much of the utility of cryptocurrency is imagined and theoretical.
>>Selling the dream was fine 10 years ago. But at this point the reality is pretty clear.
Cryptocurrency was a totally new paradigm when Bitcoin launched 9 years ago. It needs more time to be developed and tested before a verdict can be passed about the technology's inherent utility.
Meanwhile, existing systems like Betfair's betting exchange have been working for over a decade.
That's an outstanding analogy, one I had not considered before, but certainly XML is far less..err...includable is perhaps the word(?)... into a software project then a blockchain-based datastore and verification would be, right?
Let's just hope a XSLT-like companion to the blockchain is never developed...
Indeed, Jabber, an XML-based protocol, is seeing new life as a big IOT protocol. My cheap robot vacuum spends its day hanging out in a chatroom and communicating via XML, for example.
For about 1/20 of the applications they are suggested for, best I can tell.
Its pretty rare for VC and PE firms to just be blatantly ripped off like a good portion of ICO investors are.
As far as I can this is due to 3 things.
1) Geography, Most VC/PE firms only invest in a particular country and know the laws as they relate to the contracts they sign with companies. This ensures that they can atleast try and go after the founders, legally speaking, if any "shenanigans" occur.
2) KYC, most will only invest after performing due diligence, which always includes meeting the team and confirming through lawyers that the team is who they say they are and they own the IP they say they do.
3) Contracts, I've participated in a few ICO's and never signed anything. I realized I was essentially giving money to a complete stranger with nothing more than an IOU from someone who I'll never meet and in many ICO cases, never have any way to find them.
Fortunetly for ICO's as a legit means to raise money these are all solvable. They just require "adults in the room.".
If you look at the successful ICO's from a professional investors angle(VC,PE) they all followed the above 3 steps.
At which point you end up with an overcomplicated share certificate.
You are missing part of the story: before ICOs there is a presale phase where some projects finish before the ICO. This is where real competition with VCs happens since the top projects receive more money from non traditional investors using cryptoassets than the one promised by traditional VCs (except in very rare cases).
In this context: (1) Geography does not matter and (2) KYC/AML is enforced.
The advantage for real entrepreneurs is receiving a bigger investment in short time.
Disclosure: I work in this kind of syndicates.
I'd disagree with your idea that geography doesn't matter. I would have more confidence in an ICO in the US than I would in say China where it can be hard to sue someone and collect your damages if you win.
but if you really feel geography doesn't matter then please share your argument for this, I'm ready to learn!!
I am disagreeing and saying that it is VC/PE vs. Presales and ICO the whole story.
> but if you really feel geography doesn't matter then please share your argument for this, I'm ready to learn!!
It is not an argument, it is a fact. For example, you will see a really important investment to an Argentina based company (outside top geographies) in a few months.
All capital flows have a home-country bias. Even securities which are easily bought and sold internationally [1].
Proximity to investors matters even within countries. A start-up raising VC or person promoting an ICO in Silicon Valley will raise more money faster than someone in Montana. They, in turn, will outperform someone in Zanzibar. Doesn't mean it can't be done from Montana or Zanzibar. Just that it's more difficult.
Again, I am not negating the bias towards proximity but seeing there is a new distinguishable phenomenon happening. This phenomenon favors global entrepreneurs in a new way.
If I can raise money through an ICO without diluting, why would I waste my time with VCs and their beauty contests?
This is the new third way: bootstrap using your own money, they scale up with ICOs. I am not surprised the VC-funded startup world is so hostile to cryptocurrencies and ICOs: it is competition. It means a future where entrepreneurs can opt-out of VC and IPOs. That would be bad to the bottomline: no more preferred stocks with liquidation preferences!
ICOs are in their infancies, so there are a lot of scam, but the market will eventually evolve solutions like smart contracts (or just reputation!). If I was in VC, I would start worrying or lobbying for special treatment - like expending the "investor status" to cover IPOs.
It's like a Kickstarter project[1], except most of the backers don't actually want the backed product, they want to resell their pre-order to someone who does.
At least, that's how it's supposed to work, in theory. In practice, it's a hotbed for scams. Most of the re-sales happen from one speculator to another, until some fool is left holding a bag of worthless pre-orders.
[1] Which is also incredibly constrained, because it needs to do something useful with a cryptocurrency, and all the overhead and complexity associated with that. [2]
[2] Building a file-hosting service is not good enough - you have to make it a file-hosting service with a crypto-coin bolted on to it for some weird reason.
I'm not even sure it's this. Pre-orders come with rules. ICOs do not. (Or more accurately, they make them difficult and unrewarding to enforce.)
[1] Product might not perform as advertised.
[2] Product might not be delivered in the promised timeline.
[3] Product might not be completed at all, due to unfortunate circumstances, such as exhaustion of funds, acts of God, or the laws of physics.
[4] All pre-orders are final, no refunds.
If you had zero intent of making anti-gravity skateboards, they would have criminal recourse. If you had every intent but were marketing the impossible, they may have civil recourse. Not everything can be disclaimed away. Pre-orders, moreover, are regulated in many states.
Disclaimer: I am not a lawyer. This is not legal advice. Don't scam people.
You mean like regulators and trusted intermediaries? Due diligence conducted by independent third parties? Like the real financial system has always had?
So basically, we went through this whole ICO bubble to realize that things are the way they are for a reason.
That may be overly reductive. My views on several rules changed as a result of observing the ICO phenomenon.
For example, I used to be skeptical about accredited investor requirments. Turns out, they're super necessary! On the other hand, I think Regulation D could be massively simplified--from a required paperwork perspective--to lower the cost of selling unregistered securities.
I agree that we should probably have regulations in place to protect people from scams, but accredited investors are just people with > $1M or > $200k in income over the past 2 years. Basically a way to filter for 'wealthy' people that can afford to lose the money.
The part I didn't appreciate is it's also a filter for people who can hire a lawyer/adviser to conduct basic diligence. Raising $1 million in $10,000 cheques guarantees virtually zero oversight. That, much more than anything legitimate, has been what ICOs have enabled.
This is one area I keep going back and forth on in my head. On one hand, obviously scams are bad, and the fact that people are throwing their life savings into some of these companies is awful.
That said, I am not sure it should be up to Governments to decide who can and can’t invest in early stage startups and how people should be allowed to spend their money. Much of the reason that crowdfunding (Kickstarter, Indiegogo, ICOs) has become popular is because of the lower barrier to entry for contributing to projects/startups. There are a number of companies I would love to invest in, but can’t because I am not a millionaire. I do not really find that fair.
Creating an open market around funding will teach people a lot of hard lessons about money. VCs know that 90% of startups are going to fail. I don’t think it is that crazy to believe that regular people can learn that as well. All it takes is one really bad investment to learn the lesson.
Remember we live in a country where a cafe has to put the following disclaimer on Hot coffee paper cups "Caution: The contents of this cup could be hot!!"
I think the cup example may actually be more to prevent restaurants/cafes from lawsuits vs. to actually protect their customers from burns. I suppose it could be a combination of the two though.
VC/PE firms are, by and large, staffed with professionals. ICO investors are, by and large, amateurs (I settled on this word, after starting with several less nice ones).
Amateurs are much more likely to get scammed than professionals.
They get money, no accountability, and everyone just moves on.
No wonder crypto-currencies enjoy such a positive image among the ‘haters’ and ‘doubters’. Because they keep earning it.
Most ICO's - if not all of them - are powered by the greater fool theory, sustainable value isn't really on the table.
I see value in the blockchain and some in BTC (but not as much as others apparently do), but the whole ICO concept seems to be just a way to transfer wealth from greedy suckers to even greedier suckers.
Traditionally, it's hard to make money in porn due to fraud and chargebacks. Most payment processors also won't touch you. But crypto has no chargebacks, so it's a natural fit.
One could argue that if you have to dip down to the level of porn just to find some value, ICOs are worth dismissing. But I would say that it's a decent example of the future potential.
If you search for spankchain, you'll likely end up on their discord. There are friendly people to help answer your questions and set you up.
It's the same advantage YC has: by being a meta-layer, you end up attracting everyone who's trying to do anything in the space, rather than one specific aspect. Eventually, the network effects are most of the value.
Is that so?
Tell me more...
One could also argue that when porn starts adopting a technology, you should adopt it too because that tech is what is going to win.
Porn has consistently chosen the winners and any tech that discourages or disallows porn's involvement loses.
More to the point is there any evidence of the mainstream porn user actually adopting SpankChain (or any of the other supposed "blockchains for porn") as opposed to ICO profiteers adopting pornography as a relatively plausible potential future business model to sell unnecessary tokens at an implausibly high value?
Just had a look at the company page of the service. The CEO is a "decentralization laser gun" who boasts about how much money he raised in other ICOs (hmmm...) as well as his favourite computer games. In lieu of an actual testimonial, we get him in blockquote saying "we've honestly got the best team ever". Apparently this is one of the more promising ICOs and yet it's making me feel the SEC parody ICO site was a bit mild...
Buy it with another crypto currency? Problem moves one step down the road again.
I think you sort of missed the point.
> you mean all startups that fail at very high rates are also that?
No, I did not mean that.
They don't actually want any pre-order tokens that entitle them to 2 GB of storage on a distributed crypto-file-system, or whatever the ICO promises.
Think ticket scalping, except that the tickets are for a concert that may or may not happen. (Because the band hasn't actually written any songs, found a drummer, rehearsed anything, rented a venue, or even bought any instruments.)
These "entrepreneurs" are just raising as much as they can. And because there is so much dumb money in crypto, they raise a lot.
It is important to remember that what we are seeing is a v1 of the ICO model - it is likely that future versions will be able to implement more controls and governance mechanisms like the kind you described.
Conclusion:
"We also show that there is a positive and convex relationship between (log) market cap and (log) number of Twitter users, that nearly all ICO capital is raised by crypto-companies that continue to be active (on Twitter) after 120 days, and that daily Twitter intensity is associated with positive returns that day but negative returns in the future, suggesting overreaction and reversals. "
"It suggests that scams, while plentiful in number, are not as important in terms of stolen capital because investors are shrewd enough to spot (and underfund) them."
In this case, I agree with the overall sentiment. I don’t think these companies are actually “dying” though, but rather they were probably created as get rich quick schemes, so they took the millions of dollars they raised and then sailed off to some island somewhere.
From the report
> We use intensity of tweets from the cryptocurrency official Twitter account after the ICO to estimate that the survival rate for startups after 120 days (from the end of the ICO) is only 44.2%, assuming that all firms inactive on Twitter in the fifth month did not survive.
Not sure how I feel about that methodology, but probably many of these companies never planned to actually issue a product in the first place so it may very well be accurate.
It should also be pointed out that 50% of small businesses fail within 5 years, and between 70-96% fail within 10. You'd think people so incompetent at identifying success would know when to STFU by now. "Hey, our industry is the go to source for how to run a business. Businesses have a 96% failure rate. Please continue to listen to us. Why are you laughing?"
https://www.fool.com/careers/2017/05/03/what-percentage-of-b... https://www.inc.com/bill-carmody/why-96-of-businesses-fail-w...
- "It's just a glorified database"
- "It's just a slow database"
- "Congratulations, the crypto people just learned why regulations exists. Soon enough, we'd need to create each and every regulations in financial sector but for crypto"
- "Oh, to solve that problem, they'll have to do this other thing, and another thing, and soon enough you'd have recreated each and every aspect of our current financial system which they aimed to remove"
- "Can we stop using the word 'crypto' to mean 'cryptocurrencies'? I downvote any article's headline which uses 'crypto' to mean 'cryptocurrencies'"
If all investors should sell their coins, who is the counterparty that should buy them?
That's who bought all my Bitcoins at $20k when I sold them.
But Brendan Eich, the founder of the project, is much more experienced then any random ICO project founder in this space
I'm not sure he will succeed where Flattr failed, but we'll see !
Check out how many websites are already Brave/BAT publishers: https://batgrowth.com/publishers
Vice - freeCodeCamp - BitTorrent - xhamster - The Guardian - Washington Post - TinyUrl - JS Bin - Sitepoint - Smashing Magazine and much more are already verified publishers...
Even dappradar.com that was quoted in this thread !
The script is still running at the moment, right now it's 600 sites in the top 230k, around 0.25%
The cron job should be over by tomorrow
That totally means that they are worth investing in and that the people who created them give a damn about turning it into something more than an ICO...
/s
The question was about success, not trivial viability as a blockchain product.
MakerDAO and DigixDAO are just cryptocurrencies, they don't actually do anything as far as I can tell.
[0] https://etherscan.io/address/0x9f8f72aa9304c8b593d555f12ef65... (Line 453) [1] https://github.com/AugurProject/augur-core/search?q=onlyInBa...
Or do you think the ICOs you design for are all well-intentioned and just so happen to all fail after/during their token sales?
And more to the point, tiny two- and three-person shops probably aren't doing ICOs. If your company is big enough to undertake a public offering of any kind, it's damn well big enough to have someone on staff whose responsibilities explicitly include some kind of community relations work.
Every regular company that has taken on funding at least has a 'web site' with 'some information' and definitely communicates with investors etc. on what's up.
That it's not really even possible to know 'whats up' with companies that have raked in millions is in of itself very telling. Telling enough to keep me and most others miles away.
This is a baffling statement, mostly because if you sell your "coins" to someone and they keep them too long, they will lose everything. Which could lead to liability questions.
I mean, you buy those coins and sell them as fast as you can, because you know that they won't be worth anything within in days or weeks, it could be argued that you committed security fraud. Well it could also argued that the ICO itself is already fraud, because of the huge risk involved.
Issuing shares from scratch is different and there you can get done for fraud.
- claimed product became operational
- claimed product achieved positive cash flow
- claimed product repaid investors.
Anyone have thoughts as to why this ICO could be different? ICO Drops says it was a whitelisted ICO:
https://icodrops.com/singularitynet/
Interesting note from the website: "While we are aware that the AGI token is currently being traded on some exchanges, we do not encourage or facilitate this exchange trading in any manner. Speculative secondary trading is against the spirit of the AGI token and SingularityNET project. We strongly discourage speculative secondary trading and officially ask AGI token holders to act accordingly."
Zil is an example of one building something with a real purpose and non trivial technology - a sharded blockchain that should be able to scale indefinitely which is up 20x in USD. Built by university researchers rather than obvious scammers https://icodrops.com/zilliqa/
There are some interesting things out there amongst the silliness.
What makes you think it is doing so well?
Looking at the purpose of the AGI Token which is to create an open AI exchange (if I understand it correctly), where AI developers use their services in exchange for the AGI token, or for other services, then looking back at that anticipation and over-sale of tokens, it appears there are interested and active investors who are looking to make this coin work. To me, that is successful in comparison to simply having a Public Offering where lots of people invest, often to only lose that money later. This seems to have a purpose.
What points to current success, the "doing so well", is the more than decent ratings a large portion of ICO watchdog sites are giving it for now (although many ICO watchers acknowledge the level of hype to date has been high).
Looking at the current numbers, you're probably going to say "meh"; especially considering the ICO hype pushed the price up, then it dwindled down to a low ebb and flow. But that isn't why I see high expectation, still, for this coin, right? It still has intentional use built into it, and according to the website the Platform Beta Release is coming in the next month or so, at which time the coin will begin to do its work.
So, for me, "doing so well" means there was meaning behind the ICO beyond just economics, the interest was there and was overwhelming, the project has code tied to the coin that is going to go live soon and (from what I read) anticipation is still there within the AI community and the investors.
But again, I ask the question here because compared to the statistics in the article above, SingularityNET appears to be... doing well.
This is like saying after 6 months of an IPO, the stock does not outperform the S&P 500. It doesn't mean the IPO is dead, or the stock is dead.
>We find evidence of significant ICO underpricing, with average returns of 179% from the ICO price to the first day’s opening market price, over a holding period that averages just 16 days. Even after imputing returns of -100% to ICOs that don’t list their tokens within 60 days and adjusting for the returns of the asset class, the representative ICO investor earns 82%.
Not saying I want to participate in any ICOs, especially now that a lot of frothiness has gone out of the market, but this article is clickbait garbage if they can't even summarize some of the main points from the abstract.
Crypto could be Uber for securities, ignoring the regulator and using technology to self regulate, or by operating out of countries with lighter regulation
If you deregulate securities you’re just going to see a whole bunch of senior citizens fleeced by high tech boiler rooms.
The emotional response here is fantastic, it reminds me of this essay
That said, there are certainly cases where financial market regulations have hurt the middle class. For example, a pattern day trader rule was imposed in February 2001 which required a $25,000 minimum balance to trade on margin:
http://www.finra.org/investors/day-trading-margin-requiremen...
More about trading on margin (in the most basic sense - potentially doubling your gains but wiping you out if your total stock holdings equal what you borrowed, triggering a margin call):
https://www.investopedia.com/university/margin/
The pattern day trader rule was introduced after the dot bomb with several stated goals like protecting inexperienced investors or limiting volatility. But it was really yet another tactic to keep the most lucrative forms of trading in the hands of wealthy/institutional investors and leave the masses in the slow lane of trading with their own money.
It's extremely important to know the nuances of regulations and their unintended consequences. But instead we only generally hear about deregulation from politicians, because they know that insiders (their base and lobbyists) will always win over the masses in a fully deregulated economy.
P.S. I didn't downvote you, because the sentiment you expressed is widespread and needs to be addressed
Accounted for risk, the most lucrative form of trading is buying a Vanguard index fund, and sitting on it for 30 years.
Discounting risk, the most lucrative form of trading is flying to Vegas, and putting all your money on red.
Technically, Accounts with less than $25k can trade on margin, they just can't make four or more day-trade in a five day period.
This is entirely subjective and it actually also happens to be wrong.
BTW I got interested in this sort of thing after this law blocked the start of my day trading career :-P
I don't have to prove that day traders weren't negatively affected. In fact, even if one of us proved they were affected, this wouldn't support the argument that the intention of the bill was "to keep the most lucrative forms of trading in the hands of wealthy". That's just unsubstantiated hot air.
Most importantly, you haven't even proven that day trading is "the most lucrative" form of trading and that's probably an even wilder claim! While the burden of proof is on you again, I can already think of two reasons why it is incorrect: (1) day trading incurs in significant transaction costs due to the frequency of the trades and (2) though you may get outsized results on a given trade if your gamble pays off, it's just speculation so it will never beat the market on a risk-adjusted basis. Unless you're a hedge fund with significant resources to take on huge positions and minimize transaction costs, there is really no easy alpha left in the market. Everything's already priced in these days.
Do you know anything at all about the year 1929?
There is exactly nothing in blockchain that guarantees this will happen, or even makes it a likely outcome.
I really don't think this is very meaningful metric for anything.
Sure where there is a lot of money there is a lot of people trying to weasel their way in. But so far the usage has grown.
Much more companies will fail just like on "the internet" but the blockchain just like the TCP/IP protocol is here to stay and the coming generations will adopt it as if it's the most natural thing in the world just like we did with the internet.
Over in the real world, I haven't heard of any legitimate ICOs.
The vast vast majority are vaporware.
It works well for 3D graphics because it's easy to verify the work was done and it's low risk. With more encryption research the model would work for more types of computing
Do you have a less delightfully ironic and self defeating example to support your argument?
The reason many companies are doing ICOs regardless is because it actually makes sense if you look at it as a financial instrument that gets you funded quickly to the extend where you get similar capitalization comparable to a big series A or even B round.
Like with high risk investments, ROI is pretty bad; except when it is not. Most ICOs will fail but some will not. This space continues to be so hot on the premise that there are a few unicorn ICOs out there that are actually going to make it. Ironically, this is leading to a lot of misguided investments by, well, idiots. This in turn is leading to a lot of successful attempts to separate these idiots from their cash. Blame the idiots, not the ICOs. Hence Dogecoin, PonziCoin V3 (this is a thing !!!), and similarly poorly veiled scams. I applaud these people for being able to make so much money with so little effort.
There are many issues with dapps. IMHO it doesn't make any sense to write dapps right now unless your roadmap spans several years because the technology is very immature, the infrastructure is not there, and the fixes are years out from becoming proven to the point where you can rely on them to function as advertised. This requires more than proof of concept. Ethereum and bitcoin are out there with many users that are trying to exploit it in any way they can. That makes it battle tested. Alternative technology stacks exist but lack this type of user base and scrutiny.
Most of these alternative stacks still have serious flaws conceptually and practically. Quite a few of them seem to be moving the problem rather than solving it. What's needed is orders of magnitude improvements to throughput and scale for dapps to be usable by the masses. 50k transactions sounds nice until you realize that is globally and needs to service the entire ecosystem of dapp applications. That's not a lot compared to a modern db running on off the shelf hardware. Once users actually show up, that kind of traffic can be caused by a spike in usage on a single dapp. If you have many of those, that will be happening all the time.
Right now the only things dapps make sense for are things that are relatively high value so you can justify the cost and have enough per transaction revenue and very low in transaction volume so that the whole thing doesn't collapse when you actually get some traction. That pretty much narrows it down to limited amount of trading of coins on top of ethereum, which is indeed the dominant type of dapp in use today.
Some successful ICOs are actually about fixing this problem. They are long term investments in tech companies that are likely to fail but very lucrative if they don't. E.g. Telegram is a high risk investment but they are now well funded and have enough runway to execute whatever it is they are doing for the next few years. And they have a decent tech team. Similarly IOTA, QTUM, HashGraph, and others are well funded companies well capable of executing roadmaps that will take quite long to deliver results. Are those bad investments? Not if they succeed. Is that any different from e.g. the likes of Google bank rolling Magic Leap? Or indeed any kind of VC tech investment?
Recently helped a friend extract his company from a wire fraud scam. Wires, particularly international wires, are surprisingly irrevocable. You basically have to get the receiving bank to agree to send the money back.
The main difference is that the coin is just a coin, buying it won't make you a shareholder and you aren't subject to the regulation that IPOs and shareholders are. That regulation makes it difficult to scam investors by starting a dummy company, pretending it's a valuable operation, selling shares in an IPO, and then running away with the money. Doing this with an ICO is much easier, and there's a lot of concern about how many ICOs are frauds.
I’m not sure I get the point of an ICO. It seems like a company issuing monopoly money. It even seems like this would have been possible before crypto—literally just Monopoly money to people and let them trade amongst themselves.
I guess Monopoly money is easy to duplicate… but so is crypto in a way because you can just start your own currency that uses the same block chain to create more tokens.
Well, just remove the company, the product, and the regulation, and that's an ICO.
The issuer of the coins/tokens do not have to buy anything back. The idea is that they will increase in value and function, and others will want to buy them from you.
It goes like this:
1. "RichCoin" is created and the creators begin selling them at 5,000 Richcoins for 1 Bitcoin. Ads are pushed across social media platforms and web communities are seeded with information that encourages people to invest.
2. 50,000 people spend a total of 1000 Bitcoins buying the first 5,000,000 RichCoins.
3. After public launch, 5,000 people sell their RichCoins to late investors, netting ~20% profits.
4. The remaining 45,000 people "HODL", hoping that their $1 RichCoins will one day become $100 RichCoins so that they can move to a private island and never work again.
5. RichCoins fall to 10% or less of their ICO value as all official websites disappear.
6. The creators of RichCoin, who long ago converted their 1000 Bitcoins to $5,000,000 USD, move to a private island and never work again.
Time to start RichCoin 2: Totally Different This Time
Is it that easy to turn BTC to cash? I heard most exchanges have no way to withdraw real dollars.
It makes more sense if you look at most of the ICO tokens from the ethereum point of view, rather than bitcoin. Ethereum and its derivatives let you use tokens as components of distributed applications. Unlike a "pure" currency, which is useful only as a medium of exchange and has no intrinsic value, these tokens let you use the distributed application so they're worth whatever the application is. They aren't really currency, although you can usually buy and sell them and they're used to give the application some kind of market behavior.
Something like filecoin is a better example. The filecoin project intends to build a distributed storage system. If their project succeeds, the filecoin network will let you exchange coins for the network's storage, and storage is valuable so the coins are valuable too. Ideally, they'll use the funding from selling coins in an ICO to make the project so useful that a coin's worth of access will be worth more than what you paid for it during the ICO and the people who participated come out ahead.
Personally I'm still not very impressed with most ICO projects, but at least all of them aren't completely insane when you look at them this way.
There are people getting into crypto currencies purely because they hear about others making money doing so. This means there are also predators taking advantage of the lack of barriers. A crypto might not be a scam but when scams are easier to make than real things, the scams will be more numerous.