Crypto currency!

Jel · Post by **Jel** » Fri Jul 21, 2017 3:48 pm

Does anyone have any dealings with Crypto currency?
The value of one Bitcoin went up in value $600 dollars yesterday!

cutsy123 · Post by **cutsy123** » Fri Jul 21, 2017 3:54 pm

how do you get it? always wondered?

Imploding Turtle · Post by **Imploding Turtle** » Fri Jul 21, 2017 4:02 pm

cutsy123 wrote:how do you get it? always wondered?

https://www.youtube.com/watch?v=GmOzih6I1zs" onclick="window.open(this.href);return false;

FactualFrank · Post by **FactualFrank** » Fri Jul 21, 2017 4:03 pm

I did have dealings with Bitcoin, a few years ago when most people had never heard of it. It started in 2009, but only started to take off around 2012-13 which is when it was being discussed a lot in Internet Marketing. I regret not taking it more seriously and buying shares in it right from the off, but there was never any guarantee it would take off. I've worked with people online in the past who have since made a ludicrous amount of money, like over a million dollars.

Jel · Post by **Jel** » Fri Jul 21, 2017 4:12 pm

There are various sites you can go to such as Coinbase or Bitcoin wallet for example (other sites are available). You don't have to buy a full Bitcoin, just a fraction of one and for what value you want.

Jel · Post by **Jel** » Fri Jul 21, 2017 4:14 pm

I know some one who bought two a few years back for about £100. They are at £2613 at the moment.

NRC · Post by **NRC** » Fri Jul 21, 2017 4:15 pm

Well, I'm in IT marketing. The underlying technology is Blockchain, and we can't train up our consulting experts quick enough to keep pace with the enterprise enquires.

Several industries about to be massively disrupted that will make taxis, travel, insurance etc look like small change. So far the internet has revolutionalized consumer buying, but it's about to become the de facto methodology for intra-enterprise supply chain and financial trades. Non of this means that bitcoin is the currency, but if enterprise is about to move to the underlying technology it's not going to do it any harm as it fully legitimizes it

FactualFrank · Post by **FactualFrank** » Fri Jul 21, 2017 4:32 pm

Jel wrote:I know some one who bought two a few years back for about £100. They are at £2613 at the moment.

I can certainly believe that. I just wonder if the ship has now sailed, for me to buy some.

aggi · Post by **aggi** » Fri Jul 21, 2017 4:59 pm

It's suffering from its own success a bit at the moment. Transfers can take hours (or even days) to go through which limits its use for purchasing things. There are various ideas to resolve this but none have gained universal acceptance yet.

Paul Waine · Post by **Paul Waine** » Fri Jul 21, 2017 7:30 pm

A lot of stuff about crypto currencies on LinkedIn last few days.

I've quoted one article below. I'll also see if I can find a couple more.

I've got to admit that some of it goes right over my head.... though I can see where some of the stuff is coming from.

Wall Street's 'dean of valuation' says digital currencies are replacing gold

http://www.cnbc.com/2017/07/18/wall-str ... -gold.html" onclick="window.open(this.href);return false;

"Aswath Damodaran believes digital currencies will "sooner or later" compete with the major paper currencies.
Damodaran is professor of finance at the New York University Stern School of Business. He is widely regarded as the foremost expert in valuing companies and is often referred to as Wall Street's "dean of valuation."
Aswath Damodaran predicts digital currencies will eventually be as important as the major paper currencies. He said cryptocurrencies have already replaced gold for younger investors.
CNBC's Mike Santoli spoke with Damodaran in an exclusive interview for CNBC PRO . Santoli asked the valuation expert about bitcoin and other cryptocurrencies.

"All currency is ... based on trust. If you don't trust paper currency, historically what you've done is you dumped paper currencies [and] you bought gold," he said. "Cryptocurrencies have taken the role of gold at least for younger investors because they don't trust paper currencies."
Digital currency prices are surging this year. The ethereum cryptocurrency is up more than 2,400 percent year to date through midday Tuesday, while bitcoin is up more than 140 percent this year, according to data from industry website CoinDesk.

Cryptocurrency miners use graphics cards and computers to "mine" new coins, which can then be sold or held for future appreciation.
Damodaran defended digital currencies against skeptics who criticized "coin mining" as a misallocation of resources such as computing power and electricity.

"If you think about it, the printing presses that run paper currencies. It's kind of a useless transaction. You're just printing paper. In a sense all currency creation, it's not creating real economic growth by itself. The only reason currencies exist is for us to transact … If a digital currency can do it more efficiently than paper currency can, I think there is going to be a digital currency sooner or later that competes with the major paper currencies. Whether it is one of the existing cryptocurrencies I don't know."

Paul Waine · Post by **Paul Waine** » Fri Jul 21, 2017 8:15 pm

This "initial coin offerings" stuff is well explained by S&P Global team. I know John Kingston. He's a "good guy."

I'm not convinced that I'll be buying in any "ico" anytime soon.

Initial Coin Offerings: A new capital market takes wing, but not without controversy
S&P Global
Written By: John Kingston (lead author), Eric Turner, Thomas Zakrzewski and James Rilett

July 17, 2017

Capital markets have long found new ways to provide funding for economic institutions of all shapes and sizes. One of the more novel ones has helped raise hundreds of millions of dollars in just the past two years, marking it firmly as a new entrant in the world of decentralized nontraditional capital markets: the initial coin offering (ICO). ICOs are based on the distributed ledger technology of blockchain initially used for bitcoin, but they can frequently be on bitcoin's challenger, Ethereum, which has its own unique distributed ledger. Here, we answer questions about this growing--albeit confusing--method of providing startup funding, raising sums that barely cross $1 million to as much as, or more than, $150 million.
Let’s start with the basics: what are ICOs?

ICOs are a form of crowdfunding to develop blockchain-based applications, with the fund raising taking place on a blockchain. Because it is crowdfunding, individual investors are looked to as the pool of potential buyers, and it's not unusual since the value of the tokens spiked in spring 2017 to hear individual investors boast that they bought a token for $250 and sold it for many times over. (Ironically, the products in an ICO are rarely referred to as coins; tokens is the preferred word.)
Instead of seeking investment from venture capital or angel investors, an ICO allows a larger group of people or entities to purchase as many, or as few, tokens as they wish. A series of successful ICOs has led some investors to enter the space hoping to profit from getting in early on a promising platform. Some of the early numbers from the spring and early summer of 2017 reflect tremendous gains.
If an individual makes a purchase on an ICO, what's he or she buying? Is it shares in the company?
No. An ICO does not offer equity. It provides the ownership in a full or partial share of the token that is for sale. It isn't a debt instrument; the company that sold the token owes nothing to its owner other than the use of platform services equal to its value.
If I'm not buying equity in a company, like I would in an IPO, then let's revert to the original question: what I am buying?
There are several things you could get if you bought a token. Mark Williams, master lecturer at Boston University, described it this way: "Each platform is different, and the role that a token plays also differs widely from platform to platform. Usually, a token gives the owner the access or right to participate in specific activities inside the platform. If the underlying demand or value of these activities increases, the token usually increases in value. Sometimes tokens are purchased as a bet that underlying value of such access and blockchain related activities will increase in value. It is also possible for platforms to become adopted without the token gaining much value. The potential for token appreciation depends on the specifics of the economic design of the application."
A good example is the ICO-funded company Storj. The company's product is described as "distributed cloud storage.” It links available data storage space through a blockchain connection, running open-source software Storj developed. Storj first raised capital in 2014 through an ICO measured by the 910 bitcoins investors supplied. At the time, digital currency information and news provider CoinDesk valued the money raised at about $460,000. (At a mid-June value of about $2,200 for 1 bitcoin, that figure would be more than $2 million.) To reiterate a key point, the buyers in that auction did not get equity in Storj. Instead, they got Storjcoin, a digital currency tied to the Storj platform.
A buyer may also be looking to participate in any upside or notional capital value growth from that token, which would convert back into more bitcoins, ethers, or even U.S. dollars.
Can you give another example?
There's a very good, non-technical example in the white paper produced for the ICO of a company called Bancor, which recently raised a whopping $150 million in a June ICO: "For example, a musician may collect funds to record an album, which would be sold online exclusively in exchange for the issued tokens. A successful album would generate high demand for the tokens, driving up their price and rewarding those holding them." If an application tied to an ICO produces a blockchain-based application that becomes successful, potential customers will be clamoring to use it. The entrance fee to use that application will be a token. Its value presumably would rise with the increase in demand for the token, whose quantity is generally fixed and capped by the developer. (As an aside, S&P Global Chief Economist Paul Sheard, in looking at ICOs, noted the way a token is described sounds close to the classic definition of equity. “It sounds like equity in the project, not the enterprise,” Paul wrote. “Equity is a ‘residual risk’ claim: your payoff is anything between zero and unlimited upside. This sounds very similar to the description of a token.”)
You mentioned a white paper. Why not a prospectus, like with an IPO?
That's another unique aspect of the token ecosystem, as it is often referred. The traditional prospectus that would be released for an IPO of equity or for a debt offering has been replaced by a “white paper.” They differ in length, style and specifics. But they are the declaration of the entity offering the token as to what the developers plan on doing with the cash raised by the token offering. A white paper format also better serves potential token investors. While a prospectus is designed to ensure that investors understand a company's operations, a white paper is more technical and ensures token purchasers understand how a platform will work. The style of disclosures in a white paper also help to differentiate a token sale from a traditional equity offering, which for now at least can help keep ICOs away from regulatory restrictions.
Are some of these ICOs scams?
No doubt. Everybody in the token ecosystem agrees with that. It's a market that doesn't have agreed-upon standards, regulation or any specific oversight. A true scam would obviously face criminal prosecution, but that can hardly be considered “regulation.” Even if some of them aren't scams, others might be legitimately promising an application that they then fail to produce even after their funding through the ICO is in place. One thing that would make a scam transparent pretty quickly: the value of the token sold in the fraudulent ICO. It would collapse as its owners realize they've been had. If the price of the cryptocurrency is transparent, which they increasingly are, the decline would not go unnoticed.
Those in the ecosystem legitimately realize that the Wild West aspect of ICOs can't go on. There needs to be standards, and if this form of fund raising is going to flourish, there needs to be the ICO equivalent of what you find in other capital markets: equity analysts, ratings agencies and a clearer regulatory regime.
When I get my new token, can I immediately start to use it on the blockchain protocol the developers talked about in their white paper?
Maybe. More likely, the funds you provided by buying the token will be used to develop the application. Think of it like a book advance: the publisher gives the writer an advance, and the writer goes off to produce--hopefully--a best-seller. One difference: if the writer fails to produce, the publisher can usually claw back the advance. It is debatable whether that's possible with a token owner who bought a cryptocurrency for an application that remained nothing more than an idea.
When did this new trend start?
The generally accepted first ICO was for a company called Mastercoin, back in 2013, but the ICO to fund the Ethereum platform is considered the coming of age for this new form of fund raising. The many offerings in 2016-2017 reflect a combination of maturity and frenzy, all rolled into one.
If I wanted to use the services of Storj, or some similar blockchain-based application, would I need one of the cryptocurrencies that are behind each token?
The Storj white paper describes the system as "payment agnostic." It does add, however, that the system "assumes" the use of Storjcoin, the token offered as part of the Storj ICO. It also states that bitcoin and ether--the Ethereum platform's digital currency--can be used. It also says the "physical transfer of live goats" is acceptable also, which is not the type of verbiage you'd find in too many prospectuses. Implied then is that dollars would be just fine. But it's clear that the token ecosystem believes these applications operate best with the cryptocurrency designed for that platform.
Why wouldn't a company like Storj lay down tighter guidelines on approved payment methods?
The platform is based on distributed ledger technology, the key being "distributed." Transactions between parties on the blockchain-driven application are peer-to-peer, and the assumption is they can figure out for themselves how a seller gets paid.
Can you give me examples of some other services that are provided by recent ICOs?
There are now literally hundreds of them. Smith & Crown is a coin research and price tracking company with the added quirk of a name that sounds like an English pub. In mid-June, it listed almost 60 pending ICOs. It had almost 70 ICOs under the heading of recent ICOs. It also tracks the value of many cryptocurrencies created by ICOs. Some of the brief business plan descriptions include gaming or gambling; another is a decentralized encyclopedia, like Wikipedia with a "for-profit business model and rewards for users who create or edit content." Some descriptions can only be described as "geek speak." Various financial services are listed, such as one that describes itself as a "project aimed to create a regulated bank for cryptofinance" and one for a company called Legends Room, described as providing token owners with "VIP membership in a Las Vegas gentleman's club" (though to be fair, that one is very much an outlier). But in general, if you look over the list of the ICOs on Smith & Crown, the majority are distributed, transparent applications utilizing the capabilities of blockchain.
Are recently purchased tokens being actively used for the services provided by the company? Or is it all just speculation?

Here's an unscientific poll result: At a sold-out New York event called the Token Summit in May of this year, the conference chair early in the day asked a room of approximately 500 people how many of the attendees owned a token. The sea of hands that shot up was estimated by the chairman as constituting about 90% of the room. The question then was put to the audience: how many of you have actually used one of them for the application tied to the token? Only about 10% remained raised. What that may signify is not necessarily that they're all speculators. It probably also reflects the fact that many of the ICOs have been issued to fund applications that have not yet been developed.
Those connected to the token space will readily concede that in the first half of 2017, the (mostly) rising price of cryptocurrencies was being pushed by investors looking at hot money opportunities, buying tokens tied to business plans that in some cases were vague at best. Some high-profile scandals, and indeed Ethereum's very own flash crash of June 2017, have perhaps not helped. Yet there also are serious, long-term funds that have raised millions of dollars to invest in cryptocurrencies.
This sounds like a bubble. But there have been bubbles before, and the products at the heart of the bubbles have often stuck around, like in the dot com burst, or tulip mania in the 1600s. What's going to stick around in this case?
It is true that it can be difficult to fully understand the business plans of many of the companies issuing ICOs or why many tokens have soared in value. The issuers are not even what could really be called "companies." They've been more accurately described as "blockchain protocols," which are blockchain-based applications designed to facilitate further uses that may not yet be fully defined. Some will make it, others won't.
The recent token sale from Aragon--viewed as successful--is a case in point. In its white paper, it describes the Aragon Network as "a token-governed digital jurisdiction that focuses on creating the best conditions for true global indiscriminatory economic growth. The Aragon Network (AN) will be the first decentralized autonomous organization whose goal is to act as a digital jurisdiction that makes it extremely easy and friendly for organizations, entrepreneurs, and investors to operate. The Aragon Network will be bootstrapped with a very thin Constitution voted by its governance. New laws can be added and they can be amended by the governance of the AN."
It's tough to translate that easily. But if we had to, we'd say that Aragon is setting up a blockchain-based network that other entities can use as the base for building a business, with the token owners being called upon to provide a level of governance to the application. Precisely what that business would be is up to the entity developing it on the platform. But once it does, it would use the Aragon token to transact, and uses the consensus aspect of distributed ledgers to help settle disputes. That's not a lot of detail; you'd have to wait to see the application built on the Aragon network.
Will the actual use of ICOs last? Has a whole new tool for raising capital been discovered, or is this a passing trend that will run out of steam?

ICOs are addressing an issue unique to the nature of blockchain applications: the difficulty in making money from developing open-source software. As noted, many of the entities behind the ICOs consider themselves more as internet protocols rather than traditional companies. But even if monetizing those protocols through traditional channels is extremely difficult, no one knows these networks better than the original developers. Once the open-source software is released and adopted, it will go through numerous iterations; it will presumably never sit still. Who better to provide support to companies using it than the original developers?
One analogy that has been drawn is to Red Hat. (Kudos to the folks at Coin Center who pointed this out.) The Linux operating system is open source; nobody owns it. But Red Hat has carved out a $2 billion business by supporting applications built for Linux. Or as its CEO James Whitehurst said in the company's annual report for 2016: "Red Hat's breadth of open-source technologies spanning infrastructure, application development, middleware, and management layers, combined with award-winning support, training, and consulting services, help transform an organization's data center to meet those customer demands and gain competitive advantage." That's the sort of business that could be sold in an IPO. A group of developers with an open-source blockchain application that is still under development wouldn't have much attraction to traditional venture capital companies or investment bankers who take companies public. Again, quoting Coin Center in a paper from last year: “Open platforms have proved difficult to create because it has been historically difficult to monetize them even if they become successful—by nature they are public goods.”
How many tokens do the initial entrepreneurs retain in the ICO?
There is no hard-and-fast rule. But you can find numerous references to an 85-15 split, with the developers retaining 85%. There are other applications though where the developers held as little as 5%; the Gnosis ICO is an example. Long-range plans require further sales to fund the necessary investment to produce the product promised in the white paper. It's not just to fill the pockets of the principals.
Can I "mine" new tokens?
Mining is the process in the bitcoin protocol where, via an electricity-intensive complex application, new bitcoins are yielded from the original stash of 21 million bitcoins; the number of bitcoins is capped at 21 million, though each bitcoin is divisible into a smaller unit with up to eight decimal points beyond the number 1. The ether token on the Ethereum network is also mined. But most of the recent ICOs, those tied to a specific use case, offer what has been referred to as "pre-mined" tokens where further mining is not possible. Whether the total is capped varies among the ICOs.
If I bought a token as a speculator, or simply don't want to use the application anymore, how can I turn it into real money?
First things first: in this community, never use the term "real money" unless you want to be mocked mercilessly. The term the "ecosystem" uses for dollars, euros, yen, etc. is "fiat currency." It is not a compliment.
If you want to convert your digital currency into fiat currency, many exchanges exist to do so. Coinbase, probably the most well-known, is a popular exchange for bitcoin, ether, and litecoin conversions. Exchanges are being created or expanded to provide liquidity for a range of new tokens created through recent ICOs, while existing services like ShapeShift can convert more obscure tokens into liquid options like bitcoin or ether.
I've just read a whole Q&A on ICOs and now I'm starting to hear that the term is being frowned on. Why is that?
Because of a question that was asked earlier in a roundabout way: what is the difference between an ICO and an IPO? Those in the token community are starting to push back against the ICO term precisely because of the comparison with IPOs. The concern is that they will fall under the same sort of regulatory structures as IPOs, and that is something they would very much like to avoid. Step one is to avoid calling them something so similar to IPO.
Has that regulatory oversight been avoided so far?

Yes, but it's an ongoing debate within the industry how long this freedom will endure. A joint paper published this year attempted to address the issue. Part of the paper was from a consortium that included Coinbase and CoinCenter as sponsors; the other half of the paper was from the law firm of Debevoise & Plimpton. The Coinbase/CoinCenter portion laid out best practices for an ICO. It starts by discussing the so-called "Howey test," determining whether a financial instrument is subject to SEC regulation. Three elements are spelled out: an investment of money, a common enterprise, and "an expectation of profits predominantly from the efforts of others." Later, in the Debevoise & Plimpton section, the law firm says a cryptocurrency token wouldn’t meet the definition of a security--with an eye toward the Howey test--if it has several rights, such as the right to use a system and its outputs and the right to contribute "labor or effort" to that system. But it would be a security if it involved equity or ownership, something that is clearly not part of a token holder's rights.
There are those in the token ecosystem who believe ICOs should be offered only to accredited investors, making them more like a private securities offering instead of an IPO. CoinList, for example, is restricted to accredited investors. It also created a specific instrument for ICOs called a SAFT: Simple Agreement for Future Tokens.
Is the industry largely in agreement that it is not a security?
It's keeping a wary eye on the SEC. At the big blockchain-themed Consensus meeting in New York in May, Valerie Szczepanik was quoted in a Reuters story as saying, "Whether a token is a security or not is a fact or circumstance-based thing and you have to really pick it apart," leaving enough ambiguity that the issue clearly is not viewed as settled. Szcaepanik's formal title is assistant regional director, Division of Enforcement for the SEC, but she was described in the Reuters story as the head of the agency's distributed ledger team. "Whether or not you are regulated by the SEC, you still have fiduciary duties to your investors," she said, according to the Reuters story. "If you want this industry to flourish, protection of investors should be at the forefront."

dushanbe · Post by **dushanbe** » Fri Jul 21, 2017 8:56 pm

dsr · Post by **dsr** » Fri Jul 21, 2017 10:12 pm

Paper money and bank money is backed by governments. There's substance behind it, even if that substance is only the reliability of the government concerned - which is why we tend to keep money in Sterling rather than North Korean Wons.

Bitcoins aren't backed at all. One morning in 2009, someone invented the theory of 21,000,000 bitcoins, all of which were and are fictional creations that you or I can invent today. Then he asked "who wants to buy some", found some buyers, and created a value for them. Speculators drove up the value, especially as he released them slowly and made people work to get them, which made it seem more like they were worth something.

As prices go up, more buyers come in thinking they are profitable investments, and so prices go up again. And again. And as long as you get out at the right time, fortunes will be and have been made. But ultimately, they are worthless because there is nothing behind them; the time will come when the bubble bursts and the people holding the baby at that time will find they have lost the lot. It's happened before - South Sea bubble, Tulip bubble, dotcom bubble - where people speculated on buying worthless stuff just because it had been increasing in value and they thought it would carry on increasing. It always ends in tears.

PS - there's no backup security on dotcom funds. If your "bank" gets hacked and they lose your money, you're stuffed.

Paul Waine · Post by **Paul Waine** » Fri Jul 21, 2017 10:37 pm

There were a number of articles comparing and contrasting bitcoin and tulip mania a few years back. There have been some more over the past few weeks, adding also Ethereum - a newer cryptocurrency. It seems it is possible for there to be as many separate cryptocurrencies as people want.

It appears the initial motivation for a cryptocurrency is to be outside the state "fiat currencies," i.e. to exist in the "free from regulation" internet world. I'm not sure whether that is a great recommendation for the money as a store of wealth. Yes, "fiat currencies" can also experience inflation and hyper-inflation and this will destroy the value of wealth held in that currency. Last year's action by the Indian government in declaring void the larger denomination rupee notes (500 and 100, from memory) also hit the people who held their "wealth" in these notes.

dsr · Post by **dsr** » Fri Jul 21, 2017 10:45 pm

There's no problem creating a new currency. I could invent some "dsrcoins" and sell them to anyone who wants - who'll give me a tenner for a dsrcoin? Send me the money, and I'll send you a certificate to say you've got a dsrcoin. You may sell it on to whosoever you wish, for as much money as you can get for it.

Paul Waine · Post by **Paul Waine** » Fri Jul 21, 2017 10:53 pm

dsr wrote:There's no problem creating a new currency. I could invent some "dsrcoins" and sell them to anyone who wants - who'll give me a tenner for a dsrcoin? Send me the money, and I'll send you a certificate to say you've got a dsrcoin. You may sell it on to whosoever you wish, for as much money as you can get for it.

Hi dsr, I'm a buyer if you can send the certificate to a "safe document store" on my smart phone - and it is guaranteed to be worth "gazillions" more in a few weeks - and I can find a buyer to promise to pay me those "gazillions" in good old GBP (or USD, or, even euros) at that time.

If not, well, I think I'll pass this time. (Even though I know I will regret it later).

Good luck.

tim_noone · Post by **tim_noone** » Fri Jul 21, 2017 10:54 pm

Paul Waine wrote:This "initial coin offerings" stuff is well explained by S&P Global team. I know John Kingston. He's a "good guy."

I'm not convinced that I'll be buying in any "ico" anytime soon.

Initial Coin Offerings: A new capital market takes wing, but not without controversy
S&P Global
Written By: John Kingston (lead author), Eric Turner, Thomas Zakrzewski and James Rilett

July 17, 2017

Capital markets have long found new ways to provide funding for economic institutions of all shapes and sizes. One of the more novel ones has helped raise hundreds of millions of dollars in just the past two years, marking it firmly as a new entrant in the world of decentralized nontraditional capital markets: the initial coin offering (ICO). ICOs are based on the distributed ledger technology of blockchain initially used for bitcoin, but they can frequently be on bitcoin's challenger, Ethereum, which has its own unique distributed ledger. Here, we answer questions about this growing--albeit confusing--method of providing startup funding, raising sums that barely cross $1 million to as much as, or more than, $150 million.
Let’s start with the basics: what are ICOs?

ICOs are a form of crowdfunding to develop blockchain-based applications, with the fund raising taking place on a blockchain. Because it is crowdfunding, individual investors are looked to as the pool of potential buyers, and it's not unusual since the value of the tokens spiked in spring 2017 to hear individual investors boast that they bought a token for $250 and sold it for many times over. (Ironically, the products in an ICO are rarely referred to as coins; tokens is the preferred word.)
Instead of seeking investment from venture capital or angel investors, an ICO allows a larger group of people or entities to purchase as many, or as few, tokens as they wish. A series of successful ICOs has led some investors to enter the space hoping to profit from getting in early on a promising platform. Some of the early numbers from the spring and early summer of 2017 reflect tremendous gains.
If an individual makes a purchase on an ICO, what's he or she buying? Is it shares in the company?
No. An ICO does not offer equity. It provides the ownership in a full or partial share of the token that is for sale. It isn't a debt instrument; the company that sold the token owes nothing to its owner other than the use of platform services equal to its value.
If I'm not buying equity in a company, like I would in an IPO, then let's revert to the original question: what I am buying?
There are several things you could get if you bought a token. Mark Williams, master lecturer at Boston University, described it this way: "Each platform is different, and the role that a token plays also differs widely from platform to platform. Usually, a token gives the owner the access or right to participate in specific activities inside the platform. If the underlying demand or value of these activities increases, the token usually increases in value. Sometimes tokens are purchased as a bet that underlying value of such access and blockchain related activities will increase in value. It is also possible for platforms to become adopted without the token gaining much value. The potential for token appreciation depends on the specifics of the economic design of the application."
A good example is the ICO-funded company Storj. The company's product is described as "distributed cloud storage.” It links available data storage space through a blockchain connection, running open-source software Storj developed. Storj first raised capital in 2014 through an ICO measured by the 910 bitcoins investors supplied. At the time, digital currency information and news provider CoinDesk valued the money raised at about $460,000. (At a mid-June value of about $2,200 for 1 bitcoin, that figure would be more than $2 million.) To reiterate a key point, the buyers in that auction did not get equity in Storj. Instead, they got Storjcoin, a digital currency tied to the Storj platform.
A buyer may also be looking to participate in any upside or notional capital value growth from that token, which would convert back into more bitcoins, ethers, or even U.S. dollars.
Can you give another example?
There's a very good, non-technical example in the white paper produced for the ICO of a company called Bancor, which recently raised a whopping $150 million in a June ICO: "For example, a musician may collect funds to record an album, which would be sold online exclusively in exchange for the issued tokens. A successful album would generate high demand for the tokens, driving up their price and rewarding those holding them." If an application tied to an ICO produces a blockchain-based application that becomes successful, potential customers will be clamoring to use it. The entrance fee to use that application will be a token. Its value presumably would rise with the increase in demand for the token, whose quantity is generally fixed and capped by the developer. (As an aside, S&P Global Chief Economist Paul Sheard, in looking at ICOs, noted the way a token is described sounds close to the classic definition of equity. “It sounds like equity in the project, not the enterprise,” Paul wrote. “Equity is a ‘residual risk’ claim: your payoff is anything between zero and unlimited upside. This sounds very similar to the description of a token.”)
You mentioned a white paper. Why not a prospectus, like with an IPO?
That's another unique aspect of the token ecosystem, as it is often referred. The traditional prospectus that would be released for an IPO of equity or for a debt offering has been replaced by a “white paper.” They differ in length, style and specifics. But they are the declaration of the entity offering the token as to what the developers plan on doing with the cash raised by the token offering. A white paper format also better serves potential token investors. While a prospectus is designed to ensure that investors understand a company's operations, a white paper is more technical and ensures token purchasers understand how a platform will work. The style of disclosures in a white paper also help to differentiate a token sale from a traditional equity offering, which for now at least can help keep ICOs away from regulatory restrictions.
Are some of these ICOs scams?
No doubt. Everybody in the token ecosystem agrees with that. It's a market that doesn't have agreed-upon standards, regulation or any specific oversight. A true scam would obviously face criminal prosecution, but that can hardly be considered “regulation.” Even if some of them aren't scams, others might be legitimately promising an application that they then fail to produce even after their funding through the ICO is in place. One thing that would make a scam transparent pretty quickly: the value of the token sold in the fraudulent ICO. It would collapse as its owners realize they've been had. If the price of the cryptocurrency is transparent, which they increasingly are, the decline would not go unnoticed.
Those in the ecosystem legitimately realize that the Wild West aspect of ICOs can't go on. There needs to be standards, and if this form of fund raising is going to flourish, there needs to be the ICO equivalent of what you find in other capital markets: equity analysts, ratings agencies and a clearer regulatory regime.
When I get my new token, can I immediately start to use it on the blockchain protocol the developers talked about in their white paper?
Maybe. More likely, the funds you provided by buying the token will be used to develop the application. Think of it like a book advance: the publisher gives the writer an advance, and the writer goes off to produce--hopefully--a best-seller. One difference: if the writer fails to produce, the publisher can usually claw back the advance. It is debatable whether that's possible with a token owner who bought a cryptocurrency for an application that remained nothing more than an idea.
When did this new trend start?
The generally accepted first ICO was for a company called Mastercoin, back in 2013, but the ICO to fund the Ethereum platform is considered the coming of age for this new form of fund raising. The many offerings in 2016-2017 reflect a combination of maturity and frenzy, all rolled into one.
If I wanted to use the services of Storj, or some similar blockchain-based application, would I need one of the cryptocurrencies that are behind each token?
The Storj white paper describes the system as "payment agnostic." It does add, however, that the system "assumes" the use of Storjcoin, the token offered as part of the Storj ICO. It also states that bitcoin and ether--the Ethereum platform's digital currency--can be used. It also says the "physical transfer of live goats" is acceptable also, which is not the type of verbiage you'd find in too many prospectuses. Implied then is that dollars would be just fine. But it's clear that the token ecosystem believes these applications operate best with the cryptocurrency designed for that platform.
Why wouldn't a company like Storj lay down tighter guidelines on approved payment methods?
The platform is based on distributed ledger technology, the key being "distributed." Transactions between parties on the blockchain-driven application are peer-to-peer, and the assumption is they can figure out for themselves how a seller gets paid.
Can you give me examples of some other services that are provided by recent ICOs?
There are now literally hundreds of them. Smith & Crown is a coin research and price tracking company with the added quirk of a name that sounds like an English pub. In mid-June, it listed almost 60 pending ICOs. It had almost 70 ICOs under the heading of recent ICOs. It also tracks the value of many cryptocurrencies created by ICOs. Some of the brief business plan descriptions include gaming or gambling; another is a decentralized encyclopedia, like Wikipedia with a "for-profit business model and rewards for users who create or edit content." Some descriptions can only be described as "geek speak." Various financial services are listed, such as one that describes itself as a "project aimed to create a regulated bank for cryptofinance" and one for a company called Legends Room, described as providing token owners with "VIP membership in a Las Vegas gentleman's club" (though to be fair, that one is very much an outlier). But in general, if you look over the list of the ICOs on Smith & Crown, the majority are distributed, transparent applications utilizing the capabilities of blockchain.
Are recently purchased tokens being actively used for the services provided by the company? Or is it all just speculation?

Here's an unscientific poll result: At a sold-out New York event called the Token Summit in May of this year, the conference chair early in the day asked a room of approximately 500 people how many of the attendees owned a token. The sea of hands that shot up was estimated by the chairman as constituting about 90% of the room. The question then was put to the audience: how many of you have actually used one of them for the application tied to the token? Only about 10% remained raised. What that may signify is not necessarily that they're all speculators. It probably also reflects the fact that many of the ICOs have been issued to fund applications that have not yet been developed.
Those connected to the token space will readily concede that in the first half of 2017, the (mostly) rising price of cryptocurrencies was being pushed by investors looking at hot money opportunities, buying tokens tied to business plans that in some cases were vague at best. Some high-profile scandals, and indeed Ethereum's very own flash crash of June 2017, have perhaps not helped. Yet there also are serious, long-term funds that have raised millions of dollars to invest in cryptocurrencies.
This sounds like a bubble. But there have been bubbles before, and the products at the heart of the bubbles have often stuck around, like in the dot com burst, or tulip mania in the 1600s. What's going to stick around in this case?
It is true that it can be difficult to fully understand the business plans of many of the companies issuing ICOs or why many tokens have soared in value. The issuers are not even what could really be called "companies." They've been more accurately described as "blockchain protocols," which are blockchain-based applications designed to facilitate further uses that may not yet be fully defined. Some will make it, others won't.
The recent token sale from Aragon--viewed as successful--is a case in point. In its white paper, it describes the Aragon Network as "a token-governed digital jurisdiction that focuses on creating the best conditions for true global indiscriminatory economic growth. The Aragon Network (AN) will be the first decentralized autonomous organization whose goal is to act as a digital jurisdiction that makes it extremely easy and friendly for organizations, entrepreneurs, and investors to operate. The Aragon Network will be bootstrapped with a very thin Constitution voted by its governance. New laws can be added and they can be amended by the governance of the AN."
It's tough to translate that easily. But if we had to, we'd say that Aragon is setting up a blockchain-based network that other entities can use as the base for building a business, with the token owners being called upon to provide a level of governance to the application. Precisely what that business would be is up to the entity developing it on the platform. But once it does, it would use the Aragon token to transact, and uses the consensus aspect of distributed ledgers to help settle disputes. That's not a lot of detail; you'd have to wait to see the application built on the Aragon network.
Will the actual use of ICOs last? Has a whole new tool for raising capital been discovered, or is this a passing trend that will run out of steam?

ICOs are addressing an issue unique to the nature of blockchain applications: the difficulty in making money from developing open-source software. As noted, many of the entities behind the ICOs consider themselves more as internet protocols rather than traditional companies. But even if monetizing those protocols through traditional channels is extremely difficult, no one knows these networks better than the original developers. Once the open-source software is released and adopted, it will go through numerous iterations; it will presumably never sit still. Who better to provide support to companies using it than the original developers?
One analogy that has been drawn is to Red Hat. (Kudos to the folks at Coin Center who pointed this out.) The Linux operating system is open source; nobody owns it. But Red Hat has carved out a $2 billion business by supporting applications built for Linux. Or as its CEO James Whitehurst said in the company's annual report for 2016: "Red Hat's breadth of open-source technologies spanning infrastructure, application development, middleware, and management layers, combined with award-winning support, training, and consulting services, help transform an organization's data center to meet those customer demands and gain competitive advantage." That's the sort of business that could be sold in an IPO. A group of developers with an open-source blockchain application that is still under development wouldn't have much attraction to traditional venture capital companies or investment bankers who take companies public. Again, quoting Coin Center in a paper from last year: “Open platforms have proved difficult to create because it has been historically difficult to monetize them even if they become successful—by nature they are public goods.”
How many tokens do the initial entrepreneurs retain in the ICO?
There is no hard-and-fast rule. But you can find numerous references to an 85-15 split, with the developers retaining 85%. There are other applications though where the developers held as little as 5%; the Gnosis ICO is an example. Long-range plans require further sales to fund the necessary investment to produce the product promised in the white paper. It's not just to fill the pockets of the principals.
Can I "mine" new tokens?
Mining is the process in the bitcoin protocol where, via an electricity-intensive complex application, new bitcoins are yielded from the original stash of 21 million bitcoins; the number of bitcoins is capped at 21 million, though each bitcoin is divisible into a smaller unit with up to eight decimal points beyond the number 1. The ether token on the Ethereum network is also mined. But most of the recent ICOs, those tied to a specific use case, offer what has been referred to as "pre-mined" tokens where further mining is not possible. Whether the total is capped varies among the ICOs.
If I bought a token as a speculator, or simply don't want to use the application anymore, how can I turn it into real money?
First things first: in this community, never use the term "real money" unless you want to be mocked mercilessly. The term the "ecosystem" uses for dollars, euros, yen, etc. is "fiat currency." It is not a compliment.
If you want to convert your digital currency into fiat currency, many exchanges exist to do so. Coinbase, probably the most well-known, is a popular exchange for bitcoin, ether, and litecoin conversions. Exchanges are being created or expanded to provide liquidity for a range of new tokens created through recent ICOs, while existing services like ShapeShift can convert more obscure tokens into liquid options like bitcoin or ether.
I've just read a whole Q&A on ICOs and now I'm starting to hear that the term is being frowned on. Why is that?
Because of a question that was asked earlier in a roundabout way: what is the difference between an ICO and an IPO? Those in the token community are starting to push back against the ICO term precisely because of the comparison with IPOs. The concern is that they will fall under the same sort of regulatory structures as IPOs, and that is something they would very much like to avoid. Step one is to avoid calling them something so similar to IPO.
Has that regulatory oversight been avoided so far?

Yes, but it's an ongoing debate within the industry how long this freedom will endure. A joint paper published this year attempted to address the issue. Part of the paper was from a consortium that included Coinbase and CoinCenter as sponsors; the other half of the paper was from the law firm of Debevoise & Plimpton. The Coinbase/CoinCenter portion laid out best practices for an ICO. It starts by discussing the so-called "Howey test," determining whether a financial instrument is subject to SEC regulation. Three elements are spelled out: an investment of money, a common enterprise, and "an expectation of profits predominantly from the efforts of others." Later, in the Debevoise & Plimpton section, the law firm says a cryptocurrency token wouldn’t meet the definition of a security--with an eye toward the Howey test--if it has several rights, such as the right to use a system and its outputs and the right to contribute "labor or effort" to that system. But it would be a security if it involved equity or ownership, something that is clearly not part of a token holder's rights.
There are those in the token ecosystem who believe ICOs should be offered only to accredited investors, making them more like a private securities offering instead of an IPO. CoinList, for example, is restricted to accredited investors. It also created a specific instrument for ICOs called a SAFT: Simple Agreement for Future Tokens.
Is the industry largely in agreement that it is not a security?
It's keeping a wary eye on the SEC. At the big blockchain-themed Consensus meeting in New York in May, Valerie Szczepanik was quoted in a Reuters story as saying, "Whether a token is a security or not is a fact or circumstance-based thing and you have to really pick it apart," leaving enough ambiguity that the issue clearly is not viewed as settled. Szcaepanik's formal title is assistant regional director, Division of Enforcement for the SEC, but she was described in the Reuters story as the head of the agency's distributed ledger team. "Whether or not you are regulated by the SEC, you still have fiduciary duties to your investors," she said, according to the Reuters story. "If you want this industry to flourish, protection of investors should be at the forefront."

are you available for after dinner speeches by any chance.the deaf society are looking for someone at the annual dinner dance.in November.

Paul Waine · Post by **Paul Waine** » Fri Jul 21, 2017 11:02 pm

tim_noone wrote:are you available for after dinner speeches by any chance.the deaf society are looking for someone at the annual dinner dance.in November.

I'd love to do it, tim. My favourite speech is on pensions starting with how Gordon Brown robbed us all of our pensions back in 1997 - and almost no one noticed.

I'm best speaking just before bed time, so if everyone can wear their pyjamas rather than evening dress we will all be sorted.

I've taken advice from the BBC on going rates for after dinner speakers. Based on £400,000 per annum for late night radio, I can do it for, lets say, £2,000 per night. (Actually, that sound cheap to me). Are you ok for 10% agent's commission?

BTW: There was no need to copy all my post. This board will have the same problems as bitcoin if we aren't careful.

Cleveleys_claret · Post by **Cleveleys_claret** » Fri Jul 21, 2017 11:11 pm

Paul Waine wrote:I'd love to do it, tim. My favourite speech is on pensions starting with how Gordon Brown robbed us all of our pensions back in 1997 - and almost no one noticed.

I'm best speaking just before bed time, so if everyone can wear their pyjamas rather than evening dress we will all be sorted.

I've taken advice from the BBC on going rates for after dinner speakers. Based on £400,000 per annum for late night radio, I can do it for, lets say, £2,000 per night. (Actually, that sound cheap to me). Are you ok for 10% agent's commission?

BTW: There was no need to copy all my post. This board will have the same problems as bitcoin if we aren't careful.

May take you up on your offer. But dont deal in paper anymore. How about 4 cleveleys_claret coins (CCC'S). At present I value them at £600 each so already you are in profit on them

tim_noone · Post by **tim_noone** » Fri Jul 21, 2017 11:14 pm

At £2000 I will whisper it gently to all members.thanks for your speedy reply and keeping it short.regards Tim.

aggi · Post by **aggi** » Sat Jul 22, 2017 12:17 pm

In reference to Ethereum , which was mentioned in one of the above articles, someone just stole $30m of it and the rest was only saved because other hackers stole it and subsequently returned it https://medium.freecodecamp.org/a-hacke ... 5dc29e33ce" onclick="window.open(this.href);return false;

mohamed69 · Post by **mohamed69** » Sat Jul 22, 2017 1:31 pm

dsr wrote:Paper money and bank money is backed by governments. There's substance behind it, even if that substance is only the reliability of the government concerned - which is why we tend to keep money in Sterling rather than North Korean Wons.

Bitcoins aren't backed at all. One morning in 2009, someone invented the theory of 21,000,000 bitcoins, all of which were and are fictional creations that you or I can invent today. Then he asked "who wants to buy some", found some buyers, and created a value for them. Speculators drove up the value, especially as he released them slowly and made people work to get them, which made it seem more like they were worth something.

As prices go up, more buyers come in thinking they are profitable investments, and so prices go up again. And again. And as long as you get out at the right time, fortunes will be and have been made. But ultimately, they are worthless because there is nothing behind them; the time will come when the bubble bursts and the people holding the baby at that time will find they have lost the lot. It's happened before - South Sea bubble, Tulip bubble, dotcom bubble - where people speculated on buying worthless stuff just because it had been increasing in value and they thought it would carry on increasing. It always ends in tears.

PS - there's no backup security on dotcom funds. If your "bank" gets hacked and they lose your money, you're stuffed.

How is regular currency 'backed' by the government?

Paul Waine · Post by **Paul Waine** » Sat Jul 22, 2017 1:44 pm

mohamed69 wrote:How is regular currency 'backed' by the government?

By their management of the country's economy. If the government balances all the things that impact an economy then (1) inflation will be low; (2) unemployment will be low; (3) social programmes/the welfare state will be funded; (4) taxation will be "reasonable" (5) the government won't be borrowing massively, etc etc etc.

Run the economy badly and things don't work - and, among other things, inflation turns into hyper-inflation, people are "unhappy" and perhaps a revolution occurs, or the government maintains power through repression.

Example: Germany, Weimar republic; Zimbabwe late 1980s onwards, Venezuela Chavez period and continuing today.

mohamed69 · Post by **mohamed69** » Sat Jul 22, 2017 1:49 pm

Paul Waine wrote:By their management of the country's economy. If the government balances all the things that impact an economy then (1) inflation will be low; (2) unemployment will be low; (3) social programmes/the welfare state will be funded; (4) taxation will be "reasonable" (5) the government won't be borrowing massively, etc etc etc.

Run the economy badly and things don't work - and, among other things, inflation turns into hyper-inflation, people are "unhappy" and perhaps a revolution occurs, or the government maintains power through repression.

Example: Germany, Weimar republic; Zimbabwe late 1980s onwards, Venezuela Chavez period and continuing today.

So the UK and US governments haven't been borrowing massively? Phew, that's reassuring.

Paul Waine · Post by **Paul Waine** » Sat Jul 22, 2017 2:48 pm

mohamed69 wrote:So the UK and US governments haven't been borrowing massively? Phew, that's reassuring.

No, I didn't say that. I described the ways in which governments contribute towards a sound currency. Yes, too much borrowing will weaken an economy and weaken the currency of that economy.

Paul Waine · Post by **Paul Waine** » Sat Jul 22, 2017 2:52 pm

aggi wrote:In reference to Ethereum , which was mentioned in one of the above articles, someone just stole $30m of it and the rest was only saved because other hackers stole it and subsequently returned it https://medium.freecodecamp.org/a-hacke ... 5dc29e33ce" onclick="window.open(this.href);return false;

Thanks for posting, aggi. The article is very good to read - and I've learnt a little more about Ethereum and distributed ledgers and the rest.

Is it possible to short a crypto currency?

mohamed69 · Post by **mohamed69** » Sat Jul 22, 2017 2:57 pm

Paul Waine wrote:No, I didn't say that. I described the ways in which governments contribute towards a sound currency. Yes, too much borrowing will weaken an economy and weaken the currency of that economy.

Are you not concerned by the current level of borrowing?

How about the massive amounts of QE?

Do you still trust the government to have your best interests in mind?

Paul Waine · Post by **Paul Waine** » Sat Jul 22, 2017 3:11 pm

mohamed69 wrote:Are you not concerned by the current level of borrowing?

How about the massive amounts of QE?

Do you still trust the government to have your best interests in mind?

Hi mohamed69, yes I am concerned - you might remember some of my posts on the General Election thread.

QE does not score highly in the "protecting the currency stakes."

I trust in democracy. I trust in the way our political system operates. Do I think that means that everything that any of the political parties offer in order to become the elected government are in my best interests, no, I don't. However, in a democracy my best interests are only a small part of the best interests of the electorate.

Compared with crypto currencies however the British Pound Sterling works very well for me.

mohamed69 · Post by **mohamed69** » Sat Jul 22, 2017 3:39 pm

Paul Waine wrote:Hi mohamed69, yes I am concerned - you might remember some of my posts on the General Election thread.

QE does not score highly in the "protecting the currency stakes."

I trust in democracy. I trust in the way our political system operates. Do I think that means that everything that any of the political parties offer in order to become the elected government are in my best interests, no, I don't. However, in a democracy my best interests are only a small part of the best interests of the electorate.

Compared with crypto currencies however the British Pound Sterling works very well for me.

Crypto would've worked WAY better for you over the last couple of years than the GBP. You have lost a significant amount of your spending power holding GBP.

QE / and increase in the money supply is directly related to the value of the currency, way more so than any of the factors you mentioned.

Paul Waine · Post by **Paul Waine** » Sat Jul 22, 2017 3:49 pm

mohamed69 wrote:Crypto would've worked WAY better for you over the last couple of years than the GBP. You have lost a significant amount of your spending power holding GBP.

QE / and increase in the money supply is directly related to the value of the currency, way more so than any of the factors you mentioned.

I don't think we are measuring currencies over a 2 year period - that's just speculation. How would bitcoin or ether have worked for me over the past 50 years? And, how will they perform over the next 50 years? How will either of these cryptocurrencies perform when many other new cryptocurrencies are created in the years ahead?

mohamed69 · Post by **mohamed69** » Sat Jul 22, 2017 3:54 pm

Yes, you are inherently speculating by holding GBP.

Paul Waine · Post by **Paul Waine** » Sat Jul 22, 2017 4:25 pm

mohamed69 wrote:Yes, you are inherently speculating by holding GBP.

Just living my life.

I live in a country that uses GBP. Most of my assets are in GBP. My income is in GBP. My expenditure is in GBP. And, I'm taxed in GBP.

Yes, I'm long residential property - because I need somewhere to live.

And, I own a car - that depreciates.

And, I own some computing equipment - that only ever appears to have a short life before a new upgrade is required.

In 10 years time I plan that things are the same, and beyond that.

I appreciate that things change in value. That's where I've earned my living - managing financial risks. Being competent at understanding financial risk is why I'm "long" GBP denominated assets. If I was living in the USA, I would more likely be long USD assets. If I was in Germany.... well, maybe I'd be missing the Deutsche Mark.

Jel · Post by **Jel** » Mon Aug 14, 2017 3:52 pm

So, I thought I would give it a try. I started a Bitcoin wallet with $246 in it on Friday.
At the moment it's worth $299! Not bad for a couple of days.
Bitcoin has jumped about $1300 in the last week.
I wish I'd done it sooner.
Of course it could all go pear shaped, but it doesn't seem like it.

FactualFrank · Post by **FactualFrank** » Mon Aug 14, 2017 3:59 pm

Jel wrote:So, I thought I would give it a try. I started a Bitcoin wallet with $246 in it on Friday.
At the moment it's worth $299! Not bad for a couple of days.
Bitcoin has jumped about $1300 in the last week.
I wish I'd done it sooner.
Of course it could all go pear shaped, but it doesn't seem like it.

Yep. Pretty much what I alluded to earlier in the thread. You can make a lot of money from it and it'll overtake Gold as an investment that's for certain sure. Certainly one of my biggest regrets. Had you mentioned Bitcoin 4 years ago, people will have looked at you like you were from the planet Zog. Congrats on the investment btw.

Can I ask - where did you buy them?

Jel · Post by **Jel** » Mon Aug 14, 2017 4:05 pm

I read an article the other day about a bloke who'd bought $27 worth some years ago. Forgotten about it until recently and it's now $846,000. Wow!

Paul Waine · Post by **Paul Waine** » Mon Aug 14, 2017 4:47 pm

I've read in the past few days of a scam where cryptocurrencies were sold to some unsuspecting punters. Few £100,000 scammed. The currency didn't exist.

Also, commented that there are "dozens" of new cryptocurrencies created every month.

And Bitcoin Cash split of from Bitcoin by a rival group of traders....

Not read it yet, article in today's Times: Trustme aims to tame ‘Wild West’ of cryptocurrency investment

The "crypto" guys criticise "fiat currencies" because governments can simply "print" more currency. What is the advantage of crypto currency if a new one can be created every few days?

FactualFrank · Post by **FactualFrank** » Mon Aug 14, 2017 4:51 pm

Satoshi Nakamoto created Bitcoin, but nobody actually knows who he is.

http://dailyentertainment.me/mystery/mo ... ous-people" onclick="window.open(this.href);return false;

Clevedon Claret · Post by **Clevedon Claret** » Mon Aug 14, 2017 5:00 pm

Coincorner dot com for buying bitcoins.

dsr · Post by **dsr** » Mon Aug 14, 2017 5:07 pm

FactualFrank wrote:Yep. Pretty much what I alluded to earlier in the thread. You can make a lot of money from it and it'll overtake Gold as an investment that's for certain sure. Certainly one of my biggest regrets. Had you mentioned Bitcoin 4 years ago, people will have looked at you like you were from the planet Zog. Congrats on the investment btw.

Can I ask - where did you buy them?

That's not for certain sure. Bitcoins don't exist, they are inherently worthless. It's a bubble - their only value is that someone else wants them more than you do. It is exactly what happened with tulip bulbs, the South Sea bubble, and to a lesser extent dotcoms; it will in my view go belly up, probably (again in my view) relatively soon. Be sorry for the people holding the baby when it does.

Paul Waine · Post by **Paul Waine** » Mon Aug 14, 2017 5:22 pm

dsr wrote:That's not for certain sure. Bitcoins don't exist, they are inherently worthless. It's a bubble - their only value is that someone else wants them more than you do. It is exactly what happened with tulip bulbs, the South Sea bubble, and to a lesser extent dotcoms; it will in my view go belly up, probably (again in my view) relatively soon. Be sorry for the people holding the baby when it does.

Agree, dsr.

And, gold has some real uses beyond making wedding rings and other pretty jewellery.

Jel · Post by **Jel** » Mon Aug 14, 2017 5:46 pm

I used Blockchain Frank

Paul Waine · Post by **Paul Waine** » Wed Sep 13, 2017 11:03 am

Today's Times, Business section:

Regulator warns of ‘scam’ virtual currencies

Customers lose millions after fund’s collapse

The City watchdog has warned about the perils of investing in virtual currencies such as bitcoin as it emerged that one fund purporting to invest in so-called cryptocurrencies had collapsed with the loss of tens of millions of pounds of its customers’ money.

The Financial Conduct Authority cautioned savers yesterday against putting their money into so-called “initial coin offerings” that have exploded on to the market in recent months, leading to warnings that scammers may be taking advantage of the soaring price of bitcoin to defraud investors.
Initial coin offerings are often lightly regulated and the FCA indicated that it could say whether investors would be protected only on a “case-by-case” basis, meaning that many who end up losing money may find they have no recourse to industry compensation schemes.

Coin offerings were described by the regulator as “very high-risk, speculative investments” that carried significant potential for fraud and suffered from extreme price volatility. “The digital token issued may represent a share in a firm, a prepayment voucher for future services or in some cases no discernible value at all,” the FCA said.

Luke Scanlon, a financial technology lawyer at Pinsent Masons, said it was “extremely unlikely” that investors putting their money into cryptocurrencies would get any safety net. “You will not have any recourse to regulatory protection,” he said.

Bradley Rice, at Ashurst, a law firm. said: “The FCA doesn’t want to inhibit technological development, but it is making very clear that the line between an unregulated token offering and the marketing of a security, crowdfunding activity or even a collective investment scheme is very thin.”
Jamie Dimon, chief executive of JP Morgan Chase, told a Barclays banking conference in New York that bitcoin “is a fraud. It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed.”

The warning from the regulator came separately as investors counted their losses after I2 Investments, a fund said to be investing in bitcoins, told customers that 95 per cent of their money had been wiped out after its trading strategy went awry at the start of the month.

I2 Investments, which had an office in London but apparently was run out of Austria, said that sharp moves in the value of bitcoin at the beginning of September after a clampdown by the Chinese authorities had caused a “significant trading drawdown loss”. The fund, whose website was registered in Vienna, said it was managing about €26 million. It added in a notice on its website on September 1 said that nearly all of its investors’ funds had been lost.

“The Bitcoin (BTC) trading strategy implemented caused a large and immediate downward shift of several thousand Points/Pips that our strategy could not recover from due to being designed for Spot FX [foreign exchange] trading on four-digit (much lower volatility) instruments.
“We are genuinely shocked by the turn of our BTC strategy’s trading algorithm.”

Investor forums had warned for several months about potential danger signs over the fund, such as investment returns reaching as much as 15 per cent a month.

Investor complaints on the Trustpilot website met with a standard response from a company called 12 Trading, KL Malaysia, stating that the fund had “nothing to hide”.

“We are very sorry for the massive DD [drawdown] seen this week on our trading. As you know, we have achieved over 1,000 per cent compound return and there was always a risk for loss. It is not ‘Scam’ . . . We wish you the best in your future endeavours,” 12 Trading wrote.

Telephone numbers linked to I2 Investments rung by The Times appeared to have been disconnected.

aggi · Post by **aggi** » Wed Sep 13, 2017 11:39 am

To be honest, if you're investing in initial coin offerings without understanding that they're hugely risky that is probably the investor's problem.

It's not fully up to date but this is an interesting chart with bitcoin price changes tied to possible causes. https://99bitcoins.com/price-chart-history/" onclick="window.open(this.href);return false;

JohnMac · Post by **JohnMac** » Wed Sep 13, 2017 11:55 am

It's all double Dutch to me!

I think I'll stick with the underside of my Slumberland, always worked on the principle of if it looks too good to be true...

john'sroseyspecs · Post by **john'sroseyspecs** » Thu Sep 14, 2017 10:35 pm

Sell! Sell!

Paul Waine · Post by **Paul Waine** » Thu Sep 14, 2017 11:03 pm

Jamie Dimon Slams Bitcoin as a ‘Fraud’

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he would fire any employee trading bitcoin for being “stupid.”

The cryptocurrency “won’t end well,” he told an investor conference in New York on Tuesday, predicting it will eventually blow up. “It’s a fraud” and “worse than tulip bulbs.”

If a JPMorgan trader began trading in bitcoin, he said, “I’d fire them in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous.”

http://www.bloomberg.com/news/articles/ ... ud-bitcoin" onclick="window.open(this.href);return false;

No Ney Never · Post by **No Ney Never** » Thu Sep 14, 2017 11:44 pm

Paul Waine wrote:I'd love to do it, tim. My favourite speech is on pensions starting with how Gordon Brown robbed us all of our pensions back in 1997

I'm pleased somebody else is still a bit pi55ed at the tax imposed on dividends paid to our pensions, not happy at the current government either for further reducing the amount our pot can earn before tax is paid.

dsr · Post by **dsr** » Thu Sep 14, 2017 11:50 pm

No Ney Never wrote:I'm pleased somebody else is still a bit pi55ed at the tax imposed on dividends paid to our pensions, not happy at the current government either for further reducing the amount our pot can earn before tax is paid.

Whatever else various governments can be accused of, they can't be accused of not knowing what they were doing with the pensions. When they passed the laws restricting large pension pots, they made sure to pass an extra one to ensure MPs are exempt. (I'm a bit surprised they haven't gone the whole EU-hog and abolished income tax altogether on their salaries. Presumably they think the electorate would notice and object, while this particular fraud is a bit more obscure.)

Garnerssoap · Post by **Garnerssoap** » Fri Sep 15, 2017 12:54 am

I put 5k into that football index when it started up.

aggi · Post by **aggi** » Fri Sep 15, 2017 12:31 pm

An interesting comment from the JP Morgan guy is that he won't short bitcoin because it may end up at $20,000 before it collapses (that's around a fivefold increase on value from where it is now).

I've been talking to someone who is involved in one of the alternative currencies, Crown. An interesting concept here is that there are nodes (or trons) set up that form part of the infrastructure. Anyone can set one up but you need to have 10,000 coins to do so (around $11k at the moment). This obviously gets people to buy coins and further propagates the currency. The benefit of running a node is that you get 45% of coins that are mined in the future increasing your number of coins.

Currently showing about a 20% rate of return in terms of Crowns but obviously that is dwarfed by the volatility of the currency. Over the course of the past month it looks like it has trebled in value and then lost a third of that peak value.

It's an interesting concept in terms of investment. You're essentially getting a dividend for holding the coins. The issue obviously being that the dividend is in a very volatile currency. It's the kind of investment that could make a lot of money if it comes off, or you could end up with a lot of coins worth barely anything.

There are a lot of these alternative currencies out there, well over a hundred, and a lot were interesting concepts but very few have continued and grown.