Seriously Bloomberg, automatically playing a video? I just woke up my wife by accident thanks to your poor UX.
I like the idea of more democratic film-making but am apprehensive about this as it seems just like crypto is hitting fever pitch and people are trying to make it fit in every paradigm they can think of
Every ICO I hear about just sounds like a scam. Maybe I don't understand it, but I have yet to see a case where as an investor I thought "that sounds like a good investment!".
Can someone describe a scenario where an ICO is a win for the investor?
For example, at least with stocks, I get a share of ownership in return for my money. So as the value of the company goes up, the value of my share goes it. It's based on tangible ownership of a real thing. But with a crypto coin, what is the value tied to? Is it really just the perceived value of the underlying asset? And what happens when the company shuts down? They sell all the assets, the real shareholders take all the money, but what happens to all the coin holders?
In the specific case of ethereum ERC20 tokens [1], it depends on how the mechanism design uses the token, there's no general answer. I can give 3 specific examples.
MKR stablecoin (https://github.com/makerdao/docs/blob/master/Dai.md): users of the collateralized debt positions system pay fees for using the service (because they want to take margin long positions, or because they want to issue some stablecoins), those fees go to MKR holders (the mechanism for this has changed over time, but it could be through dividends, or buy-and-burn). In return MKR holders provide a service by having MKR be one "line of defence" in undercollatiralization scenarios (new MKR is minted and auctioned).
Decentralized exchanges (0x and Kyber Network are some that have recently ICO'd) - generally users of the exchanges (who consumer services like liquidity, order routing and matching) pay fees to the token holders, somehow. I'm less familiar with these.
The fact that users pay fees is enforced by smart contracts. There is also some thoughts on a general framework for valuing these tokens here http://vitalik.ca/general/2017/10/17/moe.html.
> And what happens when the company shuts down
In a "proper" decentralized application there's no centralized company that can unilaterally decide to "shut things down". All the projects I mentioned above aim to in the long run behave like this.
Notes
[1] of course, not all ICOs are of ethereum ERC20 tokens, eg recent ones are EOS, Tezos, arguably Polkadot. But I am much less able to talk about how the token economics of those tokens.
The best use-case for a crypto coin is as a share of an underlying economy. Take ethereum for example, their underlying asset ETH is used to power computation on the network. So when the network first launches you get to purchase a share of the ethereum economy for relatively cheap since the risk of failure is high. Your expectation is that once the network of apps and users is built up, that economy will grow and so will the value of your share of it. The value proposition in an ICO is that the potential upside of your investment can reasonably be 100x.
I don't recall exactly but I think ether tokens sold for around 30 cents per coin which is about a 1000x return at current prices. So for the extra risk of having zero leverage in determining how the company operates, and no ability to recover assets if things fail, you hope for a much greater return than you get through traditional investments.
The problem with the recent ICO wave is that the value proposition has gone completely out of whack. Instead of the underlying economy starting off at a $2M market cap and thus having huge room to grow, they're starting off at $20M or even $200+M with very little room to grow outside of the increase due to massive bubble valuations.
There are some speculations about ICOs founding things that are needed but are not founded now - like Open Protocols and Open Source software working with them. It might not be a good mechanism for extracting the value - but the others are also not very efficient.
It is fraud and a blatant lie for Christopher Woodrow to claim “Investors will benefit as the tokens, which can be traded in the secondary market, would appreciate based on the success of the films”
That is a straight up lie. Token value is not a share of the film’s revenue or profits.
Sounds like just buying a tiny piece of equity in a seed round. I don't get what a blockchain value adds here except probably easier SEC regs - maybe I'm missing something.
It would only work if they advertise the coin inside the movies that are produced. They have to keep driving attention towards the coin with every movie released.
[+] [-] datamoshr|8 years ago|reply
I like the idea of more democratic film-making but am apprehensive about this as it seems just like crypto is hitting fever pitch and people are trying to make it fit in every paradigm they can think of
[+] [-] schmookeeg|8 years ago|reply
I generally run with only the "Media" switch on, and I haven't seen autoplayed videos in an age. They annoy me mightily.
[+] [-] aibara|8 years ago|reply
[+] [-] lithos|8 years ago|reply
I was not even remotely disappointed when that's not what they were using it for. And instead just making another tulip bulbs fiat currency.
[+] [-] jaryd|8 years ago|reply
[+] [-] murukesh_s|8 years ago|reply
[+] [-] LightsTech|8 years ago|reply
[+] [-] jedberg|8 years ago|reply
Can someone describe a scenario where an ICO is a win for the investor?
For example, at least with stocks, I get a share of ownership in return for my money. So as the value of the company goes up, the value of my share goes it. It's based on tangible ownership of a real thing. But with a crypto coin, what is the value tied to? Is it really just the perceived value of the underlying asset? And what happens when the company shuts down? They sell all the assets, the real shareholders take all the money, but what happens to all the coin holders?
[+] [-] zodiac|8 years ago|reply
In the specific case of ethereum ERC20 tokens [1], it depends on how the mechanism design uses the token, there's no general answer. I can give 3 specific examples.
MKR stablecoin (https://github.com/makerdao/docs/blob/master/Dai.md): users of the collateralized debt positions system pay fees for using the service (because they want to take margin long positions, or because they want to issue some stablecoins), those fees go to MKR holders (the mechanism for this has changed over time, but it could be through dividends, or buy-and-burn). In return MKR holders provide a service by having MKR be one "line of defence" in undercollatiralization scenarios (new MKR is minted and auctioned).
REP (http://blog.augur.net/for-reporters-a-guide-to-rep-tokens/) - users of Augur's prediction markets pay fees to REP holders, who in return participate as reporters in the prediction market.
Decentralized exchanges (0x and Kyber Network are some that have recently ICO'd) - generally users of the exchanges (who consumer services like liquidity, order routing and matching) pay fees to the token holders, somehow. I'm less familiar with these.
The fact that users pay fees is enforced by smart contracts. There is also some thoughts on a general framework for valuing these tokens here http://vitalik.ca/general/2017/10/17/moe.html.
> And what happens when the company shuts down
In a "proper" decentralized application there's no centralized company that can unilaterally decide to "shut things down". All the projects I mentioned above aim to in the long run behave like this.
Notes
[1] of course, not all ICOs are of ethereum ERC20 tokens, eg recent ones are EOS, Tezos, arguably Polkadot. But I am much less able to talk about how the token economics of those tokens.
[+] [-] hackinthebochs|8 years ago|reply
I don't recall exactly but I think ether tokens sold for around 30 cents per coin which is about a 1000x return at current prices. So for the extra risk of having zero leverage in determining how the company operates, and no ability to recover assets if things fail, you hope for a much greater return than you get through traditional investments.
The problem with the recent ICO wave is that the value proposition has gone completely out of whack. Instead of the underlying economy starting off at a $2M market cap and thus having huge room to grow, they're starting off at $20M or even $200+M with very little room to grow outside of the increase due to massive bubble valuations.
[+] [-] zby|8 years ago|reply
https://medium.com/@zby/the-case-for-icos-bee2c223ec71
[+] [-] bfuller|8 years ago|reply
[+] [-] klipt|8 years ago|reply
[+] [-] dreamdu5t|8 years ago|reply
That is a straight up lie. Token value is not a share of the film’s revenue or profits.
[+] [-] loup-vaillant|8 years ago|reply
For a second it looked like the blockbuster itself was about AES something.
[+] [-] dillondoyle|8 years ago|reply
[+] [-] jondubois|8 years ago|reply
[+] [-] junk_f00d|8 years ago|reply
[+] [-] clarkmoody|8 years ago|reply
[+] [-] valsoltow|8 years ago|reply
[+] [-] Howered211|8 years ago|reply
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