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RE: Vitalik Buterin doesn’t want non-blockchain and fiat projects to conduct ICOs, and here are economic reasons behind that
No one should be doing an ICO. While it is currently a big money making thing for everyone, there is very little due diligence done on any project (whitepaper is not enough) and there is no investor protection whatsoever in most ICOs. Moreover, retail investors pumping these projects have very little expertise in analyzing blockchain projects. A lot of projects currently have no need to be on a blockchain, yet companies are raising millions of dollars and what happens when they are unsuccessful as 90% of them will be.
My view is far from that radical. One shall compare ICO to angel investing rather than to IPO (which is a major mistake and a common opinion). Think of this as a way to to 3F stage on investment, but on the global scale. Being an angel investor, you throw you $100 to a neighbourhood kid experimenting in his/her garage, and in crypto world the whole planet is your playground: you can put your fingers in honey pots from Tallinn to Jakarta. In terms of risk, very true: the segment is not regulated and law enforcement mechanisms don't exist at all. So what? Consider these investments 93% risky (as all VC firms do), and the result won't surprise you.
hi, thanks for replying.
Traditional crowdfunding can achieve the goals you mentioned and give investors some sort of protection, and ownership. And protecting investors from investing in higher risk countries is probably important. I doubt if adding country risk to equity risk is a good thing. Developed markets have mature financial markets and developing countries have protectionist regulatory policies and less open financial markets. The problem is with current VC set-up probably. A crowd funded VC may be a better idea.
Additionally we don't yet know if ICO projects are 100% risky or 93% or lower. token price increase is not indicative of a product that can overtake a centralized company or of any form of success. Token price appreciation is probably just speculation and hype.
Very true in all aspects. Just to be clear: VCs are marching on full steam towards crypto markets and there are plenty of projects that are working to establish a framework (a legit one) to tie fiat investments with crypto. A lot is still to be done but there are good signs of progress in the area. There have been over 120 crypto related fund established, according to Next Autonomous, and I bet that some of them have lawyers onboard bity enough to protect their clients' funds. And as regards to the price of tokens, we are yet to see if there will be any products that those tokens enable buying. My guess that some projects will deliver upon their promises and success rate in blockchain as a whole will be higher than zero. But let's wait and see, right?
absolutely, that is why we are invested in them. :)