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Thoughts on Tokens
- pdog 9y agoBeyond buying some Bitcoin and Ethereum, is there anything else a prospective investor should do?
- knowaveragejoe 9y agoTokens in organizations that you think may succeed? I'm not particularly clear on details, i.e. how would you know whether a company is succeeding vs. just being a speculator's toy.
- vernon99 9y agoIdeally the organization itself should: a) be fully built on distributed technologies, if that's not the case, this is a clear red flag as it gives too much control to the founders to screw it. Ether+Web3.js+IPFS is a good combo. Proper voting/execution system for members is also a must IMO but very few actually have it. b) have a clear incentives model in place (built in smart contracts which code you should be able to inspect), meaning both initial users/contributors get increased value from participating and long-term growth can be achieved. c) solve a real problem, obviously. There're some existing models that can be disrupted as well as some of the more futuristic things like prediction markets, distributed clouds, etc. All of that should be explained in their whitepaper. That said, we're in a sort of 1999 situation right now so expect it to correct short-term. Also there's a lot of scammy projects now, so do your due diligence.
- mbrock 9y agoIt's very easy to make a "whitepaper" about solving some important problem using Ethereum/Web3/IPFS with whatever interesting kinds of voting schemes and incentives. Whitepapers of all kinds are basically designed to seem impressive and downplay problems, just like any other promotional material. Deciding whether the organization behind that whitepaper is legit, competent, and serious enough to actually make it happen is much more difficult than ticking some bullet points. Front end development is hard to do well, cryptoeconomic mechanism design is really difficult and prone to horrible failure, marketing is hard, profit is hard, etc etc. (As an aside, I'm curious how many people actually understand how IPFS works. Are we all clear that it's not a magic place where you can upload things to make them available everywhere forever? In most important aspects it's equivalent to BitTorrent with Magnet. You still need to seed!) That all said, in the sense of the "Keynesian beauty contest" it doesn't really matter whether a team will actually deliver anything good. If the web presence and whitepaper hype is cool enough to generate a good buzz, that's enough to generate a speculative wave where you hopefully won't be part of the crash!
- livestyle 9y agoIt's also "very easy" not fall into FOMO token buying.
- deleted 9y ago[deleted]
- to3m 9y agoBuy some Litecoin, of course.
- aqsheehy 9y agoHave knowledge asynchronous from the market. If you're asking here you don't, so don't trade.
- Temasik 9y agoBuy xrp
- eigenvalue 9y agoThe best alt coins in my view are SiaCoin, Golem, and Steem.
- redm 9y agoI think it's safe to say that the entire market is currently being driven by speculation. If it had a volatility index, it would be through the roof.
- WikipediasBad 9y agoThis definitely feels like a bubble. But if anyone is interested in investing in some potentially cool tokens and projects, I personally think the most interesting ones are: 1. Tezos (not part of ethereum ecosystem) 2. Golem (part of ethereum) 3. Litecoin (they are pioneering the lightning + SegWit protocol first, before BTC, the price could rise dramatically if it's a success) 4. Dogecoin (this one is just fun and has been a cult classic since it came out, don't recommend anyone buying, just fun to add it to the list, much wow) Disclaimer: I own no position in the above nor am I affiliated with any of them. These are just my opinions.
- jurandom 9y agoAny thoughts on Augur/Gnosis? Those have a real use case in my opinion.
- mifeng 9y agoAre those just prediction markets or is there something else to them? I remember there was a site called TradeSports everyone was excited about in the early 2000s. It's problem was that there was very little liquidity for any bet other than presidential elections and the Super Bowl.
- jurandom 9y agoWhy is low liquidity a problem? As long as there is someone betting for and someone against an outcome, a prediction market is successful, right?
- twoodfin 9y agoI bet 50 cents to your dollar that the S&P 500 will be above 2,500 on Jan. 1, 2018. Would I have bet 51 cents if offered? 55 cents? 75 cents? Without a bunch of participants, we'll never know. Markets with low liquidity are terrible at price discovery. Price in a prediction market is (if we believe in the concept) directly tied to how likely a prediction is to be true.
- lowglow 9y agoI'm 100% bullish on tokens backing great projects and awesome people. I'm going to help bring to light some quality uses of them by both people and organizations.
- deleted 9y ago[deleted]
- wangii 9y agoit's a power stuggle governments and central banks can't afford to lose. and it'll be a recurring scheme to rob those don't understand the stake. it's about who is/will be the monetary policy maker, governments/central banks, or the market controlled by speculators? what are the exact differences between gold and tokens?
- isubkhankulov 9y agoHowever, when considered as an alternative to classic equity financing, token sales yield a >100X increase in the available base of buyers and a >1000X improvement in the time to liquidity over traditional methods for startup finance. The three reasons why: a 30X increase in US buyers, a 20–25X increase in international buyers, and a 1000X improvement in time-to-liquidity. these token sales are successful because people who buy into them are selling off their profits from buying Ethereum (from $0.88 in Jan '16 to $193 today >2000% return). Its a diversification play of course. Look how much the DAO raised a year ago. Its ridiculous that the adults in the room like A16Z, USV, Balaji are falling into hypnosis. ICO's coming out have no product, no users, just a white paper and a nice website, with an ERC20 contract address for deposits. If you talk to anyone buying these tokens, they all say the same thing, that they're buying to flip the tokens on Poloniex for a quick buck. A recent example is Gnosis, which raised $12.5M by selling 4.17% of their tokens at $30 each during the 1st auction round. They started trading at $60-100 a week after the sale and now are trading above $200. Look at the charts of coins delisted by Poloniex. immediate 50%+ drop. The value of these tokens is their liquidity. Take that away and you won't see these valuations. For traditional VC's, if companies let their shares float on exchanges, the SEC mandates financials. These tokens are designed around hopes and dreams. Most certainly a bubble but more so a game of musical chairs, make some money while the music is still playing. Bitcoin at the end of the day grew in price from speculation BUT it had a real use, albeit in the black market. It has grown from that since 2013 but not by much. P.S. Token sales don't even give up equity. These people are paying millions for API keys they can't yet use? I don't think so.
- jerguismi 9y ago> These people are paying millions for API keys they can't yet use? Comparing API keys to tokens is quite weird. I don't think they have almost anything to do with each other. In general the blog text is pretty bad. It doesn't differentiate very well between tokesn and cryptocurrencies. Tokens are usually not mined but are more like shares in a company. Also many of these ICO's are very scammy, investors should be cautious.
- isubkhankulov 9y ago
- aqsheehy 9y agoAnother ponzi pumping article on HN
- harryh 9y agoTo me the two most provocative points made in this essay are that tokens could be used to fund open source projects and that tokens could be used to distribute some of the value in large successful internet companies like Google & FB to early adopters. I don't see how this would work though. I buy a token for some random open source project (say a unit testing library because they link to one as an example). And then what? Or I buy a token in a new social network that eventually becomes very popular. What does that get me? They don't connect the dots on these ideas at all & I really wish they did. As it is it sounds like they're trying to gloss over something that doesn't really make sense when you try to think it all the way through.
- cryptonector 9y agoLike all currencies and alike, they have to be exchangeable in order to be of any value.
- brut 9y agoYou can raise money by crowdsourcing without having to raise a single USD ever, fill forms, go through regulators and banks etc. It's not that you offer redeemable tokens. You just create a token and people buy it. Then you have money. That's how it works for at the moment.
- jerguismi 9y agoI'm pretty sure that if you ask the regulators, they will have a different idea on how token crowdsales should be treated. Essentially they are very similar to a shares in a company. In the end when you sell those tokens you get BTC or USD, which pretty much should be treated as money if you ask the government.
- brut 9y agoI was being a bit sarcastic. :)
- wmf 9y agoI think the idea is that people have to spend the tokens to use the network and thus they buy tokens from early adopters. https://coincenter.org/entry/what-are-appcoins https://coincenter.org/entry/what-are-appcoins
- simonebrunozzi 9y agoShameless plug, I've written an extensive article on "how to handle your bitcoin investments in 2017", and I feel it answers many of the questions raised here, mostly about whether investing in crypto (BTC or else) makes sense, and how: https://medium.com/simone-brunozzi/how-to-handle-your-bitcoin-investments-in-2017-cc8e38a2b297 https://medium.com/simone-brunozzi/how-to-handle-your-bitcoi...
- dangerousbeans 9y agoIt's nice to have something a bit more meaningful than a mug from kickstarter though
- runeks 9y ago> Tokens based on forked chains and forked code. The most important example here is Ethereum Classic, which was based on a hard fork of the Ethereum blockchain that occurred after a security issue was used to exploit a large smart contract. As far as I understand, this is the exact opposite of what happened. After a flaw in a contract, on the Ethereum blockchain, was exploited, most people agreed to follow a hard fork which retroactively changed the core protocol such that the interpretation of the malformed contract no longer allowed exploitation. Ethereum Classic is the original, unforked chain, in which the flawed contract is respected, rather than altering the core protocol to circumvent a badly written contract.
- mbrock 9y agoKind of, except that ETC itself has also done a hard fork to do major protocol changes, so it's not exactly right to call it the "original, unforked chain." The original Ethereum Homestead blockchain was designed to demand at least one hard fork. The mining difficulty was set to increase exponentially after some time, in order to force the community to make a decision regarding switching away from proof-of-work toward proof-of-stake. The ETC community hard forked the Homestead chain to remove this "difficulty bomb." That's quite different from the "TheDAO" hard fork, but it's still a hard fork of a blockchain, so it's not true that ETC represents completely immutable law -- that community can also demonstrably agree to hard fork.
- runeks 9y agoIf the only reason to buy a token is because you expect to sell it later at a greater price, then this is known as a pyramid scheme, not investment. This will end the same way as all other schemes that rely on continual capital gains: collapse when people want to withdraw their profits, turning capital gains into capital losses, and thus revealing that there was never any future profit to be had (unless you were lucky to exit early). Investment differs from speculation in that it offers a yield on capital, not just a capital gain. When a company pays dividends to shareholders, all holders gain. When a company's stock increases in price, the profits of those who gain are taken from those who've lost. Speculation is zero-sum, investment is not. A yield on capital is fundamentally different from a capital gain, because a yield is a flow of profit paid out right now, as opposed to an alleged gain that will only be realized in the future (at which point the whole thing collapses, because the system depends on continual appreciation). Importantly, a yield on USD is paid in USD, a yield on bitcoins is paid in bitcoins, etc. Paying a yield in a scarce currency is a challenge, while bidding up the price, as measured by some other currency, is relatively simple.
- cm2187 9y agoYou can invest in Gold, which doesn't yield any return. The notion of investment implies a return, whether it is a cash yield or a principal appreciation. But I would say bitcoins are more similar to fiat currencies than commodities. Commodities have an intrinsic value due to their rarity. You cannot manufacture gold (technically you can but in very small quantities). Which means that if you find a gold coin which ancient romans were buying goods with, you can still buy a suit with it today. You can call that a convention but it is a convention dictated by the laws of physics, not by some white paper. Fiat currencies instead only have value by convention or law, anyone can manufacture a new fiat currency, like everyone can create a new blockchain. A government can by law change the algorithm behind any of these blockchains. But a government cannot create gold. If someone finds a bitcoin key in 2000 years, long after the western civilisation is gone, it will be an interesting piece of history that can but placed in a museum, but you won't be able to buy a suit with it. With gold you will.
- arethuza 9y ago
- livestyle 9y agoTokens = Branded Gift Cards