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You can make that argument about regular stocks too. When you buy a stock, you're not really getting any equity, not any share of the profits. You do get the in

You can make that argument about regular stocks too. When you buy a stock, you're not really getting any equity, not any share of the profits. You do get the indirect benefits, mostly through other people believing in the success of the company, buying the stock, and pushing its price. And occasionally dividends, but not many companies distribute them.

kgwgk 9y ago
Yes, you get equity. What do you think shares represent?
- imaginenore 9y ago
  You're confusing common stock (what most people buy) and preferred stock. The common stock doesn't entitle you to the dividends of the profits, it only gives you the voting rights. The preferred one does. Common stock is also shielded against liabilities, as in it can go to zero, but can't go negative. Equity can. Common stocks are really strange, they are much closer to tokens, than to actual pieces of the company.
  - kgwgk 9y ago
    That’s so wrong I don’t know where to start.
  - Hambonetasty 9y ago
    Completely incorrect.
  - subroutine 9y ago
    This isn't exactly like trading the common stock of Exon or IBM; ICO purchases are early investors pouring money into completely unknown companies. If you're about to put in $100k into a seed-round startup, you should require a convertible note, or major shares (since pre-money the company should be valued near zero). I can only think that people pouring tens of thousands into an ICO and only want tokens, which are legally meaningless, are either seriously misinformed or they are laundering cash. But to your point about common stock, even when a publicly traded company undergoes a buy-out, they will require their purchaser to pay a premium on their current stock price ('current' typically meaning average over the last few months). As an example, if they are currently trading at $20 per share, they will require the purchaser to pay $30 per share to acquire. Once this is announced the common stock price will jump to the buyout price; at which point major investors of even common stock get a significant return. The reason for the jump is because the purchasing company will either payout cash or the stock will convert into the new parent company's stock. On the other hand, who knows what happens with tokens upon acquisition; there is no legal obligation whatsoever.
  - deleted 9y ago
    [deleted]

kgwgk 9y ago

Yes, you get equity. What do you think shares represent?

imaginenore 9y ago
You're confusing common stock (what most people buy) and preferred stock. The common stock doesn't entitle you to the dividends of the profits, it only gives you the voting rights. The preferred one does. Common stock is also shielded against liabilities, as in it can go to zero, but can't go negative. Equity can. Common stocks are really strange, they are much closer to tokens, than to actual pieces of the company.
- kgwgk 9y ago
  That’s so wrong I don’t know where to start.
- Hambonetasty 9y ago
  Completely incorrect.
- subroutine 9y ago
  This isn't exactly like trading the common stock of Exon or IBM; ICO purchases are early investors pouring money into completely unknown companies. If you're about to put in $100k into a seed-round startup, you should require a convertible note, or major shares (since pre-money the company should be valued near zero). I can only think that people pouring tens of thousands into an ICO and only want tokens, which are legally meaningless, are either seriously misinformed or they are laundering cash. But to your point about common stock, even when a publicly traded company undergoes a buy-out, they will require their purchaser to pay a premium on their current stock price ('current' typically meaning average over the last few months). As an example, if they are currently trading at $20 per share, they will require the purchaser to pay $30 per share to acquire. Once this is announced the common stock price will jump to the buyout price; at which point major investors of even common stock get a significant return. The reason for the jump is because the purchasing company will either payout cash or the stock will convert into the new parent company's stock. On the other hand, who knows what happens with tokens upon acquisition; there is no legal obligation whatsoever.
- deleted 9y ago
  [deleted]