WARNING: buy these ICOs at your own risk

[iamnotback]

This is a friendly attempt to give you speculators some information to prevent you from shooting yourselves in the foot, because of your myopia. These risks aren't disclosed to you in the prospectus for the smart contract app ICOs. Bitcoin is rising in price (likely heading to $2500) and I would want to keep my powder dry to buy the best opportunities based on the following risks...

Make sure that if you are buying these ICOs that the coins will become free trading on exchanges well before the end of this year, because it is very likely I will have launched my project by the end of the year and it will then be clear to everyone that app tokens have no value (i.e. that the paradigm of creating a separate token for each smart app is nonsense and will be replaced by smart apps that use the mainstream tokens):

https://github.com/Scanate/UltimateICOCalendar

... And a monetization model that doesn't require all the app vendors to create their own unwanted tokens as in the current Ethereum "smart contract' ICO craze...

Regarding ICOs, one of the aims of my project that is different from Ethereum is that via the distribution model, I intend (i.e. hope to) provide a way for the derivative "smart contract" (or apps) projects to monetize their business model without creating a useless token and ICO lie. I am attempting to change the entire paradigm to not only a legal but also a viable one. @Skalpell although you make reasonable arguments in some respects, you seem to have a blindspot on the fact that these ICO tokens are completely unrealistic in that the world won't be using 100s of colored coins with a separate coin for each "smart contract" or app. The world will rally around one or at most a few leading units-of-exchange and units-of-account. The ICO model is not viable long-term. It is a FOMO delusion that works for now because speculators haven't yet learned that 100s of tokens isn't going to work.

Token utility linkage is not always there

The assumption that everything with a potential network effect is going to work with a decentralization starting point is not entirely true. The blockchain is not for everything.

The solution or product being developed needs to have a solid business model linkage that has a particular value when decentralization and/or tokenization of actions take place. The promise of a new model needs to be very compelling.

In the name of decentralization, the promises are big. You can’t just slap a token to anything, and expect magic to happen.

The token is not the business model. The value proposition or utility that is enabled by the token is the business model, and that linkage needs to be there early on. If the direction is not right, the chosen path will not lead to a good place.

The marketing hype is frightening

Some ICOs are being marketed like a rocket ship, but in reality, no startup is a rocket ship. A lot of the communication is biased towards the most optimistic assumptions, but nothing goes up in a straight line.

I see potentially a web of gazillions of currencies, connected by gazillions of distributed exchanges.

I used to think that. I even offered an idea and discussed (in the Bitcoin Technical discussion forum) with @TierNolan and @jl777 how to deal with the jamming (Sybil attack) problem of his atomic cross-chain exchange protocol.

Decentralized exchange singular (not distributed exchanges as that is what we have now) won't ever be adopted because speculators want the highest liquidity, the lowest spreads, the fastest trades, and the most accurate aggregate trading statistics. I have instead switched my focus to a payment channel invention I have which can make it impossible for centralized exchanges to lose coins (i.e. the user never gives up the private key control).

Gazillions of currencies won't work because there are huge losses for businesses and individuals when not having the same unit-of-exchange as the unit-of-account. Hedging just the major currencies is already a major headache for international corporations. This is why Germany created the Euro so they could charge the cost of the appreciation of the German mark (due to Germany's higher industrial productivity) to the PIIGS.

Also make sure that no Ethereum smart contract will be "hacked" (how can you    ), because if another is hacked, then likely all smart contract apps will be sold off in a stampede.


Note I want to use this poll both to gauge popular opinion and also as a form of motivation for myself. I prefer when I am doubted and love the underdog position.


Edit:

It also means that after 3 years of waiting for Ethereum to gain millions of adoption, its established inertia is not necessarily indicative of future success. Inertia tends to metastasize and rot. Saplings grow to oak trees, but aging oak trees don't grow to the moon. The early adopter exponential phase of Ethereum's growth is over. Just like Bitcoin, the dynamic headroom of what it can be is already baked into its inertia. ETH and BTC have one more 10 bagger (up to and less than 100X) run in them (per the technology adoption curve since they passed the first hump already), but that is all. Ditto Monero and Dash.

Speculators are attempting to know what is impossible to know too early. And thus they are being taken in by 100s of ICOs and going to end up in an ICO graveyard.

It used to be that speculators could perhaps gauge which ICOs had a superior level of hype and marketing, so they could speculate not on actuated creative technological achievement, but on the ICO being the actual launch of the manipulation of the minds of speculators (aka "mining the speculators"). But now we are entering a new phase where there will be an an oversupply (market saturation) of ICOs which have copied that "the ICO is the launch of the reality distortion field" paradigm. Ethereum is spawning offspring (i.e. smart contract) copycats of its own reality distortion field business model, which may cannabalize ETH itself.

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[thejaytiesto]

I always thought that having one token per smart contract thing was absolutely insane. This only creates high stress for investors. The simpler your portfolio is the better. I want to hold a single token that can be used for everything. There are some ETH dapps thing pretty interesting like Golem, I can see it being useful for people that want to hire computing power to render 3d video faster for example. But why the hell do all of those have their own token beyond speculation? why not use the same ETH token? we already got a ton of alts to speculate, so why create more pseudo alts from ETH itself? that only makes me stressed at keeping track of every damn different market. If the dapps are a success, ETH as a whole would benefit. By having different tokens, beside the stress of keeping track of different markets, ETH itself is in risk of losing value since people might sell ETH to buy the different tokens... its nonsense.

[jpoker272727]

This is a friendly attempt to give you speculators some information to prevent you from shooting yourselves in the foot, because of your myopia. These risks aren't disclosed to you in the prospectus for the smart contract app ICOs. Bitcoin is rising in price (likely heading to $2500) and I would want to keep my powder dry to buy the best opportunities based on the following risks...

I see your point, but the ICO has been a trend for a year now and this is very risky because there are lots of new coins joining the crypto market and can make the price of these coins drop so fast.

People who are investing in ICO know the risk and know that the coin price can be very different from the ICO price (better or worse)

Why do you think that app tokens have no value, when we are able to trade it for bitcoin in exchanges?

[klarki]

There is no regulator, this is the whole problem.

[iamnotback]

Why do you think that app tokens have no value, when we are able to trade it for bitcoin in exchanges?

The ability to trade something doesn't necessarily give it any particular value. I said they have no utility and thus no value other than as a unit of speculation. But the supply of units of speculation is not going to be limited, as everyone jumps on board offering Ethereum smart contract project app tokens.

My point is that when someone makes a project that enables apps to be monetized by some means other than app tokens, then those app token projects will have competitors who have viable business models, whilst app tokens have no utility and thus are not viable (per the reasons provided in the OP). So app tokens will collapse in value at that point. And I think that will be coming soon enough (perhaps in 2017).

Ya it is true that latest their are so many ICO which are performing their project on Ethererum Platform so this is a good for ETH as this all project coins have to move through eth network and for all transaction you have to pay gas through ETH

Unless you consider the possibility of my point which was that ICOs may drain (cannabilize) ETH into app tokens (which presumably might be sold for BTC or fiat by those issuing the ICO) if you don't have new money entering ETH from BTC. Also there could be 0 gas demand for these app projects since they seem to mostly be delusional "scams" which will never attain any adoption.

I tend to agree there will be a near-term speculators wet pants boost for ETH, but long-term I see Ethereum as a massive failure in the making. I see the app tokens ICO proliferation as the last hooray for ETH and it will die smoldering in hacks and the inherent lack of utility of the concept of an app token and the proliferation of pie-in-the-sky "scam" projects. Besides Ethereum can't scale to massive adoption. And Casper (PoS plans) can't scale decentralized (c.f. the Ethereum Paradox thread). And the competition is coming...

Ethereum will be known as the scammers and hackers paradise ecosystem after this. I'm waiting for someone to do a Bruce Wanker-style subtitled YouTube with Coolio's Gangster's Paradise as the video and background music.

Okay the wildcard is that via all the experimentation that some Ethereum app becomes a killer app of blockchains and Ethereum copies my decentralized blockchain design (but do you think I am going to let them to that!). If the experimentation does produce any good ideas, the community will just steal it over to the blockchain that can scale. In short, I don't think Ethereum has anything special. Even the model of a Turing-complete blockchain is prone to hacks.

Well Ethereum has one thing special, which is it enables massive, permissionless (decentralized) experimentation and speculator demand. This also brings more people into the crypto ecosystem. Sometimes the details are less important then the main theme as stated in the prior sentence.

[gredisgold88]

If you correctly predicted the BTC with the price of $ 2500, then in exchanger market will experience very tragic, no one is buying, meaning it will have stuck prices, BTC will be at $ 2,500 but no one is buying. and the gambler in the casino back to use fiat casino, some ico will rise, and thousands ico decreased to 1 satoshi, thousands of people will crazy, flat and stagnant position in cryptoccurency.

[jacaf01]

I voted NO, I think you should include I don't know in your poll.
I pick no because it seems your work is a one man team which I don't think you can see through alone

I totally agree with you that most of this apps tokens have no need to existing, but because what this developers are interested in is your Bitcoin they need to find away to swap their shitcoins for your Bitcoin

[Tesorex]

Who creates a poll asking if imnotback will do whatever he thinks he's going to do?

[IadixDev]

Hello

I have been reading many of your posts, even if i have to admit i have hard time to follow everything, i think you still stand out to me as one of the rare person who doesn't speak out of emotion or trying to surf on the next trend, and try to keep a global view and see every aspect of blockchain ecosystem, which i think is good, and it's very missing on the forum imo

On the topic of the app token, i think they can have some use, i'm developping distributed application framework so i believe in application token, as long as they remain this, app token, to exchange information via blockchain in distributed application it make sense, like let say you use a token to represent score or stats in a video game, it doesn't mean the token need to have any value on the market, or that it's made to be sold on the market. Can imagine even temporary chain to be made for an instance of game to store the in game state and deleted at the end of the game. In that sense app token make sense.

But i'm completely on this same line that this idea that because something is stored on the blockchain, then necessarily it's something that need to have value on a market in a way or another, and need to see still the biggest success of bitcoin so far is more for traders than software developers, or e-economy at large, so there is this whole habit to think that because there is a token on the blockchain, then the only purpose is to make this token rise in value on the market to make some trading profit out of it, and in a way anything can be speculated into as long as it has minimum of rarity or is bit hard to make, in a way anything that seems to goes against the global entropy and become special or rare can have value, and i think satoshis was very well aware of this kind of dynamic with the concept of monetized proof of work, but that doesn't necessarily apply to all kind of token that can be stored in a blockchain. After all these ico, the rarity of a token even via proof of work start to fade a little bit away.

But that said, what would you really need to start on the project ? I see you wrote you need encouragement and all, but imo it's not really a good dynamic to wait for motivation to come only from forum popularity, and anyway engaging on any kind of project with blockchain, it's going to take a lot of determination and regarding the current athmosphere, also having to deal with lot of troll, propaganda shill, fuders, haters, paranoiacs, and it's not very likely to have a lot of support on theorical project before a while.

But beside this there is issue of confidence, i sense somehow you don't have lot of trust in your capacity to lead a project to something useful, i can have a bit this kind of tendency too, but i always had good engineers to remind me certain principle like if you really want to get somewhere, really see what your software is going to improve, what is the real purpose of it, and stick what are really implementation key point with good time estimation, and limit the theorical research to this, time is money, if you want to think like ingeneer all the time spent on a project must have some kind of rentability planning, and limting the time to what are really profitable key point in the use case of the software rather than building whole theory a bit in the wind to see every aspect of everything that doesn't have necessarily huge interest in the life time of the software.

But that said i think it's also good idea to theorize on blockchain, and i think we really lack some kind of true "blockchain science" also to study all the impact and possibility, in technical term, sociological/economic term, see what is good practice, bad practice, or even beyond 'good' & 'bad' which lead to manichean view & regulation, at least some true ontological work need to be done, to avoid all the semantic confusion on ultra hyped buzz word, for that at least people can know what to expect from those fancy jargon words they see disseminated around in some ico marketing campaign, and what can work or not, and not focusing on some kind hyped problem keyword to produce a myiopic solution seeing only one aspect of the thing and ignoring the rest, without thinking the blockchain ecosystem as a whole.

I saw also in other thread something i'm also interested into, when you speak around the term of what blockchain really revolve about which is trustless system, and how the different scheme like POW or POS also showed that they fail at truly decentralizing authority, which doesn't in itself prevent the network to work, the whole software industry has been running with centralized vertical system for decades, so in itself it doesn't prevent the network to operate, and it's still balanced enough in the interest and incencitive not to collapse on itself too soon, but i'm also in the search of system that really focus on the trustlessness and system without central authority or trusted party without involving the concept of proof like it's though today. Which imo doesn't really prove much in the current state of things with the bitcoin network compared to what it was supposed to provide in term of true decentralization, ASIC and mining farms already ruined this for the most part. And the bottle neck with transaction processing rate is also due to this conception.

Did you ever look at erights.org ?

http://erights.org/elib/capability/index.html ,

http://erights.org/history/original-e/satan/index.html ,

http://wiki.erights.org/wiki/Walnut/Secure_Distributed_Computing/Satan_at_the_Races



They make some very good points on decentralized authority ,and they have tons of theory about trustless network, object interaction, distributed application, crypto, digital right transfer, and things like smart contract with full crypto theory behind on how to secure things, and they have many good articles on this kind of problems. Even if it's not based on blockchain at all, i think lot of the solution to smart contract / complex distributed app with trustless network are solved in their system.

Hope it's not too long to read I think i covered all i wanted to Maybe i'll edit to add more things

Good luck with your things

[iamnotback]

I voted NO, I think you should include I don't know in your poll.
I pick no because it seems your work is a one man team which I don't think you can see through alone

I decided not to modify the poll because I've never been able to change my vote in a poll apparently that feature doesn't work. And 13 already voted. Also I would prefer more 'No' votes because it is more satisfying to accomplish what people think you can't.

Btw, I agree that such a major project can't be accomplished by one developer, especially not in 8 - 9 months. On top of that, I am currently still too ill from ongoing Tuberculosis treatment to actually work. So yeah, there are significant hurdles ahead.

[Piston Honda]

warning...buy pretty much NO ICO lulz

[jpoker272727]

Why do you think that app tokens have no value, when we are able to trade it for bitcoin in exchanges?

The ability to trade something doesn't necessarily give it any particular value. I said they have no utility and thus no value other than as a unit of speculation. But the supply of units of speculation is not going to be limited, as everyone jumps on board offering Ethereum smart contract project app tokens.

My point is that when someone makes a project that enables apps to be monetized by some means other than app tokens, then those app token projects will have competitors who have viable business models, whilst app tokens have no utility and thus are not viable (per the reasons provided in the OP). So app tokens will collapse in value at that point. And I think that will be coming soon enough (perhaps in 2017).

Then can we compare app tokens with bitcoin or any other altcoin, are we now in the same page or these are two different things (from the value perspective)

I think that bitcoin can be joined here too as it has value but it changes by the speculation, investments and other factories which can lead to pump or dump the bitcoin price.

We know that if people are not interested in a coin then the price/value of that coin will drop dramatically until 1 satoshi or zero.

[NoiseBoy]

And yet every corporation has its own stock. Tens (hundreds?) of thousands of different stocks out there, spread across of host of heterogeneous markets, and yet capitalism continues to thrive.

Where I completely agree with you is on the focus on Ethereum based ERC-20 tokens. I've been mentally writing a post that won't be fully relevant for another year or two, but it's about locating all of one's eggs in a single basket.

One of the things I like about ICONOMI (not shilling, promise!) was that they were asked during their ICO phase what they would do if Ethereum crashed. This was right in the middle of the computational DOS attacks, so it was a very relevant question. Their answer was they were already looking at other blockchains as backups (specifically Lisk, which, really?). Frankly, every ICO needs to have an answer to that question: what's your plan if Ethereum curls up and dies?

[iamnotback]

Why do you think that app tokens have no value, when we are able to trade it for bitcoin in exchanges?

The ability to trade something doesn't necessarily give it any particular value. I said they have no utility and thus no value other than as a unit of speculation. But the supply of units of speculation is not going to be limited, as everyone jumps on board offering Ethereum smart contract project app tokens.

My point is that when someone makes a project that enables apps to be monetized by some means other than app tokens, then those app token projects will have competitors who have viable business models, whilst app tokens have no utility and thus are not viable (per the reasons provided in the OP). So app tokens will collapse in value at that point. And I think that will be coming soon enough (perhaps in 2017).

Then can we compare app tokens with bitcoin or any other altcoin, are we now in the same page or these are two different things (from the value perspective)

I think that bitcoin can be joined here too as it has value but it changes by the speculation, investments and other factories which can lead to pump or dump the bitcoin price.

We know that if people are not interested in a coin then the price/value of that coin will drop dramatically until 1 satoshi or zero.

You are completely ignoring certain key points that were made in the OP, especially the point highlighted in red text below which is that we will never end up with many viable altcoins. We will end up with one token, because that is the way money works. Humans are herding animals. They like to all rally around the same standard, so they feel safety in numbers. Money only has value due to public CONFIDENCE, meaning that everyone else uses it as money.

Token utility linkage is not always there

The assumption that everything with a potential network effect is going to work with a decentralization starting point is not entirely true. The blockchain is not for everything.

The solution or product being developed needs to have a solid business model linkage that has a particular value when decentralization and/or tokenization of actions take place. The promise of a new model needs to be very compelling.

In the name of decentralization, the promises are big. You can’t just slap a token to anything, and expect magic to happen.

The token is not the business model. The value proposition or utility that is enabled by the token is the business model, and that linkage needs to be there early on. If the direction is not right, the chosen path will not lead to a good place.

The marketing hype is frightening

Some ICOs are being marketed like a rocket ship, but in reality, no startup is a rocket ship. A lot of the communication is biased towards the most optimistic assumptions, but nothing goes up in a straight line.

I see potentially a web of gazillions of currencies, connected by gazillions of distributed exchanges.

I used to think that. I even offered an idea and discussed (in the Bitcoin Technical discussion forum) with @TierNolan and @jl777 how to deal with the jamming (Sybil attack) problem of his atomic cross-chain exchange protocol.

Decentralized exchange singular (not distributed exchanges as that is what we have now) won't ever be adopted because speculators want the highest liquidity, the lowest spreads, the fastest trades, and the most accurate aggregate trading statistics. I have instead switched my focus to a payment channel invention I have which can make it impossible for centralized exchanges to lose coins (i.e. the user never gives up the private key control).

Gazillions of currencies won't work because there are huge losses for businesses and individuals when not having the same unit-of-exchange as the unit-of-account. Hedging just the major currencies is already a major headache for international corporations. This is why Germany created the Euro so they could charge the cost of the appreciation of the German mark (due to Germany's higher industrial productivity) to the PIIGS.

...But now we are entering a new phase where there will be an an oversupply (market saturation) of ICOs which have copied that "the ICO is the launch of the reality distortion field" paradigm. Ethereum is spawning offspring (i.e. smart contract) copycats of its own reality distortion field business model, which may cannabalize ETH itself.

[iamnotback]

And yet every corporation has its own stock. Tens (hundreds?) of thousands of different stocks out there, spread across of host of heterogeneous markets, and yet capitalism continues to thrive.

Stocks pay dividends to the shareholders who own equity in a for profit company. The only people who are forced to buy stocks are investors. Whereas, app tokens are forcing users of the service to forgo using the most ubiquitous token (e.g. BTC or ETH). So someone will just fork/duplicate the project and get rid of the app tokens (allowing the use of ETH and/or BTC instead). Thus app tokens have no sustainable value.

If all app tokens did was pay dividends, then they would very clearly be investment securities and subject to regulation.

One of the things I like about ICONOMI (not shilling, promise!) was that they were asked during their ICO phase what they would do if Ethereum crashed. This was right in the middle of the computational DOS attacks, so it was a very relevant question. Their answer was they were already looking at other blockchains as backups (specifically Lisk, which, really?). Frankly, every ICO needs to have an answer to that question: what's your plan if Ethereum curls up and dies?

That is why I think my OpenShare blockchain project could be a goldmine, regardless what happens with the other projects such Ethereum.

There is only PoW, PoS, DPoS, and DAGs. Actually the only DAG that is sound is Byteball, but it has the same problem as Casper, TenderMint, and Cosmos in that it can get stuck and require a hard fork to unstuck. Nothing else so far. But OpenShare will be something new.

[statdude]

It seems to me that app tokens have served as a vehicle to circumvent having to be listed as a security as well as to provide any sort of obligation to holders.

[iamnotback]

It seems to me that app tokens have served as a vehicle to circumvent having to be listed as a security as well as to provide any sort of obligation to holders.

Agreed the utility is only to provide a speculation unit, but the supply of these speculation units is becoming unlimited due to Ethereum smart contracts which can be created as a proof-of-concept in a matter of a few hours. Slap on a whitepaper and website for a couple $100s of expenses, and launch an ICO.

[topesis]

It seems to me that app tokens have served as a vehicle to circumvent having to be listed as a security as well as to provide any sort of obligation to holders.

Agreed the utility is only to provide a speculation unit, but the supply of these speculation units is becoming unlimited due to Ethereum smart contracts which can be created as a proof-of-concept in a matter of a few hours. Slap on a whitepaper and website for a couple $100s of expenses, and launch an ICO.

I don't think we should be surprise by these ICO craze, when their is possibility of money to be made, people will speculate on it, though I believe the Ethereum project as underperform but the concept has brought to live some interesting projects too like Augur, ICONOMI, Golem etc.

This is just the beginning of ICO, I believe before sanctity come to the space we must learn some lessons that will make the space evolve and get better