DNotes 2.0 - Staking, CRISP Interest, DNotes Pay

[Dyna]

I'm not involved in Bitcoin and cryptocurrency but was referred to DNotes in regards to your venture capital program where you help companies raise up to 3 million dollars through legal fundraising. The ICO route currently seems very risky, if not outright illegal, but you list on the white paper that DNotes will be facilitating ICO's. What might that look like, and will there be investor protections?

Will DNotes Consulting and Venture Capital be focused on funding for cryptocurrency based businesses only, or can unrelated businesses participate also?

Hi Member Hero, welcome to DNotes.

DNotes Global NextGenVC is contingent on the successful completion of our Reg. A+ Mini-IPO Tier 2 to raise up to $50 million from accredited and non-accredited investors.

During the first year of operation, NextGenVC will select one among many potential candidates that best fit our business model and best in class mindset. It does not have to be in the cryptocurrency business but one that could benefit from our association as a digital currency and blockchain technology leader. High preference will be given to companies that have a revenue producing history of at least two years with high growth and profit potential but constrained by other shortcomings. Up to $3,000,000 will be funded by our group to best position the company for successful funding.  

We will mutually select a funding program that best meet the company's capital needs provided that we can be in compliance with existing security laws in a security token offering. The security token will be offered in conjunction with DNotes blockchain and DNotes Global exchange when available. More details will be disclosed in the coming months. We believe that ICO can be an excellent tool to facilitate capital formation but must be structured with consumer protection and in compliance with existing security laws.

This is in line with our vision of mass adoption of DNotes and the best use of DNotes Global's fully integrated ecosystems. However, please understand that we will be very selective.

[kimhong1131997]

Is this coin's full name from Death Note? lol

[mrbum805]

Is this coin's full name from Death Note? lol

You know thats pretty disrespectful. I suggest you make those commits elsewhere.

There is a whole plan in action if you looked a little further with a lot of hard work involved. quite frankly this is one of the better or best coins that are available. The market place is going to change over these next few years and dnotes will take ever initiative to be right there in the action following the tax mans rules all along. I highly suggest you dig deeper, an opportunity you don't want to pass if you do your own research.

goodluck

[Amadeus82]

I must say that in this whole situation with Cryptopia listing, the only thing that I find a little disappointing, is that they let us know about delay in listing only about one or two days prior to when actual listing should happen This is maybe a little unprofessional from their side, because DNotes (and also me) already shared a lot of post and news of listing on May 12th.

Now in the eyes of some investors we (DNotes and all who help promoting it) could be seen like the ones who are not serious and professional, because the listing date was changed so close to when actual listing should happen.

In the long run I suppose it does not matter, but as now, I think it is important to explain the investors why it came to this situation. I think that team already made a good work on that, especially with published letter of Alan Young, so I think we shall be just fine

[Chase]

I must say that in this whole situation with Cryptopia listing, the only thing that I find a little disappointing, is that they let us know about delay in listing only about one or two days prior to when actual listing should happen This is maybe a little unprofessional from their side, because DNotes (and also me) already shared a lot of post and news of listing on May 12th.

Now in the eyes of some investors we (DNotes and all who help promoting it) could be seen like the ones who are not serious and professional, because the listing date was changed so close to when actual listing should happen.

In the long run I suppose it does not matter, but as now, I think it is important to explain the investors why it came to this situation. I think that team already made a good work on that, especially with published letter of Alan Young, so I think we shall be just fine

Last night was the first time I have had a few spare minutes to even look at what is listed on Cryptopia. DNotes is the least of their concerns! Unfortunately it appears it is getting lumped in with the rest, including many that won't hold up to regulatory scrutiny.

Perhaps their lawyers could speed things up by reading the Cryptocurrency & ICO Screening Guide For Investors - https://dnotesedu.com/2018/02/cryptocurrency-ico-screening-guide-for-investors/.   

[Member Hero]

I'm not involved in Bitcoin and cryptocurrency but was referred to DNotes in regards to your venture capital program where you help companies raise up to 3 million dollars through legal fundraising. The ICO route currently seems very risky, if not outright illegal, but you list on the white paper that DNotes will be facilitating ICO's. What might that look like, and will there be investor protections?

Will DNotes Consulting and Venture Capital be focused on funding for cryptocurrency based businesses only, or can unrelated businesses participate also?

Hi Member Hero, welcome to DNotes.

DNotes Global NextGenVC is contingent on the successful completion of our Reg. A+ Mini-IPO Tier 2 to raise up to $50 million from accredited and non-accredited investors.

During the first year of operation, NextGenVC will select one among many potential candidates that best fit our business model and best in class mindset. It does not have to be in the cryptocurrency business but one that could benefit from our association as a digital currency and blockchain technology leader. High preference will be given to companies that have a revenue producing history of at least two years with high growth and profit potential but constrained by other shortcomings. Up to $3,000,000 will be funded by our group to best position the company for successful funding.  

We will mutually select a funding program that best meet the company's capital needs provided that we can be in compliance with existing security laws in a security token offering. The security token will be offered in conjunction with DNotes blockchain and DNotes Global exchange when available. More details will be disclosed in the coming months. We believe that ICO can be an excellent tool to facilitate capital formation but must be structured with consumer protection and in compliance with existing security laws.

This is in line with our vision of mass adoption of DNotes and the best use of DNotes Global's fully integrated ecosystems. However, please understand that we will be very selective.

Thank you for the speedy reply. So if a successful candidate will exchange equity for acceleration capital and consultation services, does this mean DNotes consultation services will be provided over the duration of the businesses lifetime? Or will equity be sold off as DNotes so chooses?

From what I have seen, DNotes has a good business model. What terrifies me the most about cryptocurrency is inadvertently being caught up with criminal activity, and being found guilty by association. Until such risks are mitigated, conservative investors will not be participating in cryptocurrency. If DNotes can pull off what is being claimed, it will remove entry barriers for major investment firms who are chomping at the bit to place their bets. At that point I would consider adding cryptocurrency to my investment portfolio.

Can you give me an idea of which stock exchanges DNotes Global might be listed on?

Some analysts are calling for corrections/reversals in these respective markets. would it make sense for DNotes to avoid exposure to these markets until they stabilize and return to their average trendline?

Sorry for taking up so much time of your time with all these questions and thank you in advance for the reply.

[wiser]

I'm not involved in Bitcoin and cryptocurrency but was referred to DNotes in regards to your venture capital program where you help companies raise up to 3 million dollars through legal fundraising. The ICO route currently seems very risky, if not outright illegal, but you list on the white paper that DNotes will be facilitating ICO's. What might that look like, and will there be investor protections?

Will DNotes Consulting and Venture Capital be focused on funding for cryptocurrency based businesses only, or can unrelated businesses participate also?

Hi Member Hero, welcome to DNotes.

DNotes Global NextGenVC is contingent on the successful completion of our Reg. A+ Mini-IPO Tier 2 to raise up to $50 million from accredited and non-accredited investors.

During the first year of operation, NextGenVC will select one among many potential candidates that best fit our business model and best in class mindset. It does not have to be in the cryptocurrency business but one that could benefit from our association as a digital currency and blockchain technology leader. High preference will be given to companies that have a revenue producing history of at least two years with high growth and profit potential but constrained by other shortcomings. Up to $3,000,000 will be funded by our group to best position the company for successful funding.  

We will mutually select a funding program that best meet the company's capital needs provided that we can be in compliance with existing security laws in a security token offering. The security token will be offered in conjunction with DNotes blockchain and DNotes Global exchange when available. More details will be disclosed in the coming months. We believe that ICO can be an excellent tool to facilitate capital formation but must be structured with consumer protection and in compliance with existing security laws.

This is in line with our vision of mass adoption of DNotes and the best use of DNotes Global's fully integrated ecosystems. However, please understand that we will be very selective.

Thank you for the speedy reply. So if a successful candidate will exchange equity for acceleration capital and consultation services, does this mean DNotes consultation services will be provided over the duration of the businesses lifetime? Or will equity be sold off as DNotes so chooses?

From what I have seen, DNotes has a good business model. What terrifies me the most about cryptocurrency is inadvertently being caught up with criminal activity, and being found guilty by association. Until such risks are mitigated, conservative investors will not be participating in cryptocurrency. If DNotes can pull off what is being claimed, it will remove entry barriers for major investment firms who are chomping at the bit to place their bets. At that point I would consider adding cryptocurrency to my investment portfolio.

Can you give me an idea of which stock exchanges DNotes Global might be listed on?

Some analysts are calling for corrections/reversals in these respective markets. would it make sense for DNotes to avoid exposure to these markets until they stabilize and return to their average trendline?

Sorry for taking up so much time of your time with all these questions and thank you in advance for the reply.

Your questions are most welcome here. They represent a different but extremely valuable perspective. A lot of us who are into cryptocurrencies kind of got lucky in certain ways, and now we have to really cram to learn about how investments and high finances really work. So please keep asking, and we may have some questions for you too to help with our education

[DNotes]

I'm not involved in Bitcoin and cryptocurrency but was referred to DNotes in regards to your venture capital program where you help companies raise up to 3 million dollars through legal fundraising. The ICO route currently seems very risky, if not outright illegal, but you list on the white paper that DNotes will be facilitating ICO's. What might that look like, and will there be investor protections?

Will DNotes Consulting and Venture Capital be focused on funding for cryptocurrency based businesses only, or can unrelated businesses participate also?

Hi Member Hero, welcome to DNotes.

DNotes Global NextGenVC is contingent on the successful completion of our Reg. A+ Mini-IPO Tier 2 to raise up to $50 million from accredited and non-accredited investors.

During the first year of operation, NextGenVC will select one among many potential candidates that best fit our business model and best in class mindset. It does not have to be in the cryptocurrency business but one that could benefit from our association as a digital currency and blockchain technology leader. High preference will be given to companies that have a revenue producing history of at least two years with high growth and profit potential but constrained by other shortcomings. Up to $3,000,000 will be funded by our group to best position the company for successful funding.  

We will mutually select a funding program that best meet the company's capital needs provided that we can be in compliance with existing security laws in a security token offering. The security token will be offered in conjunction with DNotes blockchain and DNotes Global exchange when available. More details will be disclosed in the coming months. We believe that ICO can be an excellent tool to facilitate capital formation but must be structured with consumer protection and in compliance with existing security laws.

This is in line with our vision of mass adoption of DNotes and the best use of DNotes Global's fully integrated ecosystems. However, please understand that we will be very selective.

Thank you for the speedy reply. So if a successful candidate will exchange equity for acceleration capital and consultation services, does this mean DNotes consultation services will be provided over the duration of the businesses lifetime? Or will equity be sold off as DNotes so chooses?

From what I have seen, DNotes has a good business model. What terrifies me the most about cryptocurrency is inadvertently being caught up with criminal activity, and being found guilty by association. Until such risks are mitigated, conservative investors will not be participating in cryptocurrency. If DNotes can pull off what is being claimed, it will remove entry barriers for major investment firms who are chomping at the bit to place their bets. At that point I would consider adding cryptocurrency to my investment portfolio.

Can you give me an idea of which stock exchanges DNotes Global might be listed on?

Some analysts are calling for corrections/reversals in these respective markets. would it make sense for DNotes to avoid exposure to these markets until they stabilize and return to their average trendline?

Sorry for taking up so much time of your time with all these questions and thank you in advance for the reply.

Your questions are most welcome here. They represent a different but extremely valuable perspective. A lot of us who are into cryptocurrencies kind of got lucky in certain ways, and now we have to really cram to learn about how investments and high finances really work. So please keep asking, and we may have some questions for you too to help with our education

Agreed, while these questions are better covered by Dyna / Alan, they are a great opportunity to elaborate the case for DNotes Global, Inc. and address potential concerns.

[Dyna]

I must say that in this whole situation with Cryptopia listing, the only thing that I find a little disappointing, is that they let us know about delay in listing only about one or two days prior to when actual listing should happen This is maybe a little unprofessional from their side, because DNotes (and also me) already shared a lot of post and news of listing on May 12th.

Now in the eyes of some investors we (DNotes and all who help promoting it) could be seen like the ones who are not serious and professional, because the listing date was changed so close to when actual listing should happen.

In the long run I suppose it does not matter, but as now, I think it is important to explain the investors why it came to this situation. I think that team already made a good work on that, especially with published letter of Alan Young, so I think we shall be just fine

Last night was the first time I have had a few spare minutes to even look at what is listed on Cryptopia. DNotes is the least of their concerns! Unfortunately it appears it is getting lumped in with the rest, including many that won't hold up to regulatory scrutiny.

Perhaps their lawyers could speed things up by reading the Cryptocurrency & ICO Screening Guide For Investors - https://dnotesedu.com/2018/02/cryptocurrency-ico-screening-guide-for-investors/.   

Thank you, Chase. The DNotesEDU article - “The Cryptocurrency & ICO Screening Guide For Investors” is fantastic. It is highly recommended reading:
https://dnotesedu.com/2018/02/cryptocurrency-ico-screening-guide-for-investors/   

It is unfortunate that DNotes listing on Cryptopia has been delayed. 

My letter to Cryptopia is on page 213. Here is a portion of it:

“As much as it is disappointing, I appreciate that you promptly advised us that the listing of DNotes on Cryptopia has been delayed. I understand that all exchanges trading cryptocurrencies are under intense scrutiny for regulatory compliance.

At issues, among others, is whether a coin listed on an unregulated exchange is a “token” or a “security”. From a legal prospective, a coin becomes a security token when it is utilized as a funding vehicle most commonly used in ICOs. In the process of using a token to raise capital, a change of state occurred – the status of a token becomes a security. There are no known exceptions.

Here is a prime example of a token: Bitcoin, while being labeled as a “token”, “commodity”, “property”, and more, has never been labeled as a “security”. This is because Bitcoin has never been used as an investment funding vehicle to raise capital. DNotes holds the same status as a token and not a security. DNotes has never been used or will ever be used as an investment funding vehicle to raise capital.

DNotes’ management and leadership are among the most committed to remain in compliance with all existing laws as we strive to build the most trusted brand for DNotes to gain mass adoption. We have devoted the last four years in building a fully integrated ecosystem that will help bridge the gap between the decentralized cryptocurrency world with current centralized systems. Everything will be done in full compliance with existing laws”.

Readmore: page 213

[Dyna]

I must say that in this whole situation with Cryptopia listing, the only thing that I find a little disappointing, is that they let us know about delay in listing only about one or two days prior to when actual listing should happen This is maybe a little unprofessional from their side, because DNotes (and also me) already shared a lot of post and news of listing on May 12th.

Now in the eyes of some investors we (DNotes and all who help promoting it) could be seen like the ones who are not serious and professional, because the listing date was changed so close to when actual listing should happen.

In the long run I suppose it does not matter, but as now, I think it is important to explain the investors why it came to this situation. I think that team already made a good work on that, especially with published letter of Alan Young, so I think we shall be just fine

Hi, Amadeus82. Your points are well taken. It is disappointing to see DNotes listing placed on hold a day before it was supposed to be listed.  We may never know for sure what happened. I trust that my letter could help them reach a legal opinion beyond any reasonable doubts that, like Bitcoin, DNotes is not a “security” but a “token” because it has never been used as an investment funding vehicle to raise capital. 

[Dyna]

I'm not involved in Bitcoin and cryptocurrency but was referred to DNotes in regards to your venture capital program where you help companies raise up to 3 million dollars through legal fundraising. The ICO route currently seems very risky, if not outright illegal, but you list on the white paper that DNotes will be facilitating ICO's. What might that look like, and will there be investor protections?

Will DNotes Consulting and Venture Capital be focused on funding for cryptocurrency based businesses only, or can unrelated businesses participate also?

Hi Member Hero, welcome to DNotes.

DNotes Global NextGenVC is contingent on the successful completion of our Reg. A+ Mini-IPO Tier 2 to raise up to $50 million from accredited and non-accredited investors.

During the first year of operation, NextGenVC will select one among many potential candidates that best fit our business model and best in class mindset. It does not have to be in the cryptocurrency business but one that could benefit from our association as a digital currency and blockchain technology leader. High preference will be given to companies that have a revenue producing history of at least two years with high growth and profit potential but constrained by other shortcomings. Up to $3,000,000 will be funded by our group to best position the company for successful funding.  

We will mutually select a funding program that best meet the company's capital needs provided that we can be in compliance with existing security laws in a security token offering. The security token will be offered in conjunction with DNotes blockchain and DNotes Global exchange when available. More details will be disclosed in the coming months. We believe that ICO can be an excellent tool to facilitate capital formation but must be structured with consumer protection and in compliance with existing security laws.

This is in line with our vision of mass adoption of DNotes and the best use of DNotes Global's fully integrated ecosystems. However, please understand that we will be very selective.

Thank you for the speedy reply. So if a successful candidate will exchange equity for acceleration capital and consultation services, does this mean DNotes consultation services will be provided over the duration of the businesses lifetime? Or will equity be sold off as DNotes so chooses?

From what I have seen, DNotes has a good business model. What terrifies me the most about cryptocurrency is inadvertently being caught up with criminal activity, and being found guilty by association. Until such risks are mitigated, conservative investors will not be participating in cryptocurrency. If DNotes can pull off what is being claimed, it will remove entry barriers for major investment firms who are chomping at the bit to place their bets. At that point I would consider adding cryptocurrency to my investment portfolio.

Can you give me an idea of which stock exchanges DNotes Global might be listed on?

Some analysts are calling for corrections/reversals in these respective markets. would it make sense for DNotes to avoid exposure to these markets until they stabilize and return to their average trendline?

Sorry for taking up so much time of your time with all these questions and thank you in advance for the reply.

Hi, Member Hero. Thanks for some great comments and questions:


Q. Thank you for the speedy reply. So if a successful candidate will exchange equity for acceleration capital and consultation services, does this mean DNotes consultation services will be provided over the duration of the businesses lifetime? Or will equity be sold off as DNotes so chooses?

A. All of DNotes Global’s business units must be viable sustainable entities - their service or product line must have significant growth and profit potential. This same philosophy applies to our selection of any investment candidates we decided to fund. Additionally, we must also have a high level of confidence that the top management and leadership share our general business philosophy and best in class mindset. Our goal is not to generate billable hours for our consulting business but to help the company develop internal capabilities especially in the areas of management and leadership. We train others to multiply ourselves – in terms of business philosophies, unified culture based on the key pillars of business success. We want them to grow with us, not dependent on us for ever.
 
DNotes Global will always reserve its rights to liquidate its ownership or equity position subject to restrictions of any agreements. But we are not interested in short-term investment.

Our goals go beyond generating a high rate of return for our shareholders. We believe that this is one of the best pathways in assisting DNotes to gain mass adoption. We believe that the right candidate will not only have our long-term commitment to ensure optimum business success but also benefit from our family network of partnerships and technologies. In short, we will liquidate if we must, but we are in it for the long term.

Q. From what I have seen, DNotes has a good business model. What terrifies me the most about cryptocurrency is inadvertently being caught up with criminal activity, and being found guilty by association. Until such risks are mitigated, conservative investors will not be participating in cryptocurrency. If DNotes can pull off what is being claimed, it will remove entry barriers for major investment firms who are chomping at the bit to place their bets. At that point I would consider adding cryptocurrency to my investment portfolio.

A:  The shady side of our industry is concerning.

We believe that for any coin to gain mass adoption, it must have a group of highly committed supporters with sufficient invested self-interest to protect and promote the best interest of the coin. In the case of DNotes, we took it one step further and created DNotes Global, Inc. to create intrinsic value and shareholder value. Our cross-ownership further enhanced the “self-interest” and quite frankly inspired support and followings beyond our industry.

DNotes business model is quite complex and extensive. We are religiously committed to best in class mindset in all things that matter, including building a trusted brand, being purposely inclusive, doing the right thing, the right way, at the right time, stay in compliance with existing laws, and much more.

DNotes has certainly differentiated itself as a unique breed among others in our increasing crowded space. We are very transparent and relentlessly committed to our vision of mass adoption of DNotes. We have developed an enormous amount of researchable materials for serious investors to do their due diligent with convenience and ease.

Q: Can you give me an idea of which stock exchanges DNotes Global might be listed on?

A: Shortly upon successful completion of DNotes Global Reg. A+ Mini-IPO Tier 2 we plan to have our shares listed on OCTQX. The process is very straightforward.

Q: Some analysts are calling for corrections/reversals in these respective markets. would it make sense for DNotes to avoid exposure to these markets until they stabilize and return to their average trendline?

A:  Sounds reasonable but that may not be a good idea.

From my prospective, our industry is at a period of extremely risk. It is in a period of thinning out and will be harder for irrelevant coins to survive. The temporary delay at Cryptopia to list DNotes 2.0 could turn out to be advantageous as a short-term event. However, since DNotes is significantly undervalued with a clearly differentiated trusted brand I believe that this is the appropriate time to stand tall and claim our rightful place.  

Q: Sorry for taking up so much time of your time with all these questions and thank you in advance for the reply.

You are most welcome. Feel free to connect with me on LinkedIn, send me a private message, or make a post here, if I can be of further assistance.

[Amadeus82]

I must say that in this whole situation with Cryptopia listing, the only thing that I find a little disappointing, is that they let us know about delay in listing only about one or two days prior to when actual listing should happen This is maybe a little unprofessional from their side, because DNotes (and also me) already shared a lot of post and news of listing on May 12th.

Now in the eyes of some investors we (DNotes and all who help promoting it) could be seen like the ones who are not serious and professional, because the listing date was changed so close to when actual listing should happen.

In the long run I suppose it does not matter, but as now, I think it is important to explain the investors why it came to this situation. I think that team already made a good work on that, especially with published letter of Alan Young, so I think we shall be just fine

Hi, Amadeus82. Your points are well taken. It is disappointing to see DNotes listing placed on hold a day before it was supposed to be listed.  We may never know for sure what happened. I trust that my letter could help them reach a legal opinion beyond any reasonable doubts that, like Bitcoin, DNotes is not a “security” but a “token” because it has never been used as an investment funding vehicle to raise capital. 

Dear Dyna, that was really inconvenient thing for Cryptopia to do. I think that's exactly why it is important to get on at least few exchanges, so Dnotes would not be dependent on the whim of just the one But yes I know...it is easier said that done...

[DCEBrief]

Can ICOs Escape Economic Reality?

https://dcebrief.com/op-ed-can-icos-escape-economic-reality/

[Dyna]

Can ICOs Escape Economic Reality?

https://dcebrief.com/op-ed-can-icos-escape-economic-reality/

Another excellent article, Tim. I believe that the "thinning out" process in our industry has started. This happens to all major technology industries where the cost entry barriers are low, enabling an abundant number of "me too" at the early stages. It happened in the personal computer era, the dotcom era. This cryptocurrency blockchain era will not be an exception. Thanks for sharing your deep knowledge.

[wiser]

Can ICOs Escape Economic Reality?

https://dcebrief.com/op-ed-can-icos-escape-economic-reality/

Thanks for the article, Tim. It brings up a question. Here's a quote from the article:

If it does have intrinsic value (read: profit share), real equity investors in the ICO-born company will watch on as the ICO token proves a permanent drag on the company’s long-term prospects – which, given the general spending on intangible business activities, aren’t good to begin with. The token goes to zero.

Could you explain further how that works? The only reason I would or have ever bought into ICOs is because of the promise of recurring and permanent profit sharing. You say that actually delivering on this promise drags down the company and I can see how having to allocate 10% to token holders and such would represent an opportunity cost for the company. But how is that different from dividend paying stocks?

Please educate me

[DNotes]

Happy Mothers Day!!!

I hope all the amazing mothers out there have a great day and stop by CryptoMoms to say hi.

[DCEBrief]

Happy Mothers Day, ladies!

Ignore conventional wisdom, because money doesn't really make the world go 'round.

You do.

Take a bow; you've earned it.

[doctorlw1]

I suggest applying to nanex, up and coming exchange that seems to be doing everything right in my opinion.

https://www.reddit.com/r/nanex/comments/8bn0k4/how_does_an_asset_get_listed_on_nanex/

[DCEBrief]

Reserve Bank of Zimbabwe Orders Banks to End Crypto-Related Activities

https://dcebrief.com/reserve-bank-of-zimbabwe-orders-banks-to-end-crypto-related-activities/

[TeeGee]

Can ICOs Escape Economic Reality?

https://dcebrief.com/op-ed-can-icos-escape-economic-reality/

Thanks for the article, Tim. It brings up a question. Here's a quote from the article:

If it does have intrinsic value (read: profit share), real equity investors in the ICO-born company will watch on as the ICO token proves a permanent drag on the company’s long-term prospects – which, given the general spending on intangible business activities, aren’t good to begin with. The token goes to zero.

Could you explain further how that works? The only reason I would or have ever bought into ICOs is because of the promise of recurring and permanent profit sharing. You say that actually delivering on this promise drags down the company and I can see how having to allocate 10% to token holders and such would represent an opportunity cost for the company. But how is that different from dividend paying stocks?

Please educate me

Thanks for the question wiser! I had to delete two words in the article and replace another to clear up some of the meaning.

The first part to say about your question, is that there are a wide range of ICO structures, so i'll just answer for probably the most common (which do sometimes vary depending on the application being built - say exchange or retail businesses etc).

The second part is that most ICO tokens that I've seen are not actually 'profit sharing', but rather 'income sharing' -- I'll explain.

In a profit-sharing scenario, the ICO would need to be generating significant revenue, and be running an operational surplus for ICO tokens to ever receive a 'dividend equivalent' payout. The business that ran the ICO would take their total income for the year, subtract all their expenses, then decide how much they want to reinvest back into their business for improvements, and the leftover is the 'profit'. Dividends to equity owners in traditional businesses are paid based on profit, which is determined after the company decides how much it wants to hold onto (retained earnings) for business upkeep / growth. If the company wants to grow, it just holds onto all the earnings for the year. This is a luxury it wouldn't have when it comes to ICO payments that are generally based on gross income, rather than profit (i'll get to this).

So in a hypothetical example, say my ICO business turned over 10m for the year, had 8m of expenses for the year, and I decided to reinvest 1m of the remaining 2m into the company to improve its services. That would leave 1m in profit. If my ICO token promised a 10% return from all profits, there would be 100 thousand dollars paid out to the ICO token holders, and then the equity owners would get the rest in dividends (as they are lower than ICO tokens in the capital structure).

But the way that many ICOs I've seen are set up, is the token is used as a voucher to pay the fees to use the ICO's network, where a certain percentage is paid back to token holders -- which functionally makes them a drain on total income. The funds are automatically forwarded to the token holders, so they are potentially never recorded on the ICO's income statement, but the final resting places of all funds involved in the transaction remain the same. Me giving you $20, and then you giving 10 of it to someone else is exactly the same as me giving you $20, and your software automatically giving that $10 to that other person.

So with Tim's ICO of 10m turnover with a 10% return of network fee to token holders, there would be 1 million dollars paid out to token holders, rather than just 100k in the above 'profit' model. One of the 'payment processing' coins out there has a functional draw from its network equivalent to ~25% of what would be considered its 'net income' from fees. That would be a draw of 2.5m out of the 10m turnover in Tim's ICO, which would suddenly see Tim's ICO making a loss: remember that regardless of the way you play trick accounting, a 10m turnover, less 2.5m ICO dividend, less 8m expenses = 0.5m loss, is exactly the same as a 7.5m turnover, less 8m expenses = 0.5m loss (not accounting for ICO income in turnover, nor as a dividend drain).

There are four main ways that I can see this potentially hurt an ICO business:

Firstly, the drain from income occurs regardless of whether the ICO company is making an operational surplus -- meaning it could make it stay in the red longer, and at worst accelearate losses that force it to go broke if it can't turn profitable by the time the ICO money runs out.

Secondly, The above scenario could scare investors away from putting their money into the ICO business (or save one) that had such an automatic drain on its turnover, because:

Thirdly, sustainable operational surpluses are required to reinvest surplus capital back into the business that allow it to grow (and equity investors care about growth). Investors only tolerate perpetual losses for so long. Once a business runs out of money,  and nobody wants to invest, it dies.

Fourthly, and last, the fee structure places the startup at a competitive disadvantage to other projects that don't have, say, a 25% income drain sent to token holders. A hypothetically otherwise 'identical' competitor (No ICO) could eliminate some of this margin to attract new customers, yet still remain profitable and grow.

i.e. Baseline (using everything recorded accounting, and assuming expenses are fixed):

Tim's ICO  = 12.5m turnover, less 3.75m ICo dividend (25% of network fee), less 8m expenses = 0.75m operating profit to reinvest.
Competitor = 12.5m turnover, less 8m expenses = 4.5m operating profit to reinvest and grow.

And if engaged in a price battle:

Tim's ICO = 10m turnover, less 2.5m ICO dividend (25% of network fee), less 8m expenses = 0.5m loss, disgruntled equity investors.
Competitor = 10m turnover, less 8m expenses = 2m operating profit to reinvest for growth.


As you can see, an equally competent competitor without income-based ICO will easily win a price war. While the ICO model will see greatly reduced growth in the business even as turnover rises. The ICO token in this model anyway, becomes a parasite on the economy that constrains its growth. And the only way to draw more investment in to remedy the situation is to attract more investors -- but again, why would they want to bail out a business where they get reduced growth, and where ICO token holders still get paid even when the busienss is making a loss? That investment could be the difference between many ICO businesses surviving or failing. And as each ICO business dies, so too does its token.

Note: there are lots of different ways ICO's can look, and not all ICOs are prone to all the downsides in ever case. Models are illustrative only.