Are Most Cryptocurrencies Doomed to Collapse — because they’re “ICO-issued”?

[Dullmartini]

Is he correct in his analysis?

Well he predicted this 2 days before it happened.

And specifically warned at the top of his blog that NEO was vulnerable.

Winner will be the country that makes icos legal and regulated.

All countries are being forced to enforce securities regulation same as was the case for FATCA. All this information is covered in detail at the following blog:

Are Most Cryptocurrencies Doomed to Collapse — because they’re “ICO-issued”?

I think banning of ICO means ban to start an ICO, not ban to invest in ICO.

Incorrect. Read the linked blog to learn about investment securities and more details. Follows is a summary.

There will be a banning of trading on the exchanges for the tokens which were issued by ICO (or any obfuscation of an ICO which is equivalent).

Tokens will be frozen on exchanges. Money will be recovered from issuers and some will be jailed. Some who promoted and/or traded large quantities of ICO-issued tokens will be fined and possibly jailed.

Use of ICO-issued tokens will be illegal because it is illegal to trade investment securities on an unregulated exchange.

So that means avoid IOTA, NEO, Qtum, EOS, ETH, Stratis, Decreed, NEM, List, Waves, Tezos, PIVX, etc.

Legal tokens include Bitcoin, Bitcoin Cash, Litecoin, and Monero.

Guess Quality coins should rebounce within 2 weeks

Only tokens which were issued with proof-of-work are going to remain legal for use. So Ethereum would be another one to avoid.

And as the blog explains, coins which were issued with instamines and stealth mines are also investment securities and thus will be illegal to trade and spend. Therefor, Dash, Steem and Bytecoin should be avoided.

Continuing to use ICO-issued coins could create a situation where you as a user pay huge fines and potentially jail time.

(Note the market can remain irrational, so that is not a prediction about which will experience dead-cat bounce rebounds).

I think Singapore could be the one.

Incorrect. Singapore is planning to crackdown also.

this event is a small bump on the road, Chinese investors will always finds a way to invest in ICO's, but for ICO operator they need to migrate to other country to continue with their operations.

Chinese don’t speculate on illegitimate things. They speculated on ICOs because they could pitch a greater fool message that these were something that would be the future. How can they have that sales pitch when most of the major nations will eventually be making ICOs illegal?

China, Russia, Singapore, and South Korea have already made announcements. The SEC also warned and will likely make enforcement announcement soon, which will cause another massive crash to lower levels.

Speculators still haven’t digested that this affects all the ICO-issued tokens, not just the China affiliated ones.

More and more crashing to come for ICO-issued tokens. (May get a dead-cat bounce which would be a good time to sell)

The other nations’ security regulators are not going to stand by and do nothing and let their citizens be subjected to scams, while the Asian countries protect their citizens. That would be very embarrassing to Western nations and abrogation of their responsibility and duty. There is already a contagion of a critical mass of nations now. This is unstoppable and ICOs are dead.

can be banning existing ICO

Existing ICO-issued tokens will become illegal, because investment securities are illegal to exchange if not on a registered exchange. And illegally issued investment securities are never legal to trade.

Thus ICO-issued tokens can not be spent decentralized. They are useless because can’t function as a cryptocurrency. At least not legally.


Click here for a longer explanation of why proof-of-work mined tokens are not investment securities and thus not afflicted by recent events.

One thing that has not been mentioned is that regulators like the sec can grandfather existing instruments when a new regulation comes out.

This situation reminds me a lot of crowdfunding. People did crowdfunding even though it was not permitted by securities law. In the us, the sec got involved and issued regulation. The existing crowdfunding arrangements were grandfathered, afaik. Even thoug they were securities.

[Hyperme.sh]

One thing that has not been mentioned is that regulators like the sec can grandfather existing instruments when a new regulation comes out.

This situation reminds me a lot of crowdfunding. People did crowdfunding even though it was not permitted by securities law. In the us, the sec got involved and issued regulation. The existing crowdfunding arrangements were grandfathered, afaik. Even thoug they were securities.

I do not admonish you with an intent to be disrespectful or unappreciative. I guess I am glad you raised this point although it has been raised numerous times all over the forums and refuting and correcting it every time will become tiring and impossible for an expert. Thus the community will become highly misinformed and idiotic as a result. It behooves all of you to be more astute and stop spreading incorrect information. And to try to help spread correct information.

Unfortunately readers here such as yourself make comments while being inadequately informed about the details, thus your statements are most often highly incorrect because "the devil is always in the details". This is why statements by people who have not studied an issue carefully, are worse than worthless. Statements from uninformed people, can be misleading and contain the opposite of the truth.

In this case, you are not emphasizing a very important detail which can mislead readers of your comment, which is that equity crowdfunding (as opposed to preselling production or other forms of non-securities crowdfunding a la Kickstarter) afaik has not been grandfathered in any way that allows them to be not classified as securities.

Thus all equity crowdfunding has remained subject to securities regulations, and thus all the pitfalls I detailed about not being able to trade the securities (i.e. shares or tokens) applies to all equity crowdfunding that occurred prior to the Regulation CF and Regulation A+ legislation. Essentially the main change in those new equity crowdfunding rules is that it is easier to sell equity to up to 1000 non-accredited investors subject to certain stipulations and regulatory compliance requirements (but only for a USA corporation!).

But they are all still securities. And as I explained already, a token being a security is a kiss of death, because it can not be legally traded P2P nor on unregulated exchanges (and afaik no crypto exchanges are registered with the SEC yet and no tokens are registered with the SEC).

Even if ICO issued tokens are properly registered and compliant in the future (in every fucking jurisdiction! which is an implausible clusterfucked mess of unresolved legal crap!), still they will be delisted from unregistered exchanges and illegal for use as a currency or utility token, because P2P trading of even registered securities is illegal.

Bottom line is that raising equity is entirely incompatible with creating an unencumbered token.

And there is no way currently to legally raise equity with a global sale to non-accredited investors all over the globe. For legal reaons, equity must be raised separately in each jurisdiction, e.g. USA, Canada, UK, Singapore, etc..

Also I do not think any equity crowdfunding was grandfathered. Rather the equity crowdfunding sites were working with the SEC on the new Regulation A+ and CF rules. And any equity crowdfunding that was sneakily done on non-equity crowdfunding sites (such as Rimbit's scam on Indiegogo which was linked in the linked blog of the OP of this thread) is still culpable (and will eventually haunt the participants unless it is just too small for the regulators to bother going after).

Readers are apparently very slow minded and/or just uninformed (and not well read) and thus having much difficulty in grasping these facts.

Ponder the many days and dozens of hours or more I have expended to become somewhat knowledgeable on this issue. And every issue I am involved in, ranging from deeply technological issues to these organizational and political economic issues requires deep study. That is why I am often on the computer 16 hours a day, which is a very unhealthy level of exposure to blue light and lack of exposure to the sunshine and exercise.

The soundbite Twitter tl;dr generation expects everything to be easy. But then they do not give appreciation and respect to those who do the hard work to explain for them. How do they expect that to end up then?

I wish someone even more expert than myself on this issue would enter this thread and help analyze. Unfortunately that does not seem to happen on BCT.

[Spoetnik]

I have to think about the dev's long term plans.
If it involves getting a currency adopted by the large world public of average people then yeah.. ICO's are a problem.
It's one thing to make a currency like Bitcoin then an ICO.

Most of earth will not want to participate in a crooked shady scheme coin system.
They are all doomed not to collapse but by being choked by a glass ceiling.
Sure they can play with them for profits on centralized exchanges but that amounts to nothing accomplished.

Doesn't matter though because none of the scammy assholes here are interested in looking at these issues.
They see dollar signs and want to cash out... BITCOIN.
They see the ICO as a way to get their hands on the NON-ICO coins.  

[jacafbiz]

If fund flow move out, the value of all cryptocurrency is droped too

I'm disappointed to see proof-of-work issued tokens declining along with ICO issued tokens. But I think this might be a short-term aberration as China has apparently threatened to close all exchanges even for Bitcoin.

But I think it is impossible that China will remove themselves from the cryptocurrency markets. They will shoot themselves and their high tech economy in the foot if they do so. Japan and South Korea have fast growing exchanges. Let China leave and let the door hit them in the ass on the way out. Yet I think China will not. Just rumors that will end up being not true.

But ICO issued tokens are eventually doomed. Not sure how many months or years until they are clearly doomed though.

China just want to make a bluff of it.. I dont think peoples in china will stop buying and selling crypto. Who cares about china. Not like china own this crypto market. With this strong community. i believe with or not china in crypto doesnt make crypto world destroy. For me it just more a rumor then a true fact. who can stop peoples from buying crypto? Just think.

I tthink China recent ICO ban is a good thing for the space long term, because there is no way you can totally ban all the crypto community, and that means those that are now interested will be buying at premium prices

[Gnosis7777]

This isn't rocket science. These ICO idiots aren't doing anything new, they just think they're being 'sneaky'; Forming a corporation then selling an interest in your product/coin/company is the fucking definition of a security. These 'offerings' have nothing to do with being a 'currency'.

I am trying to create an alternative to an ICO. Details will be forthcoming. I also have a consensus algorithm which fixes all the problems with proof-of-work and proof-of-stake and which (in theory) scales to on the order of millions of real-time transactions per second (actually unlimited) and remains decentralized. It is named Proof-of-the-Transacting-Majority.

I am very busy trying to bring this to fruition (and trying to rehabilitate my messed up liver).
https://bitcointalk.org/index.php?topic=1558366.msg21773902#msg21773902

Sounds interesting, if you've found a salvable, decentralized method of investing from an anastomosis, keep us updated.

Btw, you're doing a fine job elucidating what you've found (I'd chime in more on securities law, I've been studying commercial law for 5 years, yet these days I'm extremely busy) and have clearly done extensive research into the subject of ICO securities; I do feel bad for the newer investors in these ponzis', unfortunately the coming pogrom will in majority effect the later investors, unless of course the government ends up initially pursuing the original issuers to mitigate the damage (which they well may).

Regardless, people have been warned countless times over these pestiferous ICO launches; yet greed, being greed alone, keeps them coming back for more.

A quick resource that may be of use to your research: The Public Library of Law
Here you can search for actual case law (Similar to the $200 a month WestLaw, but free) to add more resources to recapitulate your position with rulings from judges; I'd bet there are even more cases to add to your position than Howie).

[moemoolah37]

Is he correct in his analysis?

Crypto could be illegalized everywhere and we would still be able to use it, they could have stopped it in 2009 but now it's too late. No matter what we will be able to use and trade crypto.

I would not worry about this.

Agreed. The cat is out of the bag, nothing can stop cryptos now.

[Temmy007]

Just do your research before investing in any ico's.  Even the ones you believe in can still crash.  The team might just be professional scammers

[Bummers]

Hyperme, thanks for your posts. It's good to get a reality check on what could be coming. I wonder what kind of timescale it would be before the SEC & others come after crypto?

Thinking about it, all it would take is an official announcement that ICO issued cryptos are illegal and SEC are investigating exchanges for the prices to crash through the floor. They wouldn't even have to issue shutdown orders or go after anyone.

Is there a list of ico cryptos anywhere? I think it might soon be time to move my investments.

[Dullmartini]

One thing that has not been mentioned is that regulators like the sec can grandfather existing instruments when a new regulation comes out.

This situation reminds me a lot of crowdfunding. People did crowdfunding even though it was not permitted by securities law. In the us, the sec got involved and issued regulation. The existing crowdfunding arrangements were grandfathered, afaik. Even thoug they were securities.

I do not admonish you with an intent to be disrespectful or unappreciative. I guess I am glad you raised this point although it has been raised numerous times all over the forums and refuting and correcting it every time will become tiring and impossible for an expert. Thus the community will become highly misinformed and idiotic as a result. It behooves all of you to be more astute and stop spreading incorrect information. And to try to help spread correct information.

Unfortunately readers here such as yourself make comments while being inadequately informed about the details, thus your statements are most often highly incorrect because "the devil is always in the details". This is why statements by people who have not studied an issue carefully, are worse than worthless. Statements from uninformed people, can be misleading and contain the opposite of the truth.

In this case, you are not emphasizing a very important detail which can mislead readers of your comment, which is that equity crowdfunding (as opposed to preselling production or other forms of non-securities crowdfunding a la Kickstarter) afaik has not been grandfathered in any way that allows them to be not classified as securities.

Thus all equity crowdfunding has remained subject to securities regulations, and thus all the pitfalls I detailed about not being able to trade the securities (i.e. shares or tokens) applies to all equity crowdfunding that occurred prior to the Regulation CF and Regulation A+ legislation. Essentially the main change in those new equity crowdfunding rules is that it is easier to sell equity to up to 1000 non-accredited investors subject to certain stipulations and regulatory compliance requirements (but only for a USA corporation!).

But they are all still securities. And as I explained already, a token being a security is a kiss of death, because it can not be legally traded P2P nor on unregulated exchanges (and afaik no crypto exchanges are registered with the SEC yet and no tokens are registered with the SEC).

Even if ICO issued tokens are properly registered and compliant in the future (in every fucking jurisdiction! which is an implausible clusterfucked mess of unresolved legal crap!), still they will be delisted from unregistered exchanges and illegal for use as a currency or utility token, because P2P trading of even registered securities is illegal.

Bottom line is that raising equity is entirely incompatible with creating an unencumbered token.

And there is no way currently to legally raise equity with a global sale to non-accredited investors all over the globe. For legal reaons, equity must be raised separately in each jurisdiction, e.g. USA, Canada, UK, Singapore, etc..

Also I do not think any equity crowdfunding was grandfathered. Rather the equity crowdfunding sites were working with the SEC on the new Regulation A+ and CF rules. And any equity crowdfunding that was sneakily done on non-equity crowdfunding sites (such as Rimbit's scam on Indiegogo which was linked in the linked blog of the OP of this thread) is still culpable (and will eventually haunt the participants unless it is just too small for the regulators to bother going after).

Readers are apparently very slow minded and/or just uninformed (and not well read) and thus having much difficulty in grasping these facts.

Ponder the many days and dozens of hours or more I have expended to become somewhat knowledgeable on this issue. And every issue I am involved in, ranging from deeply technological issues to these organizational and political economic issues requires deep study. That is why I am often on the computer 16 hours a day, which is a very unhealthy level of exposure to blue light and lack of exposure to the sunshine and exercise.

The soundbite Twitter tl;dr generation expects everything to be easy. But then you do not give chops and respect to those who do the hard work for you. How do you expect that to end up then?

I wish someone even more expert than myself on this issue would enter this thread and help analyze. Unfortunately that does not seem to happen on BCT.

Sheesh man, chill. I was just asking a question. Regulators can and do grandfather stuff all the time. I'm not an expert so I posted a theory. Thanks for explaining why it was wrong but you don't have to get all condescending about it. Maybe you should put the computer away and get some sleep

[garciaor2002]

Big No!

[Hyperme.sh]

Hyperme, thanks for your posts. It's good to get a reality check on what could be coming. I wonder what kind of timescale it would be before the SEC & others come after crypto?

Thinking about it, all it would take is an official announcement that ICO issued cryptos are illegal and SEC are investigating exchanges for the prices to crash through the floor. They wouldn't even have to issue shutdown orders or go after anyone.

Is there a list of ico cryptos anywhere? I think it might soon be time to move my investments.

Finally someone gets it.

Yeah we do not know the timing (especially harmonization with nations which have underdeveloped securities law), but I had the same thought that if the SEC announces a crackdown, it will crater ICO market prices we'll see a stampede for the exits.

If crackdowns continue to accrue from major nations ongoing, the ICOs will get repeatedly slapped down.

I just can't fathom how ICOs would not be doomed unless securities regulation is abandoned by major nations.

And I can't fathom how illegal trading in minor nations could sustain them. They may end up more unappreciated than Pink Sheets stocks in the USA. However, if the mania in ICOs is too strong we may get the opposite where the masses are fighting to get in and commit illegal trading to not miss out on the gains. We could be headed for some Tulip or South Seas Bubble situation, wherein the destruction and punishments come much later after a much larger bubble that is beyond the control of authorities.

Also if another vehicle for speculation which replaces ICOs comes along, that could be another significant factor in the outcome. I outlined one such idea w.r.t. to gaming.

Sheesh man, chill. I was just asking a question. Regulators can and do grandfather stuff all the time. I'm not an expert so I posted a theory. Thanks for explaining why it was wrong but you don't have to get all condescending about it. Maybe you should put the computer away and get some sleep

I thought I made it very clear that I was not being disrespectful or unappreciative, and that my frustration is only that I do not have time to run around every place on the forum where incorrect information is promulgated. And I asked for others to take on that responsibility of correcting misinformation based on what they read.

I do not think regulators will grandfather illegal issuance of securities, because it would embolden future non-compliance with new twists such as the obfuscation of an ICO with instamining. I also think that in order to punish non-compliance with illegal trading, they will be forced to punish some traders as well. Otherwise, they will appear to be impotent and non-compliance will proliferate.

Btw, I did edit the sentences about "tl;dr" to replace 'you' with 'they' which was my intention when I wrote it.

(I'm not lacking sleep nor overworking recently)

[tychovrahe]

most cryptocurrencies are doomed because there is no use for them.  ico or not.

[James_CanYa]

Sure some cryptocurrencies are doomed but that's not because they are ICO-issued. Ethereum itself was ICO-issued - the reason some of these cryptocurrencies are doomed is because the teams isn't driven or the solution isn't workable. A good project is going to be good regardless how it's issued.

[iluvbtc]

Many people do not see the big picture, because we have lived our whole lives under the current economic system, where the US dollar is the reserve currency. That system is coming to an end, I could point to many events which prove my case. People NEED to get into the burgeoning crypto and ICO space because it is literally going to save humanity, and WILL NOT BE STOPPED, no matter what China does. This movement is THAT big of a deal, it will fundamentally change the world.

[jacafbiz]

With the  CHinese exchanges ban confirmed I expect a new air to be breathe into the space, the uncertainties from CHina has presented a very good buy opportunities for good traders to make money

[Hyperme.sh]

Sure some cryptocurrencies are doomed but that's not because they are ICO-issued. Ethereum itself was ICO-issued - the reason some of these cryptocurrencies are doomed is because the teams isn't driven or the solution isn't workable. A good project is going to be good regardless how it's issued.

I agree with all you wrote except the last sentence seems dubious. Are you not familiar with what happened to the proprietors of the Liberty Dollar in the USA, egold in Panama, and the Tencent QQ game currency in China? Afaik the former two are still in jail, defunct, and afaik QQ currency (and other game currencies) can not be converted to fiat any more.

Apparently in the case of QQ coin, China was able to stop it because it was centralized. And that is the problem with ICO issued tokens, they are centralized. So to kill those systems, the authorities can go after the developers and issuers, as well as delisting on centralized exchanges within their jurisdictions. However, I agree with you in that if those systems have any merit as decentralized systems, perhaps they can be continued as decentralized systems, yet I'm thinking they would have to be reissued as non-ICO, else trading them would be illegal. So then you do think that the masses are going to be willing to use an illegal token system?

Do you really think an illegally issued blockchain token will be above the reach of the law?

(again I presume Bitcoin, Litecoin, and other decentralized issued tokens employing proof-of-work are exempt from securities regulation)

(Again I am thinking not only China will attack the ICO issued tokens, and I presume all the major nations will uphold their responsibility to regulate securities, but if I am mistaken, then the analysis will change significantly)

Decentralization changes the equation if the masses are wiling to do "illegal" activity. With online music downloads, many of the affluent masses preferred hassle free low priced alternatives (e.g. iTunes) than pirating.

Stupid laws should be broken and destroyed. Are securities regulations stupid?

The masses gain (selfishly?) from pirating music, games, and videos. But do the masses benefit from being greater fools in ICO pump & dumps? I think the masses will remain in support of securities regulation to minimize the scams (but I might be wrong and the world has reached some insanity, bubble mania, and ultimately collapse).

The masses want a safe environment that allows them to steal from the system in a politically correct way which makes them feel smug about stealing. The power vacuum has always been that TPTB use the masses to attack their competitors and take control of the system, while feeding the masses the debt collectivist lie. Everyone is always trying to find a way to best game the system. Civilization is a crab bucket clusterfuck of defection.

Decentralization is long-term viable when it benefits the masses, not when it suckers them into scams and financial abuse. Primarily because the harm to the masses empowers TPTB to regulate and steal it all.

We might be headed into a tragedy-of-the-commons bubble mania if the authorities are unable to get control of this.

Taking all of this into account, I realize it is very important for me to leverage this bubble/mania for the additional resources it can provide, without incriminating myself nor encumbering the token I want to create. I have an idea of how to do this (will explain in my next post).

[Spoetnik]

Is he correct in his analysis?

Crypto could be illegalized everywhere and we would still be able to use it, they could have stopped it in 2009 but now it's too late. No matter what we will be able to use and trade crypto.

I would not worry about this.

Agreed. The cat is out of the bag, nothing can stop cryptos now.

I agree..
There will be 10,000 more shit coins and another 1 million accounts here.
And ?
Clap for your success now ?

[R.Hasan]

We need to improve the culture of cryptocurrencies RIGHT NOW. As crypto gets big, we are spreading out this culture to the wider world

[Hyperme.sh]

Although some have expressed defiance and disregard the potential legal issues of encumbering a token with potential future securities regulation, I think it's best to structure fundraising so that it will not encumber the token of the decentralized ledger. Why add potential legal problems for the token if it's not necessary? Why risk future delisting from exchanges and legal hassles for users/traders/promoters of the token?

We need to improve the culture of cryptocurrencies RIGHT NOW. As crypto gets big, we are spreading out this culture to the wider world

Agreed we should create something for the world which is not encumbered with legal issues that we can avoid.

Specifically my idea is that fundraising should be for a corporation which creates apps for the decentralized ledger. The tokens are not issued to investors, and instead either with proof-of-work or alternative onboarding idea I have, such that the tokens are not securities and are not encumbered with securities regulation. The investors instead receive shares in a corporation which earns tokens by making apps which provide services to users (holders) of the tokens. The corporation can then pay dividends in tokens. The tokens are thus not securities and any securities regulations apply to the shares of the corporation, not to the tokens.

The downside of this idea is that the tokens are taxed as dividends when distributed to the shareholders, and not as capital gains. But this may not be a significant disadvantage because the tokens are distributed as they are earned, potentially when they have a very low value early on (when that probably single corporation formed at inception has a near exclusive on apps since others did not jump into the app ecosystem yet). Also it compares favorable from a tax standpoint compared to ICOs which try (I think unsuccessfully) to escape securities regulation by selling utility tokens as goods and paying sales and income taxes:

No matter how you slice it, you’re probably going to have to pay a huge amount of tax on income or capital gains from your tokens’ sale, which doesn’t happen when you raise traditional equity. (Tax law treats this stuff differently than securities law, I’m afraid.) But hey, if you’re paying a lot of taxes you’re selling a lot of tokens, so who cares, right?

An additional facet of my idea is the tokens issued for onboarding users would be locked up for a period of time so they can't be traded immediately. Thus the supply of tokens available on exchanges early on (when the market cap is still low) would be limited in supply, so for investors to get a significant supply of tokens, the investment in corporations that produce apps and earn tokens may be the most viable way for them to obtain their desired investment share of tokens.

Compare my idea to the following linked idea of taking funding by having a foundation and/or stake-based vote mint tokens and award those to developers:

https://medium.com/@FEhrsam/funding-the-evolution-of-blockchains-87d160988481

My idea also employs debasement (aka inflation) to raise funding, but in my idea the debasement is issued to onboard users, which solves the problem that Open Money has and provides a pool of tokens for apps to compete to earn.

My criticisms of the above linked idea:

• it's a power vacuum because there will be a fight for who can control that resource (e.g. whales forming an oligarchy of state and/or taking control of any foundation or other democratic process)
• the tokens are at risk of being securities if it can be argued that investors who obtain the tokens were relying on the managerial or development efforts of the foundation or oligarchy of stake in control
• decentralized awarding of bounties and managing development, is a clusterfuck that doesn't work

I agree with this though:

However, adding more people to software projects usually fails when its components can’t be divided up, and there are a sufficient number of different scaling paths at this point where each can be pursued relatively independently...

...So, perhaps the highest leverage thing protocol designers can do is think about how to engineer the evolutionary characteristics of their blockchains — specifically, the economic incentives for anyone to come along and improve them...

...By harnessing their decentralized nature they can evolve faster than a centralized organization ever could.

My idea is that many corporations are eventually formed to work on apps for the decentralized ledger.

And since they all have an incentive for the decentralized ledger to be improved, they each voluntarily contribute some (perhaps small) fraction of their development resources to the decentralized ledger development, not just only to their own apps. They do this for the same reason that corporations fund open source projects, because it's the way to cooperate on the shared portion of their businesses. Corporations tend to act rationally with a longer-term perspective, unlike most individuals. Also it would help if the core protocol of the decentralized ledger is stable and doesn't need further changes going forward after initial development, which can be facilitated if improvements can be added on top of the core protocol (think of the analogy of the layering of network protocols).

In that way, we would in theory attain an open competition, decentralized, permissionless, independent, open sourced solution, which avoids the securities regulation issue on the tokens of the decentralized ledger and attain greater myriad of decentralized participation instead of just one centralized set of developers.

I think this is much superior to Ethereum's model. I'm trying to get this organized.

[CoinCube]

The masses want a safe environment that allows them to steal from the system in a politically correct way which makes them feel smug about stealing. The power vacuum has always been that TPTB use the masses to attack their competitors and take control of the system, while feeding the masses the debt collectivist lie. Everyone is always trying to find a way to best game the system. Civilization is a crab bucket clusterfuck of defection.

I was asked via private message if I could refute the above quote.

The power vacuum is simply a scaled up version of a prisoners dilemma. It is a situation where rational actors will make choices that improve their own short term position that result in an inferior overall outcome for society as a whole.

The only solution to a prisoners dilemma type problem is change the character of the masses over time. You must transform the masses into superrational actors as this is the only way to escape a rational defect-defect equilibrium.

Economics and game theory are ultimately driven by morality and ethics. To highlight this let's look at the classic and famous example of the prisoners dilemmas and its Nash equilibrium.

The prisoner's dilemma is the standard example of game theory where two rational individuals will not cooperate despite it being in their best interest to do so.

https://en.m.wikipedia.org/wiki/Prisoner%27s_dilemma

Two members of a criminal gang are arrested and imprisoned. Each prisoner is in solitary confinement with no means of communicating with the other. The prosecutors lack sufficient evidence to convict the pair on the principal charge.

They hope to get both sentenced to a year in prison on a lesser charge. Simultaneously, the prosecutors offer each prisoner a bargain. Each prisoner is given the opportunity either to: betray the other by testifying that the other committed the crime, or to cooperate with the other by remaining silent.

The offer is:
If A and B each betray the other, each of them serves 2 years in prison

If A betrays B but B remains silent, A will be set free and B will serve 3 years in prison (and vice versa)

If A and B both remain silent, both of them will only serve 1 year in prison (on the lesser charge)

It is implied that the prisoners will have no opportunity to reward or punish their partner other than the prison sentences they get

The prisoners dilemma leads rational actors to logically betray each other leading to a suboptimal low cooperation outcome. Betrayal and failure to cooperate is the Nash Equilibrium of the prisoners dilemma.

A Nash equilibrium of this sort, however, is a failure that only binds "rational" individuals. All that is needed to escape from this trap is to elevate the nature of the participants and make them superrational.

Superrationality
https://en.m.wikipedia.org/wiki/Superrationality

In economics and game theory, a participant is considered to have superrationality (or renormalized rationality) if they have perfect rationality (and thus maximize their own utility) but assume that all other players are superrational too and that a superrational individual will always come up with the same strategy as any other superrational thinker when facing the same symmetrical problem. Applying this definition, a superrational player playing against a superrational opponent in a prisoner's dilemma will cooperate while a rationally self-interested player would defect.
...
Superrationality is a form of Immanuel Kant's categorical imperative.
...
Superrationality is an alternative method of reasoning. First, it is assumed that the answer to a symmetric problem will be the same for all the superrational players. Thus the sameness is taken into account before knowing what the strategy will be.
...
(In the prisoners dilemma) two superrational players will both cooperate, since this answer maximizes their payoff.
...
Note that a superrational player playing against a game-theoretic rational player will defect, since the strategy only assumes that superrational players will agree.

If you want to see how superrationality would play out of in the real world just change the players in prisoners dilemma.

Suppose two Christian missionaries are arrested and imprisoned in North Korea for suspected spreading of blasphemy against the Great Leader. Each missionary is in solitary confinement with no means of communicating with the other.

The North Koreans lack sufficient evidence to convict the pair on the principal charge. But can get both sentenced to a year in labor camps on lesser fabricated charges. Simultaneously, the prosecutors offer each missionary a bargain. Each prisoner is given the opportunity either to betray the other by testifying that the other is a Christian missionary, or to remain silent.

Does the Nash Equilibrium still hold? Doubtful most likely the missionaries will stay quiet. They will do so because they are superrational.

The prisoners dilemma is a microcosm for a whole host of human and societal interactions.

Superrationality breaks the prisoners out of the dilemma allowing the achievement of optimal cooperative outcomes despite a Nash equilibrium of defection and betrayal. Superrationality itself is just a formalization of Immanuel Kant's categorical imperative.

Kant's categorical imperative:
Act only according to that maxim whereby you can, at the same time, will that it should become a universal law.

The categorical imperative in turn is a valiant but incomplete attempt to codify much older wisdom into a logical framework.

Brett Stevens wrote up a nice article on this deeper religious wisdom and its relationship to the good but imperfect categorical imperative.

Kant’s categorical imperative, Biblical law and the “golden rule”
http://www.amerika.org/science/kants-categorical-imperative-biblical-law-and-the-popular-notion-of-the-golden-rule/

Ultimately superrationality is at its heart the logical result of applying ancient religious wisdom to modern problems. It is Ethical Monotheism that teaches us to treat others as ourselves even when dealing with strangers.

Christianity: Matthew 7:12
"So  everything, do to others what you would have them do to you, for this sums up the Law and the Prophets."

Judaism: Hillel the Elder
"What is hateful to you, do not do to your fellow: this is the whole Torah; the rest is the explanation; go and learn."

Islam: Abdullah ibn Amr Al-Ass
"Whoever wishes to be delivered from the fire and enter the garden should die with faith in Allah and the Last Day and should treat the people as he wishes to be treated by them"

Ethical Monotheism is thus directly responsible for a tremendous portion of the progress humanity had made to date as it facilitates cooperative outcomes over competitive defection.

Religion is a the only functional superrationality protocol. It maximizes superrationality and thus positive societal outcomes. It is the only force that enables suspension of defect-defect equilibrium like the power vacuum. When a superrationality protocol is abandoned (widespread rejection of religion) the gradual vice of ever increasing defection sets in and the countdown towards destruction of the society commences.

Paradoxically enough, the release of initiative and enterprise made possible by popular self-government ultimately generates disintegrating forces from within. Again and again after freedom has brought opportunity and some degree of plenty, the competent become selfish, luxury-loving and complacent, the incompetent and the unfortunate grow envious and covetous, and all three groups turn aside from the hard road of freedom to worship the Golden Calf of economic security.

The historical cycle seems to be: From bondage to spiritual faith; from spiritual faith to courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to apathy; from apathy to dependency; and from dependency back to bondage once more."

It is moral degradation that leads to bondage for it is moral strengthening that allows free and strong societies to be built in the first place.

This is why Ethical Monotheism is so important and the reason why so much that is good in the world came from the west.

Without it we are reduced to merely rational actors. We become the prisoners who cannot escape the Nash equilibrium of defection and betrayal.

See: Health and Religion for more.