Are ICOs creating a fake market Cap?

[Larzini]

Hi guys,

Been reading about cryptos for 3 months and invested some money 4 weeks ago.
I now have my eye on an ICO which is believe in.
Like most ICOs you can deposit BTC or Eth to get the new coins.
However this got me thinking:
Lets say 1BTC is 8k dollars and i invest 1BTC in ICO X tot get 8000 Xcoins (random name). Which means 1xcoin = 1 dollar.
This means Xcompany now has 1 BTc worth 8k dollars and i get 8000 Xcoins.
At some Point Xcoins Will be added to An exchange.
Now for our example the price of neither BTC or Xcoin Changed.
The Company Sells it's BTc for 8k dollars and i sell all of my Xcoin for 8k dollars.
Somehow the company has 8k and so do i. So we "created" 8k dollars.
Am i missing something here?
Are ICOs creating a fake market Cap?
Are they creating a bubble?
Who's actually paying that 8k dollars?

[player514]

Hi guys,

Been reading about cryptos for 3 months and invested some money 4 weeks ago.
I now have my eye on an ICO which is believe in.
Like most ICOs you can deposit BTC or Eth to get the new coins.
However this got me thinking:
Lets say 1BTC is 8k dollars and i invest 1BTC in ICO X tot get 8000 Xcoins (random name). Which means 1xcoin = 1 dollar.
This means Xcompany now has 1 BTc worth 8k dollars and i get 8000 Xcoins.
At some Point Xcoins Will be added to An exchange.
Now for our example the price of neither BTC or Xcoin Changed.
The Company Sells it's BTc for 8k dollars and i sell all of my Xcoin for 8k dollars.
Somehow the company has 8k and so do i. So we "created" 8k dollars.
Am i missing something here?
Are ICOs creating a fake market Cap?
Are they creating a bubble?
Who's actually paying that 8k dollars?

I'm not 100% sure, but isn't the sale of tokens like the sale of "shares" of a company? The ICO can sell 8k worth of tokens, which sure, makes the coin worth more, but that coin is still in your hands. If the coin suddenly tanks and is worth nothing, it is you who is paying the 8k. That's because you put your money in and the coin price fell. They take the BTC/ETH and you lose your money.

[EXtremeAEX]

ICOs start off with an initial price per token, which is what you have to pay. The price of the token afterwards would depend on its success, so the market cap may change accordingly. Scam ICOs basically just takes your money and run away, so in a way the market is 'fake' and will crash immediately.

The paradox in your situation that the company gets 8k from Bitcoin, and you get 8k from XCoin, is that there needs to be a buyer for that XCoin. Someone has to buy that XCoin worth 8k from you, so there isnt anything wrong here. Hope this makes things clear, just think of a shop selling goods. Someone sells a shirt to you for $2, and you get a shirt worth $2. Same logic as that.

[Creepings]

There are some ICOs that gives bonuses to people. Let's say you bought their tokens worth $8000, and they give you a $8500 worth of tokens, some of the people who received the token will be holding or maybe sell it instead. The thing here is he will be trying to make a profit out of it, it is either you will be selling those tokens for $9000 having a profit of $1000. The one who will be paying you the money is the buyer who wants the token, but in terms of having a profit, you can play it.

[sugihe]

Fake ico maybe make fake marketcap on their website but marketcap in exchange can not be fake because its pure from transaction.
You asking for who pay the $8k? The other trader who buy yoir coin is the answer.

[digaran]

Excellent question, one lol. who do you think is paying that $8000 to you and then another $8000 to the scammers? (sorry I meant to the devs, hello how you doing? I'm also a dev a serious one myself, two lol.) I know who will pay you both, for your tokens, beggars and idiots, for their Bitcoins, people who are using them as a free digital currency.

[thr3]

Hi guys,

Been reading about cryptos for 3 months and invested some money 4 weeks ago.
I now have my eye on an ICO which is believe in.
Like most ICOs you can deposit BTC or Eth to get the new coins.
However this got me thinking:
Lets say 1BTC is 8k dollars and i invest 1BTC in ICO X tot get 8000 Xcoins (random name). Which means 1xcoin = 1 dollar.
This means Xcompany now has 1 BTc worth 8k dollars and i get 8000 Xcoins.
At some Point Xcoins Will be added to An exchange.
Now for our example the price of neither BTC or Xcoin Changed.
The Company Sells it's BTc for 8k dollars and i sell all of my Xcoin for 8k dollars.
Somehow the company has 8k and so do i. So we "created" 8k dollars.
Am i missing something here?
Are ICOs creating a fake market Cap?
Are they creating a bubble?
Who's actually paying that 8k dollars?

ICO's are not securities in most countries, shares sales have ownership of the company tied to them, in ICO you make no such contractual agreement with the ICO company. Mathematically I think you are getting the point.

Lets say 1ETH = 1 Token
They raise 80000ETH = 80000Token token + 20000(founders  )
Hence company's market value = 36,000,000 (it will depreciate(typically at a rate of 25-30% per annum) until their product starts making revenue)

The token do not hold any value unless someone is willing to pay for it. It has no ties to the company doing the ICO neither do they have an obligation to honor anything in relation to the tokens. VC's & Advisors who invest in ICO's are smart, they make money in a couple of ways (some receive all 3)

1. % Amount raised
2. Tokens
3. Share within the company

To make actual money you want to be part of the VC and Advisor group or join a pump and dump group.

[mxyzptlkof6th]

ICOs are not creating a fake market cap but rather an ideal market cap. They are taking risks which can gain profit or lose the whole company.

[BrewMaster]

ICOs are creating lots of "fake" stuff these days. market cap is only one of them. they are creating a bubble in total market cap and nobody seems to pay attention to it and whenever they release some article about bitcoin market cap they use this fake total market cap to say bitcoin has "lost dominance"!

on top of it, these ICOs are creating price bubbles in the coins they are associated with like ethereum. there is a lot of fake demand for ETH tokens that is causing a fake rise and ended up in a big bubble.

not to mention all the harms they are doing to the crypto scene in general by raising a lot of funds illegally and making the government uneasy these days thinking about banning and stuff.

[deloreswest]

even thought they did i think they just trying to got their project to the top. so there is no wrong on it. cause after all everyone trying to be the best

[trecore4]

This is mixed up with alt coin market cap and bitcoin market cap. There are projects of ICO but they are mostly funded with the Ether so the first thing is we are not putting our money directly into bitcoin and there huge difference when we say direct investment. Both the coins work on different blockchain contract and thats why we can identify them as two different currencies and hence two different market cap.


Investing into ICO doesn’t create fake market cap but the real one as the whole investment that is done by us real and we are putting the real money form our pockets. So no I don’t think that it is fake in any way. Whatever money is flowing into different ICO coins is due to fake or real projects but that doesn’t matter because fake market can not be created. This is my thinking about the bitcoin market cap and alt coin market cap.