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So in the past year or so, there's been an explosion in the number of digital currencies circulating. Many of them have solid value propositions and legitimate use cases, like Ethereum or Ripple among many others. But how many of these ICO coins actually have value?
Let's take a look at a hypothetical example. With the trend of ICOs, digital currencies are becoming less so alternatives to using the dollar and more so funding mechanisms for startups that are more efficient than equity or debt financing. And that's totally fine, I don't know enough about IPOs to actually defend them.
But looking at ICOs, let's take a theoretical example- Gamesphere. I start a game console called Gamesphere and say that it is somehow superior to Xbox, PC, Mac, Playstation, etc. etc. I need to fund my startup and I have three options. I have debt, equity, or a coin. Starting a coin avoids the regulations and insider deals in debt and equity markets, allowing me to access capital as fast as possible. So let's say I start Gamecoin and start selling it to investors. I position Gamecoin as being redeemable on the GameSphere- you can buy map packs, skins, and other game features using it. And let's say I have an ICO and sell $20 million in Gamecoins.
Those sales of Gamecoin aren't to people actually using the Gamesphere. Thus, the Gamecoin doesn't really have tangible value to them for that purpose. Looking at Xbox, people buy Microsoft points to buy stuff on the Xbox Live store. This generates profit for Microsoft, as 1600 points are like 20 bucks (last time I played was in 2013), and it makes purchases more convenient for customers in certain cases or allows them to access convenient content.
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Yes, yes they are.
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>>3472046
cont.
But to investors who don't actually own a Gamesphere, all Gamecoin is to them is a speculative instrument. Investor A buys Gamecoin expecting Gamesphere to make deals and do really well. Investor B might buy Gamecoin expecting Gamesphere to increase its online presence. It becomes less so like investing in the US dollar, Euro, or another currency, and much more like buying a stock in Apple. But Gamecoin lacks the physical value that backs a share in apple, that is, a share in Apple's profits. In buying a Gamecoin, I don't get the guarantee of a share of Gamesphere's profits, I only bet on the future viability of the product.
My question is, does this mean that ICOs are a meme? Will stocks always retain that advantage over digital currencies as a funding mechanism for startups in that they are backed by actual physical value, while digital currencies are only as viable as their uses on the platform, which may not even exist in some cases?
I ask this because I've looked a lot of startups and while they have really good ideas with blockchain, their currencies have really bad value propositions aside from being speculative instruments. Boulé wants to secure elections using blockchain technology, which has the benefits of allowing e-voting, while avoiding the normal problems associated with that technology, like DDOS attacks or voter fraud. It's great, but what value does their coin have? Boule would clearly benefit from releasing a coin versus doing an IPO or debt because it's unregulated, but what do I as an investor gain from buying Boule coin rather than buying a share in Boule or Boule's bonds?
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>>3472102
Nothing. They're a fad, there's absolutely no real value. Most people are just trying to play the buy low sell high game because the market is so volatile and it's easy to get in. The rest are deluded.
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>>3472242
Will people eventually realize these tokens are worthless aside from niche cases or will there always be a chain
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Perhaps
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>>3472593
>mfw memecoins have no value
>mfw still probably some short term value using them as a speculative instrument on startup values
Honestly, someone could steal like half of these blockchain ideas and start conventional companies and probably do really well. I mean, the election one Boule I mentioned before has a really good idea, they just insist on using an autistic coin to avoid all the paperwork even though these coins have little to no actual value in comparison to a stock. If you started something like that, you could easily get a contract with the federal government. The left is worried about Russia hacking while the right is worried about voter fraud, so a solution like that would be applauded a lot.
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