[AJRF]

It isn't, if you take the case under contractual law there is absolutely no basis to charge the person who extracted the $55m. The contract had 'flaws' but it was the contract, so tough cookies it agreed to something you didn't like, but you wrote it! (Except we know now it was too big to fail, which in turn means centralization)

The DAO was pumped up by VCs and friends of the founder of Ethereum, which, before the launch, attracted some people who had clout from the big banks and enterprises, ergo, if the DAO failed then Ethereum failed in the eyes of the most lucrative customers & developers there.

The thing that pissed of purists so much was, that when it first came out it was marketed as this beautiful "world computer" that would be incorruptible by anyone, but the hard fork made it apparent that the values of the Ethereum community had changed to value support of banks & business over that idea.

I was at a conference this week and watched a lecture by one of the founding board members of the Enterprise Ethereum Alliance, who was getting the crowd fired up about the idea of ICO's, and then directly after his talk, David Birch from Consult Hyperion came on and said that people who are involved in the launch of new tokens in this current feverish phase are extremely likely to go to jail for fraud. Was hilarious

[Jabanga]

David Birch has been bashing cryptocurrency since around 2012. It seriously goes that far back for some of these ideologues.

Edit, just to give people an idea of where he's coming from ideologically, these are some of his comments that show the kind of world he wants to see:

https://youtu.be/c8mdr8iwX20?t=6m49s

"law-abiding taxpayers like me are subsidizing criminals to use cash and not pay taxes"

https://youtu.be/c8mdr8iwX20?t=10m47s

"so getting rid of cash has some other benefits which will lead to unexpected changes. For example for economists, getting rid of cash means that you lose the zero lower bound on interest rates. You can't have interest below zero because if you drop interest rates below zero people will just draw out the cash and just hold it. If you don't have cash you can have negative real interest rates. So getting rid of cash has a lot of benefits."

https://youtu.be/c8mdr8iwX20?t=13m55s

"So if you allow us technologists to build the stuff so we build something like Bitcoin which let's pretend it's anonymous. Do you know what you get if you let us build that? You get a giant electronic Somalia. If you want to live in a society which is entirely driven by anonymous cash, where the rich aren't accountable anymore, where whoever's got the most money can be the warlord and do what they like, well that's what you're letting us build now"

His demonization of cash remind me of this:

"The cashless society – which more accurately should be called the bank-payments society – is often presented as an inevitability, an outcome of ‘natural progress’. This claim is either naïve or disingenuous. Any future cashless bank-payments society will be the outcome of a deliberate war on cash waged by an alliance of three elite groups with deep interests in seeing it emerge"

https://aeon.co/essays/if-plastic-replaces-cash-much-that-is...

[AJRF]

He is totally right about ICO's though. They are essentially Ponzi schemes as investors think the coins have value and that their initial investment is generating more value, but that is not what is happening.

[Jabanga]

None of the token sales I've seen are ponzi schemes. "Ponzi scheme" seems to be the buzzword used to describe any irrational or bubbly investment. It's incorrect usage of the term.

[AJRF]

You are categorically wrong about this.

Ponzi schemes are financial frauds where, under the promise of high profits, users put their money, recovering their investment and interests only if enough users after them continue to invest money.

Further to this, its qualatively provable, as you can look at the contracts and actually class the type of Ponzi scheme they are.

* https://ftalphaville.ft.com/2017/06/01/2189634/its-not-just-... https://stratechery.com/2017/tulips-myths-and-cryptocurrenci... * https://arxiv.org/pdf/1703.03779.pdf

[dgacmu]

The wikipedia article on Ponzi Schemes draws a fairly subtle distinction between a classical Ponzi schemes, economic bubbles, and pump-and-dump schemes:

https://en.wikipedia.org/wiki/Ponzi_scheme

Most ICOs seem more like pump-and-dump by that nomenclature, than like true Ponzi schemes, in which the Ponzi operator is directly involved in all of the transactions in and out of the system.

https://en.wikipedia.org/wiki/Pump_and_dump

[Jabanga]

You're quoting from the Birch-Kaminska circle, which has been bashing cryptocurrency since 2012.

A ponzi scheme is where people pay a fee to join a scheme where members are guaranteed a payment that comes out of the membership fees paid by members that join after them.

No token sale has given out payments, let alone guaranteed one. A speculative price gain is not a "ponzi scheme".

[AJRF]

So tell me, what is the goal of an ICO? And by extension, how do you ensure an ICO is successful?

[jpatokal]

Many ICOs out there are effectively Ponzi schemes, which are near-universally illegal.

[Jabanga]

I don't think any of them are ponzi schemes. Shitty investment based on speculation and hype != illegal or ponzi scheme

Bubbly sectors see irrational amounts of money thrown at things that have little underlying value, like Beanie Babies, or a token for a proposed protocol described by a two page whitepaper.