[fowlerpower]

A lot of people are calling these things Scams. People arent wrong and to a certain degree they do attract the "quick buck" type to them. Keep in mind though that these are also very useful for companies to get the Digitial Currency and block chain into the hands of the masses without some of this money, which large parts of that may be burned, will yield some killer apps.

The people doing an ICO do it to raise a bunch of money, much like a kick starter campaign. The people buying an ICO buy it for a quick buck and a lot of times they end up selling these coins from the ICO for 10x, see BATs.

The allure for people starting a company is that you can raise millions and give 0% of your company away. Some people will scam, it's true maybe a lot will, but some will undoubtedly start something big and will want to do more than just scam.

[richardknop]

Call me when a single of these projects that raise a ton of money from ICOs actually delivers and becomes a success. So far we have seen a lot of no strings attached cash given away to people with just an idea who would never raise money from real investors. I think it's a ponzi scheme. As far as people selling ICO tokens for 10x price, only a small number of people can logically do that and it relies on influx of new buyers. Usually after listing of your token on exchange you get a fresh infusion of speculators and gamblers which allows the earliest investors to cash out but most people end up losing money.

[creeble]

Technically, I don't think you can call it a Ponzi scheme unless you're paying existing ICO owners with new, incoming ICO buyers' money. Coins sort of prevent that?

I think it's technically just fraud: they take your money, convert it into worthless acorns, then when nothing happens, the acorns can't be traded for any value.

[richardknop]

Yes, perhaps. I think most people who "invest" in ICOs follow this logic:

1) Get into the ICO race and be quicker than others so you get tokens. There is always massive demand to participate in ICOs so most people aren't quick enough to get their transactions in.

2) Wait until the new worthless token is listed on some speculative exchange which allows trading of these tokens (Poloniex). In the meantime hype the token on social media like Reddit to increase FOMO. Once it's listed those people that didn't get into ICO will rush in to buy tokens as they anticipate the price to go up by 10x.

3) The ICO investors cash out their coins from this initial spike of new money rushing in after listing on exchange.

4) Rinse and repeat.

[Hermel]

Ethereum raised 20000 Bitcoin giving away 2000 Ether per Bitcoin. Today, one Ether is worth 0.1 Bitcoin. That's a 200x return. Also, they created the most widely used Blockchain. Does that qualify as "delivered"?

[richardknop]

Ethereum is interesting because it is basically a ponzi scheme which spawns new ponzi schemes (ICOs) on top of itself. I am only an observer of blockchain space (don't own any blockchain tokens) but afaik there isn't anything real aside from gambling apps and some prototypes hacked together for ICOs (without any real users) running on smart contracts.

So I think I wouldn't count such usage as it's all speculative until there is some mainstream application which actually uses smart contracts or public blockchain.

Most transactions on blockchains (Ethereum or Bitcoin) are just moving tokens between addresses on exchanges (either by bots or by gamblers who do it manually) or moving tokens to ICOs to create new tokens and then trading between different kind of tokens in order to gamble and hopefully make some money from it.

[SippinLean]

A Ponzi scheme would be impossible, no ICO buyers are paid dividends of any kind.

[ckastner]

> The allure for people starting a company is that you can raise millions and give 0% of your company away. Some people will scam, it's true maybe a lot will, but some will undoubtedly start something big and will want to do more than just scam.

A system which enables scamming like that is a horribly broken system, and the occasional success story does nothing to change that fact.

Contrast this to an IPO, where you have to more or less lay all your cards on the table before you can sell your stuff to the public.

[ksahin]

You can't "contrast this to an IPO". It's just 1000 times different. ICO are more like a seed round, accessible for everyone, not just VC firms. Seed round are counter-intuitive / highly risked investments, like ICOs.

>A system which enables scamming like that is a horribly broken system I agree, lots of people are going to get scammed, and the market/ the ICO structure is going to evolve, that's natural. People are already digging and you can already see very well documented due dilligence about ICOs.

I don't think it's a broken system, it's just a young system that is evolving quickly.

[frgtpsswrdlame]

That's the point isn't it? A company is offering this to raise money but doesn't actually give anything away? Then where is the value coming from? It's all based on herd mentality and trying to buy the first ticket on the free money train. ICOs are pyramid schemes, the sad thing is that there's a bunch of smart, young internet types falling for it.

[creeble]

I don't think they are technically pyramid schemes either, as pyramid schemes require multiple levels.

I think it's just fraud: taking people's money with no intent or ability to return anything.

[wwwv]

The answer is a little unfortunate, even though things are said to be worth $xxxxM market cap, but the depth of the market is so shallow that the true value is near zero.