[noddy1]

In addition to these blatantly fraudulent ICO's, I contend that even the "legitimate" ICO's are a total shitshow.

It's not that they raise far too much money for their projects (although they do), its just that without equity in the company performing the ICO you simply don't get alignment of incentives.

Guys like Juan Benet talk about this utopian fantasy of coins funding open-source protocols, but think about the reality. A legitimate project raises 15-45million dollars with a stated intention. Even being well funded, it is still highly speculative, and most startups "fail". So the team raising money has 2 options. Spend the entire amount trying to get the protocol going - which will probably fail (as most projects do), or have a half-hearted go at getting the protocol going, and keep the rest of the money - a 100% chance of getting comfortably rich, but further decreasing the already small odds of the project succeeding.

If the protocol/token model is so good, then companies can launch a token and use that to feed profits back to equity-holders. There is no reason why investors should have to take their chances on some made-up instrument that puts an extra barrier between their interests and those of the founding company.

[Taek]

Same is true for startups, except that startup funding carries fiduciary responsibility. If you are not spending money in the best interests of the investors, they can sue you.

Current token sales waive this responsibility, but investors should demand that it is there.

[vkou]

They would, if any of them were interested in going long. That they don't leads me to believe that most of them are just doing short-term speculation.

[alexasmyths]

+1

And you're just scratching the surface.