Topic: 3 kinds of ICOs — Protect yourself - page 21. (Read 13686 times)

best example is Ripple. The company thrives, ILP and Ripple Connect are growing in acceptance.
XRP is not.

Good point.

In the long run, I think that coins will be tied to fundamentals. As an example, if Ethereum does not solve its scaling problem, ETH will not continue going up in value and might even decline. Right now, there are many tokens that serve no function. The whole purpose of buying Gnosis tokens was that Gnosis will eventually create prediction markets. If Gnosis never releases any software so that Gnosis tokens can be put into use, I cannot see how the Gnosis token will maintain value.

Good information here. A nuance: investing in an ICO is not the same as investing in a company. Typically, coin holders do not have the same legal rights and protections as shareholders. Coins may go up and down in value independently of the performance in the company, which means that some investors invest in the coin itself, and its prospects for increasing in value.

As mentioned in my OP:


In non corrupt countries, people grow up with lots of regulations and enforcement. Though there are exceptions, the people feel that the way to get ahead is based largely on merit. In corrupt countries, there is less regulation, less enforcement and more people trying to find ways to get ahead by working around the system. In fact, they see that the most successful people in their country, usually in their government, are those who get ahead by lying, cheating or working around the system, instead of based on merit. If you do not think this is a risk, you may be right. I may be wrong.

ModulTrade
https://bitcointalksearch.org/topic/annpre-ico-modultrade-the-freedom-to-trade-2240518


This means that they are selling a security and will be on regulators’ lists. Maybe ModulTrade doesn’t care about regulators because Russia does not have extradition agreements with other countries, but what happens if regulators ban their token in Europe or North America? Will you suffer a loss?

Countries without extradition agreements make teams feel more invulnerable. Therefore, they are more likely to lie and cheat investors from other countries, because there is little to no recourse from the other countries' governments.

I watched a video of a conference. ConsenSys was warning about selling securities. Waves’ CEO, who is from Russia, debated this and shrugged it off. Is he less concerned because the chances of him getting punished is minimal?

Russia wants to boost the crypto industry in their country. Putin's advisor ran an ICO. Is the Russian government funding Russian teams to help them maximize the money that they raise on ICOs? If so, you should be aware of this risk. Though there are exceptions, in the far majority of time, when a government tries to pick and choose companies, it’s not a good idea. The U.S. government forced taxpayers to give $535 million to Solyndra. It looked great at first and then it went bankrupt. Governments are not educated nor skilled to be Venture Capitalists, investors or stock pickers. Their money is often spent on policies to further their political or social goals.

In the extreme cases when the government tries to centrally manage the economy, they create socialism, or communism which is the extreme form of socialism. Every government that centrally manages their economy have always made their economies poorer in the long run. Think of Cuba, Venezuela, when Russia was communist, when China was communist, etc. The people who are best at picking which business will succeed or fail, are those in the free market.

This is a very well-thought post that should be read by newbies who are just starting their crypto journey especially when they are entering their first ICO. Many people think that ICOs will just make you more money once you get in early but that's not the case most of the time. I've known different person who lost numerous amounts of BTC by just joining and investing in scam ICOs. You laid out the most important things that should be considered before joining an ICO. This should be pinned at the top of this section. 

This is a very good way to distinguish between ICOs. Thank you for having posted this useful guide. I will forward it to all my crypto friends.

This is very extensive and descriptive post. I believe it will be very useful for beginners. I've just introduced crypto world to my little brother, he will like to read this.

This is an excellent analysis of ICOs and is definitely an eye opener for me. Thanks!!

Your post is GOLD. Thank you for sharing this, I think this should be put on top of this section.
I agree with all of your points, except the one about "Corrupted Country". In my opinion, it means nothing. A good project can be done even if the main developers are from Venezuela, for example, or Angola. There are many good project done in Russia, even if this country seems quite corrupted. You have to separate individuals from government. The government could be corrupted and yet a single developed could be the most serious and reliable person on Earth.

Someone private messaged me and asked me for a review of:

Winding Tree
https://bitcointalksearch.org/topic/lif-winding-tree-decentralized-travel-distribution-lufthansa-swiss-1946065

They stacked their team with 6 people and 3 advisors. They should’ve been able to create 3 prototypes by now, but I do not see any.

Their white paper states:


That’s likely a lie. Every hotel I’ve stayed at, even small ones in 3rd world countries, use computers.

Then it states:


Is Winding Tree trying make us believe that travel companies communicate with the Online Travel Agencies by using fax?

Winding Tree gives a good explanation of the problem with the OTA space and the lack of competition. This sounds like a serious business problem that should be solved. I agree that there needs to be more competitors in the OTA space. But for Winding Tree to be a serious competitor is questionable. They’ll need to raise a ton of money and do more than just create a new token.

The challenge is similar to internet search and advertising. Google controls the market and makes tons of money. There needs to be more competition. But an ICO is not going to be able to compete against Google just because it creates a new token.

In order to compete against these OTAs and GDSs, you need huge CENTRALIZED systems that can store and process PETABYTES or EXABYTES of photos and other data. Ethereum’s blockchain can barely handle 200 GB because it is decentralized. Then Winding Tree would need to spend a thousand person-years of programming to build a system that has enough features and functions to compete. Then Winding Tree would need a massive budget and outbound corporate sales staff to get hotels and airlines to sign up with them. Then Winding Tree would need a massive budget, marketing staff and inside sales and support staff to market their service to consumers.

It would seem that none of their team members had worked for large companies to manage very large databases.

There have been many competitors. Does Hotels.com still run their commercials? Obviously, they haven’t succeeded.

Creating a new crypto currency does not make you a competitor to Expedia. These OTAs can start accepting Bitcoin or Ethereum if they wanted to.

This is a massive project and Winding Tree's white paper only has 6 pages on the business aspects. Any other startup in this space should have 100 pages minimally. To take on Priceline or Expedia with a 6 page explanation, is a joke.

The right solution is for the government to break up the OTAs and GDSs into multiple smaller companies, similar to what the U.S. did to AT&T a few decades ago, in order to increase competition.

Winding Tree is a very high risk project.

Someone private messaged me and asked me for a review of:

ModulTrade
https://bitcointalksearch.org/topic/annpre-ico-modultrade-the-freedom-to-trade-2240518

If this is executed well, it has potential. However, there are several projects trying to do something similar. Their video didn’t say anything special or different than what other projects are trying to do. This idea is old and has been around for a while. The key to success will be execution.

They have a “prototype” but it’s really a demo (only on the client computer), because it doesn’t execute any transactions. A demo is far easier to build than a prototype. With 11 people on their team, they should’ve been able to build 5 prototypes by now. Nevertheless, a demo is better than nothing.

With 8 advisors, they have 19 people on their team. Most of them probably do not do much. They’re stacking their team to fool you.

They have lots of competitors, but their white paper does not compare them. This is misleading. Even the existing way of doing international trade is a competitor. They should’ve provided side by side comparisons to competitors and explain why each of their features/functions are superior.

They plan to use Ethereum as the production blockchain. I question the viability of this. Ethereum is already getting bogged down with just ICOs. Wait until several projects get some traction in production usage. Ethereum might grind to a halt. ModulTrade’s white paper explains that this will not be an issue and they can get around this. But this is an additional risk that you’ll be taking because it’s unlikely that you’ll be able to verify ModulTrade’s numbers.

Only 40% of tokens are sold to buyers and they’re keeping 38% of the tokens, which is too greedy and centralized.

They started their idea in October 2016. Startups at Y Combinator with only 2 people on the team, build their prototypes in 6 months.

The CEO and several team members are from Russia. Not all Russian ICOs are bad, but you’ll be taking an additional risk.

On their Bitcointalk announcement, they say:


This means that they are selling a security and will be on regulators’ lists. Maybe ModulTrade doesn’t care about regulators because Russia does not have extradition agreements with other countries, but what happens if regulators ban their token in Europe or North America?

As a side note, countries without extradition agreements make teams feel more invulnerable. Therefore, they are more likely to lie and cheat investors from other countries, because there is little to no recourse from the other countries' governments.

ICO will always be controversial! Especially now with hundreds of them with all kind of promises! Yet, there are still very good ones out there, one just have to look for them.

I bookmarked your thread, it is very legitimate. Unfortunately, many millions of dollars that could be used to invest in currently traded coins are being dumped into this ICO hysteria. I 100% agree that there better be a damn product in existence before running an ICO! No product = no good.

The ICO hysteria will not last long as the SEC gets it claws clamped down. I don't think they can disassemble ICOs from the past, but future ICOs will be soon extinct before too long.

There are many other more legitimate ways to raise funds for projects, such as the dev fee. But the ICO is one thing that is far too shady IMO.

DOVU says people will pay for car data. Who will? What value are they going to get when they can already get tons of data from a fleet of test cars. Let’s say there are, why wouldn’t they pay with BTC, ETH, USD, EUR or any other existing currency?

Request Network sounds like a me-too. Bitpay and other companies already enable online payment.

Hedge is another me-too. There are already many investment funds, and they all suffer the same problem as exchanges or DAO. By doing the taboo, centralizing, you are putting your money in a honey pot, which can be stolen by hackers or employees.

Only crazy investors will risk to fund an ICO which the devs holds the majority of the supply. Even the devs has a valid reason to get the 65% but still they are just using the money of investors to run the project. So it is basically unfair. I salute you for exposing ICO's flaws simce nowadays there are so many crap ICO showing.

yeah legitimate and crap ico is everywhere but im sure there is plenty ico that had a bright project. i mean there do a great ico that strungle in the middle of fake ico. for sure we need a universal regulation for cryptocurrency, not just an internal regulation from country to country.

Minerva gives tokens to platforms that accept Minerva’s OWL token. But they never explain where the money comes from? How will Minerva continue giving their token away forever? Business model makes no sense.

Blockv.io’s homepage says:


This is similar to what ARToken and Datum want to do: put TONS of data onto the blockchain. This shows that they are clueless about the blockchain. At 120 GB, Bitcoin’s blockchain is already causing scaling problems.

Blockv.io’s token allocation shows that they are among the greediest teams around. Only 35% will be go to buyers. Developers and company will keep 65%. Unbelievable. Not only is this an extreme example of greed, there is no decentralization. Their team can overpower and control the blockchain whenever they want.

As I wrote in the OP:


Yes, the best evidence of their competency is if they have built a prototype or product.

If you read, see, learn and ask sufficiently, then you should understand the business, which means you will not be investing in a business that you do not understand.

To be honest, I do not agree with everything. about the corrupt countries - this is not always a risk. I also noticed that a lot of ICO from Russia is now on the market, but the fact that they are from Russia does not make them risky at once. Therefore, it is better to look at the competencies and style of communication, rather than the country. And the advice "not to go where you do not understand anything" - but what about read, see, learn, ask, finally? The main thing is interest and desire to learn.