That's an interesting article. I have been personally puzzled by the rush to invest in lots of different ICOs or even a new coin that looks flashy. I picked some new coins to invest in back in 2014, including DNotes, and what's funny is that two of those coins I picked back then I'm still investing in now, and they're like
old coins. I've picked up one new coin since then whose future is up in the air but other than that, I'm sticking with the tried and true ones, and trying to add to my holdings as much as I can.
One thing that truly puzzles me is the Ethereum phenomenon, and I'm wondering if anyone here would like to comment on it. I avoided Ethereum for the longest time because every time I heard something about it, it was bad. Smart contracts getting hacked, millions of Dollars worth getting lost or held up somewhere in the etherspace where no one could find them until they sort of wandered back home. I wanted nothing to do with it. If I heard of an interesting ICO, I'd look into it and as soon as I learned it was ethereum based I'd drop it like a hot potato. I recently got into the position where I own two different ETH based tokens (one because I thought it was a NEM token and the other because I was kind of forced to--long story). So I finally tried to get a wallet and my first attempt failed repeatedly, until I finally switched to a different wallet. It works, but is very clunky. I guess what I don't understand is how a coin that is so awful can be priced so high and be so popular per coinmarketcap. That's the part I truly do not understand. Why is Ethereum where it is, and not one of a half dozen other coins that do smart contracts and wallets far better?
Thank you, wiser. I always enjoy your posts – original, honest and refreshing. The fact that your picked two from years back that are still promising today, by itself, is quite amazing.
I have high regards for Ethereum, despite their occasional stumble. It is difficult to be perfect. There is a lot of untested ground and uncontrollable.
However, I am concerned about the potential fall-out of ICOs that SEC may deem “securities” that were sold without registration or exemption. Among other remedies, they can issue a rescission order to rescind or return the proceeds of the fund raised; much of the amount is still held as Ether and Bitcoin. A major case or a combination of a few could cause significant value adjustment. A wide-spread enforcement could be very damaging.
Thanks for the kind words. I like your perspective on Ethereum--focus on what that project has accomplished, which is considerable.
The two "new" coins I got into in 2014 are NEM and DNotes. With DNotes, it was the professionalism and dedication to developing solid infrastructure that won me over. With NEM, I kind of fell into it because I had been playing around with NXT, unfortunately not profitably, and some of their team decided to launch NEM and I got a stake figuring I had nothing to lose. Now I wish I'd gotten two or three. In 2015 I got involved with DMD, which by that time was already nearly three years old, and the longevity interested me. Early on I took a small writing gig with them and was very impressed with the thoroughness and ease of communication I had with the lead developer. That coin is now 4.5 years old and going strong, and paying a lot of my bills. The two newer coins I'm into now are STEEM--I really like the blogging for currency concept--(though right now I need to figure out if they're having growing pains or real issues), and VIVA, which I think is a great concept that will make it but at this stage is still a wild card.
Honestly, four or five coins is about all I can handle keeping up with, so I'm not even looking at the new ones coming out. One thing I love about DNotes is that if I'm not around for a couple months I don't have to worry that there will ever be some deal breaking piece of information that I missed that I should have acted on immediately (as in sell off all my coins). I can know that DNotes will still be there and making progress.
Thanks, wiser. You are very analytical and objective in your selections. Many investors in our industry can learn from you. There are always leaders and followers in any competitive industry, such as ours. And you are able to identify them.
DNotes has a lot of moving parts and only those who can connect all the dots can appreciate its true value. It is strategically designed to be a long-term player and positioned for the next wave of serious investors and professional fund managers who take their fiduciary duties seriously. I have no doubt that our relentless commitment to building a trusted brand with integrity will be quite valuable one day and we all can be proud of it.
I really enjoyed the article, especially because I hadn't heard about the Enron scandal. But it makes me really wonder about
the definition of a 'bubble'. I've read about the Tulip bubble, the over-heated market and investing in investment companies that preceded that Wall Street Crash of 1929, the dotcom bubble, and in Australia, we've been waiting for the real-estate bubble to pop for well over a decade now. But
the difference I see between these bubbles, and the cryptocurrency bubble is the underlying value of the investment. Tulips were over-priced, but still had natural value. Where as many of the dotcom companies received investment without ever having much of a chance at success, and had nothing of value at the time of investment other than a plan or an idea.
I think that
the cryptocurrency bubble can be reasonably divided into two halves. One is bitcoin and the other is speculation on the value of ICO tokens.
I'm just guessing, but my feeling is that
the majority of investors in ICOs never intend to use most of their tokens on the service that the ICO company is developing. For example, if you buy into an ICO that is going to offer you the ability to buy listening-hours on a music content platform, and invest US$1,000. It is not because you intend to get $1,000 dollars worth of great listening experience from your tokens. It is because you're hoping that you'll be able to sell the tokens to investors or listeners for more than you paid for them. If the ICO developers deliver a solid and wanted product, you might make a legitimate income by assisting developers bring a product to market. But because these ICOs typically gain hundreds of times more in funding than the development should cost on the open market, I feel like this outcome is unlikely or will be vary rare.
Instead my guess is that early buyers in ICOs will profit by selling to the greater fool, and like any other pyramid scheme, it is doomed to end in tears. In this way, I see the ICO industry when viewed as a single unit as a bubble caused by investors hoping for nothing more than to sell before the crash.
Bitcoin is different to this. And while the current price might be ten or one hundred times its present value, I believe that at some point in the future, the current price will reflect bitcoin's real worth as a utility, not a commodity. I also believe this is a widely held view and that many people who buy into bitcoin, even at the current price, will hold onto their investment through any trough, in the solid belief that it will always recover.
But when I refer to bitcoin, I'm not really thinking about the current dominant cryptocurrency. I'm thinking about the utility of the blockchain concept and the coin that does the best job of providing that utility and supporting services. I am also aware that I'm not alone in this way of thinking because the concept is neatly wrapped up in the term,
"the flippening". This is the point where bitcoin loses the combined market advantages that it currently enjoys from being both the first, and the most valuable / popular.
If or when a cryptocurrency becomes more popular than bitcoin, it is believed that there will be a sudden and irreversible shift of investment from bitcoin, to the new favourite. And this is where I see the line between tokens, and other cryptocurrencies. Certainly some believe that bitcoin will continue to be the base coin, while their favoured cryptocurrency will be successful in parallel due to better functionality and supporting services. But I'm sure just as many investors in alt-currencies believe that they choice will eventually win out over bitcoin, and they will reap huge profits by being early adopters taking advantage of an undervalued coin.
So while I don't see bitcoin as a concept as being a bubble, I do believe that there will be a point in time when bitcoin the currency will lose favour to some other currency and become close to worthless. And in that way,
bitcoin owners who don't move fast enough will be burnt by the flippening as surely as investors in a bubble.
As for DNotes, I see that it has huge potential. DNotes Global Inc is currently providing value to the community with its strong focus on education, and the care it is taking to establish a standard of ethical and inclusive behaviour in the industry. I don't see DNotes cryptocurrency having much current value as a utility because I have not seen it traded for goods or services outside of its growing community. I have never independently come across DNotes being used functionally. So whether DNotes will end up providing functional services along side bitcoin, or if ultimately DNotes will become the coin to dethrone bitcoin, I can't tell. I see they have the business acumen, and corporate culture it requires. But to achieve their potential everything depends on the functionality of DNotes and its supporting services.
I wouldn't call this a definitive example of utility value or functionality by any means, but I've gifted people DNotes for doing voluntary work, and have included DNotes as a tip/gratuity for work that was paid in fiat. The thing I like about this means of distribution is that you're giving it to people who know the value of hard work, and understand what value productivity adds to a financial network. DNotesVault makes this very easy, because it doesn't take much tech experience to figure out, and all people need to remember to receive money is the email address they used to sign up.
The ICO's are truly getting insane, many of them don't even have a blockchain at the time of launch. So if a promise to build a blockchain can be worth how ever many hundreds of millions of dollars to speculators, then what is a blockchain that has been operating functionally for several years worth? I've been kicking around cryptocurrency for a few years now and in that time I've seen hundreds and hundreds of blockchains break or be completely abandoned. I have never and will never participate in a black market ICO, because I've witnessed far too high a percentage of investors lose it all in a short period of time. DNotes has made is through some pretty tough trials and tribulations... I mean if we look at the price now, let's face it, it's bad. But even with that low price, the team is unwavering in their support and level of work ethic. While a good majority of teams would walk away from problems like this, we hit them head on and keep plowing through!
Tim, again excellent job. I appreciate your earnest efforts to look at things from different prospective and share the reasoning why you arrived at that conclusion.
This is the current reality confronting our industry, “
majority of investors in ICOs never intend to use most of their tokens on the service that the ICO company is developing …. early buyers in ICOs will profit by selling to the greater fool.” It is difficult to refute this statement.
Herein lies the problem. The token is sold as an investment. It is speculated, sometimes manipulated, as an investment for greater gain. All the characteristics, based on facts and circumstances, lead one to conclude that it is a security, labeled as “token”. We could call it by a different name, but that does not change its status. All the characteristics remained the same. It is illegal to sell securities in the United States, and other countries for the matter, that are not registered or exempt.
Now let’s look at the next conundrum. The token, or cryptocurrency is generated in a decentralized setting governed by algorithm. It is leaderless and no single individual or group of individuals controls it or has the right to do so. That is the beauty of the decentralized system. But, it has its limitations and can be problematic as we have seen many times.
There is another crucial point to consider. The token holders, or stakeholders have no ownership rights to the private entity that raised all the money with total control over them. The “Golden Rule” applies here just as well – “He who holds the gold makes the rules.” The rules are never in favor of those who have handed over their money, without ownership rights to the new asset – a private entity in most cases. Unfortunately, the prevailing mentality is – who cares, if, I can find a greater fool and still make a profit. Sadly, we always run out of “fools” even when one is born every minute. That is the impending risk of a typical bubble before reaching its breaking point.
We have the foresight to see all these at the launching of DNotes on February 18, 2014 and have been building a different path; whereby, one day, we can successfully bridge the gap between the new decentralized world with the centralized world. I have no doubt that it can be done, and it will be done. But, wow, getting people to understand to the point that they can connect all the dots seems to be our biggest challenge.
With due respect, many in our industry are clueless what DNotes is all about. I am sure we have many skilled writers in our community who can do a good job in explaining the DNotes difference and an effective way to connect the dots. I challenge you to join me in our efforts to get the message out.
In preparation for our funding for DNotes Global, Inc. I have been talking to many professionals in the legal and financial arena and keeping myself extremely busy these days. It is very challenging, but I believe it will be well worth it. While not many of them are as knowledgeable on the relevant subjects as I wished, I believe that we can engage the right firm to assist us in getting the job done. And there is a general consent that A+ Mini-IPO title IV tier 2 is the most appropriate program for us.
A+ Mini-IPO title IV tier 2 under the Jobs Act allows us to raise up to $50 from accredited investors, and non-accredited investors with a 10% limit on annual gross earnings or net worth whichever is greater. We can set a lower minimum, like $5 but cannot raise more than $50 over 12 months. Although only US and Canadian companies are qualified to use Reg. A+, anyone globally can participate as an investor, subject to their domestic rules if any. Equally important, once approved general solicitations and advertisement worldwide are permitted.
I shall conclude here and wish you all a Happy Thanksgiving.
