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Let the Paramedics Sort Them Out

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A bit of a flawed analogy.

One of the salient points of a decentralized blockchain is the value that would have flowed upwards to centralized “investors” is instead dispersed among decentralized “savers” of the network. That’s the major attraction, after all. It’s democratic.

Or alternatively, the “investors” are the miners and/or the developers that “premine”. Premining by devs is not taken very favorably in the cryptosphere if it is excessive (and is with many, if not all, shitcoins). Yet some value is of course necessary for the operating expenses of seed nodes, setting up a foundation, etc.

Some coins even use taxes on the blocks mined that goes to a Treasury for community funding or to pay interest to coin holders.

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Posted by (Questions: 36, Responses: 635)
Posted on 01/06/2018 11:21 AM
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So you see, everything involved with a decentralized blockchain is primarily for the benefit of “savers” in lieu of “discounted cash flow” to “investors”. When it is not, you’ve got a shitcoin. Now I’ll be honest, the mindless mainstream Boobuses buying up everything left and right hardly understand a word I just said above. That’s when you know you got a genuine bubble… when fundamentals don’t matter.

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Posted by (Questions: 36, Responses: 635)
Answered on 01/06/2018 11:23 AM
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Also, I think an interesting example that Swiss cheese holes the the normal blockchain “democracy” is Ripple. As far as I can tell, their blockchain coin Ripple is just a for-profit corporate balance sheet item and yet the whole “investor” businesss seems to be focused around selling Ripple to financial institutions while hoping the uncontrollable value of Ripple goes up over time via speculation which is a direct conflict with the express purpose of what Ripple is for (to reduce expensive legacy banking/money transmitter transaction costs). There are no “savers” in Ripple because its a strictly licensed, regulated and top-down controlled blockchain, e.g. not democratic. I guess we can say its a private blockchain, although the coins are clearly public. A lot doesn’t make sense with this model.

I also get the intuition people are waaay overestimating the power and value of “efficient price discovery” and “price signal” for coins in blockchain. But hey, maybe I’m just out of touch.

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Posted by (Questions: 36, Responses: 635)
Answered on 01/07/2018 8:57 AM
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“One of the salient points of a decentralized blockchain is the value that would have flowed upwards to centralized “investors” is instead dispersed among decentralized “savers” of the network. That’s the major attraction, after all. It’s democratic.”

Buying a crypto is like being able to buy a venture in its super early stage. The value of that blockchain is bid up based on how valuable that actual underlying service will be. But make no mistake – it’s not that different from the way companies raise capital now. These ICOs are shipping piles of cash off to the builders of the underlying technology and the buyers of the coins are bidding up prices based on what they think that underlying technology will be worth.

An ICO is really not that different from an IPO except that there’s no central liability issuer like there is with an IPO.

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Cullen Roche Posted by (Questions: 10, Responses: 1855)
Answered on 01/07/2018 2:06 PM
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ICO’s are overwhelmingly for issuing smart contract-based cryptotokens (which can function as securities, utilities or both), not blockchain-based cryptocurrencies. A cryptotoken is akin to a stock or a bond being issued by a centralized issuer, although they’re not legal liabilities (not yet, anyway!). Normally and traditionally, a blockchain is not funded by the ICO tokenization process, but there’s been at least several blockchain-based ICO’s issuing cryptotokens for startup funding during the past year that will be later converted 1:1 to the actual coin at network launch (if it ever reaches that stage). That would imply there would be no pre-mining since the ICO process already raised the necessary funds. A good example of that recently was Electroneum. And because the ICO process is so full of scammers now, forking existing blockchains with coin airdrops is gaining momentum lately.

Utility cryptotokens clearly have no way to value themselves based on a discounted cash flow analysis unlike security cryptotokens. So buyers that are bidding them up to more than $1 or $10 are eventually gonna learn the hard way what “utility” really means. “Utility” is not money or at least it has very few of the attributes that would make it good money.

Interestingly, Ripple as a blockchain has the ability to issue cryptotokens as well, though unlike Ethereum its not democratic in that anyone can do so. So it’s ideal for activities such as gambling which require command and control regulation from top to bottom to be regulatory-compliant. So there’s even a choice for those that choose to be collaborators instead of anarchists.

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Posted by (Questions: 36, Responses: 635)
Answered on 01/07/2018 3:25 PM
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Let the Paramedics Sort Them Out Is really some decent advice when it comes to these types of new paradigm shifts in society.
I remember playing the market during the dot com days when I guy I worked with bought a bunch of Amazon for $27-28 a share back in the late 90’s. Then it fell to around 6-7 a share as was most stuff falling. I was joking with him about it and he just kinda smiled humbly saying he would just hold on to it, it will come back.
And boy has it.

Cullen is right in that context here. Watch them all see who has the best management team and product and then after the big run up and Collapse, swoop in pick up on the cheap and wait 5-10 years for a nice payday.

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Posted by (Questions: 31, Responses: 115)
Answered on 01/07/2018 11:17 PM