Ethereum to Ico: what are you doing wrong ?.

"Grotesque" might not be the word you would think the ethereum developers would attribute to today's ICO scene.

But that is exactly how some of the fiery defenders of the platform described the current state of affairs. In Devcon3 in Cancun, Mexico, last week, developers were not enthusiastic when approached to reflect on the new method of financing, even claiming that many projects that use it to raise money are little more than "scams" . This statement is very worrying in the ecosystem.

Even Fabian Vogelstellar, the developer behind the technology standard that helped make ethereum tokens that are easy to cast, wanted to join the ranks of ICO critics, echoing comments made by a colorful cast of commentators as diverse as Joi Ito , director of MIT Media Lab and "Wolf of Wall Street", Jordan Belfort.

Vogelstellar reported the following: "The problem now is that too many people outside the blockchain space are focused on tokens and ICOs, frankly, it is the least interesting part of ethereum." There is a kind of pick up easy profits.

However, ethereum has seen a meteoric growth this year, in part, due to the success of ICOs for open source projects and funding for startups.

The CEO and founder of Etherscan, Matthew Tan, came to call the "killer application" of ICOs ethereum, a statement that aligns with the more than 10,000 symbolic projects launched to date, 13 of which have eclipsed, or disappeared, with $ 100 million in total market value, according to Etherscan data.

However, that road to capital still has a stigma. "Many ICOs, they seem to be a cash draw by people who could not raise money from venture capitalists. In many cases, these are little-thought-out chips based on centralized products, "said Jack du Rose, co-founder of ethereum startup Colony. He added something else.

It is an interesting read as ICOs are often promoted as a means of circumventing traditional fundraising methods. But du Rose's feelings hint at a crucial criticism: that many ICOs are simply executing incorrectly.

Now, what is the Product after the ICO. The only way to intensify the distrust of developers towards ICO issuers is the fact that many of the current projects raise money, often millions of dollars, before they have a product.

Likewise, the developers of Ethereum believe to a large extent that, at least, the individuals or the company that is behind an ICO should have a prototype to demonstrate that their idea could work theoretically in practice. For example, the casino games platform based on ethereum FunFair launched an ICO during the summer, but only after launching several prototypes. That is to say that a product already exists to demonstrate its viability.

Also of note, the founder and CEO of FunFair, Jez San Obe, had strong words about the issuers that do it differently. This was the one that said, "You must have a product before an ICO, you must know how to run a company, you must not have an anonymous team and you must first launch a prototype", adding:

"When you describe a technology that nobody can understand, you can fool people. People trust your money, you can raise $ 100 million dollars and you still do not know how to build it. " It's simple assumptions, you have to be very careful.

Therefore, having a product before launching an ICO is also important for du Rose, whose company seeks to put a job market on the blockchain, not only because it adds credibility to their idea, but also because, in their opinion, that is what the regulatory environment dictates.

According to du Rose, it is not worth "to risk other people's money on something, when there is a reasonable probability that we will be prosecuted."

For him, issue a token before the product is not only silly from a regulatory point of view, but also "incompetent and greedy."

The ideal is to keep it decentralized. And that aligns with the ideas of du Rose as "purist" (a description he said applies to many developers on this topic), which means that the tokens and the products for which they will be used should have some kind of decentralized component .

The ICOs have gained notoriety not only because they allowed people with novel ideas and new companies to raise substantial amounts of money, but also because the decentralized structure allowed them to bypass traditional methods of fundraising.

But when a decentralized token sale finances a centralized product, many developers feel that there is something off or that the process is not clear.

In this sense du Rose said the following. "For a token to be interesting, it should be a totally decentralized protocol, not just a shine on a centralized company with its own revenue models." That is to say that there must be a conceptualized idea.

In this way, although it is probably curious for some, the founder of Giveth, Griff Green, pointed to The DAO as a success story of ICO. Although their code had an error that led to the loss of millions of dollars in the theft of users, it was at least decentralized, said Green, who was the community organizer of the project.

However, think of the DAO in a more abstract way, saying that, in the future, people will be able to launch their own cryptocurrency to press against the power of the banks. That has become hegemonic and does not allow the democratization of wealth.

In this regard, Green said the following. "The power to create currencies is unavoidable. Banks are in a good position today. They have a lot of money and a lot of energy and power to clump together. They can generate money out of nothing. On the other hand, with ICOs, you can give that power to each one, to each person ". That is, the product of work is democratized.

For the previously exposed emerges the learning curve. While many stakeholders in the cryptocurrency community believe that the ICO space is riddled with bad actors, others consider it more judiciously as part of the learning process, with people trying to discover what ethereum and other blockchain technologies are and are not able to do what.

"What I've seen is nothing surprising," said DappHub software engineer Andy Milenius. "It allows the first experience of people with an idea to be wrong." That said, he expects the community to start focusing more on the projects that use the ICO model.

In this sense, Melenius said the following, "The only thing that unites people in blockchain is the skepticism of the state. But when ICOs appear, skepticism sometimes flies out the window." It seems that the problems are forgotten.

Although, there could be a reversal that is already happening, he said, pointing to the October totals, when the ICO raised less than the previous month, it is the first time it has happened since the boom began.

But, Milenius concluded, with what seemed like a tender reminder that experience is the best teacher: "People will not know until they try."

In short, the experience of living a traumatic event or not, it is not possible to teach, "nobody learns in the head of others", the important thing is to study each case, when you want to make an investment in an ICO. It waits for new announcements.

Reference: coindesk.com