China Forbidding ICOs: Why This Is A Good Thing For The Crypto Ecosystem
A couple of days ago, PBOC (People Bank Of China) announced that they will not only forbid any new ICO but will also ask the ones who already took place in China to refund the contributors.
As a result, the entire market is in red. Bitcoin lost almost 10%, Ethereum more than 15% and some of the altcoins lost as much as a quarter of their value. The most prominent example being NEO, the so-called "Ethereum of China" which lost over 26%.
But as red as the market looks right now, I think this is a good move. It may have come with a dash of centralization, it may have come at the "wrong" moment, when the market was booming and Bitcoin was ready to pierce the $5000 level, but it's a good thing.
Here's why.
1. First of all, there is a contextual situation.
During the last few months, hundreds of so called ICOs emerged out of nowhere. Most of them didn't have more than a one-page website, with a few paragraph of text and a couple if images. Yet, they expected to receive millions of dollars. This is pure speculation. It doesn't do good to anyone, except, probably, the beneficiaries of these ICOs. So, first of all, the inflation of ICOs must be stopped somehow.
2. Second, an ICO is not a cryptocurrency.
These two activities were so tied together during the last few years, that in the collective consciousness they tend to blend. Wrong. An ICO is just a way of asking money upfront, for something that may, or may not go as expected. A cryptocurrency is a very complex project, requiring a significant amount of human resources, and, most important, time, to get to maturation. Satoshi Nakamoto didn't have any ICO, AFAIK.
3. The fact that this regulation comes from China is very significant.
As you know, a lot of Bitcoin mining power, probably more than 50%, is coming from China. This puts a big question mark on the term "decentralization". If all the mining power is concentrated in the hands of a single community (being it a country, or a government) then Bitcoin is no longer decentralized. So, despite the temporary dive of the price, I consider the dumping of Bitcoin from China, to be a good thing. Please note that I have no proof that the majority of the dumping is coming from China, it's just a hunch.
4. I've been in the position of taking money from investors before, and, although it sounds great, it's not as good as you think.
Of course, if things go well, everybody is happy. But if things don't go well, well, it's shitty. So purely from an entrepreneur perspective, the fact that many crypto enthusiasts will work without the pressure of the ICO (I'm talking about the genuine developers, not ICO scammers) may lead to better products in the future.
All in all, this measure, as strange as it is, and as upsetting as it may be for those who had plans these days with their tokens, it's a good one.
So, hodl! :)
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
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You are right dip in market is temporary it's good decision for market for long term you had explain it very well.
Some people were misusing the ICOs,just because they were the "in thing"
They saw it as an easy way to raise money!
It is good it will be stopped.
This will weed out the wrong companies from the right ones.
@dragosroua,
Personally I am happy, no matter coins are at the bleeding stage! But I really accept the work done by China Public Bank! Few weeks ago I told at your article I am fed up by all those fake pulse cryptos and ICO calls! Not only that ITO is there and once my money was scammed too!
So, basically those regulations should be there, and whole world should implement such kind of process as well!
Great article you have written here! Really appreciate it and you know I am daily ReSteem the best post I have read in a certain day! So, today I will ReSteem your post! I hope you allow me to do that!
Cheers~
I see this dump as either manipulation/stupidity or the combination of both.
The only things effected by the PBOC are ICO tokens, which as you rightly say are not crypto-currencies and perhaps Etherium/NEO, whos price has been largely based on its only production use case which is ICOs.
Thank you, there's so much FUD about this topic lately, when it's actually a good thing! May I traduce this article for the Spanish community? (Of course giving you the due credit ;)
Yes, by all means, send me the link when you're ready and I'll give it a resteem as well.
Thanks I will ^^
Here it is :) https://steemit.com/spanish/@arturomdg/china-prohibe-las-icos-buena-noticia
Great job, resteemed :)
very bad for me already have been holding these coins for almost 3 months :(
I only hodl.
That's the attitude :)
@dragosroua - Actually it little hurts me. Because, I had NEO & few other new coins, but today I decided to sell the off. You described the situation in-detailed. Love your work Sir. Therefore, I wish to ReSteem your post.
+W+ [UpVoted & ReSteemed]
I guess this could be a benefit for the future. It is just speculation at first with an ICO. Sometimes people judge something purely on the look of the website which many people did with District0x. I saw some peoples justification of getting on to DNT was because the website looks nice however it was purely just a hype coin.
I didn't realise how big of an influence China has had it is probably a good thing for the long term if they give up some of their influence now as they begin to dump to make the network more distributed across the world @dragosroua
agreed, well put together. a bit of a distribution after this pull back would be a good thing. more mining power elsewhere, maybe steemit posse should think about getting some mining space in the node pole? i know a few people ;)