I'm Worried about this ICO wave. These Contracts are Neither Decentralized Nor Smart

in #bitcoin7 years ago (edited)

tiger.jpg

What's happening people. I don't have a lot of time and so won't be able to make this article as pretty as I originally wanted to.

However, this needs to be said, so I'll just say it in twitter fashion.

I'm worried about this ICO wave.

People are trusting these companies with Millions of dollars worth of liquid crypto. Eth, btc, you name it. They can move it.

What do you get in return? in most cases you will get a much lower liquidity IOU token, and a promise to build the thing. W,e it is they are promising to build.

Here's the problem. You just made the company millions. And they have not had to do that much work. This can be deadly for people's motivation to do work, unless they are very high integrity, committed and passionate.

It is a truism that start ups need to stay hungry to thrive. Once you are rich enough not to worry about things too much, you get lazy and comfortable and someone else begins to eat your lunch.

Is there a good chance your ROI will pay off as short term investment? Yeah, totally. Right now there is. But how long can that last?

Not only that, but what happens when some of these ICOs start to fail?

Right now investors are patient. They understand that there's a business cycle and that it takes time to build things.

But they won't be patient forever.

The better we handle that risk of failure by those companies, the stronger this space will be. There will always be failing companies. But that does not mean we can't mitigate that risk.

How do we mitigate such a risk?

Well, you see. There's this thing called smart contracts. They used to be talked about in the context of trust less finance. But it seems people have forgotten about that.

We can actually maybe go back to that.

here's some ideas.

Find one or two people / companies that are well known in your target market.

Get them to become escrow holders of some of the funds raised.

Put those funds in multi signature addresses either on Bitcoin or Ethereum.

Your company holds some of the keys and so do the escrow party.

You can do 2 of 2 multi signature escrow and establish publicly known processes for how to deal with conflicts. What milestones to wait for before releasing funds and, ideally. Proof of stake voting by token holders on what the best solutions to problems that may raise are.

Publish your Bitcoin and ETH escrow holding addresses.

And tell the world about it.

Not only will your ICO have a lot higher integrity. But people will respect you for it. And you'll be fending off the temptation to take some of that money and go to the bahamas.

Or you'll have more hunger and will focus on what really matters rather then less important and more expensive side features.

Investors. If you don't already know this. You should consider it. You are trusting your money to companies. If they fail. It is your fault and your responsibility.

Don't go crying to the SEC later. Take responsibility now and demand accountability and do your due diligence.

The SEC won't regulate cryptos and ICOs when everything is in a bull market. They will hit, like the tigers that they are when there is blood on the field. When the markets are red and when people are paniqued and pissed off.

That's when the SEC will be most tempted to pounce.

Companies will always fail. But the better a job we do at solving this problem before it happens, the stronger a counter argument for industry self regulation will be against them when the day comes.

And it will probably to come. In my honest opinion.

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most of them are scams, these people are making 10 million dollars in a matter of minutes

I think there are too many ICO's, don't we already have enough coins already. I feel that most of these tokens wont amount to much, most will be delisted. Thanks for sharing your thoughts

I don't trust many of these tokens and have not given them my money.

The use of smart contracts with funds released when milestones are reached is a good idea but I don't see that happening much.

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