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Underscoring bitcoin’s maturation, the currency set new price records this week as the value of a single coin crossed the $2,000 threshold. Since bitcoin was announced in 2009, and certainly since I first wrote about it in 2013, the ecosystem of cryptocurrencies has exploded.

Cryptocurrencies have expanded since the days bitcoin shared some of the media’s spotlight with litecoin and the silly-by-design dogecoin. It was a time when Mt. Gox ruled, cupcake shops could become media darlings by accepting the digital currency and pizza was a critical bitcoin-pricing metric.

Now, there are dozens of cryptocurrencies worth eight figures, and the birth pace of new entrants is accelerating.

In that particular milieu of freshly launched coins is a newly famous transaction type we need to understand called the “Initial Coin Offering” or ICO. An ICO is akin to an IPO, but in temporal reverse (sort of). Although confusing, it has recently acquired prominence as a favored way to launch a new cryptocurrency.

But as is typical of nascent cryptoproducts, there are legal questions and unethical players in the mix. So let’s explore what an ICO is in the current cryptocurrency market.

ICO basics

An ICO is a fundraising tool that trades future cryptocoins in exchange for cryptocurrencies of immediate, liquid value. You give the ICO bitcoin or ethereum, and you get some of Billy’s New Super Great Coin or the infamous CrunchCoin.

The Financial Times calls ICOs “unregulated issuances of cryptocoins where investors can raise money in bitcoin or other [cryptocurrencies],” which is accurate, especially if you underline the word “unregulated.” We’ll get to that in a moment.

Sticking close to the older financial publications, The Economist also took a look at the financing mechanism, describing what you buy in an ICO in the following fashion:

ICO “coins” are essentially digital coupons, tokens issued on an indelible distributed ledger, or blockchain, of the kind that underpins bitcoin, a crypto-currency. That means they can easily be traded, although unlike shares they do not confer ownership rights. […] Investors hope that successful projects will cause tokens’ value to rise.

The referenced value increase is critical to understanding the appeal of ICOs. These are not transactions of love. They are investments made in hopes of quick, strong returns.

Notably, not all ICOs are for cryptos that will maintain their own blockchain. According to the crypto-focused Smith + Crown research group, some ICOs are actually “launching ‘meta-tokens’ built on Ethereum, Bitcoin, NXT or others.”

After all, why not.

So ICOs can be coins on top of coins funded by the transfer of other cryptos to accounts in the hunt for what’s next. That might sound crazy, but it’s hot times in the crypto world.

And that heat is keeping ICOs bubbling. The same Economist piece, published in April of 2017, notes: “[n]early $250m has already been invested in [ICOs], of which $107m alone has flowed in this year,” a metric that it attributes to the aforementioned Smith + Crown.

That is a lot of money, making ICOs large in terms of their sheer dollar-scale. It’s therefore not hard to understand why more traditional business publications are paying attention. Following the money is their jam.

In short: ICOs are the new funding slingshot by which nascent cryptos are flung into the world.

Thieves, lies and laws

As with any boom, there are bad actors to be found in the land of ICOs. Given bitcoin and the larger cryptocurrency world’s deep tradition of enduring bad behavior, it is not a surprise that ICOs are attracting humans of base intent.

ICO fraud and skullduggery is common enough that a quick search yields heart-melting headlines like “Ver Backed Qtum Founder Ran Previous ICO Scam,”  “To everyone that bought into the Matchpool ICO, it looks like it was maybe a scam…,” and “A Digital Currency Scam is Misusing the Rothschild Family Name.” All of the articles are from this year to date.

In the world of ICOs, fraud is never hard to find. Add in regular sums of incompetence that any new venture could fall prey to, and ICOs feel a bit Old West.

Laws

But what about regulation, you reasonably protest. Surely that must exist to protect consumers?

Returning to Smith + Crown, skirting usual rules concerning fundraising is nearly normal in the realm of ICOs — at least partially explaining why guard rails in crypto offerings may remain a homegrown affair:

Most ICOs today are marketed as ‘software presale tokens’ akin to giving early access to an online game to early supporters. In order to try to avoid legal requirements that come with any form of a security sale, many ICOs today use language such as ‘crowdsale’ or ‘donation’ instead of ICOs.

So regulation is out of the mix for now.

There is an argument to be made that a dearth of regulatory oversight is actually good, as it allows the ICO market to iterate and innovate quickly. It is a reasonable(ish) argument and likely technically correct, but that doesn’t mitigate the potential for unsophisticated investors to be preyed upon.

Caveat emptor and moral hazard are fine arguments in favor of no rules regarding ICOs and cryptos, but if the market wants to keep growing, it will need to do more to attract consistently larger pools of capital.

Bubble me this

Is there a chance that ICOs will slow? Of course, but the forces behind them run a bit deeper than we might have first guessed.

CryptoHustle makes the related point in a recent article that “ICO mania is likely due to early Ethereum adopters making serious returns after the last bull run.” Etherum’s run has certainly been staggering. If it is fueling the ICO craze, we could be in for a long cycle.

Regardless, the point doesn’t mean that cryptomarkets are as they should be. That ICOs would eventually get ahead of themselves and bubble like so many young technology niches was predicted at least since last October. How long the good times will last isn’t obvious. But the correction will come, as always, and when it does, we’ll see which cryptos have a real shot.

Take this away

The cryptocurrency market is hot once again. And while it continues to set new records, a host of altcoins will demand its slice of the market.

Should you buy into an ICO? Only if you have a massive appetite for risk, zero fear of losing your capital and are willing to take a flying chance on an idea that could flop.

Then again, crowdfunding has similar risks and seems perfectly healthy. Your call.

Use Case IDO versus ICOThe benefits of DeFi-ance

A top global cryptoprocessing company, CoinsPaid was crowned Payment Provider of the Year at the AIBC Dubai show last month. Having secured its position in the payments niche, the fintech is in the process of expanding its services to include decentralized finance (DeFi). 

Learn more about CoinsPaid

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

#Business #ICO #IDO Related News Building Empires: Biggest Crypto Exchanges Push for Global Presence Akon gives the play-to-earn poker platform a shoutout for being the next wave of gaming DAOs prepare to face off: Would vigorous IP battles be good for DeFi? Hashing out a future: Is Bitcoin hash rate drop an opportunity in disguise? Crypto investment platform Coinseed shuts down amid NYAG lawsuit Kraken rethinks direct listing plan following Coinbase’s lackluster performance

Tune in to watch Cointelegraph host and analyst Benton Yaun alongside resident market experts Jordan Finneseth and Marcel Pechman. Here’s what to expect in this week’s markets news breakdown: 

After failing to reach $50,000, Bitcoin (BTC) slid back down to $40,000 on Monday before recovering to $44,000. What, or who, was behind this pullback?Dogecoin (DOGE) is gaining popularity even though transaction levels are at a low. Why is this happening?United States President Joe Biden nominated a new head for the Office of the Comptroller of the Currency, Saule Omarova, who is an anti-crypto law professor. If this nomination succeeds, how significantly will it impact crypto?

Next up, resident experts Pechman and Finneseth take a dive deep into the most important factors driving the markets in back-to-back expert takes. Pechman raises some questions about the practicality of El Salvador accepting Bitcoin as legal tender. Did the country really think it through? Finneseth walks us through the rise and fall of the nonfungible token (NFT) market. New data suggests the market is dying, but is it really?

Up next, the Cointelegraph experts identify two altcoins that stood out this week, Elrond eGold (EGLD) and Axie Infinity Shards (AXS), using insights from Cointelegraph Markets Pro, a platform for crypto traders who want to stay one step ahead of the market.

Finally, the show wraps up with an exclusive guest interview with professional crypto trader Eric Krown. We talk to Crown about trading plans, strategies and which coins he currently trades.

“The Market Report” streams live every Thursday at 4:00 pm UTC, so be sure to head on over to Cointelegraph’s YouTube page, and smash that like and subscribe button for all our future videos and updates.

The venture capital industry is beginning to take a good, hard look at a new financial instrument coming out of the bitcoin community — Initial Coin Offerings, or ICOs. Also known as “token sales,” this new fundraising phenomenon is being fueled by a convergence of blockchain technology, new wealth, clever entrepreneurs, and crypto-investors who are backing blockchain-fueled ideas. ICOs present both benefits and disadvantages, as well as threats and opportunities, to the traditional venture capital business model.

Here’s how an ICO typically works: A new cryptocurrency is created on a protocol such as Counterparty, Ethereum, or Openledger, and a value is arbitrarily determined by the startup team behind the ICO based on what they think the network is worth at its current stage. Then, via price dynamics determined by market supply and demand, the value is settled on by the network of participants, rather than by a central authority or government.

Insight Center

Venture capitalists, who generally have been standoffish to the ICO phenomenon, are now becoming more interested in it for a number of reasons. One is profits — cryptocurrency investors made some massive returns in 2016, with cryptocurrencies from Blockchain startups Monero and NEM both seeing 2,000% increases in value. For example, the cryptocurrency used for the Ethereum network, called Ether, saw its value double in just a few days in March 2017. Yes, in three days, people who invested in Ether doubled their investment. Those investors can opt to cash out to a fiat-backed currency, or wait for the cryptocurrency to continue to rise (or fall). Volatility is a two-way street. While the price of Ether has been rising, Bitcoin has dropped 20% to $1,000 dollars from a record $1,290 on March 3, 2017.

The second reason VCs are becoming more interested in ICOs is because of the liquidity of cryptocurrencies. Rather than tying up vast amounts of funds in a unicorn startup and waiting for the long play — an IPO or an acquisition — investors can see gains more quickly, and can pull profits out more easily, via ICOs. They simply need to convert their cryptocurrency profits into Bitcoin or Ether on any of the cryptocurrency exchanges that carry it, and then it’s easily converted to fiat currency via online services such as Coinsbank or Coinbase.

What traditional investors don’t like about any of this is the regulatory uncertainty; the high valuations and over-capitalization; the lack of control over financials, strategy, and operations; and the lack of business use-cases. And like any industry, the ICO arena has had its fair share of outright scams, pump and dumps, and blatant Ponzi schemes. However, much of the criminal activity is now being mitigated by self-organized, crowdsourced due diligence in the community, as well as by external parties such as Smith and Crown, a research group focused on cryptofinance, and ICO Rating, a ratings agency that issues independent analytical research on blockchain-based companies.

At least one VC firm is moving into cryptocurrencies. Blockchain Capital is set to raise its third fund via a digital token offering in the first-ever liquidity-enhanced venture capital fund (where people can invest without locking their money up for years on end) via a digital token called BCAP.

ICOs are the Wild West of financing — they sit in a grey zone where the U.S. Securities and Exchange Commission (SEC) and many other regulatory bodies are still investigating them. The main problem is, though, that most ICO’s don’t actually offer equity in start-up ventures; instead, they only offer discounts on cryptocurrencies before they hit the exchanges. Therefore, they don’t fit into the current definition of a security, and are technically outside of traditional legal frameworks. Secondly, they are global instruments — not national ones — and they are funded using bitcoin, ether and other cryptocurrencies that are not controlled by any central authority or bank. Anyone can invest, and they can even do so pseudo-anonymously (it’s not impossible to find out who people are, but it’s not easy, either). Currently, there’s no Anti-Money Laundering (AML) law or Know Your Customer (KYC) framework, though some companies are working on that. One example is Tokenmarket, a marketplace for tokens, digital assets and blockchain-based investing, that has teamed up with the Stock Market of Gibraltar to offer KYC- and AML-compliant ICOs.

Detractors of these new funding schemes scream for structure and protection, point out the scams, demand more control, and say that without equity, investors don’t have enough skin in the game. Meanwhile, proponents retort that there’s a real need for freedom to invest outside the accredited system, which sees the wealthy getting wealthier. They argue that the door needs to close on the domination of Sand Hill Road in Silicon Valley and other VCs and investors in the tech industry who have been making massive returns on the backs of entrepreneurs for far too long.

Here are five basic principles underlying the technology.

1. Distributed Database

Each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary.

2. Peer-to-Peer Transmission

Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes.

3. Transparency with Pseudonymity

Every transaction and its associated value are visible to anyone with access to the system. Each node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others. Transactions occur between blockchain addresses.

4. Irreversibility of Records

Once a transaction is entered in the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network.

5. Computational Logic

The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between nodes.

For blockchain startups, ICOs are a win-win — they allow startups to raise funds without having equity stakeholders breathing down their necks on spending, prioritizing financial returns over the general good of the product or service itself. And there are many in the blockchain community who feel that ICOs are a long-awaited solution for non-profit foundations that want to build open-source software to raise capital. Non-profits usually hold about 10-20% of the total cryptocurrency they issue; as Ethereum did in their ICO in 2014, with 20% going to the development fund and the remaining going to the Ethereum Foundation. This is so they have a vested interest in building more value, as well as having reserves for growth in the future. (As of March 2017, the market capitalization of the ether token was more than $4 billion.)

The market cap for bitcoin is now close to $20 billion, and half of that is allegedly owned by less than one thousand people, who are called “bitcoin whales.” Many of them are in China, but there are also hedge funds and bitcoin investment funds who hold massive amounts of bitcoin. Most made their money early on by buying or mining bitcoin when it was still under $10 (in the early days of 2011-2013). It’s now worth approximately $1,120 per bitcoin. These “bitcoin whales” are currently the ones who make or break many of the ICOs. Some of the enormous profits they have made in bitcoin are being channeled back into innovation, as many of them seek to diversify holdings, as well as support the ecosystem in general.

More than $270 million has been raised in ICOs since 2013, according to Smith and Crown (not including the $150 million raised in The DAO scandal, which was returned to investors). Since 2013, there’s been about $2 billion invested in blockchain and bitcoin startups from the VC community. ICOs are becoming more and more popular for startups seeking to get out of self-funding, bootstrapping starvation mode and avoid being locked in by venture capitalists, watching their own equity drown in a sea of financing rounds. ICOs are dominating the overall crowdfunding charts in terms of funds raised, with half of the top 20 raises coming from the crypto-community.

In a recent conversation, MIT scientist and author John Clippinger described the vast potential of this new movement to me as such:

One way of thinking about a crypto-asset is as a security in a startup, which begins with a $10 million valuation and becomes a $10 billion dollar entity. Instead of stock splits, the founding crypto-asset gets denominated in smaller and smaller units; in this case 1,000 to one. Here, everyone in the network is an equity holder who has an incentive to increase the value of the network. All of this depends upon how well the initial crypto-asset and its governance contract are designed and protected. In this instance, good governance, e.g. oversight, yields predictability, security, and effectiveness, which in turn creates value for all token holders.

Just as venture capitalists are taking a hard look at this new phenomenon, so should we all. It’s not just about the money that can be made; it’s also about funding blockchain projects and, in the near future, other startups and even networks, as Clippinger noted. We now have a way to easily fund open source software, housed under foundations rather than corporations, that can truly drive faster innovation. Right now, blockchain technology is at the stage where the internet was in 1992, and it’s opening up a wealth of new possibilities that have the promise to add value to numerous industries, including finance, health, education, music, art, government, and more.

They have names that make them sound delicious, like Cookie Coin. Or headed for outer space, like Pluto Coin. Or space-bound and delicious, like AstroCake, which was described this way: “Created 5 minutes ago. SAFE.”

Hype coins, as they’re known, sit squarely on the flashy, speculative end of the cryptocurrency business. Every day, dozens of them are created around the world by developers promising fortunes to would-be investors. It usually ends poorly. The vast majority of these tokens are worthless within a couple of weeks. The developers, on the other hand, can make tens of thousands of dollars, sometimes a lot more.

Despite this track record, hype coins have become the investment of choice for millions of people, most of them men in their 30s, or younger, and convinced that the economy writ large is rigged against them. Some are the same traders who have been leaping into stocks like GameStop and AMC Entertainment. To them, crypto is both a source of hope (in imminent riches) and fellowship (many coins have chats on Telegram, an encrypted messaging app, that can sound like faith-based support groups).

It’s hard to think of another financial craze in which so many people poured so much into entities with so little intrinsic value. Few hype coins have any utility as currency. Good luck buying lunch with one. Many are minted in numbers rarely seen outside astronomy books — trillions, quadrillions — which dooms them to vanishingly tiny prices.

From the outside, the hype coin party is a mystery. To understand it, you have to join it.

Which is surprisingly easy. You may have heard that Bitcoin, the granddaddy of crypto, is “mined” by power-gobbling supercomputers, a process that verges on the utterly incomprehensible. Making a hype coin, by contrast, is more like ordering a pizza online. The entire process is automated and speedy. The fixings — in this case, what to call it, how many coins to make and so on — are up to you.

So one day in May, I created my own cryptocurrency. I did it on a Zoom call with an excitable 36-year-old in Taiwan, Dan Arreola, who had posted a tutorial on YouTube about how to make, and promote, a “scam coin.” It has more than 240,000 views.

“The lowest cost to launch a token is $8,” he said during our call.

That’s if you use a site for the tech savvy. For everyone else, there is Cointool. After a few minutes of tweaking, and about $300 in fees, I pressed a button. Instantly, 21 million coins were minted.

I christened them Idiot Coins.

The name was the first of many “do not buy” signs to potential holders, as crypto investors are called. I didn’t actually want this coin to soar in value. I wanted it to flop, spectacularly. The point was to demonstrate that creating a hype coin doesn’t take expertise and that many are flimsy and dangerous. Idiot Coin would be a crash test dummy designed to underscore the wisdom of seatbelts. And while laws provide guardrails for these investments, they are mostly ignored. Developers operate with little oversight.

Their main worry is marketing, the fine art of convincing people that a coin will enrich all comers. There are many colorful pages in the hype coin P.R. playbook, and I copied each one — with a twist.

I had a website built, with a How to Buy section that warned against it. (“Step 1. Do not buy Idiot Coin.”) I wrote an announcement for CryptoMoonShots, a Reddit page, where newly born crypto is unveiled. Usually, the coins are breathlessly flogged for their imminent moonward trajectory. I took a different tack.

“Def NOT going to the moon!” my announcement read. “Might not get an inch off the ground!”

On July 2, I activated this modest little promotional contraption. Then I stood back and hoped for the worst. Ideally, the level of enthusiasm would not exceed that of the person who left this message on the CryptoMoonShots announcement:

“My favorite all time Bollywood movie is 3 Idiots. So I’ll buy 3 Idiot coins.”

Not a Cop in Sight

The dream of instant riches has been around for as long as money. Only the source of the fortune changes. Gold, tulips and mortgage-backed securities have all taken a turn as the surefire investment vehicle of choice for investors in a hurry.

Now it’s cryptocurrencies. The uninitiated may have the sense that a couple of dozen of them are out there. The actual number is closer to 70,000, according to a site called Token Sniffer. About 100 are created each day.

Many are now worthless, but nearly 80 cryptocurrencies have market capitalizations above $1 billion, and they have won the affections of more than just investor bros. So far this year, U.S. venture capitalists have pumped $4.2 billion into at least 280 cryptocurrency deals, data collected by PitchBook shows. In late June, the venture capital firm Andreessen Horowitz raised $2.2 billion for a crypto-focused fund, its third.

There have been a few breakout stars. Most notably, there is DogeCoin, which started this year by appreciating 14,000 percent in five months and today has a market cap of $26 billion. This despite its origins as a larky tribute to an adorable, Internet-famous pooch from 2013.

Friends and allies are essential in Cryptoland. I met mine in March when I joined a WhatsApp thread of enthusiasts that is based in the London suburb of Chingford. Every day, about 200 people in The Crypto Crew, as it’s called, trade tips and offer advice. They serve as a help desk to anyone stymied by the baffling architecture and terminology of the crypto universe. They crow when coins go up and urge patience when they go down.

Before the current downturn, about once a week, someone in the Crew would pipe up with the name of the latest hype coin and a question in the vein of, “Hey, you guys have any thoughts on this one?”

In early May, it was Bonfire. It had recently gone up 700 percent. On the chat, a couple of members swooned. The skeptics were not far behind.

“Does Bonfire have a use case?” a member asked.

“Yeah it sets your money on fire,” quipped another.

Whenever a hype coin is mentioned on the thread, there is a related question: Anyone know how to buy it? I decided to give it a try.

You might imagine that a visit to Cryptoland is all about shiny surfaces and precision, like running around the inside of a Swiss watch. It’s more like a bog where all the roads are unpaved and half the signs are written by lunatics. The websites are mostly slow, buggy and confounding. Nearly every step requires a pause to watch a YouTube tutorial.

As bad, Cryptoland is swarming with scammers. Some are waiting for an errant keystroke so your money can be intercepted, never to be returned. Some make look-alike copies of apps that you need to download, which makes your assets easy to grab. Some produce knockoffs of currencies you want to buy. Dozens of coins are called Bitcoin, for example.

Estimates of losses in Cryptoland are hard to come by, and range from hundreds of millions of dollars to $1 billion a year. Harry Denley, director of security at MyCrypto, a cryptocurrency management company, says that every day between 30 and 50 people get in touch with him, looking for help recovering as little as $500 to as much as $1.2 million. In nearly every case, there’s little he can do.

The experience was like discovering a guard in a bank lobby trying to pickpocket the wad of cash you just withdrew. A note to PancakeSwap’s email address was eventually returned by someone identified as Chef Hops.

Cake wasn’t an actual administrator, Chef Hops wrote, just someone pretending to be.

“It is an unfortunately frequent occurrence,” he wrote.

My Bonfire coins, it turned out, were simply delayed by online congestion. The journey from PancakeSwap to my crypto wallet took four and a half hours. Which pointed up another surprise about Cryptoland. It’s absurdly slow.

Soon after the coins arrived, Bonfire’s run-up ended. The value of the coin, and every other cryptocurrency, started to plunge.

Hype Is Other People

This was actually Bonfire’s second near-death experience. The first happened a few days after its birth in April, when it became clear that its developer had conceived the coin as a pump and dump. That developer had sold nearly all his coins after Bonfire’s initial rise. But Mr. Tolia and a team of like-minded holders decided they would try to rescue the coin from oblivion. Nobody would get paid, for the time being, but that didn’t matter. This was a mission.

At the time, Bonfire had a market cap of more than $26 million and within a few weeks about 200,000 holders. Mr. Tolia leveled with them. On YouTube and Telegram, he explained that they had all bought into a scam. Now, he argued, Bonfire could become a community and, with enough patience and focus, a thriving business. He pitched the idea that the coin could serve as the backbone of an alternative to Facebook, one with real privacy and no ads.

Most holders were delighted. Mr. Tolia was hailed as a hero and a saint on Bonfire’s Telegram account. He was ecstatic. He had spent years studying dentistry, in part because so many others in his family had joined the profession. But it had never felt like his calling.

“I’ve always wanted to do something big,” Mr. Tolia said in an interview in May, “something with a futuristic vision.”

To him, Bonfire was also an amazing tale, crypto’s answer to a reanimated corpse. This would make a great documentary, he said.

If so, a major plot twist was coming. China’s move against crypto sent the price of Bonfire into free fall. By June, many Bonfire holders were selling. They were often denounced for spreading “fud,” a ubiquitous acronym in the cryptosphere that stands for fear, uncertainty and doubt. On Telegram accounts, repeat fud spreaders are booted out.

By June, it took about 7.7 million Bonfire coins to equal $1. While brutal for Bonfire’s early holders, infinitesimal prices are part of the appeal for many hype coin fans. The first Bitcoins ever traded were reportedly valued at a fraction of a cent. If the price of a coin like Bonfire ever reached a penny, holders would be spectacularly rich.

Unfortunately, the 1 cent mark is impossible. That’s because staggering quantities of tokens are typically minted — 650 trillion in Bonfire’s case. Were they worth a penny each, the market cap of Bonfire would far exceed that of Apple and Amazon combined. Plus Walmart.

The core audience of hype coins doesn’t seem to care.

“I bought more at this price, got 35 billion tokens,” someone nicknamed Hodler said on Bonfire’s Telegram in June.

“You’re a legend,” replied Rosie. “Buy more!”

Given the scale of the losses, the tone of the chat remained largely sunny. There was endless talk of the power of the Bonfire community, about how the projects envisioned by Bonfire in the “road map” were going to turn it into a phenomenon. It was just a matter of time.

The optimism seemed perplexing. It made far more sense when, a few weeks ago, I happened across the Telegram account of FEG Token. (The acronym stands for “Feed Every Gorilla.” Gorillas are nearly as popular as dogs when it comes to coin names.) More than 100 people were on its Telegram group voice chat one July afternoon.

They sounded uncannily like Bonfire supporters. They spoke passionately about the FEG community. They were convinced that FEG would change the world. (Its offerings include a defi exchange said to be safer than others.) They thought the story of the coin would make a great documentary.

FEG’s price had belly-flopped from its high in May. By early July, it took 148 million FEG coins to equal $1. Devotees were undeterred. FEG still had a market cap of $176 million, according to Coinmarketcap.com, with about 600,000 holders. Many on the chat that afternoon remained stoked.

“I would love to make more money quicker too,” one attendee said. “But this is an actual project that is going to revolutionize defi and make people safer.”

“They’re saying it’s a ten year road map,” someone else said.

I introduced myself. After a brief verbal frisking — it was weird to have a reporter drop in — the group was friendly and happy to answer questions.

Why invest in crypto? A guy identified as Bogdan Danci spoke up.

“I live in the Netherlands, and the banks, the whole centralized system crashed in 2008 and we lost a ton of money,” he said. “Why should we pay for a bunch of gamblers in the banking system? Our whole nation got scammed. That’s why I moved into this space.”

Many here have the sense that inflation is eating away at fiat currency, and that the stock market is a dangerous bubble. Some people believe that boomers and other older generations have a death grip on the world’s wealth and will never hand it over. Crypto is an end run around that problem.

“You’ve got to look at inequality to understand why young people are buying into crypto,” said Travis Kling of Ikigai, a crypto asset management firm in Austin, Texas. “Especially after Covid, when the rich got even richer. These people feel like the financial system doesn’t work for them. Politicians are crooked. Big Tech takes your data. This is a recoil from all of that.”

Crypto also offers something deeper and more gratifying than a regular investment. It offers meaning. The more time you spend in a cryptocurrency chat the more elements it seems to share with a religious sect. Belief is required. Heretics, in the form of those Telegram dissenters, are banished. And if you stick around long enough, the proselytizing begins.

“Once you start seeing the potential of this project for the rest of the world,” Mr. Danci told me during the Telegram chat, “you will want to start promoting it yourself because it is really game changing.”

“Resistance is futile!” someone piped up, with a laugh.

Investing in crypto holds out the prospect of a jackpot and the chance to bond over a shared catechism. It’s like a church social in a casino. One attendee said he spent about 10 hours a day on the FEG chat.

“I talk to these people more than I talk to the friends I grew up with,” he said.

Minting a Stinker

Before making my hype coin, I needed to answer a basic question: Would doing so break the law? I was about to create something that sure sounded like a security and put it up for sale for the entire planet. It seemed like the kind of enterprise that might draw unwanted attention from the Securities and Exchange Commission or regulators in Britain, where I live.

The S.E.C. has brought few enforcement actions against crypto scams, but on Tuesday its chairman, Gary Gensler, asked Congress for more authority to oversee the sector. For now, no one in the hype coin business sweats about jumping through legal hoops. A member of the Bonfire team, Andrew Cunningham, said the company had hired lawyers, but only to study issues like trademarks.

I consulted two lawyers who had expertise in the area: one in Manhattan, Philip Moustakis, and another in London, Dan Hyde, author of a book on international crypto law. Both told me that coin creators could be sued by regulators in either country. In the United States, the trouble would start if the coin met the legal definition of an “investment contract,” which it would if it came with an expectation of profit and the profit resulted from the efforts of a promoter.

The wisest course, the lawyers said, was to ensure that Idiot Coin was utterly hopeless.

No problem. This coin would be a fiasco.

Albeit one created by a savvy veteran. Mr. Arreola, the auteur behind the “Let’s Make a Scam Coin” video, had not made a guide for con men. It’s a warning to investors, proof that all it takes to fabricate new crypto is a computer and some nerve.

After a few emails to Taiwan, we ended up sharing a screen on Zoom.

“I think there is already a Dummy Coin,” he said as we tossed some possible names around.

I put seven million of the 21 million Idiot Coins up for sale on a defi exchange called BakerySwap. What were they worth? That was up to me. I lobbed $30 worth of a crypto called BNB into Idiot Coin’s “liquidity pool.” This is the money that buyers would use to swap their BNB for Idiot Coins. After every swap, the price of Idiot Coin would rise.

That was the theory. Most developers stake liquidity pools with $10,000 or more. By putting up such a piddling sum, I was all but dooming the coin. It was like a machine that was too low on oil to get whirring.

Still, I wanted to go through the hype coin publicity motions, all of them facilitated by an assortment of freelance vendors and websites. First, I made it appear as though a bunch of investors had already snapped up Idiot Coins, a charade made easy by Cointool. The site’s “Batch Wallet Generate” button instantly created 100 crypto wallets, each with its own 12-word security phrase. For about $70, I put 100 Idiot Coins in each wallet. There was no way to tell that those wallets had been made by the same person who had created the coin.

Now I needed to pitch this stinker to crypto buyers. That meant hiring a TikToker to post an Idiot Coin-exalting video. Through a site called Collabstr, I found my dream performer, Samuel Malki, who performs under the name Malki Means King and has 5 million followers. He raps while fanning himself with stacks of fake $100 bills, wearing outrageous eyewear, a gold crown and cartoonish fake teeth. It’s a parody of opulence, confected with props and attitude.

“I actually live with my parents,” he said during a video call on Instagram.

I hired a web designer to build an Idiot Coin website. A Meet the Team section includes a photo of a bull terrier owned by friends. The site also has a “White Paper.” It’s supposed to lay out exactly why the world and investors need this coin. Mine implores investors to scram.

Finally, I wrote that deflating CryptoMoonShots birth announcement. On a website called Fiverr, I found someone known to me as Expert Troll to post the announcement for a fee. (I lacked “Karma points” on Reddit to post it myself.) To ensure that the announcement appeared high up, I bought 100 Reddit “upvotes” on a site called Soar.

In all, the coin and its artificial hoopla cost about $1,000. I had the coin looked over by an auditing firm in Ukraine, Zokyo, to make sure it wasn’t hackable. Finally, at the appointed hour, on July 2, the CryptoMoonShots announcement went up. Mr. Malki posted his TikTok. Coinforidiots.com went live.

Nothing happened. Or rather, almost nothing. Four people, or bots — it’s hard to tell — bought a grand total 73 Idiot Coins, yielding a small fraction of a penny in sales. It was a total bust, thankfully.

Nobody was financially harmed, but one group seemed disappointed. I had hired yet another member of the web’s gig economy, this one from Nigeria, to post links to the Idiot Coin Telegram account on social media. About 300 people from across the globe showed up. Many were confused. Others sounded like members of a flock desperately in search of a preacher. They wanted an earful of the gospel of impending affluence.

“Why are you so pessimistic about this coin,” someone named Dylan asked.

I was letting down these people by refusing to promise them riches.

“Should we buy or not!” asked Pro Developer_1.

Not, I replied.

“OMG,” wrote Geogae Mike. “Am I in the wrong group?”

Ready, Aim, Firestarter

In an interview in early July, Mr. Tolia had the somewhat rattled demeanor of a man who had been on a bumper car ride for three days. There had been turnover among the still unpaid leadership team of Bonfire — marketers, graphic designers, app developers and so on. A deal with a possible investor had fallen through. A doctor had put him on medication to treat nausea caused by reflux. Holders unhappy with the price of the coin had menaced a major Bonfire investor — details were not offered — and Mr. Tolia believed others might demand that he spend more of his own stash on marketing.

“Bunch of loonies,” he said of the aggrieved.

The door to a career in dentistry would remain open. He may never embrace the work with much ardor, but dentists don’t fret about getting cold-cocked by angry holders.

On YouTube a week later, Mr. Tolia seemed pleased to announce that Mr. Cunningham, the Bonfire team member, would become the new chief executive of Bonfire Token. That evening, the two men unveiled Bonfire’s first product, Firestarter.

It’s a launchpad for new tokens, and when Mr. Cunningham gave viewers an online tour, it looked positively spiffy. The idea is that coin developers will pay for access to Bonfire holders and the expertise of its management team. New coins will also be vetted, weeding out scams.

A few commenters on YouTube gave Firestarter a thumbs down. Maybe they saw a flaw in this shiny new platform, designed to appraise shiny new coins. In a business dominated by scammers, who would spend money for a seal of approval?

That was a minority opinion. Most people were thrilled.

“All I know,” someone identified as G wrote on Bonfire’s Telegram chat the same evening, “is I’m holding no matter what til the end.”

You would think that of all the places on the internet, you’d be able to read the Bitcoin whitepaper on Bitcoin.org. For Brits, that won’t be possible for much longer. 

Dr. Craig Wright, the self-professed (and much-contested) creator of Bitcoin, today won a case in the High Court to force the Bitcoin education site to remove the Bitcoin whitepaper from its website. It is the first success in his string of attempts to control who displays the Bitcoin whitepaper.

In a remote hearing today, a judge said that “Cøbra,” the pseudonymous operator of Bitcoin.org, must display a notice on his website about the judgment, pay at least £35,000 ($48,600) in legal costs and remove the whitepaper from his site. Cøbra lost the case through a default judgment; he mounted no defense to preserve his pseudonymity. 

Wright had claimed that Bitcoin.org infringed on his copyright to the whitepaper, which he claims to have written under the moniker “Satoshi Nakamoto.” Wright’s wider battle to prove that he is the progenitor of Bitcoin is still going through the courts, but has been widely rejected by the community.

The order hasn’t been served yet, Cøbra told Decrypt. “Me continuing to host it after that will be breaking the law,” he said. A spokesperson for ONTER LLP, the legal firm that advised Wright on the case, said they did not know when the order would be served.

Simon Cohen, a lawyer at ONTER LLP, said in a statement, “Dr Wright does not wish to restric [sic] access to his White Paper. However, he does not agree that it should be used by supporters and developers of alternative assets, such as Bitcoin Core,” he said.

Bitcoin Core is more commonly known as Bitcoin, a title Wright believes should be assigned to his (relatively unsuccessful) fork of Bitcoin, Bitcoin SV. (The “SV” stands for “Satoshi’s Vision.”) Wright thinks that Bitcoin Core, and offshoots of Bitcoin like Bitcoin Cash, misrepresent “the vision for Bitcoin as [Wright] set out in his White Paper,” said Cohen. 

The price of Wright’s coin, Bitcoin SV spiked by 21% after news of the hearing, which was not recorded, spread online. However, with a market cap of $2.9 billion, the market for Bitcoin SV is still 224 times smaller than Bitcoin. 

The Crown Platform NFT Framework enables the tokenization of assets on the Crown blockchain by the issuance of protocols and tokens. With this release, authored by technology lead Artem Brazhnikov, Crown Platform extends its functionality to serve as a decentralized and immutable registry: an asset-chain.

Starting today, individuals, businesses and institutions can become issuers of unique protocols and tokens, specifying their rules and participating in the creation of a decentralized on-chain registry linked to the CRW public-key cryptography and powered by a highly secure Masternode Proof of Stake consensus mechanism. The Crown Platform development has been focused on the usability of the framework. That is why no additional coding language is needed to program the tokens, unlike Ethereum’s ‘Solidity’ approach. As Brazhnikov puts it,

“The NFT Framework is a way to tokenize assets without writing any asset-specific code.”

The NFT Framework represents a central part of the always evolving Crown Platform ecosystem. NFT applications range from registry of digital and physical assets to the extension of Crown’s governance and consensus structures through additional possibilities of registry, authentication and documenting. This development milestone is a big step forward for the Crown Platform and its enthusiastic community, and there are more to follow.

Implementing instant NFT transactions for non-fungible asset exchange and trading are among the top development priorities, together with the soon-to-be released Bitcoin v0.17 codebase update.

Crown Stakeholders have been working on this pioneering cryptocurrency project for years, allowing Crown Platform to evolve through its Decentralized Governance and Proposal System: an algorithmic voting and funding mechanism that allows the Crown Platform project to self-sustain its path towards further technological and social innovation. By doing so, Crown Platform is creating an alternative, decentralized economy based on its native fair-launch coin, CRW.

The Crown Platform community is committed to enabling an open, decentralized, and community-governed infrastructure, supporting functionalities that leverage the potential of blockchain technology while remaining truthful to decentralization and permission-less interaction in a cryptographically secure and incentivized peer-to-peer network.

New users are joining Crown Platform every day, adding new ideas to build on its technology. If you want to get started with the Crown Platform or have any questions, you can get in touch with the community following the links below.

PRESS RELEASE. Crown Sterling’s Crown Sovereign token (CSOV), the world’s first quantum-resistant digital asset, will be listed on Bitcoin.com Exchange in late September. This represents a milestone for both parties, one where Crown Sterling’s (CSOV) token will be listed on one of the world’s leading exchanges, while the Bitcoin.com Exchange team will be the first CEX in the space to list the token. CSOV will trade with BTC and USDT pairs.

What is Crown Sterling in a nutshell?

Crown Sterling is unlike many other software companies in the space, it delivers Quantum-Resistant cryptography, by means of certain secure communications techniques with it’s random number generators (RNGs), alongside its other encryption products. The company has innovated the well-known and scalable Elliptic Curve Diffie-Hellman (ECDH) encryption software module by replacing vulnerable prime number private keys with high entropy non-repeating irrational number derived private keys. Its purpose, ultimately as a software house, is to change the face of digital security and lead the future of Self-Sovereign Blockchain and NFT technology. Its product suite serves this purpose. By engineering the first viable One-Time Pad encryption module, CrownEncryptOTP (TM), and complimenting it by means of building the world’s first quantum-proof digital asset. The proof, though, is in the product:

What is CSOV?

The Crown Sovereign Token (CSOV) is a cryptocurrency ultimately tied to Crown Sterling’s CrownEncryptOTP, complimenting one another with the utility to ensure the individual and merchant’s protection of sensitive information. Token Holders use CSOV to pay for the (Quantum) secure transmission of their data with each transaction. This is just one example of CSOV’s utility within the Crown Sterling ecosystem, the company created by Robert Grant and his team of mathematicians and physicists. The scope for creating the token was focused around data sovereignty, one aspect the industry needs right now, due to significant privacy and vulnerability issues. It’s time people gain control of their own data once again, which is the primary mission of Crown Sterling and its technologies.

Strong Endorsement

Danish Chaudhry, CEO of Bitcoin.com Exchange, shared his views on CSOV’s upcoming listing, saying that: “The Crown Sterling team are providing a platform and product suite which is currently something the industry needs, and with such intricacy that you rarely find in the sphere today.”

Chaudhry continues on by saying: “We’re very excited to see how CSOV will continue to empower their vision, and gain further outreach with our outstanding community at the exchange once listed in September.”

Robert Grant, CEO at Crown Sterling expressed his enthusiasm about the upcoming listing of CSOV onto the exchange, by stating: “We are very excited that with this listing our Self-Sovereign Blockchain and Cryptography products will gain wider market access.”

About Bitcoin.com Exchange

The mission of Bitcoin.com Exchange is to empower people from all over the world to trade cryptocurrencies with ease and confidence, from first-time traders to advanced trading professionals. With high liquidity, 24/7 multilingual support and dozens of trading pairs, complemented with a high level of security, we offer an attractive platform for trading any cryptocurrency. Within one year since launch, on average, our exchange has been visited by more than 500K active traders per month, and growing.

About Crown Sterling

Crown Sterling delivers next generation software-based, Quantum Resistant cryptography in the form of random number generators and encryption products. From irrational numbers that modernize existing cryptography, to leading-edge encryption products and developer tools, Crown Sterling is changing the face of digital security with its non-integer-based products. Crown Sterling’s Mission: Personal Data Sovereignty.

For more information, please visit Crown Sterling online at www.crownsterling.io.

This is a press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.

According to DeFi Llama, the Total Value Locked (TVL) across all networks is closing in at a record $180 billion, with the Ethereum network accounting for the vast majority of this.

The data includes valuations from Ethereum, Polygon, Solona, Fantom, Terra, Avalanche, Binance, and other less prominent DeFi chains.

Ethereum accounts for $131 billion of this total, making it the most dominant network by far. But the exploding popularity of “newcomers” shows that users are starting to branch out into other (cheaper to use) chains.

DeFi Is The New Financial System

Decentralized Finance or DeFi is a relatively recent phenomenon that uses decentralized networks to transform financial products into transparent protocols. All with the added benefit of operating without intermediaries.

It is revolutionary in the sense that everyday people can access the same mechanisms available to bankers. But on the blockchain, of course.

Using blockchain networks, users can act as exchanges, liquidity providers, and lenders, creating a novel way to participate in finance. And with higher yields on offer than legacy finance, it’s hard to give compelling reasons to stick with the old way of doing finance.

As evidenced by the uptrend in DeFi TVL, this is an understanding that’s spreading.

Can Ethereum Fend Off The Competition?

TVL across all platforms has been on a sharp rise since mid-July, when it stood at $103 billion.

In fact, surging DeFi inflows enabled TVL to re-reached previous all-time highs, of $150 billion achieved just before the crypto crash, on August 19. It has since added an additional $30 billion in two and a half weeks.

As mentioned, Ethereum makes up almost three-quarters of TVL across all platforms, with Binance Smart Chain next in line accounting for $19 billion, or 11% of the total.

But the rise in popularity of “newcomers” of the likes of Solana, Terra, and Avalanche may bring Ethereum maxis cause for concern.

While Avalanche currently accounts for just over 1% of the total TVL, at $2.3 billion, a look at its TVL chart shows a rapid increase in value locked since mid-August.

At that time, Avalanche’s TVL stood at $258 million, but it has since increased value locked by almost 800% in two and a half weeks.

It’s a similar story with Solana, which has captured people’s attention following SOL’s epic run in which it displaced Dogecoin as the seventh-largest token by market cap. A look at the numbers shows a 170% increase in TVL in Solana since mid-August.

For comparison, since mid-August, TVL in Ethereum has grown by just 16%.

What’s more, with Cardano set to roll out smart contracts on September 12 and the inevitable flood of DeFi protocols this will bring, Ethereum faces yet another challenger to its crown.

So far, Ethereum has benefitted immensely from being the DeFi pioneer. But with cheaper-to-use platforms gaining ground, might we see a new dominant DeFi platform in the coming months and years, or will its networks effects see off the competition?

Cardano, Solana, And Polkadot Threatens Ethereum (Eth) Existence

Which cryptocurrency is capable of making it the “Ethereum Killer?” This question is increasingly becoming a topic of conversation among crypto communities. Ethereum’s issues such as high gas fees and network congestion with low scalability are becoming more apparent. With this, possible substitutes have emerged and are competing to increase their DeFi market share.

Making the list of Ethereum’s biggest competitors are Cardano, Solana, and Polkadot. The first, Cardano, is a third-generation blockchain. The network was developed to solve issues plaguing the blockchain industry through vigorously peer-reviewed upgrades and updates. Unlike Ethereum which runs on proof-of-work (PoW), Cardano utilizes an eco-friendly proof-of-stake (PoS) consensus mechanism. Ethereum, however, has plans underway to migrate to PoS with ETH 2.0.

As for transaction speed, Cardano surpasses Ethereum with 250 transactions per second (TPS) while the latter runs 20 TPS. ETH 2.0 will have a sharding mechanism, enabling the processing of 100,000 TPS. Meanwhile, Cardano is working on its Layer 2 Hydra which, theoretically, could scale to 1 million TPS.

An Ethereum killer?

Additionally, Cardano’s smart contracts are to be launched during the weekend, welcoming Cardano into the DeFi space. The much-awaited day will determine whether the network’s well-researched design will work in practice on a large scale.

Seeing as both Cardano and Ethereum have significant upcoming changes, it is hard to tell which will emerge on top. Cardano may be closer to Ethereum in terms of market cap, but future events will determine if it’s crowned Ethereum killer.

Solana is another network that, in the past month, has attracted investors to its native token SOL. Like Cardano, Solana seeks to solve Ethereum’s high transaction costs and scaling issues. Presently, the network can process 50,000-65,000 TPS, therefore transaction costs are low at an average of just $0.00025. On the other hand, Ethereum’s transaction fees are higher and quite volatile. The average transaction fee was $48.178 as of Sept. 9, according to BitInfoCharts.

As of now, poor adoption blocks prevents Solana from overtaking Ethereum. But as Solana releases new NFTs, onboards institutional investors, and SOL’s value surges, the narrative may just change.

Despite making quieter headlines than the previous two, Polkadot has been referenced as a potential Ethereum killer. The network solves the issue of network congestion through parachains connected to the central relay chain. The feature also allows cross-chain communication.

Again, Ethereum could achieve the same with its soon-to-come sharding. Polkadot may also need to compete harder seeing as Cardano and Solana recently overtook DOT’s market cap.

Networks co-existence

Notably, the term ‘Ethereum Killer’ is more of a buzzword than an actual coveted position. Ethereum dominates the DeFi world and its demise would bring dire consequences for the above coins. Therefore, rather than coin maximalism, many support a multiple network ecosystem. Cardano founder Charles Hoskinson has even been quoted saying there is space for co-existence.

Cardano, Solana, And Polkadot Threatens Ethereum (Eth) Existence

The Bitcoin (CRYPTO: BTC) price has slipped back below the vaunted psychologically important US$50,000 level.

Having traded as high as US$50,496 during the past 24 hours, Bitcoin is down 1.4% since this time yesterday, currently trading for US$49,549.

Still, the world’s biggest crypto by market cap remains up 70% since 1 January.

Where it heads next is up for debate.

Taking a technical analysis view, global multi-asset investment platform eToro’s market analyst Josh Gilbert said, “If BTC can break above the next resistance level at $51,000 and hold, then I expect to see further upside as demand increases.”

But there’s more to the world of cryptos than Bitcoin.

Yes, we’re looking at you Cardano (CRYPTO: ADA).

This time last year you could have picked up 1 Cardano for 12 US cents.

Having gained another 2.8% over the past 24 hours, the altcoin is now worth US$2.88. That gives it a market valuation of US$92.9 billion.

That’s enough to vault Cardano into the number 3 crypto spot. It now trails only Ethereum (CRYPTO: ETH) – market valuation of US$391.4 billion – and Bitcoin, with its market valuation of US$928.8 billion.

In other words, if today is the first time you’ve heard of Cardano, it’s unlikely to be the last.

While Cardano has a long way to go before it overtakes Bitcoin in terms of market valuation, don’t forget that only 12 months ago it was trading for a mere 12 US cents.

Gilbert said, “We know that investors are bullish on ADA, as it was the most traded cryptoasset globally by eToro investors in Q2 2021.”

According to Gilbert:

While BTC continues to be the most dominant cryptoasset, it has been recently outperformed by Cardano (ADA). ADA has reached new record highs trading at US$2.88, up more than 1,480% year-to-date.

Gilbert adds that, “ADA is the largest altcoin by market cap to reclaim a new all-time high since the crypto sell-off in May 2021.”

Bitcoin is still some 24% below its mid-April record highs of US$64,829. Ether, currently at US$3,334, also remains down 24% from its US$4,382 record high reached in mid-May.

So why all the investor enthusiasm for Cardano?

The Alonzo upgrade for ADA, which will provide smart-contract capabilities to the network, is set to be fully released by September 2021… Once the upgrade is complete, ADA will be in a solid position to challenge Ethereum (ETH) for the De-Fi crown. The price appreciation of ADA with benefits such as staking makes it a standout to retail investors.

Whether Cardano continues its march higher or is due for a sharp retrace remains to be seen.

But for now, it would seem, Bitcoin has a new challenger.

The post The next Bitcoin? Why investors are bullish on fast-rising altcoin Cardano appeared first on The Motley Fool Australia.

Before you consider Cardano, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Cardano wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

More reading

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Yes, they call it an ICO, and over the last 14 months, more than 60 startups, open source projects, and ragtag online communities used this method to raise over $250 million for their own business efforts. "The data shows a ton of momentum at the end of the year," says Matt Chwierut, of Smith and Crown, a new research outfit that tracks this new phenomenon, "and that momentum has only continued."

This isn't just more blather about bitcoin as the future of currency. Yes, many of these online operations are merely trying to create digital currencies that serve as an alternative to bitcoin. The Zcash Electric Coin Company, for instance, recently offered up a currency designed to ensure that financial transactions remain private. But many others are using new internet tokens not as digital currencies per se, but as a way of building an entirely new kind of business.

Take The Golem Project, which bills itself as "AirBnb for computers." This rather elaborate effort aims to create a system that allows anyone to buy computing power from anyone else. But the added trick is that this system will operate outside the control of any one central authority, as a kind of online co-op. Golem recently offered up a digital token that provides a share of the fees generated when services are bought and sold on its network. This token is not quite a currency. And it's not quite a stock. It's a third thing when you thought there were only two.

For now, this strange new breed of business operates outside of government oversight, and nobody is really sure how governments will regulate these kinds of sales. That's where Blockchain Capital comes in. Today, the firm announced that in the US, it will only offer its tokens to accredited investors, as the firm seeks to comply with US regulations. Overseas, any investor can buy the token, which will be called BCAP. The firm plans to release a detailed memorandum describing the offering on April 3, and the offering itself will likely follow after a few more weeks, through an organization based in Singapore. In Singapore, regulators do not consider this kind of digital token to be a security.

"Our view is: let's just face regulation head on, and see if this can be done compliantly," says Blockchain Capital managing partner Brock Pierce. "Once we've done this, everyone is going to copy the roadmap we've created."

This method is new to the ICO world, but probably warranted. The structures to help ICOs succeed and thrive in the mainstream are still evolving---like the Argon Group, which longtime Wall Streeter Stan Miroshnik founded to help oversee ICOs. Argon will bookrun the token offering on behalf of Blockchain Capital, meaning, in this case, that it will actually issue the token. "Our mission is to help this new capital market evolve," Miroshnik says.

Certainly, Blockchain Capital's coin offering is far less extravagant than an ICO from a distributed operation like The Golem Project. And it lacks the potential to truly change the nature of business in the way such a project can. But it could at least call greater attention to the complex dynamics that an ICO can bring.

ICOs are a very different animal from IPOs. Operating atop a blockchain---a vast ledger for recording digital transactions, like the one that underpins bitcoin---these coins have value in and of themselves. When you buy a coin, you're not just buying something that represents a piece of an operation. You're buying an actual piece. "It has some resemblance to how equity works," says Peter Van Valkenburgh, a lawyer and the director of research at the Coin Center, a crypto-finance think tank. "But it works in a purer way." Plus, these coins can help drive a truly decentralized operation like the Golem Project. Like many other ICO tokens, the Golem coin sits atop the Ethereum blockchain, which can run automated agreements called smart contracts. That allows the project to operate without a central authority.

The Blockchain Capital token will be somewhat similar, in that it will let individuals buy straight into an operation. The firm invests solely in, yes, companies exploring technologies related to bitcoin and the blockchain. Previously, it raised money for two traditional funds. Now, its ICO will provide part---but not all---of a third.

This ICO also means investors can readily sell their investments on a secondary market. In the US, only accredited investors can buy the coin at the beginning, but after a waiting period, they can offload their investments online, and others can buy in. "We call this liquidity-enhanced venture capital," Pierce says, meaning that people can invest without locking their money up for years on end. In the long run, this kind of setup could attract more investors, and more money. Of course, as Van Valkenburgh points out, the secondary market for these coins may be subject to regulation.

Because only accredited investors can buy the coin in the US---with Blockchain Capital adhering, it says, to regulations that exempt it from registering the coins as securities with the SEC---the initial ICO won't reach as many investors. And the fund certainly isn't decentralized. Pierce and his partners will decide how to invest the money. Across the community that drives bitcoin and various other blockchain projects, the real hope is that ICOs can feed far more ambitious creations. Already ideas like Arcade City, a decentralized version of Uber, and Augur, a decentralized service for prediction markets, have raised money through ICOs. Ethereum itself was originally funded with an ICO, and similar blockchains continue to offer their own coins. The knock-on effect is enormous. A new San Francisco hedge fund called Polychain is investing solely in ICO coins.

That said, there's reason for caution. Blockchain watchers will remember the Decentralized Autonomous Organization, a blockchained venture capital fund that got hacked to the tune of $50 million. Today's ICOs have even more potential than the DAO, as long as the people using them take the time to ensure they're on solid ground.

Talk to a cryptocurrency enthusiast and there's a good chance you'll hear some version of this: It feels a lot like 1999.

That's not to suggest that bitcoin and its ilk are the next Webvan or Pets.com, but looking more broadly at the current trend, the analogy makes sense.

While bitcoin crossed $2,000 over the weekend and is up by almost 150 percent this year, other digital currencies have rallied even more. Ether has tripled in value in the past month and Ripple's XRP is up about tenfold.

In 1999 we saw the speculative internet IPO. Today, it's the ICO -- initial coin offering.

Companies built on blockchain, a digital database for recording financial transactions and other types of deals, are raising money by selling digital "tokens" that can typically be used to pay for goods and services on their platform, or just stashed away as an investment.

Thus far in 2017, companies have raised $180 million in ICOs, compared to $101 million all of last year, according to Smith + Crown, a blockchain research, data and consulting group. Often, these are very early projects that are far from generating significant revenue.

Sound familiar?

"We're in a very frothy phase of ICOs," said Naval Ravikant, a Silicon Valley investor and entrepreneur who's also a venture partner at digital currency firm MetaStable Capital. "People are getting caught up in the vision and it's going to take 10 to 20 years to build out. In the meantime, people are throwing money at anything that looks like it has a shot."

Interest in cryptocurrencies is reaching the masses. This week, New York is hosting two industry conferences -- Consensus and Token Summit. On Monday, 86 firms from Toyota to Merck joined a group called the Enterprise Etherium Alliance (EEA) to create standards for smart contracts.

Meanwhile, 10 financial institutions signed up with cryptocurrency platform Ripple last month to send real-time international payments, joining a roster of clients that already included Bank of America and RBC.

The ultimate vision is a world in which all data and transactions are trackable via an electronic ledger that eliminates delays caused by disparate currencies and financial systems. Blockchain currently claims to process 160,000 transactions a day across 140 countries.

'Trouble with the SEC'

Start-ups building applications on blockchain are launching ICOs to raise capital without giving up big equity stakes in their companies and to drive interest and usage of their product.

Currently, the market is almost entirely unregulated. In its purest form, an ICO looks like a Kickstarter crowdfunding campaign, which is a legal way for a company to raise money by having users fund an early-stage project in return for perks and early access. Crowdfunding can be risky, because if the company cannot deliver the product as promised, backers have no recourse.

But unlike a campaign to fund a Pebble smartwatch or the development of a mobile game, ICOs are inherently financial in nature and can look more like securities, particularly when the tokens fluctuate in value. As ICOs gain popularity and dip more into the mainstream, look out for the regulators.

"If anyone is selling these securities to U.S. citizens, you will get in trouble with the SEC for sure," said Pamela Morgan, an attorney and the CEO of consultancy Third Key Solutions, at a bitcoin meetup in Switzerland last month.

Civic, the developer of a digital identity platform for online transactions, is aiming to raise $33 million in an ICO beginning Thursday, to build out its network.

Vinny Lingham, Civic's co-founder and CEO, said the company is playing it straight and hired law firm Perkins Coie to try and stay out of the legal gray area.

"These tokens are tokens you need to use to function within our platform," said Lingham, who started the company last year. Unlike the case with an IPO, Civic is booking the proceeds from the ICO (or token sale) as revenue, since it's selling a product that customers can eventually use.

Investors in the ICO will pay with bitcoins or ether -- two popular types of cryptocurrency -- in exchange for Civic's tokens. Banks, travel companies and hotels can use the tokens as currency when clearing transactions, and customers can acquire more tokens by inviting friends.

Stan Miroshnik started the Argon Group in 2016 as an investment bank focused on digital currencies. He's advising on the Civic offering and has plenty more in the pipeline, with an ICO scheduled about every three weeks.

But Miroshnik said there's clearly excess in the market now, with companies that have no functional business and no real relation to blockchain looking to ICOs for a quick buck.

"We are very cautious," said Miroshnik. "This is something that should be coming from the community and projects related to blockchain."

Prior to Civic, Miroshnik's biggest deal was last week, when Storj Labs initiated a $30 million token sale. Storj is a cloud storage company that uses the available capacity on lots of individual computers to store and secure data. Imagine Amazon Web Services, but instead of owning massive data centers full of servers, Storj pays individuals to let others rent space on their machines.

For Storj, the offering lets the company capitalize on the surging value of digital currencies. The company created the Storjcoin three years ago and sold a portion of them in a $500,000 crowd sale. The value of the currency has jumped 50-fold since then, leaving Storj with hundreds of millions of dollars worth of coins.

Storj is selling 15 to 25 percent of outstanding Storjcoins, which are based on the Ethereum platform after migrating from bitcoin.

"It's an asset on our balance sheet that has value and we're converting it into fiat," said John Quinn, co-founder of Storj. "Part of the rationale was to raise capital to accelerate development of the business."

As of late Wednesday, the ICO had raised almost $29 million of the $30 million target. Buyers in the offering can use the currency to pay for storage and bandwidth.

Storj competitor Filecoin is likely to hold an ICO in mid-June. But the prospective investor base is very different.

Filecoin will be the first offering on a new platform called Coinlist that is targeting accredited investors, or people with a net worth of at least $1 million (excluding the value of their homes)

Ravikant, who's an investor in both Filecoin and Coinlist, said he doesn't know when the regulators will come knocking, but he's certain that these companies will eventually have to exist within the confines of securities law.

"We're going to try and prove to the market that you and do a legal coin offering," Ravikant said. "If the SEC doesn't crack down, this party will be amazing, the biggest party in town for a long time. If they do crack down, a lot of people are going to feel a lot of pain."

“Ethereum’s ascent to the top of the cryptoverse seems unstoppable,” declared Nigel Green in mid-August, and it’s not hard to see why the deVere CEO thinks this. DeFi is on a tear, NFTs are mushrooming, Ethereum (ETH) remains more scalable than Bitcoin (BTC) and it also offers more uses including smart contracts. Moreover, Ethereum will soon move to a proof-of-stake (PoS) consensus algorithm, looking to be more eco-friendly than Bitcoin’s energy-intensive proof-of-work (PoW) protocol.

“Ethereum is already years ahead of Bitcoin in everything but price and fame,” said Green earlier this year, adding: “There’s a real sense that 2021 is the year for Ether. Its time has come.” But, is it really a foregone conclusion that the world’s first, largest and best-known cryptocurrency is ready to relinquish its market-cap crown? Maybe not.

“If you look at CoinMarketCap’s homepage over the past five years, Ethereum is usually sitting in second position, right under Bitcoin — and it really hasn’t moved from that number two spot in any permanent way since its launch,” Molly Jane Zuckerman, content lead at CoinMarketCap, told Cointelegraph, adding: “History shows us that there is only one cryptocurrency that can ever claim the ‘king of the cryptoverse’ title.”

So, is there a chance for a flippening — the term often used to describe a reversal of ETH and BTC? Are altcoins still benefiting from the light that shines upon Bitcoin or are they stepping out and becoming popular by themselves? Ultimately, can the two even be compared since they are seen to serve different purposes within the crypto and the wider finance space?

Not a done deal

“Ethereum’s eventual dominance is hardly a sure thing,” commented Eswar Prasad, professor of economics at Cornell University and author of the soon-to-be-published book, “The Future of Money.” There could be technical complications with Ethereum’s switch to the PoS consensus protocol, “and there are many risks of attacks on DeFi products that could undermine confidence in those products and in Ethereum itself,” he told Cointelegraph.

Still, Bitcoin hasn’t proven itself as an effective medium of exchange, added Prasad, and its blockchain has only “limited functionality” compared with Ethereum, specifically when it comes to decentralized finance (DeFi): “Ethereum provides more flexibility, especially for DeFi products and services, and it has the potential to become a viable and efficient medium of exchange, featuring both low latency and high throughput for transactions.”

Maybe Green went a bit too far, suggested associate professor of finance at the University of Western Australia Lee Smales. “Inevitable” is a strong word, after all, he told Cointelegraph, “but, I’d say it’s highly likely that this will occur — although the recent rally in Bitcoin has outpaced that in Ethereum and has maybe delayed the timing a little bit. I would suspect it [flippening] happens in the next two to three years.”

So, how long?

Many seem to be betting on Ethereum and the question is often: not if but when? Ether could surpass Bitcoin as the crypto world’s top store of value in the coming years, said Goldman Sachs analysts in July, while deVere’s Green put the flippening “probably within five years.”

“I think it will be difficult for ETH to flip Bitcoin any time soon,” Justin Hartzman, CEO and co-founder of Canadian-based crypto exchange CoinSmart, told Cointelegraph. “The next [BTC] halving is in 2024, which will inevitably push the price up. Also, keep in mind that ‘Ethereum killers’ like Cardano and Tezos are coming up big time. If they work out, they could siphon out a lot of potential market cap from Ethereum’s kitty.” If the trading of places does occur, “I could see it potentially happening in five to six years.”

“I don’t believe in terms of market cap and overall valuation that Ethereum will surpass Bitcoin,” CEO of Banz Capital John Iadeluca told Cointelegraph, adding: “Bitcoin stands as the global ‘introduction’ to cryptocurrency, at least for the foreseeable future. For example, I don't see any scenario where the SEC approves an Ethereum ETF prior to approving a Bitcoin ETF.”

Jason Peckham, an analyst at investment management firm Invictus Capital, told Cointelegraph: “I disagree that it’s inevitable. In fact, five years is enough time for an outsider to flip ETH and BTC both.” A lot hinges on how the two crypto communities manage their regulatory challenges, he added, as well as internal factors, like the pace “at which ETH has been burnt at post-EIP-1559,” which should make it less inflationary and potentially more attractive to investors. He added:

“If I had to pin it on one thing, I would say that ETH needs the supercycle/double bubble thesis to play out. That should allow for its various sectors to continue prospering in a way that won’t be possible in a bear market, which would likely be bearish for ETH relative to BTC as we have seen historically.”

Environmental factors must also be taken into account. Bitcoin mining’s prodigious use of electricity has been long known, but when Elon Musk drew wider attention to it earlier this year, BTC’s price plunged. While Bitcoin has rallied since then, “the energy [issue] continues to garner attention,” said Smales, and that should only intensify. “So, the Ethereum move to PoS creates an additional advantage that could result in the flip occurring sooner.”

What could derail Ethereum?

Green recounted that ETH had already gained 300% in 2021, compared with only 55% for BTC, and it has outperformed all other assets during the first half of the year. Is there anything that could halt its momentum?

In order to stay in contention for flippening BTC, Ethereum needs to maintain its role as the biggest smart contract platform, however, some new competitors continue to emerge. “POS is not completely proven as of yet,” said Smales, and it could evolve so that the market is dominated by a few very large players — essentially centralizing it — creating market frictions and possibly even higher transaction fees.

The EIP-1559 upgrade was supposed to make Ethereum gas fees more manageable, but according to YCharts, the average gas fees have reached a three-month high. Given that the gas fees have placed a continuous strain on the usability of the network, the upgrade to Ethereum 2.0, or Eth2, cannot come soon enough.

Moreover, Bitcoin isn’t standing still, technologically speaking. “The planned Taproot upgrade could significantly enhance Bitcoin’s efficiency, privacy and the functionality of its blockchain,” said Prasad.

Bitcoin also enjoys the “first mover” advantage which can be critical with networks. “The case for BTC's dominance boils down to its superior Lindy Effect,” Peckham told Cointelegraph, referring to a concept popularized by Nicholas Taleb which holds that the older a technology is, the longer will be its life expectancy. “Together with this is the long-term trend towards stronger-handed market participants holding the majority of Bitcoin while the rest of the world continues to be drawn into owning their stake in the headline cryptocurrency,” added Peckham.

Still, Ethereum seems to have momentum now. “The trends in the crypto markets have indeed been shifting towards Ethereum ever since the explosion of the DeFi summer, followed by the continuing popularity of NFTs,” said Zuckerman, as Peckham added:

“Cohorts of users were drawn into Ethereum for DeFi and for NFTs, while Bitcoin is less diverse in its range of uses by comparison. Most of what crypto natives like myself are excited about in crypto right now is either built on Ethereum or an Ethereum competitor.”

Ethereum has the richest ecosystem in the crypto space, and DeFi, which largely lives on Ethereum, today holds vast amounts in total value locked, despite the early summer downturn and assertions that DeFi was just a bubble with no inherent value.

“DeFi had its strictest test yet and passed with flying colors. The number of DeFi users has already passed 3.25 million as utility and use cases increase every day,” said Hartzman, adding: “With more applications and users coming in, Ethereum could leverage Metcalfe’s Law and exponentially increase its overall network value.”

Are Bitcoin and Ethereum really comparable?

Upon further reflection, though, does it even make sense to compare Bitcoin with Ethereum? One is a (putative) form of money, the other is a platform, a new supercomputer powering Web 3.0, upon which one can build new technologies, arguably.

Right now, the two platforms perform different tasks. Once the effects of the Taproot upgrade come to the forefront and developers start constructing a DeFi ecosystem around the Bitcoin network, then that could turn into a whole new argument. For right now, however, Bitcoin is primarily a store-of-value while Ethereum is a decentralized application platform. “This is not a ‘Coca-Cola vs Pepsi’ debate. This is a ‘gold vs internet’ debate,” said Hartzman.

“Both Ethereum and Bitcoin are cryptocurrencies, but vision-wise, they pursue two very different goals,” added Iadeluca: “I don’t believe Bitcoin and Ethereum are in competition with one another; rather, I believe their respective growth compliments one another.”

Related: London’s impact: Ethereum 2.0's staking contract becomes largest ETH holder

“From a technical standpoint, they are fundamentally different,” stated Peckham, but from an investor’s perspective, it does make some sense to compare them.

“Bitcoin is unique as a store-of-value,” said Hartzman. “There really is nothing quite like Bitcoin, and there won’t be anything like it any time soon. However, having said all that, it is impossible to bet against Ethereum due to its incredible network value, rich community and pace of innovation.”

Peckham told Cointelegraph: “As a trader right now, I’m more optimistic about Ethereum in terms of price action. I think it will continue to offer superior upside to Bitcoin in a bull run.”

Rather than picking a winner, though, “a more realistic prospect,” Prasad told Cointelegraph, is that “over the next few years, Bitcoin and Ethereum cement their joint dominance of the crypto space while the competition between their adherents leads to innovations in both ecosystems.”

Quiz question: What links Snoop Dogg, Tiger Woods, Paris Hilton, Damien Hirst and, soon, our very own former rugby supremo and pin-up hero Dan Carter?

Answer: NFTs, or non-fungible tokens. NFTs are a big thing in the crypto space, a digital certificate of ownership for unique, mostly virtual, artworks. Works that are being created by an increasing assortment of artists, musicians, sportspeople, and celebrities.

Now, former All Black star Dan Carter reveals to Newsroom that he and a small group of business high-fliers are launching a Kiwi-owned NFT studio and marketplace named Glorious, to deal largely in high calibre, exclusive works for collectors and art and music lovers, he says.

They have already signed up big names including musicians Neil Finn, Six60 and Nathan Haines, and artists Dick Frizzell, Lisa Reihana, Heather Straka, and just this week, the estate of one of New Zealand’s most distinguished artists Rita Angus, who died in 1970.

READ MORE: * More than US$600 million of cryptocurrencies stolen in massive hack * NFTs have gone from digital curiosity to a crowded, creaking bandwagon * The Detail: NFTs - What are they and why is this new technology taking the internet by storm? * Non-fungible tokens are useful, innovative–and frothy * The new world of investing: Air Jordans, Banksys and cat gifs

Around the world, NFTs range from the sublime – real artists making cutting edge original works – to the ridiculous sight of nodding alpaca Gifs, or Paris Hilton’s very amateur digital drawing of her cat.

But they are all bought and sold using cryptocurrencies, and stored with their unique ownership identifier on the blockchain. And they are increasingly big business.

Not just for the digital artist Beeple, who in March sold an NFT of his work at Christie’s auction house for $100 million, catapulting him into the top three richest living artists.

Or for a twelve year old British boy who created and sold 3350 digital pictures of weird whales and made close to $600,000.

Or even for Paris Hilton whose drawing of Munchkin netted her (or at least the charities of her choice) US$17,000 ($24,000).

NFTs are increasingly being seen as a credible way for artists and musicians to fund their creativity in a digital era, and for sportspeople (and celebrities) to get close to their fans and cash in on their brand.

A better class of NFT

Carter promises there won’t be any celebrity cat pics on the Glorious platform, which is to launch in late October. They will be, he says, “NFTs with high artistic and experimental value.”

There are two main benefits of NFTs over more traditional ways of creating and selling works, says Glorious co-founder and chief executive Tim Harper.

The first is creative: the opportunity for artists to experiment with digital media and for the collectors to have easier access to digital works.

But almost more important is creating a platform where artists can make money from their art.

An artist-centric commercial model

Traditional models, whether it be art galleries or music on Spotify can favour the platform over the artist, Harper says.

The Glorious model is different.

“We take 30 per cent of the sale price, as against most galleries where it is closer to 50 per cent.” More importantly, artists, and Glorious, continue to get a small tranche of the revenue each time a work is resold.

It’s a model that’s easy to enforce since each work has a unique digital ownership certificate linked to the original artist, so everyone on the Blockchain knows when it’s been onsold.

“The seller keeps 90 per cent of the resale price, 7 per cent goes to the artist and 3 per cent to Glorious,” Harper says.

Which is a lot more than the nothing that mostly goes to an artist under the traditional model.

A crazy market

Particularly since over recent months resale prices for NFT works overseas have often gone up significantly - sometimes crazily so.

Just a few weeks after controversial UK artist Damien Hirst, of shark-in-a-tank-of-formaldehyde fame, sold 10,000 near-identical NFT dot paintings for $US2000 (just over $2800) apiece, the signed, numbered works are now changing hands for $75,000-$170,000.

It’s not clear how much Hirst will receive, but at a 7 per cent resale margin that would be a minimum of $5000 for each of the 10,000 works – so far.

“Our goal is artist first,” Harper says. “How to use technology to do something incredible for artists.”

The New Zealand artists and musicians on the Glorious platform are still developing works for the launch, and for a potential platform group show afterwards, but Harper would like to see some affordable pieces.

“I don’t want to use the word ‘mainstream’, but our intention is to make buying work as accessible to as many people as possible.

“People who want to build digital collections or who have an interest in art should be able to get something for around $300, our starting point. Then prices will go up to several thousand dollars.

Spending all that cryptocurrency

One of the peculiarities of the NFT market is that you can’t just rock up with your credit card to buy your work - sales are in cryptocurrency only.

That means a significant number of customers are cryptocurrency enthusiasts who may have made money, often a lot of money, from the rise in value of currencies like Bitcoin or Ethereum over the last five years.

The price of Ethereum, the cryptocurrency of choice for many NFTs, has gone up from less than $300 in early September 2019 to just over $4750.

Of course you can cash in your newfound cryptocurrency wealth. Or you can try to buy stuff with it, but to date there isn’t that much to spend it on.

Mostly you can’t pay for a coffee or a holiday in ethereum. But you can buy NFTs.

On the other hand, there are hurdles to non-crypto art lovers getting into NFTs. You've got to master the technology first.

And that’s isn’t always simple, says cryptocurrency expert and tax specialist Campbell Pentney from law firm Bell Gully.

Pentney is a big fan of the crypto world and of NFTs. “For a long time people struggled to come up with day-to-day uses for blockchain. NFTs is one of them,” he says.

Still there are pitfalls. Not only do you have to get hold of crypto, but often NFTs are linked with a particular platform, like Ethereum, meaning you have to have the right currency.

Meanwhile, the massive surge in popularity of NFTs has on occasions clogged up Ethereum, Pentney says, and pushed fees up.

Then there are issues like tax, where there isn’t a lot of guidance from IRD, which is still catching up with rules for blockchain.

Harper agrees NFTs can be frustrating to buy for people new to the blockchain game, in fact, the first time he tried to buy NFTs he says he found it a bit of a nightmare. But he says the Glorious team put that experience into the model when they developed the platform, trying to make it more user-friendly.

In terms of regulatory compliance, the company has Michael Heron QC, a former Solicitor General and chief executive of the Crown Law Office, as chair of the Glorious board.

“He provides authority and security as we navigate regulations around the crypto space," Harper says.

From kicker to crypto

And Carter? What took one of the world’s most successful rugby players, with 112 All Blacks games under his belt, into the world of art and cryptocurrencies?

Carter says before announcing his retirement in February he was already looking around for business opportunities, particularly in technology. He was introduced to Harper and his long time creative partner Murray Thom by another of the co-founders, PwC’s Scott McLiver .

“What inspired me was what NFTs can do with athletes and their connection with fans,” Carter says.

“Something that jumped out was NFTs are a way for athletes to build community with the fans that have supported us."

As well as being an investor (Carter, his wife Honor and lawyer Paul Calder hold a 13 per cent share in Glorious) Carter is developing a side strand of the business focusing on sports-related NFTs.

The company has already developed a relationship with yachting competition SailGP, which is developing its own NFTs, and Carter is looking for others, including in the rugby world.

He is also working on his own NFT drops, though it’s early days in terms of knowing what a Dan Carter NFT series might look like, he says. Videos, photographs, memorabilia, there are a number of different models being tried by international athletes and codes.

In August, NFL star Tom Brady announced the launch of Autograph, a NFT platform that has signed up a raft of sporting stars including tennis star Naomi Osaka, gymnast Simone Biles and golfer Tiger Woods, but has little content as yet.

“There are exciting new commercial opportunities for athletes,” Carter says, including after their sporting career is over.

“When you are playing it’s so easy, you can grow your brand by your performance. But after you finish that, some people have an appetite to continue.”

In such a new space there are a lot of different options, he says, but early thoughts are to look at “moments” – digital images that also give buyers future benefits.

Think of buying an NFT work that also brings you exclusive fan benefits in the future. Like the right to kick a rugby ball around with Dan Carter, for example, or get a front row seat at some rugby matches. Or maybe there could be rights around limited edition gear, even digital trading cards.

“The world of NFTs is new and evolving,” Carter says. “Bringing fans closer to the artists or athletes they follow is at the core of the NFT experience.”

Still, with four boys under 10 at home, including a new baby, one can only imagine the chance to take advantage of the NFT boom and commercialise the Dan Carter brand wouldn’t be too bad either.

Newsroom

TL;DR Competent, organised, compliant – the best combination the crypto world has to offer So far we’ve covered Waves, a massive, well-funded and highly-organised crypto project; and TurtleCoin, a tiny grassroots coin with an extremely active following. This time, we’re looking at a unique crypto initiative that sits somewhere between the two: Crown Coin. Crown is a regular, mined crypto with an established track record (founded 2014), a small but active community, and some competent devs who are passionate about bringing a new approach to decentralised applications. The fact that it’s a Masternode coin that pays out regularly if you make the investment and effort to set up a node really doesn’t hurt either. Crypto investment is risky and the markets can be highly volatile. Do your own due diligence before buying. No responsibility is accepted for investment decisions made on the basis of this analysis. At first, Crown is a little hard to get your head around without some help, but it’s essentially about connecting regular applications with blockchain technology. Whilst Ethereum allows you to build decentralised applications (dapps) entirely on the blockchain, Crown aims to take a smarter and more scalable approach to this by allowing ordinary applications to hook into the blockchain. Businesses will be able to register identities and run applications, plus use an instant payment API, all on the blockchain. It’s a smart approach and the team has already signed up its first real-world businesses. Compliance is a huge concern for the Crown team, who are committed to doing things in a way that is sustainable in a climate of evolving regulation. It’s a mined coin – there was no ICO, avoiding future issues that may arise around securities legislation – and because it’s merge-mined with bitcoin the hashrate is huge, making it an extremely secure blockchain. There’s a firm emphasis on working tech over hype, so ‘marketing’ is not something large amounts of money are being thrown at until all the pieces are in place. The community is relatively small but active, and there are frequent meetups in various locations around the world. Masternodes and System Nodes are critical to the Crown ecosystem. Originally a DASH fork, the team has created a model where there are layers to the network: the miners, who receive part of the block rewards, and then the Masternodes (10,000 CRW requirement) and System Nodes (500 CRW requirement) who will process transactions and support the payment and business APIs. The price of CRW (around $2.40) means that these are currently a very attractive price, and although a Masternode will be out of reach for many investors, System Nodes are much cheaper and have a better ROI from staking income. At current prices, a Masternode costs about $24,000 and nets the holder about $540 per month. There’s a handy calculator at https://crowncentral.net. A slice of block rewards is reserved for bounties, and Masternodes can be used to vote on proposals which automatically pay out a respectable chunk of CRW for these at regular intervals. This is an excellent way to fund development and avoids the need for either a controversial ICO or donation campaign. Crown is one of those jewels in crypto: an overlooked project that looks like it’s doing everything right and has a firm vision for the long term – in terms of tech, compliance, marketing and strategy. If the team succeed in delivering that vision (and there is every indication they will) then there is no reason to doubt that Crown will be integrated in a wide range of business applications. It’s one that rewards holders in the short-term via Masternode staking, but also has amazing potential beyond that. Assessment: Already profitable due to Masternode and System Node payouts; significant room for additional growth on the basis of comparable projects. Approach: Acquire an initial stake (possibly over time to average costs) sufficient for a Masternode or one or more System Nodes; sell revenues to de-risk or hold them to compound in new System Nodes. For more information, visit https://crown.tech. Red hot news, scorching wit and searing opinion pieces from Crypto Inferno. Join us on Telegram: https://t.me/crypto_inferno Reddit: https://www.reddit.com/r/CryptoInferno/ Twitter: https://twitter.com/CryptoInferno_ Facebook: https://www.facebook.com/CryptoInferno/

Hey all — it’s been an eventful week for stocks. Meme stocks from AMC Entertainment (NYSE:AMC) to Support.com (NASDAQ:SPRT) have gained ground while SPACs strike out; Lucid (NASDAQ:LCID) recently hit its lowest point since May.

Call it the stock market’s version of the “sequel effect.” January’s meme stock runup was so enjoyable that investors can’t help but try short squeezes again. This week, the 15 most shorted stocks have risen 31%, wildly outperforming the S&P 500’s 0.76% gain over the same time. SPACs are just collateral damage of attention-deficit investors.

Of course, like every other trend before, this won’t last forever. I once wrote that AMC was unlikely to breach $75, even with a meme army behind it. Now that it’s less leveraged than before, that figure is closer to $65 (remember, lower financial leverage decreases the potential for gains).

Still, those looking for a touch of excitement have plenty of options. Blink Charging (NASDAQ:BLNK), Beam Global (NASDAQ:BEEM) and Arcimoto (NASDAQ:FUV) are all highly-shorted startups that could become the next meme stock.

Other News Tidbits

Internet Computer (CCC:ICP-USD). This blockchain protocol’s first-ever NFT, ICPunks, drops today. “Did not know I needed a Juggalo NFT to feel complete until this moment,” one Twitter user noted. It’s hard to disagree.

SPRT. Meme favorite Support.com (NASDAQ:SPRT) added another 25% to its Friday gain of 30%. Shares will continue to rise as long as Bitcoin (CCC:BTC-USD) prices do.

MMAT. Meta Materials (NASDAQ:MMAT) jumped almost 20% on Monday after a StockTwits short squeeze sent shares higher. Insider selling however, suggests a $5.50 sale price.

The Next Cardano Is Already Here

It has been a phenomenal summer for Cardano (CCC:ADA-USD), one of my top crypto picks. This understated cryptocurrency has risen 700% since I first gave it my “5-star” rating back in January.

As usual, mainstream investors were late to the game. No sooner did Cardano hit #3 on the charts than did the crowd take notice: Internet search volume for Cardano overtook both Ethereum (CCC:ETH-USD) and Dogecoin (CCC:DOGE-USD) by late August.

In order to notch another 700% rise however, Cardano would have to reach a $1 trillion market cap, a feat that only Bitcoin has achieved. And Moonshot readers will know by now that, much like an oversized housepet, it’s hard for something big to grow infinitely bigger. To repeat these 700% gains, it helps to look at altcoins coming from a smaller base.

Solana (CCC:SOL-USD). Back in May, I highlighted both Solana and Cardano as “Ethereum Killers” and noted their “strong potential for gains ahead.” Fast forward three months, and Solana seems to have gone quiet, at least from a market perspective.

But don’t be fooled — Solana has done even better than Cardano. This cryptocurrency is up has almost doubled Cardano’s gains in the past month, and now sits at #8 by market capitalization.

In short, Solana has garnered more interest from Silicon Valley than from Wall Street. In June, venture capital firm Andreessen Horowitz led a $314 million funding round for the cryptocurrency. The following month, they added another $9 million to Solana digital wallet company Phantom. So though the Solana Foundation has its work cut out for it, it’s only a matter of time before the finance folks realize what the tech gurus have been doing.

Internet Computer (ICP). “ICP remains one of my favorite dark-horse candidates for the next Bitcoin crown,” I wrote in July. Today ICP is up 63%, tripling Bitcoin’s 21% rise.

In part, that’s because investors are starting to recognize the quality of ICP’s protocol. The firm is tackling the thorny issue of how to keep highly-used blockchains from growing exponentially too large, and some of the best-known Silicon Valley funds are backing the project.

It’s also because ICP is starting to understand the importance of marketing and buzz in the crypto markets. Since I first wrote about ICP, the DFINITY Foundation has awarded $1 million in grants and planned an NFT release with American hip-hop group Insane Clown Posse. Though the foundation hasn’t gotten the marketing formula quite right just yet, it’s only a question of when, not if, this well-funded project will lift off.

Terra (CCC:LUNA-USD). Ever notice that very few people use cryptocurrency to settle everyday transactions? Firms from Coinbase to PayPal have struggled to tame Bitcoin’s high transaction costs and slow speeds to the point it can be used to buy a cup of coffee.

Meanwhile, Terra has rocketed ahead. The cryptocurrency, backed by South Korean firm Terraform Labs, acts as a bridge between stablecoins, “synthetics” and other cryptocurrencies — much like a fiat currency would.

And that’s the point: Terra wants to replace the cash in your wallet. The Terra ecosystem offers a stablecoin that provides instant settlements at low costs. And its “synthetics” means investors could potentially buy stocks and other assets without converting to cash (I can feel the IRS wringing their hands in anxiety already).

And the best part? Currently sporting a $13 billion market cap, Terra’s size looks much like Cardano’s before the latter rocketed to the moon.

SafeMoon Wallets and Gaming Tokens

When SafeMoon (CCC:SAFEMOON-USD) released its wallet over the past weekend, it was supposed to be a coup for the once-most popular cryptocurrency on Twitter.

Instead, the event was a flop. The wallet encountered serious technical issues within the first 30 minutes of launch, instantly sending SafeMoon’s price spiraling 20%. The Binance token is now down almost 90% since I first warned investors about the token’s hidden dangers.

Gaming-related tokens have also been sinking. My Defi Legends (CCC:DLEGENDS-USD) and Alpha Kombat (CCC:ALKOM-USD) have followed Zoo – Crypto World (CCC:ZOO-USD) into negative territory. Each is down by three-quarters or more.

In a sense, these sinking cryptocurrencies have one common theme — a desire to be the next hot meme. In SafeMoon’s case, the longing to one-up Dogecoin created an alternative reality on Twitter where well-produced marketing videos became more important than code quality. As for second-tier gaming tokens, these looked to replicate the success of Axie Infinity (CCC:AXS-USD) and Decentraland (CCC:MANA-USD).

Regardless, these assets continue to prove the point: when all crypto boats are raised by higher tides of hype and popularity, only those with underlying quality will stay afloat.

Who Wants to Win the Gaming Token Lottery?1,500%Returns on Axie Infinity, a cryptocurrency gaming token, since last November.154The number of crypto gaming tokens tracked by CoinMarketCap, a cryptocurrency aggregator site.6The number of gaming tokens that have doubled (or more!) in value over the past week.79The number of gaming tokens with no discernable market capitalization.Interesting Reads

Joanna Makris sits down with TeraWatt Infrastructure CEO Neha Palmer to discuss the future of electric vehicle stocks.

QuantumScape (NYSE:QS) has dropped below $20 for the first time this year. Will Ashworth writes why this battery startup has now become a “buy” in his book.

Part of Lucid’s (NASDAQ:LCID) lockup ends today. Here’s what you need to know about investing in LCID, according to Nick Clarkson.

And finally, Luke Lango talks about flying cars — yes, the ones you saw in the Jetsons. If things go to plan, we could start seeing production models as early as 2024.

For Collectible NFTs, I’d Rather Be Lucky Than Smart

In 2017, an Ethereum-based project caught my eye. After an hour of trying to get MetaMask to work, I was finally the proud owner of a $200 Cryptokitty — one of the first NFT projects ever developed for the Etherum blockchain.

I would end up selling it for $350 right before Ethereum came crashing down in the 2018 wipeout. And boy did I feel lucky. Fast forward three years and Cryptokitties are all but forgotten.

Today, Cryptopunks have taken center stage. One such piece — Cryptopunk #7243 — resold for $642,652.69 last week, netting the lucky owner a 10,000x gain.

In a sense, perhaps the outcome was foreseeable. Cryptokitties multiply indefinitely by design; there are now millions in existence. On the other hand, only 10,000 Cryptopunks were ever made. Supply-demand imbalance means each can be worth six figures.

But then again, who knows which limited-edition NFT will become the next Silver Dollar? With 15,828 different ERC-721 token contracts on the Ethereum blockchain (most of questionable artistic merit), even art scholars will find it hard to predict which project people will eventually love to love.

So, unless you’re buying for art appreciation’s sake, tread carefully. For everyone like me who profited off a Cryptokitty, there’s someone else on the other end who paid $350 for a JPEG now worth pennies.

P.S. Do you want to hear more about cryptocurrencies? Penny stocks? Options? Leave me a note at moonshots@investorplace.com or connect with me on LinkedIn and let me know what you’d like to see.

Thomas Yeung is an expert when it comes to finding fast-paced growth opportunities on Reddit. He recommended Dogecoin before it skyrocketed over 8,000%, Ripple before it flew up more than 480% and Cardano before it soared 460%. Now, in a new report, he’s naming 17 of his favorite Reddit penny stocks. Claim your FREE COPY here!

On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing.

Article printed from InvestorPlace Media, n-cardanos-700-gains/.

©2021 InvestorPlace Media, LLC

By the end of the 1st quarter, close to $400m has been invested through initial coin offerings and, in not too dissimilar fashion to the dot.com era, companies are managing to raise millions of Dollars with just a white paper and a cryptocoin.

To put it into perspective, Bitcoin is now accounting for just under 50% of total market share of cryptocurrencies, despite the fact that Bitcoin’s market capitalisation has surged from around $10bn to over $40bn over the last year and having accounted for as much as 80% of total market capitalisation of cryptocurrencies a year ago, taking the total market cap of cryptocurrencies from $12.5bn to a whopping $90bn.

So, is this the new revolution in fund raising or another pyramid that is soon to explode?

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When searching for active and upcoming initial coin offerings better known as ICOs, one sees a mind boggling list of companies looking to raise money through ICOs, companies ranging from online sports gambling to regional banks being established for the digital generation, the only pre-requisite to qualify for raising funds through ICOs being that they must have a cryptocurrency and token as an integral part of product on offer.

Who needs venture capitalists when you’ve got the digital world and a rapidly growing medium for fund raising?

So what is ICO (Initial Coin Offering)?

An initial coin offering is similar in concept to an initial public offering (IPO), both a process in which companies raise capital, while an ICO is an investment that gives the investor a cryptocoin, more commonly known as a coin or a token in return for investment, which is quite different to the issuance of securities as is the case in an IPO investment.

Before getting into the details, it’s worth providing some detail on blockchains, tokens and cryptocurrencies.

A blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record, not just financial transactions, but anything of value. It’s essentially a digital spreadsheet that is duplicated across a network of computers. The network is designed to update the spreadsheets on a regular basis. As the information is shared and regularly updated and not stored in a single location, it’s considered to be truly public and easily reconciled.

Why is it considered revolutionary? Imagine not needing a single database that must be passed across global geographies and companies for updating…

Tokens are coins that are offered during an ICO and would be considered an equivalent to shares purchased in an IPO and are also referred to as cryptocoins.

Cryptocurrencies are a digital or virtual currency that uses cryptography for security. It is not issued by any central authority, such as a central bank, taking it out of the reach of governments who can interfere or manipulate. The transactions are anonymous in nature.

Tokens issued from an ICO will have a value, with the ICO allocating equivalent to equity to the token, which gives the investor ownership with voting rights and, in certain cases, qualifying for dividends.

While this will be the closest format of an ICO to IPOs, the vast majority of ICOs issue tokens that are an asset giving investors access to the features of a particular project rather than ownership of the company itself.

It’s ultimately the process of crowdfunding a new cryptocurrency project, involving a token sale, with the cryptocurrency project raising capital to fund operations, with investors receiving an allocation of the project’s tokens in return.

ICOs tend to be open from between a few weeks to a month, though some have been open for longer and fund raising for a particular ICO possibly taking place on multiple occasions, unlike an IPO which is a onetime event.

A word about Cryptocurrency trading: Most people trade cryptocurrencies through cryptocurrency exchanges, there is, however, another option with which one can speculate on price movements. This can be done by using contracts for difference (CFDs). In order to fully understand the potential of CFD instruments in cryptocurrency, read this post explaining CFD. After reading you can do your first steps in CFD trading and start trade cryptocurrencies.

Some key characteristics of an ICO include:Participation in a project, Decentralized Autonomous Organization (DAO) or an economy.Coin ICOs generally sell participation in an economy, while token ICOs sell a right of ownership or royalties to a project or DAO.Owning tokens do not always give the investor a right to vote on the direction of a project or DAO, with the rights of the investor embedded within the structure of the ICO, though generally the investor will have input throughout a project lifespan.The majority of ICOs involve the creation of a defined number of coins or tokens prior to sale.ICO prices are usually established by the creators of the economy, project or DAO.ICOs may have multiple rounds of fund raising, with coins or tokens on offer, increasing in value until the release date, with early investors likely to have greater rewards embedded within their tokens as an incentive.ICOs conclude once the coins or tokens are tradable in the open market.If we were to compare the key features of ICOs and IPOs, some of the similarities and differences would be as follows:An IPO gives you ownership of the company based on the number of shares acquired, whilst an ICO may only give you rights of a particular project, not the company launching the project.Decision making in IPO companies are centralized with the CEO and the board involved in the day to day running of the business, whilst with ICO companies/projects, decision making is decentralized, giving the investor a material decision making position.Financial data is released as per the rules of the exchange on which the IPO took place, whilst for ICOs, these will either be public by way of the blockchain or as outlined within the white paper and agreement with the investors.Companies launched by way of an IPO must pay taxes, with investors having to pay capital gains tax, whilst for ICOs, the company may not be subject to direct tax, only the investor being required to pay capital gains tax.An IPO is a onetime sale with multiple intermediaries involved in the process of determining the conditions, pricing, etc., whilst ICOs can have multiple rounds of fund raising, with few if any intermediaries, the white paper the blueprint.And finally, stock exchanges and companies listed by IPO are heavily regulated, whilst the exchanges on which ICOs are launched are quite the opposite.For companies raising capital through ICOs, the advantages include:The project, DAO or economy is not necessarily subject to direct taxation, which in contrast to companies fund raising through IPOs.Sales of coins or tokens are direct, including multiple rounds, with few if any intermediaries required in the process, investors basing investment decisions on the content of white papers prepared by the fund raising entity.

While ICOs are to mainly raise capital for a start up, they are also used to kick-start the sale of a service to be taken to market or the use of a new cryptocurrency.

On most occasions, the investor becomes the consumer of the service being offered by the company raising funds through an ICO, which allows investors to buy coins at a discount, though valuation will ultimately be dictated by supply and demand once released to market.

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In vetting ICOs, there is no guarantee or sure fire way of distinguishing the good from the bad, investors needing to avoid scammers who are using ICOs to dupe investors out of funds.

There’s plenty of interest at present from an investor perspective, attributed to sizeable returns that investors have enjoyed to date, demand driving prices, with large prices gains incentivising investors to lock in profits, which can lead to mass sell-offs that could ultimately wipe out investor money, not to mention the company.

History and Evolution of ICO

The first ICO was by Mastercoin back in 2013, which raised approximately US $600,000 for a project to create a Bitcoin exchange and platform for transactions, while Bitcoin led the way on Cryptocurrencies, becoming the first decentralized cryptocurrency back in 2009, other cryptocurrencies sometime referred to as Altcoins, essentially Bitcoin alternatives have hit the market.

The shift in focus away from the use of venture capitalists for fund raising has taken the market by storm and the numbers of ICOs continue to rise, with the liquidity associated with ICOs over VC funding driving investors into a frenzy.

Venture Capitalists have begun to take notice however and are looking for a way back into the segment, with Blockchain Capital having run its 3rd fund raising in what was to be the first liquidity enhanced venture capital fund, the VC taking out the incubation period for investors.

Unlike centralized electronic money / banking systems, cryptocurrencies are decentralized. Bitcoin and the early altcoins were launched without an ICO and with the market still considered relatively nascent, governments and central banks have been relatively slow in catching on to provide some formal legal framework to the cryptocurrencies and the ICOs that followed.

With VCs getting in on the act in fear of losing out on major fund raisings, news also hit the wires in April of this year of the first ever underwriter of initial coin offerings. First Bitcoin Capital sees itself as a gatekeeper and by acting as the underwriter, assists in separating the good with the bad in the interest of longevity within the segment, by way of sound due diligence on the underwritten ICOs.

As of today, there’s still a long way to go for the market and until there is a more robust framework, which is recognized by governments and regulators, investors can be left out in the cold with the lack of a legal framework for those who have been duped. Even Madoff’s Ponzi scheme, which lost investors billions, is returning some funds back to the investors, in the case of ICOs there’s no legal entity to which the investor can face off, let alone make claim to.

In terms of the numbers, ICOs have raised US$327m to date through fund raising, compared with US$295m raised by venture capitalists representing blockchain start ups, VCs falling behind this year for the first time as the numbers of ICOs continue to increase.

Since the Mastercoin’s ICO, it was estimated that ICOs raised a lowly US$25m in 2014, falling to US$10m in 2015 following Bitcoin’s price collapse of 2014. In 2016, the trend reversed, with ICOs raising an estimated US$225m, supported by a rally in the price of Bitcoin, which drove interest into both blockchains and Fintech.

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While there have been plenty of success stories, in the 2nd quarter of last year, an Ethereum based project named The DAO entered an ICO to launch an investment fund without a fund manager, with the investors being involved in all of the investment decisions upon launch. The ICO raised almost US$150m, almost 70% of 2016’s total capital raised through ICOs. By mid-2016, hackers managed to get away with more than US$40m from the DAO, bringing the project to a grinding halt and the value of Ether down with it, Ether’s price falling from US$19 to under $12 in just a matter of days. In the interest of market capitalizations and protecting the investors, Ethereum created a new blockchain and ultimately reversed the theft, leaving the original Ethereum blockchain, now known as Ethereum Classic behind, a small minority continuing to support and assign value to the old blockchain.

Despite the inherent risks, which are not just down to hacking, but also fraudsters and scammers, 2017 looks to be another stellar year, with ICOs raising in excess of $150m by mid-May of this year, based on numbers from Smith + Crown.

Concepts are getting more and more innovative and the speed with which capital is raised is getting faster by the day and, without the regulatory oversight things could burst before the likes of the SEC catch up.

How Does ICO Work and How to use ICO

Start ups kick start the ICO process by establishing the blockchain and set up of protocols and rules, at which point an ICO data is announced.

For the creator, the next step is to begin mining for coins that will sold during the ICO, with social media sites, Reddit and a rising number of cryptocurrency related website used as a marketing medium to attract investors ahead of the ICO data, creators looking to draw in as much interest as possible to not only raise the required funding, but also push demand and prices post ICO.

In the background, the creators will make their final checks and adjustments to ensure its smooth sailing by the time of the ICO.

For the cryptocurrency creators, they will need to join an exchange, the exchange similar to that of a stock exchange during an IPO, with investors needing to have an account with the exchange to be able to buy the new cryptocurrency with other cryptocurrencies or fiat money.

Active and up and coming ICOs can be found through various sites, with the purchase of cryptocurrencies being made through the selected exchange, with investors also able to buy directly through the creators official website.

Exchanges that are widely recommended for the purchase of new coins include Bittrex, Kraken, Poloniex, Livecoin, SpaceBTC, Bitlish, though there are many others.

Documentation requirements vary depending upon the investor domicile, with the requirements outlined on the respective exchange’s site and creator website.

A step by step of an ICO can be summarized as follows:

Pre-Announcement: This is the marketing stage of a future project through sites frequented by cryptocurrency investors, with the creators of the project preparing a white paper, essentially an investor presentation outlining the details of the project.

Once the white paper has been circulated, the company will get a sense of whether there is investor interest in the project proposed, with the company then addressing concerns and addressing risks raised by would be investors to reach a final business model and a final version of the white paper.

Offering: This is the final version of the white paper, setting out the terms of a contract for the benefit of the investors, made on behalf of the company entering into the ICO.

The offer will outline the project details, the total amount of capital required, together with project timelines. It will also indicate the financial instrument to be sold during the ICO, normally tokens. The financial instrument will have a value assigned to it, together with the rights of the investor along with the expected period after which the company will commence returning earnings to investors, traditionally by way of dividends.

Once the offer has been signed, the ICO start date is announced and the marketing campaign moves into overdrive.

Marketing Campaign: This is a pivotal component of the ICO, with the marketing campaign key to the company being able to raise the necessary capital. Companies are generally nascent and unknown, bringing marketing agencies into the frame to make the necessary presentations, etc. The campaign will tend to last up to a month on average, target audience being institutional and some smaller investors. Participants of crowdfunding programs tend to be the main segment, investors generally more willing to back projects, with their involvement in the project considered a positive for both the investor and the company.

Once the marketing campaign comes to an end, the buying and selling of tokens commences, with the company having established an exchange for investors to acquire tokens.

The ICO: Companies generally release tokens on blockchain in two ways:Collect the specific capital, outlined within the offer, and then divide and distribute the tokens to the investors based on initial investment made.Alternatively, tokens are sold on cryptocurrency exchanges, which means that the tokens need to be released on a number of exchanges in advance for trading.

Once the sale has ended, the company commences on its obligations.

For the investor, it’s a case of exploring the various exchanges or social media sites that publish active and up and coming ICOs and then opening an account, acquiring the tokens, having completed the necessary due diligence on the company or project  in question.

The New Way of Tech Companies to Raise Money

Start up companies are generally some form of an entrepreneurial venture, which will take the form of a new, rapidly expanding business targeting the needs of a marketplace by way of innovative products, processes and services.

While historically, start ups would have raised capital through venture capitalists, the advancement of fund raising through ICOs has been almost spectacular. While venture capitalists tie up investor money for lengthy periods of time that can extend to years, ICO money is far more liquid and with value easily assigned, traded within a very short period of time. The liquidity associated with ICOs is certainly a contributory factor to the increasing number of ICOs, with the lack of cumbersome documentation and unjustified demands and requirements of the VC also avoided.

Adding to the upside for start ups is the involvement of the investor in the decision making process, whether it is an actual business or a project, providing the investor a say, many of the initial investors in start ups being entrepreneurs and experts in their respective fields.

Blockchain technology and cryptocurrencies have certainly paved away for the more innovation, with the lack of regulatory oversight allowing start ups to push the boundaries created by those before them.

Successes from ICOs are well publicised, with some of the most well-known ICOs including, but certainly not limited to:

Ethereum (ETHER-ETH): US$18.5m raised in capital. At ICO investors paid US$0.4 per Ether back in 2014. The value of an Ether hit a high of US$14 per Ether in 2016. Ether is certainly one of the more well-known early success stories. Year-to-date, Ether’s market cap has surged in excess of 500%.ICONOMI (ICN): US$9.1m in capital raised.Maidsafe Coin (MAID): US$7m raised in just 5-hours, which had been the record for the most amount of capital raised in the shortest period of time.Golem Project: The Company’s goal is to build a P2P global computer network, with blockchain data handling payments in GNT tokens. US$8.6m in capital raised in just a matter of hours.

To be honest, these ICOs pale into insignificance by today’s standards, Bancor Foundation raising a whopping US$153m of Ether through the sale of its tokens in just 3 hours in mid-June.

Post ICO, there are some great returns for investors that continue to grab the headlines, Ether not alone.

Ripple’s XRP springs to mind, up 10x to dwarf Bitcoin’s 150% year-to-date return.

Ripples XRP Price Rise

If there were any doubts of Ripple, 10 financial institutions signing up to send real time payments internationally was certainly a plus for the creators and angel investors, with banks including Bank of America and Royal Bank of Canada signing on.

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And in May, there were more than 80 companies including Toyota and Merck joining a group called the Enterprise Ethereum Alliance (EEA) to create standards for smart contracts, large corporations taking the initiative to bring some order to the market.

How to Join Initial Coin Offering?

There are a number of sites that list current and up and coming initial coin offerings including Reddit, Cyber Fund and even social media sites such as Facebook.

To invest, the first step of the process is to identify which project or company launch is of most interest and while searching through the ever increasing number of ICOs hitting the worldwide web, set up a cryptocurrency wallet.

With a lack of formal structure, each ICO will likely have a different set of requirements, though ultimately it’s a simple process of sending tokens upon payment by cryptocurrency to the blockchain identified and listed on the ICO website, which will also provide the investor a step-by-step guide into the investment process.

Public sites, such as Blockchainhub, advise that before investing it is important not to use any kind of an online wallet or exchange. Backers are generally required to export their private keys into another wallet in order to access their new coins, so it is vital to ensure that the wallet’s private keys are exportable.

Companies have looked to facilitate the process by making available functioning online wallets for their ICOs, where the investor can send the money directly to the wallet established, the funds exchanged for tokens using the exchange rate at the time of purchase, with the tokens deposited into the wallet. Others remit the purchased tokens to the address from which the funds were sent.

Investors will also need to be aware that certain wallets may be incompatible with the tokens and are therefore not visible following purchase and receipt. For this reason it’s essential to have a wallet which permits the export of private keys, so that it is permissible to transfer the tokens to a new compatible wallet.

It’s become far simpler since the launch of Ethereum, with creators setting up user-friendly campaigns, with Ethereum’s wallet supporting multiple tokens, making access to purchase tokens far easier than before.

Outside of identifying the ICO itself, due diligence is also recommended in the interest of avoiding scams and Ponzi schemes, with ICORating providing would be investors with a full assessment of the project or company in question and other companies providing some additional background should more details be needed.

The Gold Rush Go Through Regulation

While cryptocurrencies have seen advancements in the regulatory landscape with countries such as Japan and Russia recognizing cryptocurrencies as legal tender, ICOs have yet to fall under the cloak of regulators.

The SEC has publicly announced that ICOs need to protect the investor and, with the size of the market, has certainly caught their attention, with certain regulators and governments now having caught up on blockchains and the likes of Bitcoin and Ether.

Regulators have a responsibility to even the most foolhardy investor and in the interests of avoiding another Dot.Com bubble eruption, some oversight would certainly save a lot of pain down the road, particularly should fraudulent cases begin to rise alongside the ever increasing number of ICOs.

While the SEC is looking into the latest fund raising FAD, it has also come out and announced that they will begin to focus in ICOs should they become a significant component of the market for investments and a triggering event takes place, with companies looking to raise capital by way of ICOs becoming subject to both regulatory and enforcement action.

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The lack of transparency remains an issue and there have also been reports that the sale of tokens to U.S citizens is in fact deemed illegal, though whether exemptions will be permitted remains to be seen, uncertainty certainly there for investors consider down the road.

In the end, it is hard to imagine regulators sitting on the side lines when considering cryptocurrency valuations, the rising number of ICOs and the inherent risks associated with investing in start ups in this manner and how both investors and the companies respond to the magnifying glass of regulators will likely decide the fate of ICOs, which for now are able to raise sizeable sums as a result of the inflated valuation of cryptocurrencies such as Bitcoin and Ether.

One thing is certain, legal recourse to start ups with enforcement agencies able to take action against scammers and fraudsters would be a great start, the less savvy investor certainly there for the taking by the few who are so inclined.

ICO or Not?

Investors will be wowed by the returns and the surge in market cap of cryptocurrencies over the last year and, while there are certainly some tremendous opportunities and sound investment opportunities to be had, there are risks that need to be considered before entering the blockchain world.

So, as is always with the case with any investment and never more so than those that can give investors returns in excess of 100% in a matter of months, there are pros and cons for the investor to consider.

Starting with the positivesDespite the number of ICOs hitting the market, as many as a 100 every few weeks, there have been a large number of companies that have become incredibly successful, having raised capital through ICOs.The high ROI (Return on Investment) story certainly provides an opportunity for the yield hungry, though where returns are on the higher side, there is a higher level of risk associated with investing.Perhaps the greatest feature of an ICO is that the tokens are considered liquid, unlike investing in traditional start ups, where investor money can be tied in for years. ICO investors can cash in and out at any time, converting ICO tokens into Bitcoin or other cryptocurrencies with ease, assuming the demand is there.There are also no fees similar to those that investors face with IPOs and then there are VCs, who like to run the show and make unnecessary demands, which could devalue the investment on occasion, companies losing their identity in search of the Dollar.Where there are positives, there are also negatives to consider and some of the more negative elements to investing in an ICO include:Well-known for failures, with too many projects being alike or with projects failing to reach expected levels, driving the value of initial coins to zero.A lack of governance can lead investors down the garden path, with a lack of appropriate due diligence leaving investors open to Ponzi schemes and more.While the upside can be sizeable, it’s ultimately not something to bet your shirt on and any investments lost as a result of scams and frauds are unlikely to be recovered.

With the lack of regulatory oversight, investors do need to do a decent amount of due diligence and repeating this view is reflective of the need, with the number of fraudulent ICOs likely to be on the rise as regulators lag behind the segment.

Due diligence tends to be expensive and when it comes to cryptocurrency economies and ICOs, the market is beginning to see the presence of rating agencies, who conduct the due diligence, carrying out the necessary analysis of the information at hand, with the rating agencies publishing their research reducing some of the risks associated with investing in ICOs, self-policing coming in ahead of any more formal regulatory oversight.

ICORating is one of the agencies undertaking the task of providing some cover for investors and the analysis will certainly be a starting point to drive the ICO market to the next level, though even rating agencies have been known to get it wrong from time to time.

On top of the ratings, investors can also look out for ICOs that include independent escrow agents, so that the capital raised does not reach the company entering an ICO, but a 3rd party.

Multi-Sig is an example of such an escrow agent, with the agent essentially funding the project on an ongoing basis, funds released from an escrow as needed, the agent ensuring that project targets are being met along with the company’s pre-determined obligations to the investor.

So, while some level of control is entering the market, the question remains on whether this is another dot.com. The skeptics have been out in force since the Global Financial Crisis, with every investment opportunity being labelled as economic bubble, included Bitcoin.

The similarity is the fact that its digital and more importantly, lacking of physicality and investors don’t have to think too far back, when companies were selling concepts for millions of Dollars.

For now, ICO fund raising falls well short of the levels seen during dot.com era, which should provide some level of comfort, the only concern being a collapse in the market should the volume of fraudsters surge over the near-term, or there be a collapse in the valuation of cryptocurrencies.

The association is ultimately coming off the back of the surge in valuations and market cap of the sector, but the surge in market cap is not isolated to blockchains and start ups hitting the market looking to take advantage of the yield hungry investor, so calling a bubble for now is certainly a more pessimistic view point. You only need to go back to the early days of tech stocks such as Intel, Apple, Microsoft and Alphabet to consider how the industry can be reshaped in the years ahead. Regulatory oversight of some sort will certainly provide it will longevity, though the attractiveness of ICOs could be lost should the minimum requirements become as intensive, such an outcome not killing off the industry, but just the medium through which capital is raised. It’s pretty easy for creators right now…

For now it’s a phenomenon, but tomorrow it could be yet another cautionary tale, joining the dot.com and MBS (Mortgage backed security) stories of yesteryear. It will boil down to the integrity of the sector and the success of companies raising capital, mindful that not all will deliver, but at least a majority.

The numbers certainly point to a bubble, with ICOs in the 2nd quarter of this year each raising in excess of US$10 in a single day and the sizes are rising as investors look to cash in on the trend before the bubble bursts. If you can get in and get out with your tidy profit before doomsday, then it’s the investment for you, but as with any bubble, few can predict the day of the crash.

Investors are throwing money ICOs and in certain cases, the business models or scope of projects are shady at best, but with cryptocurrency valuations on the rise, the investment may be justified, a crash in the value of Ether or Bitcoin could be a different story altogether, such an event not a completely farfetched consideration for investors looking to convert relatively stable currencies into tokens, the success of the business itself not the only consideration, the value and stability of the cryptocurrency also needing to be considered.

Does that sound like the Dot.Com bubble, where valuations grew exponentially, with the NASDAQ surging from under 1,000 to over 5,000? How did it happen? Cheap money, market over confidence and investors on the hunt for the next big thing after mortgage backed securities… Current surges in post ICO valuations are certainly not based on anything tangible, with projects or businesses in their early stages, so 10x increases in a matter of months sounds somewhat extreme, the appetite for cryptocurrencies perhaps masking the business or project the coins are actually investing into…  When you consider the regulatory oversight of the NASDAQ, that’s quite a run and quite a fall from grace. The gains in Bitcoin alone have been striking, bringing new investors into the market, but how long before the wool is pulled from the eyes and the smart money walks out door leaving the last person to turn out the lights. These things tend to end in tears after all…

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On an April afternoon in 2011, a twenty-seven-year-old tech entrepreneur named Bradford Stephens arrived at a stucco bungalow near the canals of Venice, California. He had recently started a new data-analytics company, and had come to speak with a coder named Brandon Smietana, whom he hoped would get involved. Stephens had already met Smietana online, where he uses the handle Synth, and where he often debated minute points about math and programming. When Stephens and Ryan Rawson, an employee who tagged along, arrived, Smietana invited them into a carpeted den. A computer sat on a table, its casings removed to reveal a tangle of circuits; a sleeping bag lay on a sofa. Smietana was in his early twenties, with dark hair and a youthful face. Rawson told me, “He had the air of this mad scientist couch surfing.” Stephens pitched his new company, but got no traction. Smietana had turned his attention to a new technology: cryptocurrency. “The only people who have to work for money are the people who cannot create it or print it out of thin air,” he told them.

The first cryptocurrency, Bitcoin—released in 2009 by an anonymous programmer (or a group of them) called Satoshi Nakamoto—was a feat of computational brilliance. A bitcoin is an abstract unit of value that people track and spend with digital wallets. When someone contributes her computer’s power to process Bitcoin transactions, the computer also races to solve an equation, a process called “mining.” Each solution that meets certain criteria mints new coins. The number created decreases by half every four years or so—an event known as the Halvening—which keeps the supply limited, guarding against inflation. The whole economy is maintained on a blockchain, a shared ledger that keeps a tally of every Bitcoin transaction. As miners add transactions, the Bitcoin software coördinates and finalizes their contributions, making the ledger transparent and unchangeable and the system nearly impossible for governments to shut down.

But the technology has a flaw: as more people use it, transactions become slower and more expensive. The average transaction fee fluctuates wildly; one day last week, it was two dollars and thirty-three cents, making it more expensive than any major credit card for everyday purchases. The pursuit of a better Bitcoin quickly became a full-blown academic field, with its own conferences, university courses, and peer-reviewed journals. But, as Smietana explained over the next few years to anyone who would listen, he had the solution. He was designing a cryptocurrency that could be sent around the world instantaneously, for next to nothing. He called it Skycoin.

He was going to use this currency, he said, to create a decentralized version of the Internet, called Skywire. He planned to build a large mesh network, a system that allows people to use special Internet routers to share bandwidth with their neighbors. With enough members, a network can bypass service providers, making it harder for corporations and governments to surveil Internet use. But it’s difficult to retain volunteers. “A community network really needs density before it is useful,” Brian Hall, of NYC Mesh, the largest community network in the U.S., wrote in a blog post. “It can be a chicken and egg problem.” Smietana’s project proposed a different way to attract people: pay them. His customers would share bandwidth using routers called Skyminers, and get paid for their service in Skycoin. He envisioned a new cryptocurrency spent over a community-owned Internet, calling it “the last step to fulfilling Satoshi’s mission.”

Stephens left his first meeting with Smietana believing that he could be destined for greatness. Skycoin launched publicly two years later, in 2013. The following year, Stephens attended a party at Smietana’s new place, an unrenovated warehouse just south of L.A. Someone had painted the walls with images of horned monsters. “It was very Burning Man meets H. P. Lovecraft,” Stephens told me. Stephens’s friend Baron Chat, a photographer who attended, said, of Smietana, “He seemed to be receiving his signal from a different station than everyone else.” According to Stephens, Smietana asked him to join the fledgling project, but he demurred. (Smietana said he doesn’t remember seeing Stephens at the party.)

The first cryptocurrency boom arrived in 2017. “Several investors I knew, and a lot of my friends, started pivoting from angel investing to putting money in crypto and seeing insane returns,” Stephens told me. Skycoin had a “token sale”—a sort of I.P.O. for cryptocurrencies—and was listed on two small exchanges. By the end of 2017, its price had gone from a little more than a dollar per coin to about fifty dollars per coin. That December, while Stephens was on vacation with his wife in Japan, Smietana messaged him with another chance to get involved. It seemed like an opportunity to work on something revolutionary. But he also thought, Everybody else is getting rich off crypto, so why not me? He said that he later told Smietana, “I’m going to need 50K up front and I gotta hire a team.” After a couple days, he checked his Bitcoin wallet and found fifty thousand dollars sitting in it. “I’m, like, ‘I guess I’m hired,’ ” he said. (Smietana denies sending the money, though he had said he would do so in texts, and there’s a record of such a transaction on the Bitcoin ledger.) Before leaving Kyoto, he and his wife had visited a shrine to Inari, the Shinto god of rice, where they left offerings and made wishes. His wife wished for the health of her father, who was battling cancer. “I asked for wealth and adventure,” Stephens told me. “And I got one of those.”

In the past decade, a shift has occurred in the way that cryptocurrencies are distributed. Satoshi put bitcoins into circulation through a reward system: the more computing power you contribute, the more coins you can mint. Some early adopters paid their rent simply through mining. Around 2012, though, people began devising blockchains that could be used for more ambitious applications: supply chains with real-time geolocation, for example, or patient-controlled medical records. Such projects required capital, compelling founders to experiment with less democratic ways to distribute coins. In 2013, J. R. Willett, the founder of Mastercoin, invented the “initial coin offering,” or I.C.O., the first token sale: developers partially pre-mined their tokens and then sold them off to raise money. Michael Terpin, who has managed two hundred such token sales, and who handled public relations for Skycoin, told me that the scheme empowers entrepreneurs. “Somebody who had an innovative product could sell directly, prior to it being built, to an audience of enthusiasts,” he said, without having to “give up a third of the company.”

A frenzy followed a few years later. Since 2017, hundreds of projects have announced token sales. One of the most lucrative, EOS, raised about three and a half billion dollars in a yearlong I.C.O. Many projects amassed funds even before their blockchains or applications existed; some prepared assiduously, but others merely threw together a Web site, a list of advisers (sometimes without their knowledge), and some semblance of a technical paper (sometimes plagiarized). “A playbook really emerged for how to set up a legitimate-looking I.C.O.,” Matt Chwierut, the head of research at Smith & Crown, a blockchain research firm, told me.

In 2018, I attended the North American Bitcoin Conference, in Miami. On the main stage, representatives from companies with unpronounceable names riled up the crowds. Downstairs, an arcade of booths hawked every kind of blockchain project: smart glasses, cargo robots, refugee-identity documents. At a booth for a group claiming to build a volunteer emergency-services network, I asked why the endeavor required a coin. The attendant told me to come back later when someone more technical would be arriving.

Because bitcoin mining is regulated by algorithms, everyone, in theory, has a fair chance of getting new coins. But, to receive pre-mined coins in a token sale, you often have to buy publicly at the sale price or else negotiate a deal behind the scenes. “A lot of coins were being sold on the side and in secret,” Josh, a major cryptocurrency investor—who eventually bought into Skycoin, and requested that I use only his first name, out of concern for his safety regarding another matter—told me. “You’ll do special deals with people if they give you three or four or five million dollars up front.” This created a sense that making your fortune required being in the right room to get the right tip.

On the second night of the conference, I went to a strip club for an after-party, where flashing your badge got you a crypto-inspired cocktail. (I ordered a Satoshi Sour.) Guests exchanged advice, sure that they were getting the best inside information. But a few hours later a friend whisked me off to a more exclusive party, thrown at a beachside bar by Patrick Byrne, the former C.E.O. of Overstock. (Byrne stepped down in 2019, after it was revealed that he had had an affair with the Russian agent Maria Butina.) The attendees were celebrating the hundred-million-dollar token sale of Byrne’s trading platform, TZero, which he said was going to “drag Wall Street behind the barn, kill it with an axe, and re-create it on blockchain.” There were giant platters of sushi and oysters; the rapper Flo Rida pulled Byrne up onto the bar for a sing-along. Guests exchanged invites to exclusive chat rooms on Telegram, an app favored by coin enthusiasts. I turned to a man next to me and asked what had brought him to the party. He rubbed his thumb and forefinger together and shouted, “Making money.”

The employment structure at Skycoin was loose, and Stephens joined without a contract. “Here I was, a guy used to wrangling hundred-page venture-capital contracts, and I’m joining a company with no last names and barely any first names,” Stephens said. Smietana, who by then was living in Shanghai, had pre-mined a hundred million coins, which were scheduled for circulation. Skyminer routers were just starting to ship, but sales had already outstripped production. Smietana estimated that operators who used Skyminers could make between fifteen thousand and forty-five thousand dollars a month. Most coinholders I spoke to were young men around the world—medical students, craftsmen, 3-D animators—who believed in the project. In chat rooms, Smietana’s followers addressed him with reverence. “We all are in honor to speak with synth,” a user called Anosis wrote. “It’s like having a chance to talk to Satoshi.”

Although Stephens studied computer science in college, he admitted that, when he started working with Skycoin, he “hardly knew anything about crypto.” He was told to handle marketing, and assembled a team composed mostly of friends and former associates. (Smietana now claims that he contracted a marketing company that Stephens ran, not Stephens himself.) But he soon realized that word about the project was already spreading. Large investors recruited in their own circles, and smaller coinholders hyped Skycoin on social media. At one point, Skycoin advertised a bounty program that promised users coins in exchange for promotional activities, such as writing blog posts and creating YouTube videos. One user-made video, titled “Skycoin - To the Moon,” featured footage of a shuttle blasting off next to a chart of Skycoin’s market value, interspersed with a closeup of glossy lips and the words “YOU COMIN’?” People who proved their worth on Telegram often got pulled up the ranks. “I started to spend 90 hours a week in the chat room,” a user called Sudo, who became one of Skycoin’s Telegram channel moderators, and who refused to tell me his name, messaged me. “They seen how active I was and offered me a job.”

By early January, 2018, the total estimated value of pre-mined Skycoins had reached almost five billion dollars. Smietana sent representatives to conferences in New York, Lisbon, San Francisco, and Singapore, and arranged a retreat in Mauritius. A former marketing contractor, who requested anonymity out of fear of harassment, recalled that Smietana could spend lavishly on the people who worked with Skycoin, in one case paying for cryotherapy, vitamin injections, thousand-dollar steak dinners, and a twelve-thousand-dollar trip to the Esalen Institute. “Dude was very liberal with his spending and could be very generous,” the marketing contractor said. The team posted a video of a yacht party, and thundered around in Ferraris. In New York, Skycoin reps cruised in a helicopter to grab footage of a Skyminer held over Manhattan’s skyline.

That month, Stephens flew to Las Vegas to speak on a panel at the CoinAgenda summit. He wasn’t up to speed on the technical aspects of Skycoin yet, but he held a Skyminer over his head and said, “You all are the first to see the new Internet!” On the first day of the conference, Smietana sent Stephens a voice memo with an urgent request. He was hoping to get Skycoin listed on Binance, one of the world’s largest cryptocurrency exchanges, which could help secure its legitimacy. During the I.C.O. boom, it was common for projects to pay a “listing fee” in order to be included on an exchange. (Binance claims that it chooses projects based solely on “strict security, legal, and regulatory compliance standards.” In 2018, facing pressure, it announced that it would donate its listing fees to charity.) Smietana said that he had paid Binance executives seven and a half million dollars but that they hadn’t followed through. (Binance confirmed that Skycoin paid it a hundred and fifty thousand Skycoins to spend on “promotion,” which were worth seven and a half million at the coin’s peak.) Smietana told Stephens to entertain the executives, to sweeten the deal. Stephens planned a party in a penthouse suite at the Bellagio. Smietana gave explicit instructions via voice messages: “You have to buy prostitutes for the people at Binance,” he said. “Get them, like, three girls each.” (Smietana denies any involvement in the party, and claims that his voice messages about it were “either a joke or a deep fake but probably a deep fake.”)

That night, Stephens and Baron Chat, who had also started working on Skycoin’s marketing, along with Catherine Byerly, another member of the team, sat in the hotel suite, with champagne on ice. Six escorts arrived at nine, and the employees instructed them to make the Binance executives feel like “rock stars.” “To them, I was this, like, stereotypical businesswoman in an Ann Taylor dress,” Byerly said. “But inside I’m thinking, How did my decisions lead me here?” Chat said, “It felt almost like you were in the process of living out some bizarre reality that sometimes you see in the movies. The weird excess . . . Crazy shit happens when you have a corporate account and a green light.” By ten o’clock, the executives hadn’t shown up, and Stephens began to worry that he’d lost the deal. He couldn’t reach Smietana, so he frantically called the event organizers. They explained that not only had no Binance reps showed up at the conference—they weren’t even on the registration list. (A spokesperson at Binance told me that the company neither requested nor knew about the party.) “That’s when I started taking anything Brandon said with a grain of salt,” Stephens told me. Still, he decided that, “if this is going to be weird, I’m going to make it memorable weird.” Some of the escorts took their pay and left; the rest drank champagne and played Cards Against Humanity with the group into the morning.

When Stephens returned from Las Vegas, he set about mapping Skycoin’s progress. One of the company’s main selling points was Obelisk, an algorithm that allowed it to send coins cheaply and quickly. On Telegram, Smietana insisted that everything that came before was “obsolete and primitive.” He boasted that Obelisk was written by Houwu Chen, a developer who had worked on Ethereum, the second-most popular cryptocurrency platform. He posted an academic paper written by Chen on the Skycoin Web site, claiming that it was a Skycoin white paper. But when Stephens reached out to Chen, he got no response. “We kept trying to chase people down to ask details, and it was slowly revealed it just . . . didn’t exist,” he told me. In a later discussion about technical details, a Skycoin “community manager” told coinholders that “it’s too advanced to share” and that the company “can’t trust the public with it.” When pressed, Smietana wrote, of Chen, “He is a recluse, I doubt anyone can contact him or he would respond.” Smietana eventually told me that Chen had taken a payment of a million Skycoins for his work on the white paper and then left the project. (Chen declined to comment, saying, “Just don’t put my name in the article. That’s my statement.”) Stephens discovered that Obelisk had never been implemented. (Smietana now acknowledges this, but claims that the project has published some of Obelisk’s code and used it in simulations.)

Skycoin’s payments were fast, but only because transactions were processed on a single server, rather than on a decentralized network of computers. The server sat in the Shanghai office of Scott Freeman, the C.E.O. of the C2CX cryptocurrency exchange. This also meant that, if Smietana wanted to, he could freeze transactions. “The big thing about a blockchain is it’s supposed to be decentralized, and no single entity is supposed to be able to change it,” Freeman told me. He added, of Skycoin’s setup, “In a way, it makes you into a fraud.” (Smietana claims that his power to freeze transactions was designed as a security measure.) Freeman said that he nagged Smietana about implementing Obelisk but that Smietana told him, “People don’t really care. It’s not worth it. We should spend our resources on other things.” (Smietana denies this.)

Skycoin’s Web site claimed that multiple payments were scrambled together to provide extra privacy, but this feature was never implemented in the Skycoin wallet. The pre-mined coins sat in virtual wallets under Smietana’s sole control. (When pressed, Smietana claimed that he shared control of the coins with a secret group of advisers, but refused to give me their names.) When Stephens asked to see Skycoin’s accounting books, Smietana explained that his girlfriend, Sarah, was in charge. Sarah told Stephens that the accounting was a work in progress. (Smietana denies directing Stephens to Sarah, and she denies being in charge of the project’s accounting.) Everything seemed haphazard. Stephens was once paid from a bank account in Mauritius registered under a different name; many employees were paid in bitcoin or Skycoin.

In early February, 2018, a month after the CoinAgenda conference, Stephens booked a trip to Shanghai to see Smietana, determined to bring some order to Skycoin. One night, he had dinner with Smietana and members of a Chinese marketing team that Smietana had hired, at a steak house in Xuhui. As the dinner began, Smietana rose from his chair and launched into a rambling diatribe of conspiracy theories. For hours, he catalogued the hidden crimes of a class of global élites who controlled citizens through virtual reality, medical marijuana, and pornography. At some point, Stephens started recording Smietana on his phone. “We want to feminize the peasant population to make them more docile,” Smietana says. “It’s so they don’t revolt.”

Stephens told me, “I just became shell-shocked. What the fuck have I gotten myself into?” He had seen Smietana post conspiracy theories on Telegram before, but he figured it was a joke. In the weeks after the dinner, Stephens tried to warn some investors, but felt that they brushed him off: “They would be, like, ‘Brandon is just doing his thing, and the value of the coin keeps going up.’ ”

Shortly after Stephens returned from Shanghai, a reporter named Tristan Greene published a scathing article about Skycoin on the Next Web, a technology-news Web site, condemning the company for pre-mining its coins. The Skyminer router was being sold for one bitcoin—worth about ten thousand dollars at the time—but Greene highlighted the fact that it was constructed from components worth about six hundred dollars. Customers got back the ninety-four-hundred-dollar difference, but it came in Skycoin, which still sold only on small exchanges, making it difficult to trade in quantity. (The software for the miners was also incomplete; users connecting to Skywire had no way to pay for the service. Smietana claims that this feature is still under development.) Stephens granted Greene an interview but couldn’t persuade him of the project’s legitimacy. Greene wrote, “Is it a scam? I’m 99 percent sure of it.”

Skycoin went into full damage-control mode. The project had been running a black-ops marketing unit sometimes referred to as Shill Team Six, composed of users plucked from Telegram who specialized in manipulating attention on the Internet. The “shills” occasionally flooded 4chan and Reddit, keeping engagement up with memes and bots. A former member of Skycoin’s inner circle, who also requested anonymity, told me that if someone spoke ill of Skycoin the shills could be sent in to “make their life difficult,” by digging up embarrassing information. (Smietana denied directing the group, saying it was “completely out of control.”) The shills found that even bad publicity could be good for Skycoin. In a chat with investors, Smietana said that they sometimes spread negative rumors about Skycoin, in order to attract attention. “Direct promotion does not get to front page and has low click rate,” he wrote. “If they create contraversy, then it directs attention and clicks to skycoin.” (Smietana claimed that these messages were taken out of context.)

Stephens knew that Smietana pored over texts about crowd psychology and even solicited advice from DJ Hives, an anonymous online personality who at one point used a Hitler avatar, on controlling public opinion. In voice messages, DJ Hives referred to Skycoin customers as “fish,” a poker term for easily exploited players, and encouraged Smietana to cultivate an aura of infallibility: “We want to put you on the level of deity as far as the masses are concerned.” (When contacted on Telegram, DJ Hives said, “None of this is correct,” and declined to comment further.)

The team gamed search algorithms into ignoring Greene’s article. “We helped bury that page for a while,” Sudo, the anonymous user, who claimed to be part of Shill Team Six, messaged me on Telegram. (Smietana claimed that Skycoin ignored the article.) But word was already spreading. Skeptics showed up in Skycoin’s social-media channels to ask questions, and Skycoin moderators started blocking them. “After banning enough losers, everyone left will be winners,” Smietana wrote. Skycoin enthusiasts smeared Greene on Telegram, accusing him of writing a paid hit piece. When Greene showed up in the channel to address their concerns, moderators kicked him out. Someone claiming to be a Skycoin investor e-mailed Greene and threatened to “visit” him, his wife, and their son if he didn’t stop “messing” with Skycoin, writing, “nothing is really impossible in the world for people like us that grew theire wealth on crypto.”

Stephens contacted Michael Terpin, the adviser, to voice his worries, but, he said, “It turns out Terpin didn’t give a shit.” (Terpin told me that, by this time, his company was phasing out its involvement with Skycoin. “Brandon’s got a flair for the dramatic,” he said. “Honestly, that’s one reason I found it difficult to keep working with Skycoin.”) Stephens came up with a plan to strip Smietana of power and transfer management

Thinking about purchasing a Ledger Nano Hardware Wallet? Browse their official website: https://www.ledgerwallet.com/r/67efWant to join coinbase to begin your crypto journey? Here’s a link to get free $10: https://www.coinbase.com/join/558828d... Find me on Steemit: www.steemit.com/@heiditravelsTwitter: @blockchainchickInstagram: @hheidiannIf you’re looking for an app that tracks the price of BTC & ETH and many other coins, check out the CoinView App: https://play.google.com/store/apps/de...Donation Addresses:Bitcoin (BTC): 16gwMprXw5ss8Nk23CU8Jc6XtVf7KYF621Ethereum (ETH): 0xac5223209791820b4c37f6f6b4b5d249d25d55acDash: XuvS5TzRSRGbNZM2va9KXYxF6QBqQ4tVQpLINKS FOR ADDITIONAL READING FOR THIS VIDEO & ALL INFO IN TEXT DOWN BELOWLet’s talk about master nodes. Master nodes are more than just another way to invest in an alt coin. They allow you to be an integral part of the improvement and advancement of that coin. By holding a master node you have the ability to vote on proposals meant to improve the coin. You also are taking an amount of that coin out of circulation, this helps to increase demand by reducing the supply.The very concept of masternodes has long term value in its core. The investors who have masternodes are the investors who have put their money where their mouth is and have chosen to commit to that coin for the long term. Holding a master node benefits the investors also. In addition to seeing capital gains by just holding the coins, you will also be paid in that coin. Payouts can occur anywhere from multiple times a day, to weekly or bi-weekly payouts. If you invested in a master node before the coin really starts to take off then your profits can increase exponentially.I should note that there are some potential downsides with masternodes that you should be aware of before taking part in one.They are vulnerable to DoS attacks if they are hosted on weak hosting accounts.If you invest in a master node at the peak price, the chance you’ll get a decent return of investment can be bleak if the price drops.The more masternodes that are created means a reduced revenue. However, more masternodes also means a better spread of the servers, which increases the security of the coin. More master node holders also means an increase in votes for proposals that can benefit the coin.There are only a handful of coins that offer masternodes, I suggest looking into Dash, PIVX, and Crown.The price of dash increased roughly 300% in the past month and has been holding steady just around $100 per coin. But it’s PIVX and Crown coin that have been making huge positive moves most recently. So if you’re looking for a coin that offers a master node and is starting to gain traction, I suggest checking out PIVX and Crown on your own and decide for yourself.Investin.com Article: https://www.investitin.com/masternode/DIY Dash Masternode: https://dashpay.atlassian.net/wiki/di... More About Dash Masternodes: https://www.investitin.com/invest-das...PIVX PIVX Masternode Explained: https://pivxmasternode.org/what-is-a-...PIVX Masternode Setup: https://pivxmasternode.org/masternode... PIVX Masternode Payouts:http://178.254.23.111/~pub/DN/DN_mast...PIVX Masternode Philosophy: https://pivx.org/2017/03/21/why-shoul...)Crown Coin Info: https://coinmarketcap.com/currencies/...Crown Coin website: http://crown.tech/