Towards a Token economy?

The ICOs & Token sales market?

ICOs (Initial Coin Offerings), token sales or crowd sales mainly finance the development and distribution /marketing of blockchain solutions including computer protocols or decentralized application called "dapps" by means of sale of corners or tokens (crypto currencies or equivalent).?It started back in 2013 with J.R. Willet's MasterCoin Bitcoin protocol.

The market really took off last year but has experienced a significant boom since the beginning of the year.

Update on Token Economy from @Andy Martin with his Next Gen Digital Business framework

Main market places

Singapore and marginally Switzerland, US blockchain startups use those foreign "platforms" to escape the SEC risk.?

The amounts raised are approaching USD 1 billion and have soared since the beginning of the year, leading to an increase in the price of the Bitcoin because all of the "issuers" or "sellers"request a payment in this crypto currency which they call "Digital Gold".?

The most famous of the ICOs is the one from the Swiss foundation ETHEREUM in 2014.

The Vitalik BUTERIN ETHEREUM platform was created for applications and smart contracts developments?in BLOCKCHAIN with the ETHER token issuance and which is today competing with the crypto currency Bitcoin.?

The emergence of this specific platform is the source of the recent development of "crowd sales" or "token sales" and ICOs globally because it provides all of the tools required for their creation and administration (digital assets management).?

Apart from the seemingly incontrovertible "sales", such as the Storj platform created by a large code developer community for decentralized computer file storage or the AUGUR predictive markets decentralized platform which offer real services to large and well-measured metric users communities, surfing on the wave, there is a flurry of sales of "token" for development of more or less defined applications with teams that are more or less competent and identifiable, even to pure scams:

https://www.theatlantic.com/technology/archive/2017/05/cryptocurrency-ponzi-schemes/528624/?

https://hackernoon.com/dear-sec-icos-tokens-are-killing-innovation-2f8d287f88c3

https://soundcloud.com/cryptoscam?

Proposals / offers of ICOs, Token sales, crowd sales are listed on specialized sites such as Smith & Crown.

Investors in these markets are stillwater mainly "nerds"?/ open source software developers and / or libertarians who want to remain anonymous.?

Legal and Regulatory

As for now, the only clear regulation authorities are:

- the Ontario Security Commission for which any such offer must be reported and follow the regulation in place for the security offer.

- the Chinese Central Bank which intends to regulate ICOs.

- HM Government of Gibraltar, is drafting a regulation proposal to encourage blockchain firms to be established there, with regulatory certainty.

- French SEC, AMF has a new set of regulation for any kind of values offered to the public allowing it to check the information provided before launching to protect retail investors.

But most players in the "token economy" remain waiting for the position of the SEC which is said to be looking into The DAO.

Other Asian regulators like the one in Singapore remain very accommodating with these sales despite the scandals. This probably occurs because of the many exchange platforms of crypto currencies installed there??

For many lawyers like attorney Pamela Morgan, the majority of these sales are under the scope of security regulations or worst "in that dangerous kind of scammy zone if not following Bitcoin or Ethereum core characteristics of decentralization, independence, openness and consensus based on proof of work".

For others, all this is only fraud and "ponzi schemes" and the bubble would be about to explode leaving in-fine only the bitcoin as the only cryptocurrency left.?

In order to prevent criminal offense and other legal issues with the American regulator, ICOs project initiators market them as ‘software presale tokens’, most often awkwardly, in order to escape the US security definition of the Supreme Court's famous "Howey test" and their "white paper" expressly states that the purchase of their token is forbidden to all US residents or citizens on one hand, and/or that it is strictly reserved for informed investors on the other hand.?

Actually they are not able (and don't want to) to check KYC/AML most often.?

The concept of pre-sales in the crowdfunding mode with a like kickstarter reward crowdfunding) is deliberately highlighted in the drafting of projects:?I buy tokens that are negotiable and tradeable, and potentially/theoretically represent a right to use a new application or a new IT service protocol.?

In theory, depending on the success of the service or application, distribution of the protocol and / or number of users, the token sees its course appreciate whereas today there is an important speculation as to "The Dutch Tulip" crisis for some observers.?

Unfortunately, in many of these token sales/offers, the existence of services or the guarantee of the availability of the new blockchain application or protocol does not exist and investors / buyers have no recourse, they often have to waive their rights in the contracts as highlighted in a recent Financial Times article.?

However, we should not "throw the baby out with the water of the bath" and some large law firms are mobilizing and working in the USA to support the development of the "token economy", by associating to the Simple Agreement for Future Token (SAFT) drafting of self-regulation rules for token sales or ICOs in a compatible way with the SEC regulation.?

Indeed, this new means of financing blockchain and open source apps and solutions and new computer protocols has the great advantage of fostering innovation and competition compared to major established digital players such as Google, IBM, etc. or big banks Blockchain Consortium.?

Conclusion?

For the pirates, the current status quo suits them at risk of being caught with criminal penalties as has already happened in the USA with a sentence of two years in prison for an "issuer" of ICO.?

For the pessimists, it is like in the gold rush where only the sellers of shovels will most likely make fortunes or those of investors / buyers who will come out in time in the event of the bursting of this supposed bubble.?

For the optimists, it is a new wave of innovation, a source of growth and economic efficiency, which emerges with the blockchain / token economy and its new mode of financing?infrastructure, protocols and applications to be fostered in partnership with regulators such as Singapore in the framework of regulatory sandboxes on one hand and the development of self-regulation on the other hand.?

Update : Cryptocurrencies More Assets Than Actual Currencies, Says Morgan Stanley ("Investment vehicle"instead of FIAT currency)

Update BBC Daily Fintech News: A call for regulators action before a bubble split

News Item 3:?$150 Million: Tim Draper-Backed Bancor Completes Largest-Ever ICO

Decrypted: Initial Coin Offerings (ICO) are driving a wedge in the startup investment landscape. They are changing the way founders raise money, outside the traditional venture capital world. In the most recent ICO last week, Bancor set a new record high raising $153 million.

Our take: ICOs are hot. They are here to stay. The amounts they raise will continue to grow, while the time it takes to raise money will drop. But it looks and sounds just like the late 90’s, when too many companies saw their stocks skyrocket, even though they didn’t make a dime.

Are we living a?1999 bubble crypto-style?

It all started in 2013, when?Mastercoin raised 4,740 Bitcoins worth approximately $613,000. Fast forward to April 2017, GNOSIS raises $12.5 million in just 12 minutes. Wow!

From a founder’s perspective, ICO is a win-win. Founders have access to fast cash own their own terms, instead of going through a lengthy?fundraising process and giving up equity to angels or VCs on their terms. Startups are no longer limited on how much they can raise because of their geography. They can raise enough money to compete with companies that are fundraising in Silicon Valley, New York, London or in other big startup ecosystems with lots of available venture capital. People using the network, the ones creating the value, now have a stake in the project. ICOs combine efficient ways to raise money, build a motivated community and give people a sense of ownership.

But then just like in in the 90’s,?when an IPO was more important than profits and was the primary goal of all the stakeholders involved, it just looks to me like too many ICOs have one goal in mind.: how to raise as much money as quickly as possible, overstating a promise and not necessarily building a product. In many cases, they don’t even have a product, they just publish a white paper. Doesn’t sound to you like someone with an idea raising millions? Isn’t that what happened in the nineties and then the bubble popped.

We are now, predictably, seeing traditional funding rounds dressed up as ICOs. These are mostly not scams (some are). Some are good ideas and have good MVP implementations (some are not). The point is that the ICO label is now just a marketing buzzword. In these hyper-speed times, we reached the top of the hype roller coaster in only a matter of weeks.

Yet ICOs are exciting and?have real sustainable value if done right. They have all the makings and possibilities to truly drive faster innovation on a global scale. Even though?big VC firms, like Andreessen Horowitz and Union Square Ventures, have backed some cryptocurrency hedge funds, traditional investors have stayed away. They have stayed away because?because they lack regulations, they have high valuations, over-capitalization and lack of control over financials.

ICOs have a lot of similarities to??securities, but they are also very different. Most ICO’s don’t actually offer equity in startup ventures, instead they only offer discounts on cryptocurrencies before they hit the exchanges. They are global, funded by bitcoin, ether and other cryptocurrencies, not controlled by any central authority or bank.

The ICO trend is?still in its infancy, and just like Internet changed everything, ICOs can do the same exact thing. But, real value needs to come out these projects and solve everyday problems of the users that make up their networks. A bubble market can only create bubble companies. ICO will become what we allow it to be. We can only hope that regulators and the?community will define a set of rules so it does not turn into a bubble.

Update about the lack of regulation and the reasons why:

..... . The second reason why VC's are not big players in cryptocoins is the regulatory and taxation uncertainties around cryptocurrencies. Crypto takes on characteristics of property, commodities, securities and money and it's currently taxed as property. No one is sure how to regulate this beast and it appears that no one wants to be responsible for killing the next internet golden goose, so most regulators haven't taken any major action.

Update about the latest AUTONOMOUS NEXT TOKEN MANIA GLOBAL SURVEY

Update regarding ICOs governance issues: Alan Wunsche very detailed analysis

Token Economy 101, or why Blockchain-powered decentralized networks are important

Losing Alpha: Why Most New Crypto Funds Are a Sh*t?Deal

29 cool slides about ICO & ITO: structuring ICO Wild West

Token Economy and BigTechs shaking lawmakers and regulators with a Taxonomy Framework which defines a token and how its value can be exchanged!?

The Token Economy (Andy Martin/IBM)

Tokenization — IPwe’s marketplace for Intellectual Property (IP)

"The recent announcement with?IPwe?was exciting for a number of reasons. IP management and patents are complex domains that, while relatively democratised in terms of the application process, suffer from a significant amount of manual and legal effort to manage. Here’s where the tokens come in: IPwe sees significant potential in issuing patents and non-fungible tokens (NFTs) to allow them to be more easily sold, traded, commercialised or otherwise monetised, bringing new liquidity to this asset class for investors and innovators. This should also make the transaction process far simpler across a potential global audience.

For small?businesses, representing patents as digital assets is particularly powerful because it allows IP to be treated as collateral or assurance of an organization’s value, also allowing it to be more easily leveraged when seeking funding — in the “traditional” finance world, or even in the world of DeFi (decentralised?finance). This initiative is also going to require a significant focus on interoperability between different NFT marketplaces which operate on different blockchain protocols. I’m genuinely excited to see this partnership and marketplace progress." @Anthony Day

https://www.dhirubhai.net/posts/brunoschneider_the-token-economy-whitepaper-activity-6866312902702350338-x_Wr

The "super" tokenomics for dummies by @Keir Finlow-Bates:

Supertokenomics | LinkedIn

https://www.dhirubhai.net/posts/prasannalohar_payments-blockchain-activity-6943378169592700928-nZKh?