‘YOUWANTWINNERS?’
Now when it comes to legal, plenty of companies do adopt best legal practices, spending a lot of time and money to do so. But plenty do not. And when investors are simply focused on “when’s the ICO?” and “how soon can I dump it afterwards?” then I think you’ll agree that there are incentives for bad actors to take advantage. Regardless of the incredible volatility and wild-west nature of this space, I still believe that if you have a little speculative itch in you, then you should get some cryptocurrencies under your belt. You see, $100 billion is a drop in the ocean of what cryptocurrencies will one day be worth. You just need to proceed very, very carefully. And “invest” no more than you can absolutely afford to lose.
THERE WILL BE BLOOD... AT SOME STAGE
It doesn’t take a genius to realize that huge sums of capital will be squandered during this speculative boom. Some blockchain companies may become the next Apple or Microsoft... but most will likely become the next Infospace.com. (Infospace. com, one of Jim Cramer’s “winners,” peaked at $1,305 a share shortly after his February 2000 keynote. By June 2002 it was trading at $2.67.) Also, there isn’t much in the way of regulatory clarity on many of these cryptocurrencies. The cryptocurrency industry is now discouraging use of the term “ICO” because of the clear stock market connotations. Because of the lack of regulatory oversight, coupled with speculative mania, I suspect it’s only a matter of time before we witness a large-scale incident of fraud (at which point the same ICO punters will probably go crying to the regulators demanding retribution). To provide some perspective here, when Snap (the company behind social media platform Snapchat) went public earlier this year, the Form S-1 registration statement filed with the SEC was approximately 120,000 words long, outlining in great detail everything from use of proceeds, to underwriting, related persons, management... you name it. Bancor, on the other hand, a cryptocurrency which recently pulled in $150 million in an ICO, did so on the back of a 13-page white paper (I read it – one of those 13 pages is the cover, and one is the table of contents).
Illustration: Bridgette Jester
It doesn’t take a genius to realize that huge sums of capital will be squandered during this speculative boom.
42 | July 2017
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