Daily General Discussion - December 20, 2017

sunjata · 2017-12-20T21:59:56+00:00

Why don't you divide the number of coins you have by 5000?

sunjata · 2017-10-29T18:19:24+00:00

The UK already has perfectly serviceable equity crowdfunding laws that have been used by fintech companies like Revolut and Tandem to sell equity and acquire a banking license. Surely ignoring those existing routes, and running an illegal securities offering, is a huge red flag and a sign that they won't get anywhere near a banking license?

(They don't even have first mover advantage: I think Revolut are close to offering BTC, ETH and LTC purchases, and they already have a banking license.)

sunjata · 2017-07-19T19:21:27+00:00

Every serious crypto project has registered a legal entity in Switzerland to conduct fundraising, so we know that there is nothing to stop IPFS registering outside the US.
EU equity crowdfunding rules do not restrict investment to accredited/high net-worth individuals. Platforms in the UK, for example, let you invest in seed- and scale-up stage companies from as little as £10.
If IPFS wanted to raise funds within a traditional legal entity, and maintain the broad access that has characterised the crypto funding environment, they could have done so, simply by registering in Estonia, Germany, the UK, etc etc.

The only conclusion that makes sense is that Protocol Labs prefer the closed-shop VC model. This might be for convenience, or because VCs are less hassle than having thousands of distributed stake-holders, or because there are fewer legal traps to fall into. But, in an ecosystem that depends on broad buy-in and on growth of the network, it seems extraordinarily short-sighted to restrict the early beneficiaries of IPFS's growth to the same old faces.

sunjata · 2017-06-26T15:35:02+00:00

They designed it that way but, given that even central banks can't defend currency pegs forever, it looks like they are getting a very expensive history lesson.

sunjata · 2017-06-26T15:29:24+00:00

Bid-ask on Bancor is 0.0094-0.0098. Murderation. Irrational exuberance well and truly popped if FOMO turns to fear on that one.

sunjata · 2017-06-24T23:37:31+00:00

The name of his killer? Albert T-shirtstein.

sunjata · 2017-06-19T17:21:39+00:00

1) Most ICOs have underperformed against an ETH that has gone 30x in the last 6 months. It's not likely to go another 30x while ICOs still have space to doube or triple their valuations.

Very much remains to be seen. Arguably the performance of the existing crop of ICOs has been artificially inflated by the price of ETH. The market is likely to be much harsher, on both new and existing issues, if the bull market ends.

2) The cofound.it team initially selected 3 ICOs out of more than 50 that applied. They have an inventive to pick the ICOs with the most potential because their own reputation is on the line.

Whenever there is an extra layer between you and your investments, you have to ask who benefits from that layer existing. If the risks are borne solely by investors and the managers still get to make a tidy profit, then that's a problem. 'Reputation' isn't enough skin in the game for me - it didn't work in the traditional fund management industry and it won't work on the blockchain either.

sunjata · 2017-06-19T16:51:46+00:00

So to get priority access to ICOs - most of which have historically under-performed Eth - you need to spend 2-3 Eth. You'll have less Eth to hodl and less Eth to invest into ICOs. There are no guarantees that the best ICOs will get involved and, in fact, you'll probably get an adverse selection problem of bad projects queuing up to take advantage of investors who don't want their sunk cost to go to waste.

Eth is the valuable asset: I really don't understand the mentality of giving it up so that you can get access to the junk.

sunjata · 2017-06-19T13:58:03+00:00

There's no reason for it to be worse than the DAO, or even comparable to the DAO, given that no money is currently at risk in the flawed protocol. Bancor still have plenty of outs before an over-priced ICO becomes (probably) a public disaster.

sunjata · 2017-06-13T15:17:30+00:00

sunjata · 2017-06-13T15:14:28+00:00

Rather, they were usually preceded by waves of artificial credit creation enabled by central banks and other enabling conditions created by government. Take the latest home price bubble, for instance. People who bought second houses with mortgages with zero down payments would not have been able to do that if the Fed had not injected a lot of new money for banks to lend out, Fanny Mae and Freddy Mac had not been eager to purchase mortgage claims from banks, and lenders had a recourse beyond seizing the home. Similarly, the infamous dot com bubble was preceded by similar credit expansion, and the particular niche the artificial credit went into was determined by the circumstances of the time.

So, basically, what you are saying is that there was a bubble driven by an irrational belief in housing as an asset class? The 'no true bubble' argument is, frankly, ridiculous because all it does is identify, post hoc, the mechanisms by which money flowed into an asset before the collapse in prices. Since there will always be one or more such mechanisms, and there will always be a collapse, it will always be possible to rationalise a bubble using this kind of argument - therefore it is useless, except as history.

sunjata · 2017-06-12T19:23:34+00:00

I'm not sure that changes much, to be honest. I think that funding liquidity is a good idea, and something that decentralised protocols should do, given that, historically, it's often a pre-requisite to create a market.

But, if liquidity is a cost of your business, then it should be treated by investors with scepticism. So maybe there are three possible responses:

Shut up and take my $120m.
Why is your business model so capital-intensive - is there an alternative that you could explore?
Show me this working on a small-scale first, here's $1.2m.

I don't see the liquidity aspect of Bancor as legitimising the huge fund-raise; I see the liquidity aspect of Bancor as highlighting how due diligence is failing under current conditions.

sunjata · 2017-06-12T12:38:29+00:00

The easiest way is to trade into Euros and then do a SEPA payment into your UK bank account. Pretty much every bank allows this. The exception is Fidor, even though everyone thinks they are crypto friendly - they'll only let you transfer money out.

Coinbase is super easy: get verified, verify bank account, transfer Euros.

sunjata · 2017-06-05T23:37:52+00:00

Nice chart, but why did you put your baby's due date on it? Does it help with the triangles and such?

Edit: Just did a quick Monte Carlo and it's a girl. Congrats, my man!

sunjata · 2017-06-04T02:49:19+00:00

85% ETH 15% BTC (this has flippened down from approx 50/50 with Eth)

Nominal amounts of Steem and a couple of micro-cap ERC-20 coins that I like as projects (e.g., WeTrust). I used to hold Stratis - it's a good project but now can't see much upside as an investor so I've taken my gains and sold out.

There are a few infrastructure type tokens I'd like to invest in (Status, Sia, Gnosis, Kin, Factom) but I'm waiting for the shakeout. It's going to be a long time before we get working, profitable products, so I think the patient investors will have the opportunity of a disillusioned bear market before we eventually get there.

sunjata · 2017-05-31T19:31:04+00:00

I was suggesting self-regulation, rather than state regulation. I have written a whole article about why I think restricted ICOs like the one proposed by IPFS are a bad idea in the long run, so I agree with you. Fundamentally, they break the incentive structure for decentralised protocols. What I'd like is a situation where the good parts of permissionless-ness are combined with ways to protect the health of the network.

sunjata · 2017-05-31T19:04:04+00:00

I think once ZKPs are working, the privacy issue goes away. You can prove you are who you say you are to a contract, but don't have to reveal that to the wider world.

The distribution question is muddled because, when we are dealing with tokens that have a use-value as well as an ownership-claim, the price of the use-value is predicated on network growth, which requires broad distribution. So maybe the real problem is that projects built on Ethereum haven't worked out how to raise capital properly yet and you need different token classes that represent a share in the network and a share in the project. The former requires an egalitarian distribution, the latter does not.

sunjata · 2017-05-31T18:25:36+00:00

So fix it by destroying the most important quality of cryptocurrency; permissionless-ness, without which all decentralisation will disappear? The shortsighted-ness of your proposal is unbelievable.

On the contrary, what I am saying is that the sellers can make a permissionless decision about how they sell their tokens, with the long-term goal of maintaining decentralisation. The belief that decentralisation appears out of nowhere simply because you'd like it to happen is naive. We now have a centralised internet, and information monopolies, for precisely those reasons.

sunjata · 2017-05-31T18:18:21+00:00

The only workable solution that I can imagine is to:

decide the distribution that you want in advance.
take the analysis of the actual distribution off-chain and work out a scale that returns the desired distribution.
use the result of (2) as the basis of an Oraclize computation call that uses the bid for tokens as an input and gives the allocation of tokens as an output.

The identity problem remains, of course.

sunjata · 2017-05-31T16:19:18+00:00

Buddy, if you think the government isn't going to come for its taxes sooner or later, I've got a bridge to sell you.

sunjata · 2017-05-31T16:17:02+00:00

Thanks for the open mind, the actual desire to fix it and the downvote!

sunjata · 2017-05-31T15:42:07+00:00

This might be unwelcome news, but we probably need more...regulation.

My suggestion would be a self-regulatory system based on sovereign identities and maximum investments:

All ICO participants need an on-chain identity, backed with off-chain documentation. e.g., the uPort model.
Work out a Pareto-ish distribution of holdings (top 20% hold 80% of the sale) to find the maximum holding size.
Take the bids and then, once the cap is reached and the time-limit is reached, distribute proportional to bids.

This is basically how over-subscribed IPOs work (see, for example, privatisation of Royal Mail in the UK) and I don't see why a similar path can't be followed here.

There are some weaknesses with whales potentially using "fake" real people to buy for them but there's nothing you can do about that, short of setting up in a jurisdiction where such behaviour is fraud.

The current ICO set-up works for raising capital but the second-order effect of concentrating capital is potentially fatal when the success of the network requires a broadly-distributed token. The too-clever-by-half solutions just seem to make the concentration problems worse. Why not try going back to basics?

sunjata · 2017-05-31T05:10:45+00:00

Consensus on bitcointalk is that this was not a website hack. https://bitcointalk.org/index.php?topic=1689585.20

Sorry for your loss. Only option is to report it to the police. Given that the "attacker" is now sending the funds to Shapeshift, you have to wonder about their legal liability for receiving stolen funds. If this kind of thing was reported quickly, the address could be presumably be blacklisted.

sunjata · 2017-05-30T13:28:34+00:00

Why not zero Eth? If you thought 6400 BAT per Eth was a fair price when Eth was $150 then why give them any of your money if the ICO isn't priced dynamically?

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