Please skim the article and share your thoughts:
Anybody who has been following cryptocurrency at all this year has learned two important things:
1: The success of the ICO model in raising funds for new startups (a couple billion dollars)
2: The extreme levels of speculation inherent to the cryptocurrency markets as evidenced by some of these ICOs.
Another way to distribute a new token/coin: Simply give it out to people who already own another cryptocurrency at a specific moment in time. There have been a few examples of this over time and it is certainly not a new idea: Clamcoin and Auroracoin are two. For example (hypothetical), on December 3, 2017 at 12 PM EST everybody who owns ethereum will automatically receive one hablamanos2 token for each ethereum they own.
Almost all cryptocurrency startups are currently using the ICO model because of how much capital they can raise. But what happens when we combine these two methods? Now i will still give out one token for every ethereum you own, but I will also keep 10 million of these tokens for myself.
Based on how speculative the cryptocurrency markets are, I know that even if these tokens are completely meaningless and arbitrary, speculators will see to it that the price remains above zero provided it is traded on an exchange. Now I can sell off some of the 10 million coins i kept for myself and raise some actual money.
Instead of making the coins completely arbitrary, how about i actually use the funds i raised from selling the 10 million coins to start a business that will hopefully be able to pay back dividends to all token holders? Maybe i will raise $500k and start my empire of fourplexes and pay back the dividends to token holders. Set up a website/whitepaper like a traditional ICO and you can still raise a lot of money off a good idea.
So imagine this: You are a holder of Bitcoin or Ethereum. This hybrid Airdop/ICO model takes off and every month 50 new companies try the same thing. Each month you are receiving all these tokens that (hopefully) represent interest in new companies. Most probably will not, but maybe some of them will and will do very well. You automatically have a stake in each of them so you do not mind speculators funding them. In fact you prefer the speculators making a market so you can just blindly sell all of them off every month if you want. (Hopefully with decentralized exchanges that do not even need to list the coin to trade it... ie, imagine when you create a new coin it comes with a special ID that you can use to trade that coin on the decentralized exchange). If you decide not to sell the random tokens, you will hopefully start to receive dividends in the form of Bitcoin/Ethereum from the companies that do well. Doesn't this entire thing start to sound like a normal dividend paid out to Bitcoin/Ethereum holders?
And here is what could lead to a huge speculate mania: This new dynamic that introduces this thing that looks like a dividend makes Bitcoin/Ethereum act like a normal investment because there is some sort of cash flow associated with it. Maybe multiple layers of speculation with a dash of hope, but still a cash flow. All of a sudden Bitcoin/Ethereum receive a lot of additional demand pushing prices higher. The market becomes more speculative and the value of the dividend rises, perhaps very rapidly as profits start chasing more risky investments (IE the airdrop/ICO combos). Which just makes Bitcoin/Ethereum seem cheaper, and go up more. We have a positive feedback loop for a massive price rally, eventual bubble, huge collapse, etc. etc. but we get some truly strange new-age type of financial instrument in the process and turn bitcoin/ethereum into a dividend paying investment.
All it takes is a couple successful crowdfunding campaigns doing this and then everyone is in. You saw how fast ICOs became common-place this year. For a trade with a huge positive expected value, simply wait for this dynamic to set up and then buy crypto to hold for a few months. If the dynamic does not set up, don't buy any.
Thoughts? Crypto investors... did you already see this and I'm just late to this train of thinking? Damn, someday i will just go get drunk when i'm bored at night at a hostel... but i guess that day is not today =Z
Submitted October 08, 2017 at 03:04PM by hablamanos2 http://ift.tt/2gkn9Mv
