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Ethereum Co-Founder Says Cryptocurrencies Are 'a Ticking Time Bomb' (bloomberg.com)

Posted by BeauHD on from the ticking-time-bomb dept.

randomErr writes from a report via Business Insider (alternate source): Ethereum, the rival to bitcoin, has been on a tear. Its founders said the latest trend in the cryptocurrency space may not be as good for the cryptocurrency as some might think. Ethereum is up 1,700% over the last year, and that spike has occurred in tandem with the growth of the hottest new trend in fundraising: initial coin offerings. Approximately $1.2 billion has been raised by the new cryptocurrency-based capital raising method this year, according to Autonomous Next, a financial technology analytics service. It is a trend that has sparked excitement across Wall Street. But the cofounder of the company behind the cryptocurrency, Charles Hoskinson, told Bloomberg that initial coin offerings may not benefit Ethereum. "People say ICOs are great for ethereum because, look at the price, but it's a ticking time-bomb," said Hoskinson. "There's an over-tokenization of things as companies are issuing tokens when the same tasks can be achieved with existing blockchains. People are blinded by fast and easy money."

64 comments

  1. Woo-hoo! by cirby · · Score: 4, Funny

    I can practically hear the GPU prices dropping!

    1. Re:Woo-hoo! by Anonymous Coward · · Score: 0

      And you got the first post, too. Congraturations! You technical monkey!

    2. Re:Woo-hoo! by Anonymous Coward · · Score: 0

      Don't be jealous because you missed out on the gold train, those like me that got in early already have our rigs paid for and we will keep making money (less now with difficulty and price) but well into the future until either the equipment dies or we move to more profitable coins as they come out.

    3. Re:Woo-hoo! by cirby · · Score: 1

      Only took twenty years...

    4. Re:Woo-hoo! by Applehu+Akbar · · Score: 1

      I can practically hear the GPU prices dropping!

      So Ethereum will never achieve its lack tulip?: http://www.amsterdamtulipmuseu...

    5. Re:Woo-hoo! by Applehu+Akbar · · Score: 1

      EDIT: Black tulip...

    6. Re:Woo-hoo! by Applehu+Akbar · · Score: 4, Insightful

      Don't be jealous because you missed out on the gold train....

      The miners forty-niners were not the ones who made big money on gold. It was the entrepreneurs who serviced them, like A P Giannini, founder of Bank of America. One of the more successful was a dry goods merchant who arrived in San Francisco with a shipload of sturdy canvas sailcloth, intending to cash in on the need to re-rig all the ships that had to round the Horn and sail up the uncharted Pacific coast of the Americas to get to the goldfields. Though he badly misjudged the market for sailcloth, he dyed his fabric blue and made pants out of it. Miners needed lots and lots of pants, and the rest was history. His name was Levi Strauss.

    7. Re:Woo-hoo! by Anonymous Coward · · Score: 0

      Never trust anyone who calls their computer a "rig".

    8. Re:Woo-hoo! by ItsJustAPseudonym · · Score: 4, Funny

      Miners needed lots and lots of pants...

      So his "round the Horn" prediction came true after all.

    9. Re:Woo-hoo! by Anonymous Coward · · Score: 0

      Is money a code word for piss-jars?

    10. Re:Woo-hoo! by Anonymous Coward · · Score: 0

      Do you listen to The Dollop?

    11. Re:Woo-hoo! by Joce640k · · Score: 1

      ...we move to more profitable coins as they come out.

      I think I see a flaw in this cunning plan.

      --
      No sig today...
    12. Re:Woo-hoo! by LynnwoodRooster · · Score: 1

      Time to upgrade from the TI 99/A, eh?

      --
      Browsing at +1 - no ACs, I ignore their posts. So refreshing!
    13. Re:Woo-hoo! by bjohnson · · Score: 1

      Nonsense, Baldrick! It's a perfectly cromulent plan! Cannot Fail!

  2. Time Bombs by Anonymous Coward · · Score: 0

    It's been quite a long time since time bombs actually ticked.

    1. Re:Time Bombs by war4peace · · Score: 1

      I'm sure they meant "tickling bomb".

      --
      ...gis sdrawkcab (usually not responding to ACs; don't bother posting as AC)
    2. Re: Time Bombs by Zero__Kelvin · · Score: 1

      You need to load the audio driver and edit alsa.conf then restart pulseaudio.

      --
      Guns don't kill people; Physics kills people! - John Lithgow as Dick Solomon on Third Rock From The Sun
  3. Blinded by the Light by turkeydance · · Score: 1

    MMEB

  4. Remember the Pyramid Parties in SoCal in 1980? by darthsilun · · Score: 4, Insightful

    Cryptocurrency speculation reminds me of the pyramid "parties" in Los Angeles back in 1980.

    At least in a pyramid party if you were standing in line to get in and nobody else was getting in line behind you you could bail.

    If you were smart.

    There were a lot of not smart people.

    Those who cannot remember the past are condemned to repeat it. --George Santayana

    1. Re: Remember the Pyramid Parties in SoCal in 1980? by Anonymous Coward · · Score: 0

      reminds me of the miners in 1849.

    2. Re:Remember the Pyramid Parties in SoCal in 1980? by bluefoxlucid · · Score: 1

      I'm going to start my own so I can get a billion dollars out of people before it crashes. It'll be the Tickle-Me-Furby Coin.

      --
      Support my political activism on Patreon.
  5. More like by Z80a · · Score: 1

    A multibillionaire game of hot potato.

    1. Re:More like by Anonymous Coward · · Score: 0

      ...or a financial bubble.

  6. Ha-ha! by Narcocide · · Score: 1

    Well, yours sure was! Next time set the timer for a bit longer.

    Hilarious.

  7. That's not what he said at all by Anonymous Coward · · Score: 0

    He said weaknesses in crypt-cryptocurrencies are a problem. Like the hacker that just stole millions of dollars of Etherium from a bullshit client. Is it just me or do we all wish we were that lucky motherfucker that discovered the flaw?

    Face it, you're all assholes that would do anything for money even if it meant you best friend or child died in the process. It's sickening.

    1. Re:That's not what he said at all by Anonymous Coward · · Score: 0

      Except the client that got hacked and was produced by the Ehterium co-founder. Basically I would say it was an official client, and I would hazard this was always these two guys' plan. One would develop the network so the price rises up, the other will put a backdoor in the clients, so they can siphon off the money when the price is right and move to a small island in the pacific.

    2. Re:That's not what he said at all by Anonymous Coward · · Score: 0

      I thought it was a conspiracy by the GPU manufacturers

  8. Not Quite by Anonymous Coward · · Score: 4, Informative

    He said ICOs are a problem, not cryptocurrency per se. Basically, he's saying there are too many cryptocurrencies.

    1. Re:Not Quite by Anonymous Coward · · Score: 1

      The two correlate strongly. In a market of a fiat currency, imposed by organizations with no strength behind their fiat, the barrier to entry is minimal (The ICO) and consequently, crreating a nwe cryptocurrency and cashing out on the chumps is very easy and will eventually cause the death of cryptocurrency. The market will see that cryptocurrencies are inherently weak, and move back to commodities and currencies backed by nations.

  9. The Headline is Incorrect by Anonymous Coward · · Score: 3, Informative

    He says ICOs are a ticking time-bomb, not cryptocurrencies directly.

    1. Re:The Headline is Incorrect by gravewax · · Score: 1

      that time-bomb when it explodes will take them all with it.

  10. It's the same as the stock market by Proudrooster · · Score: 2, Insightful

    When I buy a stock I don't actually get a stock certificate, instead I get a number in a computer or TOKEN.
    Could the whole thing come crashing down tomorrow?
    You Betcha!

    1. Re:It's the same as the stock market by Anonymous Coward · · Score: 0

      Kinda missed the whole point.

    2. Re:It's the same as the stock market by Anonymous Coward · · Score: 0

      The physical stock certificate would be a token as well, with no more intrinsic value than a number on portfolio services website. The thought is that a share in a well performing stock's value is grounded in some real world factor, be it physical/financial assets, market share, mind share, intellectual property, etc. A crypto token's actual value is typically much less clearly tied to any real world factor other than "what people are willing to pay for it". Until we can decide what being able to securely process a transaction/contract/whatever is worth on a blockchain vs a known party performing an equivalent service in a more centralized way (paypal, interac, ach...) these tokens value is largely speculative.

      As an aside, if a major stock exchange does come crashing down, you would still own shares in that stock (whatever they are worth in this hypothetical catastrophe), you would just have a difficult time proving it. In the unlikely event that a blockchain evaporates, your tokens and anyone else's are gone as the entire transaction ledger no longer exists. If your shares are transferred out of your portfolio fraudulently you have options to recover said shares, with btc and eth this is not the case.

    3. Re:It's the same as the stock market by squiggleslash · · Score: 1

      A stock certificate has a tangible value, even if it's usually inflated several times that of the physical assets minus liabilities of the company divided by shares outstanding.

      And while we're at it: a dollar? At minimum it's the recognized currency for paying your taxes in the US, which gives it value in that it's necessary.

      A crypto-currency simply doesn't have anything backing it. Contrary to the assertions of advocates, it doesn't have energy, because I can't turn a Bitcoin back into the power that created it - indeed, Zimbabwe's currency has more legitimacy because the paper and ink that was used to create each bill can be converted back into paper, a useful commodity.

      BTCs are like fiat currency, minus the actual fiat from a respected government. They're at best a social currency, and in the end, I suspect they'll fail for that reason.

      If you need to escape fiat currency for some reason, ironically shares are a pretty good alternative, be they numbers in a computer or not.

      --
      You are not alone. This is not normal. None of this is normal.
    4. Re:It's the same as the stock market by MobyDisk · · Score: 2

      Stocks are not equatable to cryptocurrencies at all.

      Cryptocurrencies have nothing backing them. Stocks are backed by assets. Owning a share of stock means you own a percentage of the corporation's assets. This means cryptocurrencies are more like fiat cash and less like owning stock.

      When one says that the stock market may "crash" that means the value of the corporations may lose significant value. But as long as the corporation exists, the stock will have some intrinsic value. If the company owns 50,000 computers and a 50 story office building, then the stock will always have some value because the owner of the stock owns some computers and a piece of real estate. That can be negotiated or sold. Courts have laws for negotiating them. Even if the company was in in bankruptcy the stock holders have some ability to redeem their stock.

      When one says that a cryptocurrency may "crash" that means that the currency is no longer used, or the exchange falls, or it loses favor because some new cryptocurrency is cooler. In that case, the owner of the cryptocurrency has nothing at all but a number. They have no asset: no computers, no real estate; no legal recourse, nothing. This is actually worse than cash, because at least with cash there are laws requiring companies to accept that cash. There are international treaties requiring some assets to be exchanged in that currency. So unless all the governments and companies that use that currency crash, even a fiat currency will still have some value.

    5. Re:It's the same as the stock market by Aaden42 · · Score: 3, Informative

      Owning a share of stock means you own a percentage of the corporation's assets.

      You might want to read the fine print on the "normal people" stocks that you can actually buy on an exchange or have in your retirement portfolio. All but the most preferred of preferred stock offerings are subordinate to basically everything in any kind of bankruptcy or reorganization. Generally the employees pensions come before common stock. You don't realistically own even a paper clip's worth of assets from any company you hold stock in. In the event of the company collapsing, the amount of leverage held by most companies means common stock isn't much better than junk paper in terms of what investors will recover. Literal pennies on the dollar would be a exceptionally good outcome.

    6. Re:It's the same as the stock market by Anonymous Coward · · Score: 1

      Generally the employees pensions come before common stock.

      Liabilities before equity. The problem as you mention is that by the time the company is bankrupt, it's soo deep in debt that it cannot meet payments---by that point, there's no equity left.

    7. Re:It's the same as the stock market by inking · · Score: 1

      How is a bankruptcy relevant to the fact that stocks constitute ownership shares of an enterprise? If you want higher security, buy the said corporation's bonds. There are stocks that waive your voting rights, but no stocks that supersede liabilities.

    8. Re:It's the same as the stock market by inking · · Score: 1

      If anything, they are like bullion. Zimbabwe can print as much fiat as they like, but you can't print BTCs indefinitely, just create a new kind of BTC the acceptance of which would usually be backed by a higher tier coin. This is in fact quite similar to how the classic gold standard worked. I very much agree with your main statement though.

    9. Re:It's the same as the stock market by Major+Blud · · Score: 1

      employees pensions

      Now I know you're making stuff up :-)

      --
      If you post as Anonymous Coward, don't expect a reply.
  11. Bully by Anonymous Coward · · Score: 0

    I believe for Cryptocurrencies to become stable currency it should not be volatile.

  12. Of sourse they are by JustAnotherOldGuy · · Score: 2

    Ethereum Co-Founder Says Cryptocurrencies Are 'a Ticking Time Bomb'

    No shit, Sherlock, what was your first fucking clue?

    Was it when an unknown hacker used a vulnerability in an Ethereum wallet client to steal over 153,000 Ether, worth over $30 million dollars? Was that the event that clued you in? Or was it the non-stop shitfest of Bitcoin thefts and scams and robberies?

    I've been saying for years that crypto currencies are a wonderful way to lose all your money in the blink of an eye. The security technology of crypto currencies is and always will be waaaaaaaaaaaay behind that of the skill needed to hack them.

    --
    Just cruising through this digital world at 33 1/3 rpm...
    1. Re: Of sourse they are by Anonymous Coward · · Score: 0

      Well also they are crypto comedies, errrrrr, commodities

    2. Re:Of sourse they are by rtb61 · · Score: 4

      It's far smarter to kick back against the intended slavery of the banksters and corrupt governments and make cash king. Asking for permission with credit cards is going too far. Of course with legalised theft in the US, the feds and law enforcers being able to straight up steal your stuff without any conviction which is wildly unconstitutional, you have a real problem in the US. Don't let them fool you, a cashless capitalist society is a slave society.

      --
      Chaos - everything, everywhere, everywhen
    3. Re: Of sourse they are by Zero__Kelvin · · Score: 1

      That's the great thing about the American dollar ... the way it is immune to theft and scams.

      --
      Guns don't kill people; Physics kills people! - John Lithgow as Dick Solomon on Third Rock From The Sun
    4. Re: Of sourse they are by JustAnotherOldGuy · · Score: 1

      That's the great thing about the American dollar ... the way it is immune to theft and scams.

      The difference between my American dollars and crypto currency is that if my bank is robbed, I still have my money.

      --
      Just cruising through this digital world at 33 1/3 rpm...
    5. Re: Of sourse they are by Anonymous Coward · · Score: 0

      Some of the cryptocurrency exchanges like CoinBase are now FDIC insured. Please educate yourself.

    6. Re:Of sourse they are by inking · · Score: 1

      If you invest all your savings into any single asset, you are playing with fire. What that asset is is less important. Since all crypto depend on BTC and to some degree on ETH as their reserves, you cannot really diversify in crypto alone. However, you can diversify by buying crypto along with your usual instruments. Considering the ROI it has had, you can get very good returns with minimal risk by holding something like 10% or less of your portfolio in crypto.

      What I find somewhat unnerving is that most people who buy Ethereum are not experienced in traditional investing. I have seen countless individuals on Reddit claiming that they are using it almost exclusively for their kid's college funds, retirement funds and so forth. They are nice people, but what they are doing is not well thought through. That is ticking time bomb.

    7. Re:Of sourse they are by JustAnotherOldGuy · · Score: 1

      I have seen countless individuals on Reddit claiming that they are using it almost exclusively for their kid's college funds, retirement funds and so forth.

      Yikes. Some of those people (possibly a lot of them) are going to wake up one day and find out that their whatever-coin wallet has been hacked, and sometime during the night all of their money just went *bloop* and disappeared.

      --
      Just cruising through this digital world at 33 1/3 rpm...
    8. Re: Of sourse they are by Anonymous Coward · · Score: 0

      CoinBase is NOT FDIC insured. Educate yourself.

  13. Clickbait headline by Anonymous Coward · · Score: 3, Insightful

    He says ICOs are a timebomb. He did not say cryptocurrencies or blockchain are, they are are clearly here to stay. Currencies are insane volatile though. Still a poor headline

    1. Re:Clickbait headline by UnknownSoldier · · Score: 1

      > Currencies are insane volatile though.

      /sarcasm You don't say ... (Stages of a Bubble in case anyone was curious)

  14. Great "article"! by GeekWithAKnife · · Score: 1


    Dude with ETC (forked off blockchain) says things for much more successful ETH are bad and a "time bomb".

    Name one fucking crypto that is not a potential "time bomb". As if ETC didn't crash badly ever for practically no reason.

    Yes ICOs can be dangerous. Like any investment you could lose everything. Crypto is even more volatile so higher risk reward/loss.

    ETH is becoming more popular and common place. It's becoming a better platform every day. If there were a bunch of fraudulent business that scammed people out of money or just plainly failed would you blame the US dollar for it? Would the US Dollar then automatically become a "time bomb" because of $1.2bln in ICOs compared to a market cap of $20bln?

    Shameless FUD promotion for ETC. What's BeauHD's stake in crypto? -Food for thought.

    --
    A 'singular oddity' is an event that cannot be explained and only happens when you are alone.
  15. Too easy by Anonymous Coward · · Score: 0

    The technical end of a cryptocurrency can be achieved by taking bitcoin, and simply requiring the output be XOR'd with a particular random string before being tested for being sufficiently close to zero. Then it is a matter of marketing and getting machines to do the hashing.

    I can imagine banks and governments using blockchain in various capacities. But if they simply stipulate that only certain machines can do the hashing and write to the blockchain (even if many others can check it -- basically require a public key signature or similar), then they trade off the decentralisation of bitcoin for a massively reduced electricity bill. Bitcoin then gets expensive to have, and governments and banks get the power to regulate transactions.

  16. Re:Like McCain's Brain? by Anonymous Coward · · Score: 0

    The fix is to get the state out of giving out handouts to big pharma and big business. End state/medical fascism now!

  17. "can be achieved with existing blockchains" by Anonymous Coward · · Score: 0

    Sounds like competition to me.

  18. The new drug by Anonymous Coward · · Score: 0

    Crypto Currencies are the new drug. Everybody thinks they will get rich, but it's a trick that will make you a slave to the central bankers. The apeal of such large amounts will lure people into it in droves, then when so many are cashless, those crypto currencies will be outlawed and a federal (or international) version will be implemented with a promise to accept the full value of the crypto's people already have in an exchange.

    At that point, the central bankers will have control over every aspect of your life. if they don't want you to buy guns, they will deny you the ability to buy one. if they want to track you down to take your children away and give custody to a child molester, there will be nothing you can do to stop it because you are tracked via your purchases.

    Avoid Crypto Currencies at ALL cost.

  19. As opposed to ..? by micahraleigh · · Score: 1

    Government imposed currency manipulation is not a ticking time bomb?

  20. Shorting cryptocurrency by FunkSoulBrother · · Score: 1

    Is there some way to short cryptocurrency that doesn't involve the same bullshit wild west risks of getting involved with these bitcoin exchanges? I smell a lot of dollars to be made, but not if some asshole Russian can just steal them from me after my bet comes in.