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

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."

Comments

Woo-hoo!

[cirby]

I can practically hear the GPU prices dropping!

Re:Woo-hoo!

[Applehu Akbar]

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.

Re:Woo-hoo!

[ItsJustAPseudonym]

Miners needed lots and lots of pants...

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

Remember the Pyramid Parties in SoCal in 1980?

[darthsilun]

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

Not Quite

[Anonymous Coward]

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

The Headline is Incorrect

[Anonymous Coward]

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

It's the same as the stock market

[Proudrooster]

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!

Re:It's the same as the stock market

[MobyDisk]

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.

Re:It's the same as the stock market

[Aaden42]

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.

Of sourse they are

[JustAnotherOldGuy]

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.

Re:Of sourse they are

[rtb61]

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.

Clickbait headline

[Anonymous Coward]

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