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Wolf of Wall Street: Cryptocurrency ICOs Are 'the Biggest Scam Ever' (betanews.com)
An anonymous reader shares an article: Jordan Belfort -- the real-life Wolf of Wall Street -- has warned that ICOs (or "token sales" or "coin sales") are "the biggest scam ever" and will "blow up in so many people's faces." The former stockbroker, who spent nearly two years in prison for fraud and financial scams, says that the Initial Coin Offerings used to raise money for cryptocurrencies are "far worse than anything I was ever doing." His fears seem to stem from the way ICOs differ from the more traditional IPO. With IPOs investors gain shares in whatever company they plough money into, and profits can be easily shared. With ICOs, however, there is no mechanism in place for distributing any profits that may be made, profits are reliant on the value of a given cryptocurrency increasing and, perhaps more worrying, ICOs are not regulated in the way IPOs are. Aside from the fact that some ICOs are out-and-out scams, many people believe that the cryptocurrency bubble is just that -- a currently growing bubble that will eventually pop, leading many people to lose out.
Because a scammer knows a scam when he sees one.
Why should we listen to you instead? What are your accomplishments?
A crypto currency is a very convenient way to store and move money. Banks will charge 5% or more to convert your money from one currency to another and wire transfers are a pain and usually cost $10. Other money transfers often come with 1 or 2% fees and banks in some countries are corrupt and incompetent. Crypto currencies could replace a good portion of M2 since they work better than most traditional money. M2 world wide is equivalent to almost 30 Trillion USD. One day one crypto currency will likely approach this amount. ICOs are a scam. They replace shares but are inferior in almost every way except they by-pass the traditional stock markets. (I suppose some conspiracy people might think this is a good idea). ICOs also don't allow high frequency trading since trades can only take place as fast as blocks are added to the block chain and buried to a sufficient depth to be trusted.
Crypto currencies are a lot of things. "Convenient" is not among those things. I've tried several times to use bitcoins but it's a total pain in the ass, so I own zero bitcoins. Bitcoin? more like shitcoin. I'm joking, but seriously - bitcoin has to be the world's least convenient way to pay for anything.
He can't buy what he needs with it. The local markets don't take bitcoin. It is not a liquid currently, nor is it easily convertible.
Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
Ohh you got me there. Just because bitcoin looks and acts like every speculative bubble ever doesn't mean it is one, right?
A good rule of thumb for what is a speculative bubble: When the value of something dramatically increases without an answer to the question, "why". (aside from the below key factors in a speculative bubble):
Displacement: A displacement occurs when investors get enamored by a new paradigm, such as an innovative new technology or interest rates that are historically low.
Boom: Prices rise slowly at first, following a displacement, but then gain momentum as more and more participants enter the market, setting the stage for the boom phase. During this phase, the asset in question attracts widespread media coverage. Fear of missing out on what could be an once-in-a-lifetime opportunity spurs more speculation, drawing an increasing number of participants into the fold.
Euphoria: During this phase,caution is thrown to the wind, as asset prices skyrocket. The "greater fool" theory plays out everywhere.
Valuations reach extreme levels during this phase.
During the euphoric phase, new valuation measures and metrics are touted to justify the relentless rise in asset prices.
Profit Taking: By this time, the smart money – heeding the warning signs – is generally selling out positions and taking profits. But estimating the exact time when a bubble is due to collapse can be a difficult exercise and extremely hazardous to one's financial health, because, as John Maynard Keynes put it, "the markets can stay irrational longer than you can stay solvent."
Panic: In the panic stage, asset prices reverse course and descend as rapidly as they had ascended. Investors and speculators, faced with margin calls and plunging values of their holdings, now want to liquidate them at any price. As supply overwhelms demand, asset prices slide sharply.
I'm not hating on bitcoin and actually think it will open up some new avenues to challenge the credit card companies to be more competitive but the irrational exuberance sucks people in and it hurts them, especially when highly speculative vehicles like ICOs are looking to cash in on it.
Invest in the stock market, and you become a fractional shareholder in a real company. If the company does well, you do well, it's joint ownership. Invest in a cryptocoin, then you're not really "investing", but you're speculating, gambling, etc.
The one thing that your theory is missing is taxes. You can exchange Bitcoin for pizza or for hotel bookings. But you cannot pay the IRS with bitcoin. If you wish to live or do business in the United State, then when the tax bill comes due, you'd better have US dollars. In a practical sense, the value of a government backed fiat currency is based on the relevance of that country to the world economy.