If It Walks Like a Duck and Talks Like a Duck
I am starting a company that is called XYZ Corp. Instead of selling equity to greedy venture capitalists, I am going to sell magical tokens to people all over the world. The company will sell $30M worth of tokens with no obligation to token-holders. The token-holders can now flip these tokens to other people on exchanges for sometimes as high as 10x within a few weeks. Sounds suspicious? It might even sound like a security. The SEC agrees and has begun targeting ICOs. The WSJ reports:
The Securities and Exchange Commission has issued dozens of subpoenas and information requests to technology companies and advisers involved in the red-hot market for cryptocurrencies, according to people familiar with the matter.
The sweeping probe significantly ratchets up the regulatory pressure on the multibillion-dollar U.S. market for raising funds in cryptocurrencies. It follows a series of warning shots from the top U.S. securities regulator suggesting that many token sales, or initial coin offerings, may be violating securities laws.
This can't be a shock to anyone. If it walks like a duck and talks like a duck, it's probably a duck. Tokens can and will serve a useful purpose for certain companies. However, 95% of companies are issuing tokens to raise non-dilutive financing with no real use case for it. Every company doesn't need blockchain, but I think that has gotten lost with the many dollars being poured into the space. If you don't believe me, ask yourself, do dentists need blockchain?
Does Bitcoin Waste Electricity?
I feel like people who dislike Bitcoin just write articles complaining about how much electricity it wastes. The NY Times just wrote an article on this subject. Here are a few more examples of prominent media publishers writing about the subject.:
- Bitcoin, the virtual currency, has become a massive energy hog
- Bitcoin’s price crashed, but it’s still devouring an obscene amount of energy
- Bitcoin’s energy usage is huge – we can't afford to ignore it
The NY Times article writes:
Other governments also are grappling with the merits of virtual currencies. Enel, the largest European power company, said earlier this month it would not sell electricity to a virtual miner, citing environmental concerns.
“Enel has undertaken a clear path toward decarbonization and sustainable development and sees the intensive use of energy dedicated to cryptocurrency mining as an unsustainable practice that does not fit with the business model it is pursuing,” the company, partly owned by the Italian government, said in a statement.
This is simply not true. Even if Bitcoin mining begins to consume a large portion of the Earth's available electricity supply, miners will be driven to pursue alternative energy sources. Chinese miners are already using hydropower plants to mine Bitcoin. Hydropower energy doesn't pollute the air or water. Bitcoin miners will always want the cheapest energy and at the moment that is green energy such as wind turbines. I don't think it's unrealistic to believe that miners will encourage a revolution when it comes to making electricity cheaper and safer for the environment because of the amount of revenue being produced.
Some Other Things I Read Today
- How I got scammed out of .08 bitcoin by a guy claiming to be Roger Ver
- Cryptographers Urge People to Abandon IOTA After Leaked Emails
- Toshi wallet now supports ERC20 tokens and ERC721 collectibles
If you enjoyed what I wrote, you should also follow me on Twitter @amlewis4.
If you'd like to get Grasshopper Capital Daily delivered every day in your inbox, subscribe here.