China Forbidding ICOs: Why This Is A Good Thing For The Crypto Ecosystem
A couple of days ago, PBOC (People Bank Of China) announced that they will not only forbid any new ICO but will also ask the ones who already took place in China to refund the contributors.
As a result, the entire market is in red. Bitcoin lost almost 10%, Ethereum more than 15% and some of the altcoins lost as much as a quarter of their value. The most prominent example being NEO, the so-called “Ethereum of China” which lost over 26%.
But as red as the market looks right now, I think this is a good move. It may have come with a dash of centralization, it may have come at the “wrong” moment, when the market was booming and Bitcoin was ready to pierce the $5000 level, but it’s a good thing.
1. First of all, there is a contextual situation.
During the last few months, hundreds of so called ICOs emerged out of nowhere. Most of them didn’t have more than a one-page website, with a few paragraph of text and a couple if images. Yet, they expected to receive millions of dollars. This is pure speculation. It doesn’t do good to anyone, except, probably, the beneficiaries of these ICOs. So, first of all, the inflation of ICOs must be stopped somehow.
2. Second, an ICO is not a cryptocurrency.
These two activities were so tied together during the last few years, that in the collective consciousness they tend to blend. Wrong. An ICO is just a way of asking money upfront, for something that may, or may not go as expected. A cryptocurrency is a very complex project, requiring a significant amount of human resources, and, most important, time, to get to maturation. Satoshi Nakamoto didn’t have any ICO, AFAIK.
3. The fact that this regulation comes from China is very significant.
As you know, a lot of Bitcoin mining power, probably more than 50%, is coming from China. This puts a big question mark on the term “decentralization”. If all the mining power is concentrated in the hands of a single community (being it a country, or a government) then Bitcoin is no longer decentralized. So, despite the temporary dive of the price, I consider the dumping of Bitcoin from China, to be a good thing. Please note that I have no proof that the majority of the dumping is coming from China, it’s just a hunch.
4. I’ve been in the position of taking money from investors before, and, although it sounds great, it’s not as good as you think.
Of course, if things go well, everybody is happy. But if things don’t go well, well, it’s shitty. So purely from an entrepreneur perspective, the fact that many crypto enthusiasts will work without the pressure of the ICO (I’m talking about the genuine developers, not ICO scammers) may lead to better products in the future.
All in all, this measure, as strange as it is, and as upsetting as it may be for those who had plans these days with their tokens, it’s a good one.
So, hodl! :)
I’m a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. On Steemit you may stay updated by following me @dragosroua.