Here’s What You Need to Know about all these damn ICOs.

Hey so everyone has by now, heard about some kind of initial coin offering, or known simply as ICO. If you haven’t take a quick peek at Google. They’re all the rage these days, to the extent that Paris Hilton and Floyd Mayweather are now promoting ICOs for different companies.

ICOs are (strictly my definition) a way for crooks to take advantage of the hype around cryptocurrencies to take money from “investors”. This is because what Initial coin offerings boil down to is a company, call it ABC Inc. launches a nifty little product that doesn’t exist yet, sold on a proprietary blockchain-like platform which only accepts their own cryptocurrency as the method of payment and or way of ownership. They then offer investors an opportunity to buy said cryptocurrency or coin, at a valuation they (or in the case of an open bid ICO) the investors set as the value of the coin. These are essentially companies with non-existent product raising money and giving you a ‘security’/product that is completely useless anywhere outside of their own platform. Why would anyone ever hand money over for that?

Simple: crypto-mania. The rise of Bitcoin and secondarily, Ethereum has created a market for any and all cryptocurrencies coming into the market to generate a bit of hype in the hopes that speculators will rush in with their money and bid up the prices so other speculators can pour in hoping to profit from more bid up in the prices of these coins and so on and so forth. The entire edifice is starting to look mad dodgy.

When every tom, dick, harry including an airhead like Paris Hilton, and well, Floyd are now selling you securities, they should come with a HUGE “Buyer Beware” sign. And it’s starting to happen. China just recently banned ICOs outrightly, declared them illegal, no ifs and buts. And while the SEC has said ICOs are not securities ‘technically’, I expect them to slap the whole ICO thing with enough regulations to bring down Mount Olympus. I just hope Bitcoin doesn’t get too affected by it.

And for goodness sake, I hope to God you’re not buying them.