The 2010s In Bitcoin: The Year 2012 - Forbes

ICO's are the new IPO's. Making Ethereum the new GBLSE

First, I may need to provide some background, as many of you may not have been around in 2012 and 2013, so you may not remember GLBSE, BTC.TC, havelock, bitfunder and a few other "bitcoin stock exchanges". On those exchanges, companies could list securities like company shares and bonds, which where traded for bitcoin.
Initially, mining bonds where the most popular security, allowing people to invest in bitcoin mining without having to own and operate any hardware, while allowing miners to raise capital and sell off the risk of future difficulty increases. Revenue from mining was then paid to bond holders as "dividends". In theory, a sound concept and the precursor to cloud mining. In practice however, these bonds quickly became a mania. They where trading at prices that made no economic sense at all, anyone with a calculator could easily see it was impossible they would yield a positive ROI. Miners and scammers quickly caught on to that, and sold more bonds then they had hardware for. But they kept rising in price, and people kept buying them, expecting to sell them later with profit.
Soon after, all kinds of companies launched IPO's on these exchanges. Some where legit, many dubious, most where pretty obvious scams. It didnt matter, IPO's where as much a hype as ICO's today, and virtually never failed to sell out in record times, raising millions of dollars. Almost nothing was scrutinized, anyone scammer with a tiny amount of photoshop knowledge or anyone promising to achieve some ridiculous ROI had no problem raising millions.
After the companies, came the investment funds. Someone raised bitcoins through an IPO, and used that money to trade in other securities listed on that same exchange. Then they launched a second IPO for another fund, and used fund A to buy shares in fund B, and fund B to buy shares in fund A. Prices went through the roof. You couldn't make up stuff like that, it was hilarious.
Almost nothing that was traded on those exchanges, had any real value. A few notable exceptions include Asicminer, which raised money to develop an asic, actually managed to get it produced as one of the first ever bitcoin mining asics, sold in large quantities and made a huge profit, paying back investors through dividens many times the IPO value. It was the largest success story by far, but even that ended with an exit scam when the anonymous founder ran off eventually.
Around 2013, the SEC intervened, closed a few of the largest exchanges, charged and fined some of the operators and issuers. Other exchanges collapsed or vanished. Tens of thousands of BTC where lost. Im not aware of any company that was launched on any of those exchanges that still operates, except for the gambling site satoshidice (which was among the ones fined by the SEC).
What caused this to happen? The enormous rise in value of bitcoin created a group of early-investor millionaires, who believed in crypto currency, who where accustomed to double or triple digit gains in a very short time and who had money to burn. Many of them got rich "by accident", not because they did a lot of due diligence or understood the risk/rewards or even the technology. This gullibility was clearly seen with Trendon Shavers aka Pirateat40, who at that time operated a gigantic, half million bitcoin ponzi scheme by promising 7% weekly returns. These people where very likely to invest large sums of money in risky crypto related startups, expecting a repeat of the success of their early bitcoin investment. This created a self fulfilling prophecy where IPO's always succeeded, prices always went up, creating gigantic bubbles.
Fast forward a few years. Besides bitcoin millionairs, we now have ethereum and a few other altcoin millionaires. Instead of IPO's, we now have ICO's. Instead of GLBSE, we have ethereum as the enabling platform. Instead of tradeable funds, we will soon have things like iconomi. Instead of bubbles created by funds investing in each other, we will have blockchains that are denominated in each other. And instead of thinking security regulation can be avoided by denominating an investment in bitcoin, we have people thinking regulation can be circumvented by calling something a token.
Am I the only one having a terrible deja vue?
submitted by Vertigo722 to ethtrader [link] [comments]

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Figure out the price of your ALTCOIN Calculator

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