Bitcoin Fork, Hyped ICOs – Immutable Gold and Silver

SEC, ICO and more acronyms

If you’ve been catching up with the latest series of House of Cards then ICO might sound like a reason for bitcoin to be banned outright as it is the fictional equivalent of ISIS.

But ICO in the real world is a very different thing, it stands for Initial Coin Offering.

Notable Initial Coin Offering

An ICO is defined as ‘An unregulated means by which funds are raised for a new cryptocurrency venture. ... In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin.’ - Click to enlarge

The hype has even grabbed the attention of that expert-investor and cool-head that is Floyd Mayweather ahead of his big fight with Irish MMA champion Conor McGregor. McGregor is thought to be a bigger fan of gold than cryptos and has tweeted about bringing “more gold back to Dublin.”

When you see this sort of thing it is an example of hype and suggests valuations may be frothy and on the speculative side.

An ICO is really just a promise about the future of a cryptocurrency and the underlying technology.

Most of them are attempts to bring innovation to the fintech space. However concerns have been raised over the lack of due diligence being carried out by investors’ and some ICO projects are playing on this.

ICOs are the offering of crypto tokens which are bought by investors. This then funds ventures in the space. Inevitably the majority of them will fail, but many show great promise as we have seen with Ethereum.

ICOs are almost certainly here to stay. Not only are we seeing a similar movement of people from traditional banking into ICOs as we did in the early days of blockchain tech. But we have also seen the SEC feeling the need to get involved. As we have seen with bitcoin, this network effect of growing stakeholders is justifying the ongoing existence and development of ICOs.

Last week the SEC issued a guidance note that tokens issued by an Ethereum project called The DAO were securities.

“The Commission applied existing U.S. federal securities laws to this new paradigm, determining that DAO Tokens were securities. The Commission stressed that those who offer and sell securities in the U.S. are required to comply with federal securities laws, regardless of whether those securities are purchased with virtual currencies or distributed with blockchain technology.”

This means that all ICOs may be subject to regulations. This announcement was received relatively positively in the crypto space, however some experts believe the SEC are showing a lack of understanding as to how these things work:

Blockchain engineer Elaine Ou pointed out on Twitter, ICO’s are “Untraceable, international, [have] no central authority, [and] funds can’t be frozen. The SEC ICO warning is the best ad for ICO’s.”

What it ultimately shows, however, is that the blockchain space continues to impress with innovation and the amount of money it attracts. However, it is all extremely new, there is a lot of hype and open to a number of threats as well as opportunities.

There will be significant creative destruction in the space.

Conclusion – Beauty and safety in simplicity of gold and silver

Many people bought bitcoin in the early days and have just sat on it.

Happy in the knowledge that it didn’t cost them much and they’ll wait and see what happens to it. Most of these people check-in with the price and whilst the volatility might scare them they are ultimately delighted with the long-term price performance.

The bitcoin price has (of course) felt the impact of the recent changes and debates. However the overall crypto space remains relatively resilient as the market-cap has remained fairly constant in the last week. However, the bitcoin price has faltered.

The problem is that this so-called hard fork has got a lot of people worried.

It has reminded bitcoin holders of the presence of counter-parties in the network, who are able to make decisions about your assets without your say so, whether they are the bitcoin miners or the regulators.

Many googled terms include ‘will I still have my bitcoin after the hard fork?…What will happen to my bitcoin?…Will I own bitcoin cash as well as bitcoin?’

There is confusion and with confusion comes doubt which is never good for price.

The ultimate lesson from all of this debacle is that bitcoin and other cryptos are not worthy substitutes for gold and silver, no matter how much some would like to push this idea.

The joy of owning physical gold which is segregated and allocated in your name is that no-one can announce that they don’t like how gold is mined so they’re changing what you own.

It cannot be manipulated in such a way. If you own gold coins or gold bars, it cannot disappear. It cannot be diluted or suffer a company take over or be hacked. It cannot be affected by alternative versions of it.

Gold is gold and silver is silver. They do not change and are immutable. There is both beauty and safety in this simplicity.

Balance Sheet Rise with ECB

- Click to enlarge