A Dispassionate Defense of ICOs as an OK Thing

Everyone seems to have an opinion on cryptographic 'tokens' of late. But maybe we should save the moral outrage?

AccessTimeIconJun 2, 2017 at 12:16 p.m. UTC
Updated Sep 11, 2021 at 1:24 p.m. UTC

Everyone seems to have an opinion on 'tokens' of late.

As if there weren't enough things to worry about in the world, the idea that a limited set of cryptographically unique data can be created and sold by anyone with an internet connection has emerged as a divisive issue, with everyone from the Financial Times to Reddit trolls weighing in.

How bad (you mean good?!) is it?

Well, let's just say people who generally decry the intervention of government are practically screaming for the regulators to be involved, and 'sensible' people are falling over chairs to distance 'blockchain' from the whole thing (and those are the more sane parts of the conversation).

What do I have to add? Just that it seems to mark a change that perhaps should be considered more dispassionately. Sorry, but tokens just aren't the end of the world (or the beginning of some new utopia).

Both sides have logical conclusions. Both are over-reaching to prove a point: Tokens are bad – woe the poor granny investor! Tokens are good – end to the Silicon Valley elites! (Written in true Silicon Valley style, of course.)

The better questions are: Should centuries of sensible regulation be discarded because of technology? (No.) Should tokens be demolished in infancy because of their threat to a highly risk-tolerant sub-population bent on 1,000% returns? (Also, probably no.)

In the words of Shooter McGavin, sometimes you have to play the ball as it lies. Sometimes that's off Frankenstein's fat foot...

But all of this sounds dumb

It does! Who needs a token? Not really anyone knows. (As with bitcoin, we should probably be OK with that.)

Maybe the guys at Polychain Capital know. They talk like reasonable people who know something that's too weird to discuss in much detail. (When your local Teslas need a protocol for a robotic union, then you'll know!)

Where to start? Bitcoin is a protocol. And in the words of Tom Ding (who ran a token sale platform that was VC funded, operational and closed before the term 'ICO' ever existed), it's a limited data set for a specific software instance.

As we've seen with bitcoin, this lets us send (increasingly expensive) bitcoins between parties around the world (sometimes to criminals!). What is that good for? Who knows? Payments? Maybe more things, maybe not.

What other software protocols need to behave like that? Leaderless and broadly usable? Got me there. But ethereum has made it super easy for us to find out. (Is this a use case? OK, let's forget it.)

Are any of these things good? Maybe. Tokens are likely this year's 'accepting bitcoin' – a way to appear trendy by using technology in a way that seems smart, but probably isn't a good intended use case.

If that's true, then this is ethereum's 2013 – expect more oddball brands to turn to the concept with little luck.

Infinite time

The common thread of both sides is there's a tendency to wrap these arguments in some kind of moral cloth.

As I'm writing this, I'm walking in the woods, typing on a little phone screen. Some time ago, I'd have used a pen and paper. Many centuries before that, a stone tablet and a big mallet.

I'd have to go somewhere to send this to you. Or maybe I wouldn't be able to send it at all. But I never really wanted to send you a letter (or a stone tablet). It's because of convenience – I'm lazy and largely apathetic – that I use a phone (or write this) at all.

Remember, I don't want to buy a record, I want to hear a song. I don't want to buy a stock, just exposure to some idea that makes my money go up or down (but preferably up). (Disclosure: I have never bought a stock and probably won't. It sounds terrible.)

Point being that technology very rarely ever seems to have a moral bent.

Like rock 'n' roll, it does, though, have an ingrained cultural posturing that sometimes, occasionally, but not really that often, has a real impact that propagates the myth.

Reinventing the wheel

(Wasn't part of this supposed to be positive? I'm getting there!)

As someone who stares at Coinmarketcap for hours, sure, it can be confusing. We have new things that look like other things, but kind of, sort of aren't. When token markets pump before an announcement... Insider trading?! Maybe, sort of. Moral outrage seems like an easy knee-jerk.

Tokens are often called a new kind of digital asset, but they're probably more like a digital invention.

If I invent the wheel and tell people about it, am I 'pumping'? If I did invent the wheel, you'd probably want to invent a wheel store. (That just seems like good advice.)

But 'Hey, only 130 people were in on the Brave sale!' Sure, but eight people invested 2 ETH (about $400) or less... See? Disrupting venture capital! Well, people need a lot of free income to invest in things, I hear.

Maybe we should focus on convenience and delivery. That seems like all we end up with anyway.

As Wences Casares reminded us at a Coin Center dinner last week: "We have no chance, we're all up against infinite time".

Tokens, in this context it seems, are likely to outlast us all.

Parking meter image via Caribbean Trakker


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