(Disclaimer: I am not a lawyer, and this is not legal advice. Please check with your attorney for legal advice on how to design your cryptocurrency project)

Why ICOs are doomed in the US

Initial Coin Offerings have sucked the air out of tech investing in 2017. Many startups and teams saw the opportunity to raise money easily from investors for their startups, using the same process that Ethereum foundation followed. For people who have been in a coma in 2017, here is how it worked.

  1. A team announces a project, which includes a product or a network
  2. The network has not been built yet
  3. The purported…

(This is part 2 of startup luck series. Go to part 1).

It is clear that startups increasingly depend on luck.

However, almost all startup advice in Silicon Valley teaches you how to maximize your skills. There are tons of free resources that teach you how to acquire, refining and leverage your entrepreneurial skill.

Most of the advice is colored by “survivorship bias”. And, almost all of it comes from people who have portfolio diversification, management fees, or jobs at big companies which were once startups. …

Startups require luck.

All successful founders (those that have built “Unicorns”) had great skills and great luck.

Skills need no definition, as they are widely understood and recognized. We know them when we see them, be it in engineering, product development, sales, marketing, or operations.

But luck is hard to define, so I use Michael Mauboussin’s definition. According to him, luck has two key attributes:

  1. It affects the startup or the founder and has a critical impact on their success or failure, and
  2. It is quite reasonable to expect that a different outcome could have occurred, if history were to…

An early prototype algorithmic stablecoin (The Perpetual Motion Machine, ~1800 A.D)

In a world without volatile cryptocurrencies, we wouldn’t need “Stablecoins”

The whole proposition of a stable asset like real estate or stocks is preposterous. People invest in assets with an expectation of profits, other wise they would just hoard cash. And therefore no one needed another “stableasset”.

So, why are the rules different when it comes to crypto? What creates demand for an asset that will remain “stable” against their cash, when there was no such precedent in other assets?

People could just hold cash.

Stablecoins will only exist during the speculative phase of crypto adoption.

Given that the primary use case for cryptocurrencies at this moment is speculation, when people speculate, they need to be able to assess the profitability…

#11. Number of miners:

Bitcoin price increases with an increase in the number of miners, because it increases competition, thus increasing aggregate hashrate and therefore network security and trust.

Nakamoto Competition VS Realworld Competition:

In a traditional economic models, when there is a consumer demand for a good or service at a profitable price, more producers enter the market and compete on price until the price of the good quickly reaches equilibrium where marginal costs tend towards marginal revenue. This is how prices drop in free markets as competition drives them to the marginal profitability, unless strong externalities interfere.

In Nakamoto Competition, as more…

#4. Future network size expectations:

One of the factors that determines the price of Bitcoin today is the expected size of the network in the future. If users expect the bitcoin network to be larger in the future, the current market price for bitcoin will tend to be higher, all else being equal. Because there is no way to quantify what people expect the future network size to be, the best way to track this variable is across time.

In traditional centralized networks, the opacity of pricing is a hindrance for users to accurately factor future demand for the network. In monopoly network scenarios, sophisticated…

Bitcoin is Rat poison. It is a Scumball activity.

It has no utility. It wastes energy. It is killing the planet!

We’ve all heard the incessant chatter, either dissing bitcoin or deifying it. Depending on who you ask, you are either stupid for investing in a bubble, or are helping usher in the second coming of money. So, what is the truth?

Does Bitcoin have any value? How can it be estimated?, and, What factors determine Bitcoin price?

Market Demand: Why do we need Bitcoin?

Let’s start with the context of Bitcoin’s creation. Contrary to popular opinion, Bitcoin wasn’t created because Satoshi Nakamoto hated Visa or Mastercard’s…

Applying the time-tested shareholder dividend model to cryptocurrency distribution.

The SEC considers any “utility token” sale an unregistered securities offering. Instead, we propose a methodology for distributing cryptocurrencies that are NOT SECURITIES and don’t violate securities laws.

TLDR — Skip below to “SOLUTION — An alternative, fully compliant cryptocurrency issuance framework”

Why token sales are doomed in the US

Many startups and teams saw the 2017 opportunity to raise money easily from investors for their startups, using the same process that Ethereum foundation followed by selling the promise of tokens to investors. For people who have been in a coma in 2017, here is how it worked.

  1. A team announces a project, which includes a product or a network.
  2. The network has not been built yet.
  3. The purported network will use a token either as an internal currency or as a way to reward participants for actions within the network.
  4. The supply of tokens is limited.
  5. The team pre-mines…

Tokens, tokens everywhere. Every day brings more news of tokens. Many companies seem to want to be applying tokenization to some aspect of their business, to raise funding or for marketing reasons. Given the wild times of 2017, there is still a belief that another gold rush is coming. However, the vast majority of tokens that have flooded the market will be not worth much, because of serious flaws in their design, flaws in technology or a complete lack of demand for what that network produces.

Here is a commonsense, easy to use decision process that we use to evaluate…

There is a lot of controversy in the cryptosphere about tokens. There are people think that Tokens are all scams. The “Tokens are scams” argument comes from from two groups

1. Bitcoin maximalists worried that “Bitcoin Dominance” is being threatened (Bitcoin dominance is the market cap of Bitcoin divided by the total cryptoasset marketcap)

2. Traditional VCs/professional investors that are worried that their profitable (but very inefficient) business model is being threatened by tokenization and the ICO trend.

The supporters of the concept of tokens have made many arguments as to why these pessimists are wrong. Smart very insightful entrepreneurs…

Chandra Duggirala MD


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