What is an ICO?

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How does the Bitcoin news trader scam work?

An ICO is a method of Bitcoin news trader scam financing. The so-called Initial Coin Offerings are in parts comparable to an initial issue of securities on a stock exchange. An ICO is an opportunity to acquire Bitcoin news trader scam tokens for projects in the blockchain ecosystem via crowdfunding. Supporters or investors acquire the tokens of the project and speculate that later a higher value of these tokens will result, similar to a stock on the stock exchange with the prospect of price gains.

Typically, ICOs are used to finance start-ups and new businesses. The startup “generates” the digital tokens and then sells them. This means that the money goes directly to the company’s team. It is to be used to build up the company.

An important difference to IPOs (Initial Public Offering) on the stock exchange is that ICOs generally do not represent ownership of the company via the token. It therefore does not entitle the holder to a dividend, nor does it automatically carry voting rights.
There are two basic purposes of tokens:

Utility Token for Bitcoin formula scam

The token does not represent any rights to the Bitcoin formula scam project or company. Instead, it should be used by the users as a means of payment after completion of the project. If the project is successful, the demand for the tokens increases and it experiences price gains on Bitcoin formula scam trading platforms. The token thus has an inherent value.

Revenue Share Token
This type of token is more comparable to shares. It entitles the owner to receive dividends. It does not always fulfil a functional purpose. The token may not even be needed to operate the platform itself, but merely serves as an investment vehicle to distribute the profits.

Depending on how the token is technically implemented, it may be that the distribution is automated via Smart-Contracts. It is conceivable, for example, that a project generates profits in the form of ethereum. Investors who hold their own Ethereum-based token from the ICO will be credited a corresponding portion of the profit to their Ethereum wallet.

What are ICOs used for?
ICOs were initially used to bring new crypto currencies onto the market and to ensure initial financing through the ICO. The projects were usually blockchain-based and the tokens were real utility tokens. Increasingly, financing via ICOs is also becoming interesting for existing companies, for example project-based. For this purpose, tokens are issued as revenue shares, which serve to distribute profits.

ICOs are particularly interesting for companies because the highly complicated process of an IPO is enormously simplified and can be implemented with moderate effort, e.g. on an ethereal basis. In addition, the investment opportunities will be accessible to a broader target group and tokens can be traded in smaller quantities more flexibly than shares on the stock exchange. The ownership of the tokens is represented on a technical level by a block chain, so that these peer-to-peers can be traded on any number of marketplaces – for stock trading, on the other hand, a central authority is required to manage the possessions.

Nevertheless, the unclear regulatory situation of ICOs poses particular challenges for companies. In many countries it is unclear whether ICOs are treated like conventional crowdfunding methods, in some countries ICOs have already been banned or severely restricted.

Scapegoat Bitcoin

Grym tries to illustrate why a digital currency is a questionable idea using crypto currencies as an example. Because of its pioneering role and its distribution, Bitcoin has to serve as a whipping boy.

It even goes so far as to deny the blockchain its decentralized character:

“For all purposes and intentions [the blockchain] is a centralized ledger. The fact that there are several copies of it, synchronized and distributed over a network, is irrelevant because they all have the same data.

A sentence that can only come from a central banker. Grym generously overlooks the fact that the advantages of decentralization only really come to bear when someone tries to change something in his copy of the ledger. Admittedly, as a central banker you have little desire to speak out in favour of decentralising the banking system. That’s why it’s hard to blame Grym for not wanting to saw the branch he’s sitting on.

“No advantages over traditional banking”

The fact that blockchain-based transactions take place (pseudo-)anonymously is also not a strong argument for Grym:

“The Bitcoin system was only built in a decentralized way to ensure anonymity. However, this is at the expense of efficiency, so the Bitcoin system is much slower and more expensive to maintain than any other existing payment system.”

Of course Visa, PayPal & Co. play in a completely different league when it comes to the maximum possible number of transactions per second. Security, decentralization and transparency come at a price. It’s a classic straw man for the central banks when they talk about scalability and efficiency instead of the actual motivation.

In addition, a Bitcoin user at least has the opportunity to see his transactions processed more quickly. All he has to do is promise the miners a higher transaction fee. The customers of centralized payment service providers do not have this option and are at the mercy of their conditions. The question of scaling is as old as Bitcoin itself. Numerous alternative crypto currencies have already addressed the problem and the number of possible transactions per second (tx/s) is constantly increasing. A payment channel in Ripple can theoretically be scaled up to more than 50,000 tx/s and would thus be at eye level with visas. The Lightning Network developed for the Bitcoin could even exceed this value many times over.

Reading the analysis is nevertheless worthwhile

Grym concludes with the thesis that crypto currencies in their essence are nothing more than accounting systems for non-existent deposits. He justifies this with the fact that money must always be available in two forms: as coins or banknotes and as institutionally covered book money. If this money is only digitised, there will only be one unit of account in the end. Now we can only talk about institutional cover as long as citizens and investors trust these institutions – in other words: states and central banks. The cover consists of the supposed guarantee of price level stability. The United States and Europe have struggled more with hyperinflation for longer. However, this does not mean that confidence in central banks can be fully justified. Greek citizens, for example, who had only limited access to their accounts in the wake of the financial crisis in 2010, will confirm this.

First, Grym criticises that it is misleading to talk about “digital coins” because there is nothing in the Bitcoin system that resembles a coin. Instead, transactions form the core of the Bitcoin ecosystem. Since transactions have to be confirmed by miners, contrary to Satoshi Nakamoto’s assertion, they cannot do without a middleman.

Grym forgets that it is theoretically possible to mine his own transactions. In addition, the issue of new Bitcoins – unlike that of new banknotes – is subject to a decentralized consensus. Finally, the role of full nodes – also a role that any participant can have in principle – is completely ignored by him.

Grym is also not impressed by the blockchain as a transaction history:

“The underlying mechanism of recording […] does not differ from the general ledgers that have been used for hundreds of years.

Nevertheless, it is worth reading the study from Finland – even if only to question his understanding of money and to understand the thinking of Bitcoin opponents.