The ICO token platform (aka Ethereum) was originally perceived by Rockchain as an open innovation ecosystem where technological innovators could have an access to liquid peer to peer investment markets, valuing their innovation potential in an open way. We were transposing the open source eyeball concept “given enough eyeballs, all bugs are shallow” onto the investment markets “given enough eyeballs, all deep innovations come to the surface”.
However, after a 13 ETH ICO still running and a few more understandings of the ICO market internal mechanisms, we’re now also looking at the “cathedral” analogy. Bernard Madoff could operate more than 10 years (link) an advanced Ponzi scheme without being caught. The two core seduction arguments of such Ponzi schemes are proven past returns and reputation. What if we considered globally the whole ICO phenomenon a “Massively distributed Ponzy Scheme” (MDPS) ? Instead of having one virtual hero bringing reputation and past returns history on the table, we have a distributed network of “advisors / influencers” distributing reputation in a net of interlinked projects, in exchange of some fixed fees or hidden benefits. For past returns, we present the ICO token returns based on the USD, not the Ether, and since the Ether cryptocurrency is doing great compared to the USD, every ICO token seems to be a great investment; thus the ICO phenomena is going on, helping the ETHER price to be sustainable.
Generally speaking, advisors / influencers are obviously not here to guarantee the fundamental value of ICO projects innovation, they merely open a network of potential backers – exactly what Madoff did in a centralized approach.
Besides, let’s be realistic in the numbers: the ICO potential returns are not good compared to ETHER, and investors start to understand it (link). The underlying token value growth (Ether) should not distort the investor ROI analysis; the truth is that derived tokens have a hard time to bring sustainable value growth, as opposed to blockchain native crypto-currencies (bitcoin, ethereum, nem…).
Rockchain conclusion is that the “eyeball theory” for crowdsales is currently a lure, and that we need a way to distribute investment research to get some kind of sustainable correlation between the market potential of innovations and the investment hype. We should definitely switch from a “distributed face rental marketplace” where advisors or influencers sell their names to promote the investment hype, into a truly distributed research platform valuing innovations. We definitely think initiatives such as sangus.org must start to convince people that the eyeball approach is still possible, otherwise a big wash out will be the only solution to stop the distributed pyramidal scheme from promoting empty projects on and on.
Besides, we still believe in the technical potential of ICO mechanisms for crowdsale transparence, asset transferability, funds vesting and other features that are great if the projects were assessed evenly by experts. So the ICO token mechanism is great; the opportunity to have a collaborative investment research platform is being spoiled.
I want to thanks our few backers, you’ll get fully reimbursed at the end of the ICO (we’ll release the procedure at that time). Rockchain will still continue innovation about distributed data privacy, in very novel ways we will announce soon.