The Reason Why ICOs Have Been Going Through The Roof...

Authored by Simon Black via,

First it was, and all the unbelievably stupid Internet businesses in the 1990s.

Investors were so eager to buy dot-com stocks, all you had to do was put an “e” in front of your business or product and you’d immediately be worth millions.

It didn’t matter that most of these companies didn’t make any money. Investors kept buying.

Later on after the dot-com bubble burst, another big craze developed in junior mining stocks – shares of small exploration companies looking for big mineral deposits.

The epicenter of the junior mining industry is in Vancouver, Canada, and the stock exchange there (TSX-V) throttled to record highs.

Shares of companies with literally no profits, no revenue, and no assets were worth tens of millions of dollars.

Then that bubble burst.

A few years later, a new hot craze developed– in cannabis companies.

The market has been flooded with companies (many of them curiously based in Canada’s poor climate and high cost structure) with plans to grow medicinal marijuana.

Their stock prices have soared, with valuations in some cases exceeding $1 billion.

Every time the bubble bursts with these big trends, most of the companies get wiped out.

Only a handful survive– primarily the ones who focused on building long-term, sustainable businesses instead of chasing a quick buck.

From the ashes of the dot-com bubble, companies like Amazon, Godaddy, eBay, etc. emerged in-tact and are still successful today.

Similarly, while many junior mining companies went completely bust, a handful are still operating and quite profitable.

And there will be a few extremely successful cannabis companies over the next several years who step over the remains of their innumerable, defunct competitors.

Clearly today’s big craze is crypto and blockchain.

Like the dot-com bubble in the 90s, you could add the concept of blockchain to just about anything and have a ‘business’ worth millions, no matter how idiotic the original idea.

(Someone will soon pitch me an idea for an app to publish grocery lists into the blockchain. It’s absurd.)

And like all the other big investment fads in the past, most of the companies in this space won’t exist a few years from now.

There are lot of reasons for that, starting with the fact that building a business is hard.

I’ve done it successfully a few times. And unsuccessfully more times that I care to remember: it’s incredibly difficult, so the odds are against most of these companies anyhow.

But more importantly, these big investment fads always attract people looking to make a quick buck. And that doesn’t work in the long-run.

Case in point: earlier this week a company called HIVE Blockchain Technologies went public.

It’s stock price is already up over 3x… since MONDAY, from an opening of 62 cents to $1.89.

Just prior to that, the company closed a private placement at 30 cents… and a few months ago the company was selling shares between 1 and 3 cents.

In other words, a handful of speculators made more than 600x their money in just a few months with a company that has ZERO revenue, simply because ‘Blockchain’ is so popular right now.

This has become the norm in the world of crypto and blockchain.

ICOs, another hot crypto fad, have been racking up huge returns of their own.

‘Tokens’ issued by crypto startups that have no profit or revenue are seeing similar gains of 2x to 10x or more in a very short period of time.

In the case of HIVE, the company is in the business of mining cryptocurrency.

And based on its current stock price, HIVE is worth close to $400 million.

Yet its own financial statements report that they have not generated a penny in revenue.

What’s more, the company’s “illustrative results” show that they -could- make around $7 million per year.

So investors are already paying 57x that amount before the company even gets started.

Even more curious, HIVE’s only real asset is its client relationship with a company called Genesis, one of the largest crypto mining companies in the world (and also a major shareholder in HIVE).

Genesis has more than a million customers who pay an up-front, flat-fee to have the company mine cryptocurrency on their behalf.

HIVE is now essentially a customer of Genesis.

So investors are essentially buying shares of HIVE at a price that’s 57x what the company says it -could- be making (but isn’t) by having Genesis mine cryptocurrency for them.

Seems like investors could save themselves the trouble (and forgo the 57x share price markup) by simply becoming direct customers of Genesis themselves.

Who knows… maybe HIVE is the real deal. Maybe it’s the rare eBay or Amazon that emerges from the bubble in-tact and successful.

But this is a pretty clear example of the irrationality that ensues every single time there’s some white-hot investment fad.

After a hiatus of many, many, many moons, I blew the dust off my microphone and recorded a new podcast about this topic.

It wasn’t so much a podcast as a heated rant against this ridiculous bubble… and a clear explanation of precisely WHY so many crypto assets are generating unbelievable returns.

You can download it here.


Collectivism Killz Five Star Sat, 09/23/2017 - 13:24 Permalink

You shouldn't keep your cryptos at exchanges. Consider them like your local bank, keep enough to cover needs for a couple months, but it is wise to keep most wealth outside of the banks or exchanges. BTW, the IRS is likely going to be more dovish to cryptos than people are thinking. They are going to expect exchanges to provide 1099-k to businesses who do more than 200 transactions per year over 20K, but that is it for now. People forget that until 2014 you even self reported gains or losses on stock sales and the IRS had a hell of a time confirming and/or challenging people. Cryptos are way, way out there in terms of the IRS being able to confirm cost basis, etc. and yes, anything they impose on cryptos will likely also be imposed on PMs and cash.

In reply to by Five Star

shocktherapy Collectivism Killz Sat, 09/23/2017 - 13:45 Permalink

How to Stop Pirate Bay and Other Sites From Hijacking Your CPU to Mine Cryptocoins… These miners have also been known to be used by malicious advertisements around the web and on occasion they can also act as trojansNooYawker Rhett Jones9/19/17 4:18pm Kind of shows how imaginary crypto currency is. Crunching numbers magically creates currency.

In reply to by Collectivism Killz

2banana Sat, 09/23/2017 - 13:18 Permalink

It is rather amusing.Literally, there are thousands of crypto-currencies either in "circulation" or about to be in "circulation"Except for one or two rare exceptions - you can buy nothing with them.  They have no value or revenue except what a speculator will pay for them.They can't all be right... 

tmosley 2banana Sat, 09/23/2017 - 13:43 Permalink

Money doesn't produce revenue. Gold has no value without speculators, either. It just has an exceptionally well established base of speculators. Problem is, the exchanges (all two of them) are completely and totally corrupted.Ledger money has always found use in circumventing the machinations of the kikes. This time will be no different.

In reply to by 2banana

2banana tmosley Sat, 09/23/2017 - 13:54 Permalink

I would disagree.Gold and silver are very expensive to actually physically mine and pull from the earth.There is no way just make up a "new" gold or silver currency.They both have certain exceptional metallurgical properties that no other metal or element has.The both have great industrial applications (silver much more so).With either gold or silver in any form, I can go to the remotest village in Mongolia, India, Afghanistan, Zambia, etc and buy things with it.They both can be made into beautiful jewelry and will help you get laid.So um...yeah.  It does have an intrinsic value just sitting in your hand.And the thousands of crypto-currencies?  Not so much.  

In reply to by tmosley

tmosley 2banana Sat, 09/23/2017 - 13:56 Permalink

>Gold and silver are very expensive to actually physically mine and pull from the earth.So is bitcoin.>There is no way just make up a "new" gold or silver currency.Sure there is. We already have platinum and palladium, which both have many of the aspects of money, but are relatively new additions to the periodic table, and so never saw widespread adoption outside of industry. They didn't have the "network effect". It is much the same in cryptos, which is why bitcoin continues to dominate despite being an outdated, poorly governed piece of shit.>They both can be made into beautiful jewelry and will help you get laid.Big bank balance will get you laid too, despite no intrinsic in paper currency. So will a fat crypto wallet (prostitute preferred, actually).

In reply to by 2banana

2banana tmosley Sat, 09/23/2017 - 14:12 Permalink

Well, it seems that you are a true believer in that cryptos are as good or even better than gold or silver.It is obvious no logic will work.Choose wisely among the thousands of cryptos.  Hopefully, the one you choose doesn't get banned by government and then vanish into net vapor.Or you go to to buy something with it and the speculator winds have changed and it cannot be spent.That is the funny thing about gold, silver, platinum and palladium.  There is no counter balance.  No relying on something else (electricity, the web, some algorithms you don't understand, some hacker you don't understand, a government bureaucrat making a decision, etc.)When all is said and done, it is there.  Unchanged.  Ready. 

In reply to by tmosley

tmosley 2banana Sat, 09/23/2017 - 14:20 Permalink

>It is obvious no logic will work.I am open to honest arguments, but you oldbugs seem completely incapable of producing them. >Hopefully, the one you choose doesn't get banned by government and then vanish into net vapor.Governments are strong, but cryptos exist in a realm that is beyond strength. The only thing they can do is attempt to police the bottlenecks between fiat and crypto. But there is no law saying that crypto can only have value if it is tradable for fiat. It is no different than some place like Venezuela trying to enforce non-market exchange rates with harder currencies.>No relying on something else You rely on coin shop operators. No-one else takes gold or silver, and certainly not platinum or palladium.

In reply to by 2banana

2banana tmosley Sat, 09/23/2017 - 14:21 Permalink

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Like I said – choose carefully.++++++ Federal Reserve to Launch Its Own E-currency: Fedcoin  | September 23, 2017 | Robert Wenzel The U.S. Federal Reserve will not only issue its own cryptocurrency but will also make sure Americans use it, according to Doug Casey. “To start with, I suspect it’s going to be a parallel currency. Perhaps usable just within the U.S. which, in effect, would be a form of foreign exchange controls even more effective than the inability of Americans to open up foreign bank and brokerage accounts today [due to monetary control through FATCA]…I think it’s a near certainty that they’re going to do something like this and soon.” They will call it Fedcoin. David Andolfatto, vice president at the St. Louis Fed, proposed the word “Fedcoin” in 2015. He’s spoken publicly about this multiple times since then, and says Fedcoin could give the central bank an “added (policy) tool.”

In reply to by tmosley

RedDwarf 2banana Sat, 09/23/2017 - 14:56 Permalink

"Gold and silver are very expensive to actually physically mine and pull from the earth."Most things are difficult and expensive to accomplish, that does not equate to them being 'valuable'."There is no way just make up a "new" gold or silver currency."This is gibberish.  You can reasonably make new currencies upon anything that is divisible, fungible, scarce, and durable."They both have certain exceptional metallurgical properties that no other metal or element has."Every element has unique properties."The both have great industrial applications (silver much more so)."Not even close.  Only 5% of gold is used industrially, 50% of silver is and that is growing.  Furthermore you just made an argument about why you would never use silver for a currency.  The LAST thing you want for anything you are using for money is for it to have a supply and demand curve independent of it's supply and demand curve as money because that introduces volatility.  The reason gold is superior to silver as money is because it has very little industrial use."With either gold or silver in any form, I can go to the remotest village in Mongolia, India, Afghanistan, Zambia, etc and buy things with it."A lot of the 3rd world now accept bitcoin as well.  In fact bitcoin is slowly replacing many of the 3rd world currencies from the bottom up because all you need to trade it is a cell phone, which many of the people in these shitholes actually have."They both can be made into beautiful jewelry and will help you get laid."If you prove to women that you are rich, a lot of them will fuck you.  Crypto does that job perfectly well.  News at 11."So um...yeah.  It does have an intrinsic value just sitting in your hand."No, nothing has intrinsic value you muppet.  Value is the regard something or someone has for something or someone else.  It is ALWAYS an aspect of the person.  Stuff has properties that you may or may not value, but the properties themselves are not 'valueable' in themselves."And the thousands of crypto-currencies?  Not so much."It's fine that you do not value crypto.  There are people who place no value on gold either.  It's fine to have your own value system.  Your greatest failing is that you think your values are objective and universal and 'true'.  You're dogmatic and religious in the belief that you know the one real truth.  The same mistake all Marxists, authoritarians, and other busy-bodies make.

In reply to by 2banana

BallAndChained tmosley Sat, 09/23/2017 - 18:45 Permalink

> Ledger money has always found useOh so you are saying cryptos are like ledgers? A paper pad and pencil ledger cost what, 30 cents?So you are saying cryptos are worth 30c. Got it!MySql is a free database that can be used as a ledger. It cost zero.So you are saying cryptos are worth zero too? Got it!

In reply to by tmosley

Disgruntled Goat Sat, 09/23/2017 - 13:37 Permalink

Explain that part about AMZN again.... 10 years of obfuscated earnings, .... trading at 200x earnings .... how is that any different from a dotcom or ICO...? Oh thats right, its Bezos, the annointed one... Boycott Amazon