My though about ICO and token sales

In past weeks, china started to issue warning about legality of ICO and exchange, and price got affected by this, which for me is not really surprising, and i'm pretty sure if people who buy those coin knew that the projects were legit, and would have no problem to fit tax and financial regulation the price would not have moved that much, but most of the time people don't even know what they are buying in, and i've been working on many projects before involving internal tokens for real use case, and worked on many e commerce platform too, to see where blockchain can have huge interest, and why most ICO and token sales are very weird model.

Already we were already working on such model based on internal token for managing micro paiment on platform, but one of the condition for this to be really workable, is that token are seen as unit of value, not as speculative assets, and the two functions are totally different from each others.

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The model was more about consumer buy tokens at fixed price, and they can only buy it through the platform, and the platform will garantee that they can trade those token for goods or product of a fixed worth, and that merchant or content producer who get those token can always get the same price out of it. If the platform sell 1 token for 1 dollar, to have easily micro transaction on the platform, then the merchant who sell good for 1 token must always be able to get 1 dollar back from it. Making this token in the same time unit of value for commerce and speculative asset with high volatility always seems nut to me.

Beside this, to be really usefull for e commerce, it needs a bit more than just anonymous transaction, as paypal did with a specific interface for merchant and consumer, where merchant can register some items, within a particular category, registered with a company name, and transaction to merchant can only happen through the buying of such items. Which make the system easily compliant with basics of accountability, taxes filling, as all transaction are also marked with a specific case, either it's a consumer buying an item, or any other operation containing meta information of what the transaction is about.

It's completely necessary to me to have a system like this to mark sales item, and having minimum of system of bills, to know what transaction are about, to know which country the transaction comes from, in order to make accountability, fill taxes and all this regarding the status of each party and the nature of the transaction.

And still all this can mostly happen via token if there is a fixed controlled value for the token, and that all transaction involving the token are associated with registered entities with a clear purpose.

Even just before the ICO craze started up, a friend of mine was already thinking about doing token pre sales , but no serious investor or buisness person we knew of would buy the idea to sell token with nothing behind, which give no legal garantee of anything, without having any platform already running with a clear framework on what one can get against those token, like just buying token like this as pre sales, with no garantee of the value of it backed by anything, no platform to exchange those token against anything with a clear value, and no accounting, seemed quite crazy for all of them.

Now it seem everyone find this normal to buy token and pour million in token sales, without any kind of legal backing, or any kind of garantee of the price, or without even a platform being built in order to have an idea of the use of those token, but really this has nothing normal at all, and it's completely predicticle that all legal entities will frown on the idea, because it clearly open the door to all kind of pure scam, and it's clearly what is happening all over the place, with millions being lost in those stuff.

Even considering those token as shares is really moot, because normally shares values are indexed to the company capital, with the idea that shares represent a fraction of he company capital value, and one always know what the share is worth because there is clear accountability on the income and expanse of the company, and even if it's normal that share value will decrease in a first time because the capital is used to pay the team, but those expanse are always clealy targeted to build something that will actually make income, and then rise the share value back, with clear study of cash flow, and supposed expanse / income plan, which is completely absent from most ico.

So even if those toekn are considered purely as share, and not as currency/utility tokens to be exchanged for a service or a good at fixed price to other entities who accept this paiment in token because it's always backed at a fixed price by the operators of the token, it's still very moot, because there is no accountability on how the invested money that is supposed to back the value of the those token as shares are managed, and so the value of token as shares is very moot.

To me it seem most ICO operators are not even very clear themselves on if the token is really a share into a capital, if it's utility/currency token to be exchanged for service or good at fixed price, and more play like schrodinger cat, being a bit both at the same time to win on all sides from speculative value, and utility value, without clarifying any of the use in any manner, just implying that it can both be rising up for investor, and both being useable as utility token for digitial economy, without laying out much of how this is all supposed to work, outside of people selling token at higher price to other speculator, which sound very much like a pyramid scheme or ponzi in my book, more than anything else.

With all this being said, i don't even get why people are surprised that regulation entity frown on the model, and why warning are issued from all competent regulation entities, because the models are very weird, and clearly open the door to many plain scam and ponzi, and it's hard to see how toke issued like this could be reglo either as share or actual token on a platform to be exchanged for services or good to service provider at fixed price.

Most people i see talking about ICO all seem to be in this whole craze of the token will go up, by vaguely mentioning utility value in very vague term, not having any kind of control on anything, and without they can exactly tell where the value will come from, or in which case of utility it can actually make income, and how that will impact the price of the token as a share, and all into this hyped out feeling they are part of some thing that can only go up, which for me look very similar to how people get caught in ponzi or scams, being all hyped out by some kind of campaign and babble about huge return, without having much backing or rationale to back up on how this price will evolve, why how and when.

I'm not saying ICO are entierely a bad model, but most operators i see are clearly lacking clarity on many things, and exploit all the vague and blur on the purpose of the token, and how the value is actually backed , which should be already warning sign for investor that it's quite fishy thing, and should really question where the actual value of the token rise will actually come from, and i really don't see lot of sound answer to this, and no wonder why the price can just crash easily if no one can really answer this sort of question in a sound manner.