Why SETHER is not getting my ETHER - Oracles and Vaporware

(to all purposes, this is fiction)
Today Mr. Positive Blue and Mr. Negative Red meet Mrs. Inquisitive Brown to talk about mainstream payments. Mr Neutral Black has made a through reading of the document and Mr Technological Green is around just in case. Mr Market Purple has joined today for a beer.
- I read the SETHER White Paper, and I have quite a few questions now.
- This project comes from a company that works in social networks analytics and plans to develop an Social Networks Oracle.
- They seem to have a good team, good programmers.
- The product is much needed.
- But, what is an Oracle?
- Do you know about Smart Contracts? Remember, those are programs that are coded into the blockchain and can be called and executed in trust-less manner?
- Yes, we spoke about them a while ago in the Quantstamp entry.
- Ok, these contracts are very good at dealing with information that is already on the blockchain, but they need to interface with other "real world data".
- For example?
- If you want to make a blockchain payment for an add in Facebook, the smart contract that does the payment needs to know that the add has been published.
- Oh, OK, and that would work also with other stuff?
- Indeed, sports results, exchanges quotations, ... anything.
- SETHER is developing an API so that smart contracts can use it as an Oracle for events that happen in Social Networks.
- It has huge potential. Is a much needed tool with hundreds of use cases.
- The technical base seems also quite good.
-So, should I invest?
- I would not.
- But, why? It sounds terrific!
- These people are great programmers, but their business proposition to the investor is awful. Firstly, there is a huge hardcap. If it is reached it would mean valuating the tokens (not even the company) (they sell 50% for a hardcap of 165,000 ether, currently all tokens would be 132M USD in value).  Second, there is no softcap. They claim that the project will go on no matter what the contribution is.
- What are the consequences of this?
- As investor, I do not know how much am I paying for what percent of the tokens. That is, if I put 1 eth, what percent of property (of tokens) do I have. It is blind investment. Also, not having a hard cap an claiming that they would do the project anyway means that they do not need my investment, so they are just using a good opportunity to get additional funds to try to do a faster development.
- That approach to software engineering is not adequate for innovation. The rationale behind this is "let's get as much money as possible so we can hire a workforce as large as possible to finish this".
- So... is that possible?
- No. It does not work like that. Growth has to be managed or the chaos will eat up the funds with meagre results.
- Are there any other red flags on this project?
- Well, not really a red flag, but there is going to be a huge competence and this guys do not seem to have a good market strategy nor a pre-existing customer base.
- So... they won't succeed?
- They may succeed, but the risk does not match the reward. Particularly with that ridiculously high valuation of a software that does not exist.
- If the software does not even have a prototype (they only have a proposed API definition), the team is good but not world class, there are not pre-existing clients, no strategic partners... I have to agree, the valuation is not correct. I am out. 

Raiden, Plasma, Qtum, NEM ... moving towards mainstream payments

Today Mr. Positive Blue and Mr. Negative Red meet Mrs. Inquisitive Brown to talk about mainstream payments. Mr Neutral Black has made a through reading of the document and Mr Technological Green is around just in case. Mr Market Purple has joined today for a beer.

- Recently, we spoke about Pundi-X, it would seem that they were going to use Ethereum to make payments at point-of-sale.

- That would not work! Is too slow!

- There are recent news. Apparently they have implemented NEM and QTUM.

- What does that imply?

- Nem is quite efective to deal quickly with transactions, ethereum is not today but the Raiden and Plasma projects will change that in a year. NEM is got the catapult project and they are migrating to C.

- Is C better than Java? 

- Better is a term I would not use to compare programming languages but It is very efficient, very close to compiler code. 

- Oh, by the way NEM has now a Magento implementation.

- Oh, magento, sound familiar but...

- Magento is one of the top plataforms for shops on the internet.

- That is an interesting step. It seems that this coin is moving in the right direction.

- What about Qtum?

- Far less mature in terms of time.

- Not close to VISA levels, but will be near in one to two years.

- What about Ethereum?

- The Raiden network is working now on testnet. Low transaction fees and excelent speed. 

- Who will win the race?

- Difficult to say. Ethereum has plenty of developing power behind, but NEM is more agile, Qtum is a promise.

- It going to be great for market player like me!

- And for developers!

The Sophistication of Ponzi Schemes - ORMEUS COIN

This is fiction to all purposes.


Today Mr. Positive Blue and Mr. Negative Red meet Mrs. Inquisitive Brown to analyse ORMEUS coin. Mr Neutral Black has made a through reading of the document and Mr Technological Green is around just in case. Mr Market Purple has joined today.

- I just spoted a great opportunity! It is an investment in an existing bitcoin mining facility that is producing half a million USD in bitcoin and is going to expand. It would go like 100x the price and produce dividends right at the beginning. It is this one. What would you say?
- Well, the market for the coin has gone strongly up last week. It is quite amazing. Frankly, I have made a few quick operations for a 15% return in one day.
- I have seen the telegram channel. They just posted videos and pictures of the facility. It is inmense!
- I have seen those videos too. I have also checked on-line.
- So, is it good?
- Well, technologically speaking, they claim in their White Paper that they will deploy an smart contract to grant dividends to investors. If you are running an operation like this, that would be peanuts... kind of the first thing you would do.
- There are a few warning indicators on this one. The less important ones are poor Bitcointalk announcement page.
- Actually, what I found is far more distressing for those who invested. Firstly, there is a company called Ormeus Global, that is linked to this development. The business they claim to be inn is wellbeing and people developing their inner potential... and the like.
- That does not seem like the kind of company that would develop a technological venture in the Blockchain.
- However, it does sound like the type of company that would develop a Ponzi.
- A Ponzi?
- A scheme based on paying previous investors with the money from future investors... until it blows up.
- But... I have seen the videos and pictures of the Bitcoin farm.
- Just look closely. They showed a video of a bitcoin mining farm. No corporate image at all, no founder image shown in the video, no team, ... It even looks like a digital makeup.
- Oh, there is a board that says ORMEUS in one of the pictures.
- Take a closer look at that one. It is as fake as it gets. It is not even half decent photo-shopping.
- Oh Oh.... seems like those people who are buying a x10 ICO are not going to like this.

The Bankera ICO - Numbers and numbers

Today Mr. Positive Blue and Mr. Negative Red meet Mrs. Inquisitive Brown to analyse the Quantstamp ICO. Mr Neutral Black has made a through reading of the document and Mr Technological Green is around just in case.

- What can you tell me about the Bankera ICO?
- In short, from a crypto-currency exchange they want to build a full bank. A very small one as per today standards, but clearly intended to capture the growth of the crypto-market. They have already some relevant licences and they need to get the rest.
- Is it a good product?
-I can't say. The exchange is there, but they plan to offer accounts in crypto-currencies. Why would anyone want to keep Bitcoins, or any other alt, in a bank? Other than that, same products as any bank out there.
- On the positive side, they have an exchange working and a seasoned and large team.
- Why don't we do some numbers?
- Sure. Just a very rough estimate. Tokenholders receive 20% of the net revenue of Spectrocoin and Bankera.
- In their blog they say they are giving 100k a week of net profit as today.
- I wonder how with a team of 50 people to pay for, but let's take their word for it.
- Perhaps the cards business is going well.

- So, if invest..what do I get in return?
- Most likely there will be an initial pump and dump. One way to get something back is to sell it quick.
-  I mean long term.
- We do not know how many tokens will be sold, and you don't really know your stake in the company.
- Let's assume that they reach the hard cap of 152 Million euros.
- That sounds like a huge ICO.
- How does that money go back to the token holders?
- The only guaranteed stream of revenue for the token holders is 20% of the SpectroCoin and Bankera net revenue. Bankera net revenue is likely to be zero for the moment. Spectrocoin last week revenue is claimed to be around USD 100k. 20% of that,  20k, will be divided among tokenholders, that is around USD 1 million a year
- But they will grow in the future won't they? How much does that revenue need to grow to give, lets say, a 10% per year for token holders?
- Currently is 3%, after the ICO, with all that new money... they would need to do really well.
- They would need to grow a lot.
- Do you think that is possible?
- There is a good perspective in the sector. Basically, there is not much of a sector at the moment and is going to be built.
- What happens if they sell much more in the ICO?
- Then is more difficult to reach a interesting return, but also more likely to grow.
- Do you think these numbers are good?
- For a start-up with a running product, yes.
- Is the team solid?
- They are experienced.
- Good advisors?
- I would say ... decent, not excellent.
- I do not know who are the shareholders of Bankera nor Spectrocoin.
- Apparently three entrepreneurs. Is a UK-Lithuanian company
- What could be the problems here?
- Well, if traditional banks are threatened they will develop similar services. Bankera would have the first to market advantage, and may even get bought.
- As a token holder, if it is bought, do I get anything?
- Well you see, there is no guarantee of participating on that. They new owner could potentially decide not to compensate token holders because a token is not a share.
- Well.. that's far away I guess.
- But, is this ICO good or not?
- It looks fine, the problem is that I do not see any institutional investor or if there are, I do not know who are they.
- Also, consider this: since they are selling 20% of the revenue, they are valuing the company at 600 million euros if they reach 150 million euros of token sales. Right now the revenue is 1 million a year. It is a big act of faith to invest with those numbers.

Quantstamp - Blockchain services and the value of Partners in ICOs

(this, to all effects, is fiction, not advice).
Today Mr. Positive Blue and Mr. Negative Red meet Mrs. Inquisitive Brown to analyse the Quantstamp ICO. Mr Neutral Black has made a through reading of the document and Mr Technological Green is around just in case.
- A while ago, we discussed the value of utility tokens and I have seen a recent pre-sale of an utility backed token: Quantstamp. Is this a worthy opportunity?
- In terms of technology, there is a clear need for auditing the smart contracts.
- What is "a smart contract"?
- It is a software program that is held and executed in the blockchain. It is transparent and trustless in its execution.
- Why do they need auditing?
- In the blockchain "the code is law", if you setup a Smart Contract and behaves in an unexpected way or has weaknesses the results can be catastrophic. The most well know examples are the "DAO fork" of Ethereum and, recently, the Parity Wallet multisig bugs.
- So, these bugs can potentially cause millions in loses?
- They can and they do. Even Buterin, the father or Ethereum, has mentioned that it is critical to the ecosystem to have simpler and safer smart contracts.
- So, if I audit an Smart contract it will be error free?
- No! There may still be bugs!
- I see... so it is just trying your best not to have them.
- Correct, and that leads us to Quanstamp. This company offers and automated testing service for smart contracts. 
- But a robot cannot catch bugs, that is for humans!
- Oh, no... there are many software testing techniques and some of them are in fact highly automated. They need to be, as sometimes there are million of combinations to try.
- And also, an automated test can incorporate progressive developments to implement "best practices".
- Best Practices?
- Yep, it is just making sure that you learn from mistakes and do things in the best possible way. It is a bit more complex than that, but just think of it as avoiding mistakes that others made.
- So the company analyses bugs and develops automated tests to catch them.
- That is right.
- And is this project solid?
- It could be just vapourware, and frankly, I do not have the time to go into the code.
- That question leads me to discuss the importance of institutional backup and solid partners. Quantstamp very credible team and just got accepted into the Y Combinator. Also has the backup of at least 6 companies in the sector.
- What is Y Combinator?
- It is an start-up accelerator, one of the bests in the world.
- But that does not mean that is going to succeed. Many companies that were on Y Combinator failed.
- Oh, for sure, but they stand a much higher chance of success, but that is not my point today.
- Then, why is it important to have all that backup?
- Because it is very unlikely to be an scam. Large institutional partners take the time to do the due diligence, so the trust level is much higher.
- So... this token is going to the moon?
- That, I don't know, but its got a rocket and fuel.

The value of Utility Tokens - CryptoTickets

(this, to all effects, is fiction, not advice).
Today Mr. Positive Blue and Mr. Negative Red meet Mrs. Inquisitive Brown to analyse the value of "utility tokens". Mr Neutral Black has made a through reading of the document and Mr Technological Green is around just in case.
- I have seen many ICOs that sell tokens that will eventually be used to provide a service or buy goods.
- That is right. CryptoTickets, Genesis Vision, WaBi,... and many other.
- My question is, the sales argument for an investor in the ICO is that since those tokens will be used to pay for services if the services are extended and demand grows the value of the token increases. Is that true?
- Well, that is a market law, if you have a limited supply of something and more people want it, you can ask for a higher price.
- Well, I do not agree.
- Why? That is kind of common sense!
- The amount of tokens is fixed, but each one of them can be used many times. The offer of tokens is de-facto infinite because they are not consumed but recirculated. For example, an event organiser or an artist that is paid in tokens will immediately change it for fiat, to pay in the "real world".
- So the only chance for an increase in value is if they decide to hold the tokens?
- I would say that is just speculation.
- Put in even simple terms please.
- Shakira agrees to get paid in tokens 
- That would be difficult to believe.
- Just, accept it for the moment. Shakira sells 1 ticket for 10 TKT tokens. Immediatly goes to the market and gets, let´s say 50 USD to pay the crew, site, etc... So the token has been bought for 50 USD by the client and has returned to the token market for 50 USD.
- That is simplistic, there are many factors to take into account.
- I agree, but basically that is what would happen, and that would add not a penny to the value of the token.
- So, there is no increase in value possible?
- Actually, there is. An event organiser has to own a certain amount of TKT tokens to use the platform.
- Oh, ok, so at the end of all this complex model lies the idea of the event organisers buying the tokens and, at in the end, paying for this new system, at a premium, rather than using the existing platforms.
- That is right in my view.
- And in return they get the value of controlling the sale price of the token, resale and having a system to manage all this.
- I think this is a very risky investment.
- I think there is a good chance for a great reward.
This system actually seems interesting for event organisers, as it allows them to vote and have some control over the middle-man and the development of the sales channel.
In any case, be very careful when you buy a token. Many times you are not buying a "share" of the profit, and, in the worst cases, you may be buying a worthless token or buying for a value that would take years to recover.

ICOs to stay away from... Metronome, Pundi X, Stack, WaBi...

To all effects, consider this fiction writing. By no means is financial advise, endorsement of products nor anything remotely close to that.

Today Ms Inquisite Brown,  Mr. Negative Red and Neutral Black meet to discuss a few incoming ICOs....

- The first one is Metronome. Intends to be a new multichain crypto with a low inflation ratio. However, it is a RC20, Ethereum compatible token and the founders leave to the comunity any further development. No funds provided to it.
- I have read the white paper. As I understand the economics behind it, is a clumsy scheme to give 20% of whatever you invest to the founders with no return. The token is basically backed by the ether that buyers put into it minus 20% for the founders.
- Nothing left to ask.

- What about Pundi-X?
- The underliying technology is not ready and will not be until Ethereum goes PoS. 
- Why is that?
- Ethereum token processing speed is not ready to commit transactions with that volumen in a few seconds, which is what most people would expect when paying for a cofee or a pair of boots. Not to mention the hours delays that could happen on a saturated network.
 - Correction: After this conversation Pundi has integrated the NEM protocol and now it is functional.

- Oh, but it seems that the Stack project and the STK token are just addressing that problem.
- Exactly, they are addressing the problem, but have no solution at the moment nor any Minumum Viable Product nor code, ... Vaporware at a expensive price. Probably Ethereum PoS will short the problem far before them.

- Let´s change the markets... what about WaBi?
- They sell what will possibly become the fidelity points of products that potentially will use an electronic anti-tampering device.
- Is the device good?
- Probably, the problem being that they are selling a token whose value is not related directly to the sales of the device but to an undefined loyalty program: it lacks any real value and may never have it. I would not go there.