An initial coin offering is a system that transfers wealth from uninformed investors into the pockets of shills and hucksters.

Originally, token buyers were early ether enthusiasts reinvesting their gains. Now I’m hearing more and more stories of kids pouring their life savings into these get-rich-quick schemes, and… man, I hate this industry.

I hate the PR agencies that pump coin offerings in exchange for a percentage profit share. If any PR firms are reading this, please keep me on your mailing list. I enjoy receiving your messages and making fun of your clients behind their backs.

I hate the ad networks that enable this pumping. Is there no editorial oversight over ad campaigns?

"No US Investors"…
*advertises in times square* pic.twitter.com/Vwk9WapFp0

— Jeff Ward (@jeffscottward) June 26, 2017

And I hate all the peripheral profiteers, the hangers-on, the tangential industries that have sprung up overnight to get in on the game.

Still, I’m glad the three-letter agencies haven’t stepped in. It’s not clear that they can: Many of the perpetrators are overseas, and the participants are pseudonymous at best.

Hey, I found the first guy going to prison pic.twitter.com/MdxxBY6d7X

— Jeremy Ross (@jebus911) August 28, 2017

There’s a theory (from @interfluidity) that an opaque financial system encourages investment and growth and progress. Humans aren’t designed to comprehend a global market. We evolved in small communities that provided accountability and social safety nets to empower productive risk-taking.

Obfuscation allows us to indirectly underwrite the risky mortgages of complete strangers. If bank customers were fully informed about the riskiness of their deposits, everyone would freak out and stash gold and never invest in anything again. Society would devolve into a nation of gun-toting goatherds.

ICOs mask the riskiness of venture financing to make it accessible to the world. A lot of token founders are people who couldn’t get traditional VC funding because they’re in the wrong industry, wrong place, wrong business model, or maybe their ideas are just too dumb.

13/ Touting the fact ICOs allow companies to circumvent regulation and 'democratize' finance is unthinkingly predatory

— Jerry Neumann (@ganeumann) August 19, 2017

There are downsides to democratization, but are token sales any worse than the student loan industry? Mortgage-backed securities? Nigerian advance-fee fraud?

If you zoom in on individual losses, yes there are people who get screwed. But each of these scams simultaneously enables opportunities that otherwise would not have been available. Countless Americans now have college degrees thanks to the democratization of federal loans. And, you know, countless Nigerians have been lifted out of poverty thanks to Nigerian scams.

Tokens will run the hype cycle, bad ideas will die and society will evolve. People might get hurt, but that’s part of the Darwinian process. We lived through the savings & loan crisis, the dot-com bubble, the housing bubble, the beanie baby bubble. Just don’t bail out the failures, because then people will never learn.