Ethereum Q&A: The ICO Token Explosion

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The ERC20 Token Standard, Token Summit, the explosion of token ICOs on the Ethereum blockchain, and whether this activity is premature in terms of security (and securities). Every million dollars you put into any token built with ERC20 creates a million-dollar honeypot test on the Ethereum virtual machine, implementations of Geth and Parity, the ERC20 codebase, and whatever poorly-tested code you added for your particular DAPP. The killer app for Ethereum is DAOs (decentralized autonomous organizations), reinventing the modern corporation -- just not that way, as venture capital The security needs to be tested first with $10k, not $10 million; gradually escalating. The trade-off of flexible smart contracts is that every contract has to be independently tested. What happens to a brand-new start-up with a whitepaper but no management experience that suddenly comes across millions of dollars? Soon, not many dollars. ICOs right now are the biggest reputational risk for Ethereum. Opening up crowdfunding to a global audience is an amazing application, when you have governance, but when you do it prematurely you blow up the launch pad. Sometimes lessons have to be learned the hard way. The market will teach them when they lose their money. The purpose of this early stage experimentation should be to test the security of the protocols, not attempt to get-rick-quick. If we don't remind investors of the risks, they will get a visit from the SEC, because one of the first rules is that you don't promote securities to the unaccredited public.

CORRECTION: The "exit scam" allegation regarding Matchpool's CEO (mentioned in the previous version of this video) was circulating in the news at the time this talk was filmed -- but it was later shown to be false, and the ICO funds were accounted for:

Chapters
0:00 What are your thoughts on the spectrum of all the activity that we're seeing specifically in the Ethereum world with ICOs?
2:15 The problem I have with these ICOs is that we're taking code that has not yet been exercised
4:33 Seventeen and a half million dollars in 30 minutes
5:47 ICOs right now, to me, are the biggest reputational risk for Ethereum.
6:35 What do you think about professionals who are in the industry who are either venture capitalists or investors who are actively encouraging people to do this where it seems like you think it's a bad idea?

This talk took place at the Silicon Valley Bitcoin meetup on April 11th 2017 at the Plug and Play Tech Center (@PlugandPlayTC) in Sunnyvale, California:

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Andreas M. Antonopoulos is a technologist and serial entrepreneur who has become one of the most well-known and well-respected figures in bitcoin.

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