ICO? Take care

ICO? Take care…..

A Boston College research paper entitled Digital Tulips has found that fewer than half of all ICO projects survive more than 120 days after the completion of their sales of tokens to the public.

That is really scary. And this fact does not seem to be putting people off. Another $10-12 billion of ICOs will be out there during this year.

I was reflecting on the longevity of Scotcoin.

In the same way that most small businesses go bust within one to three years, it appears that ICOs ( ok it’s digital so it’s faster) go bust in 3-4 months.

It’s not surprising really. Most of them are designed as get rich quick schemes for the perpetrators with no economic or financial sense. That’s why some of the earlier coins and tokens have lasted – they have a purpose and a measurable impact, unlike their imitators. In the same way that it is said there are only 7 plots in total for literature, there may not even be 7 in crypto-currencies.

So Scotcoin, actually in existence for 5 years, is almost a granddaddy. In fact, in terms of country coins we might actually be the oldest – if anyone else knows better please let me know.

But I wanted to reflect on the words of an Economics Professor – Hyman Minsky. Being a true Keynesian myself – and believe me what we have had for a long time is NOT what Keynes said – I find Minsky’s idea of his Financial Instability Hypothesis extremely enticing. Basically he says on the economic upswing, people take greater and greater risks – until the bubble bursts and we end up back down at the bottom of the boom and bust cycle again. Sadly, Gordon Brown no more banished it than controlled it – and then made a mess of the Banks’ recapitalisation. In fact, it means we are on a treadmill we can’t get off. Digital money, espoused by Milton Friedman more than 20 years ago, has enormous attractions when all around is collapsing.

But Minsky said something very wise.

Everyone can create money; the problem is to get it accepted.”

That’s what we are working on at Scotcoin.