I apologize for not sending the newsletter yesterday. I was traveling and didn't have enough time to send.
Headphones Maker Monster Is Quietly Planning A $300 Million ICO
What's the Story?
- Monster is doing a $300MM ICO
- The token will be an ERC-20 token and carry no rights.
- It'll be used as a payment token for Monster products.
Why Does This Matter?
If a company is issuing a token for an existing business that already has a business model, I take it as a bearish sign. Monster was founded in 1978. In the 40 years that it has existed, it has never needed a token and now it decides to use one. The token has no rights and is being issued to pay for Monster products. Can I not use US dollars anymore? Is Monster going to stop accepting it? The company is issuing a token because they are struggling and it's an easy way to raise $300MM in non-dilutive funding. It's the only reason Monster is doing it. Issuing tokens should be primarily for bootstrapping a network. Companies that have existed for years and have an existing user base (KIK, Telegram, etc.) are only issuing tokens and utilizing "blockchain" because it's free money. There is no other explanation. Who can blame them though? It's only irresponsible not to raise what is essentially "free money". If investors are willing to chase large returns by giving up all rights to receive some "useless token", then so be it. What a crazy world we live in.
- South Korean Government is confiscating 191 Bitcoin from a child porn operation
- The South Korean courts have ruled that cryptocurrency is subject to civil forfeiture
- It's unclear how the government will collect and sell the Bitcoin
Why Does This Matter?
For those thinking that owning cryptocurrency is a way to avoid government forfeitures are incorrect. It's obvious that if the government knows about your Bitcoin and you are engaged in activity that involves civil forfeiture, they will try to claim it. The benefit of Bitcoin and some other cryptocurrencies is that you control your money. Even if the government knows about it, they can't just go and take your Bitcoin. The government would need your private keys. This is a radical change from the past where a bank would allow the government to go into your account and take what is owed to them. While the government does have many legitimate reasons for claiming someone's assets, cryptocurrency provides a great deal of protection especially in countries where the government arbitrarily takes assets. For example, the recent Saudi Arabian crackdown of certain royal figures would have been more difficult if the people involved owned Bitcoin. How does the government go about finding the private keys and how do they know that is the only wallet you have access to? The evolution of cryptocurrency is posing harder problems for law enforcement and I'll be curious to see how that plays out over the next few years.