Fifth year of /r/Bitcoin moderation in review

Continuing the tradition, I would like to once again look at how the last year of /r/Bitcoin moderation played out.

Related topics:

Bitcoin Cash and SegWit forks

There is no denying it - the last year was largely shaped by the two most divisive forks in Bitcoin history - the Bitcoin Cash hard fork and the SegWit soft fork. Both were a culmination of years of the scaling debate buildup. While some believed only one of those forks would survive in the long term, by now it is safe to say - BTC and BCH are both here to stay and the community will be forever divided on this matter.

This split runs quite deep - we have BTC vs BCH, /r/Bitcoin cs /r/BTC, Bitcoin.org vs Bitcoin.com and so on and so on. The hard stance of /r/Bitcoin on the removal of hard fork discussion is partially to blame for the divide being both so serious and so hostile. Perhaps facilitating the discussions would have eased the tensions ahead of time and make the split less of a political dichotomy. Nowadays you only see the former members of the same community hating on one another and wearing being banned from the other camp as a badge of honour.

That is not to say, however, that the subreddit moderators are the only ones to blame. There are a number of other key actors at play here, but who you point fingers at depends on what you want to believe. So here are some possible reasons the forks did play out the way they did.

Potential reasons for the split

First, there is the Covert Asicboost. With Bitmain earning $4B in profits last year, there is clearly a lot of money on the line. If you believe Bitmain might've been using Covert Asicboost in their miners, it would've meant they were in danger of losing a lot of revenue in the SegWit fork, meaning they had a large incentive to create the fork that would preserve their advantage. Even a marginal increase in the amount of coins they could've generated would mean earning potentially millions more.

Secondly, there is SegWit and Blockstream. The company has been working on SegWit for years now, and it was pretty obvious a number of their core technology relied on that functionality being part of Bitcoin. Clearly, they would stand to benefit from Bitcoin forking into SegWit rather than increasing the block size, or even doing both. Employing a number of core devs, they also had some means of blocking other approaches to scaling. Add to that allegations of Blockstream being in the pockets of banks and standing to benefit from full mempool and you start seeing why some people are suspicious. If this side of the story was true, SegWit fork was bound to happen, and people that wanted to preserve Bitcoin that was would either have to not follow through with the fork, or make a fork of their own.

Thirdly, there are always people wanting to make some money opportunistically. Just like with the Ethereum Classic fork, there is some non-zero value to be extracted from the shared chain history. Ramp up the hype, the FUD, roll our some celebrity voices and you will inevitably end up with more money down the line than what you started with, especially if you have a lot of BTC to begin with.

Lastly, there are some people in every community that either want adulation, or want to be seen as the smartest, most important people doing the right thing. They are unwilling to compromise, and if they can get their way, they might just seize the opportunity. You can see them on both sides of the forks now, often talking the loudest and making the boldest statements. Claiming they are the ones chosen to fulfil the vision of Satoshi, that the other side is corrupt and clearly in the wrong.

So what has caused and aggravated the divide? Probably everything mentioned above to one extent or another. Some aspects of the forks were motivated by devs doing their honest best job to make Bitcoin better, some were probably motivated by the money to be made from either of the two solutions. The divide was then probably widened and further aggravated by people wanting to make money on it (perhaps buying up coins from people leaving one side of the fork before promoting that coin into new heights with a new wave of vocal supporters). Then seeing that neither side of the fork will clearly kill off the other, a tribalism equilibrium would be reached:

Two sides forever fighting and talking within their group about how much they hate the other group. Sounds familiar...

And thus we end up where we are today - having two groups that spend a lot of resources hating on one another, demanding clear stances from everyone on which side of the fence they reside, erecting totems of what they hate about the other group and so on and so forth. This approach is clearly more successful, as pretty much nobody is talking anymore about Bitcoin Gold or Bitcoin Diamond, while the first divide is all the rage.

The rest

A lot of other things surrounding the /r/Bitcoin moderation have roots in the above story. SegWit2x discussion was similar to the other forks - mostly removed. You also see periodic waves of spam activities, as well a general increase of the baseline spam activity, all surrounding the promotion of BCH and /r/btc, complaining about the censorship, or trolling the non-Bitcoin-Cash Bitcoin as being a centralised scam or the like. There have been reports of a bot spam attack as well.

Then you sometimes find people that are just asking to be banned:

I guess the only nice thing of note for this year was the quality of memes for when Bitcoin reached 9000 USD/BTC.


In the last year, the Bitcoin community has permanently split itself between BTC and BCH. This divide has grown into a very divisive rivalry between members of a number of communities, including /r/Bitcoin and /r/BTC . By now it's clear the divide will never be fully healed.


Rising trends in the ICO space in 2018 - observations from the Bitcoin SuperConference

Recently, I went down to Dallas for The Bitcoin, Ethereum & Blockchain SuperConference to represent iComplyICO, along with our CEO Matthew and Product Manager Qayyum. While I didn't manage to catch too many of the talks due to having to man the booth, it was nonetheless a great opportunity to see first hand a few rising trends in the ICO industry that will no doubt shape the space in 2018 onward.

iComplyICO team!

Regulation and enforcement is stepping in

One of the best talks I managed to catch during the conference came from Dave Hirsch, an attorney at the SEC. While for obvious legal reasons he was only allowed to express his own views and quote official statements, it was still an informative presentation from a very approachable speaker reiterating a few key things any ICO issuer has to keep in mind. If something looks like a security and it checks off all of the Howey Test checkboxes, it is probably a security and proper measures will be taken. If the ICO is offered to US individuals, it falls under the SEC jurisdiction and proper steps might be taken against it.

Or in other words - you shouldn't try to skirt the law or outright break it. The enforcement can take you down, and the regulators might be catching up soon with ICO-specific regulation.

Compliance is ramping up

Just as enforcement is ramping up, so too do we see more compliance solutions popping up. As I've said before, ICO securities will probably be the most important part of the space this year. Our own iComplyICO is obviously tackling that space, but we also saw a few others in that space - PolymathOminex and CoinCart all were present at the conference and discussing their solutions to the problem.

For more in-depth article on this topic, best follow us on Twitter, or check out our Medium page.

Emerging markets - medical and real estate ICOs

While there were a lot of people wanting to start their own ICOs at the conference, it would appear there are two new trends rising up in the industry - medical applications and real estate. You obviously had your usual utility tokens, ICOs for investing in blockchain mining and so on, but those two markets appear to be rather new. It weren't just singular projects either, it was a noticeable trend with multiple companies each doing their own thing.

It seems that my old prediction is coming true - with some ICOs being classified as securities, we are seeing some new projects in the space completely embracing being securities and wanting to use that to their advantage in the fields we haven't seen much of before.


Judging from the various conversations I had during the Bitcoin Superconference, it seems we are having a few rising trends for the ICO space in 2018 - security law enforcement, compliance solutions, and emergent of ICOs in the medical and real estate space.


BitInstant - a look at an old idea from the Bitcoin space

Every now and then, an interesting service will appear in the Bitcoin space, then get shut down at some point and we won't see the idea behind it come back. Often that might be because the idea in itself was bad (like, lending out your BTC to strangers), but sometimes you find an old idea that could be feasible still. One such idea I would like to talk about today is BitInstant, or at least one notable part of it.


BitInstant was a service started in 2011 by Gareth Nelson and Charlie Shrem aiming to help make faster fiat deposits into a few Bitcoin exchanges, such as MtGox, BitStamp or VirVox. At some point you could also convert the deposits directly into BTC. BitInstant would handle cash deposits from places like Walmart and credit you appropriately.

Overall, it seemed like an approachable way to get some bitcoins back in the day when a lot of the Bitcoin exchanges were struggling with accepting funds in the US.

It seems there was a lot of demand for this service in 2013, but unfortunately the site was shut down after its CEO got arrested in early 2014.

Now, what I just described doesn't sound all that interesting in 2018 - we currently have a lot more payment options available now that fewer banks are afraid of Bitcoin. However, BitInstant had one more underappreciated feature I wanted to talk about...

Inter-exchange transfers

BitInstant not only did normal cash deposits, but it also allowed you to redeem coupons from MtGox, VouchX or BTC-e and use those as a deposit methods into the above mentioned exchanges. In other words, you could use it to transfer money from BTC-e into BitStamp, or from MtGox into VirVox. This would allow you to handle arbitrage between the exchanges much more easily.

It seems these days there aren't as many options for that. Last time I checked I could find about three exchanges that would take BTC-e coupons as a deposit method and you can use Tether across a number of exchanges as a substitute for USD, but there isn't a neat way of transferring fiat between exchanges in a really fast manner.

I suppose you soon won't need a service for transferring bitcoins between exchanges if the Lightning Network can deliver its instant transfers on mainnet. Some other alts might benefit from something like voting pools though.

A service that would allow you to transfer fiat between any exchanges might make for a more efficient market - imagine being able to take advantage of some of the more recent arbitrate opportunities. The prices would be more uniform around the world and everyone would be getting a more fair deal.

The solution wouldn't even be that hard to implement - the major complexity would come from having to handle the large, international capital transfers to balance the books every now and then. So once again, it comes down to the inefficiencies of the traditional banking system...


BitInstant was an interesting "old" service in the Bitcoin space that helped people deposit their money onto a few crypto exchanges. It also provided a way to move funds between crypto exchanges, providing some way of cashing in on some arbitrage opportunities. Unfortunately, there aren't that many ways of transferring fiat efficiently between the major exchanges these days.


On Bitcoin power consumption

A few weeks ago, there were some articles making the rounds claiming that "in 2020 Bitcoin will consume more power than the world does today", that it creates a lot of pollution, etc. It seems that Bitcoin will be blamed for cheap, dirty power plants opening up again and so on. Well, let's break it down and see where this whole situation might be really headed...

Rate of growth

It seems that the origin of the claim that Bitcoin will consume all of world's electricity came from this site. The misconception probably stemmed from these two bullet points:

  • In the past month alone, Bitcoin mining electricity consumption is estimated to have increased by 29.98%
  • If it keeps increasing at this rate, Bitcoin mining will consume all the world’s electricity by February 2020.

As usual, there is a relevant XKCD comic on this:

The obvious crux here is the phrase "if it keeps increasing at this rate" - which can be very unlikely to happen. It's basically exponential growth, which can be really hard to match on scale - you would have to produce more mining hardware, which would also require you to at some point start creating more electronics factories and more chip fabrication facilities and so on. All of those can take a lot of time to get going.

Even if you could fabricate all of those chips, at some point you will run into some limits imposed by the economics of Bitcoin mining.

Economics of Bitcoin mining

The Proof of Work algorithm Bitcoin uses is self-balancing - it doesn't really care how much or how little mining power there is in the network, it will still try to maintain the 1-block-per-10-minutes mining schedule. With the block reward being inflexible and the transaction fees being finite, the only factor that can have a large impact on the Bitcoin mining rate is the price of a single bitcoin. If the price doubles, you can expect the difficulty to double (with some time delay) due to more miners coming onto the network. If the price goes down, some miners will be priced out of the market and the difficulty will go down.

In an ideal world, the cost of mining 1 bitcoin would be about 1 bitcoin. In real world, you have some inefficiencies and opportunity cost, so you should see some small profit margin at the least.

To figure out how much electricity Bitcoin will consume in the future, you have to break things down into basics.

First - what is a miner really? It's a computer that converts electricity into Bitcoin and produces some heat. In a perfect scenario, every dollar of electricity you would pump into the machine would give you about a dollar worth of coins.

The total amount of power produced in the world in 2013 was 23'322TWh. The average electricity price ranges from 0.08 to 0.42 USD / kWh. Taking the cheapest cost, we know that in 2013 we generated about 1.865T USD.

Every year we have about 52'596 Bitcoin blocks generated. Assuming 12.5 BTC block reward and 2.5 BTC in transaction fees, we should expect to give the miners a net gain of 788'940 BTC in a year.

Assuming the miners converted 100% of the value of electricity into mining BTC, we would expect 1 BTC to be worth about 2.36M USD. At the time of writing, one bitcoin is "only" worth 13.5k USD, or about 200 times less. For some perspective - 1/200 of the current price would be 67.5 USD / BTC, a price range from about early 2013 - 5 years ago.

Since the Bitcoin mining rewards halve every 4 years, the price per BTC would have to increase by further factors to keep up with the global power generation revenue.

Taking a more realistic look

A lot of the numbers here assumed perfect scenarios - no money being lost while converting from electricity to bitcoins, no cost of manufacturing and maintaining the miners, etc. In reality, you can expect noticeable losses from those factors, as well as things like taxes, transfer fees, internet cost, etc.

It's very unlikely Bitcoin will ever become a large enough factor in the global energy production to have an impact on the electricity prices. It's more likely to be used close to some renewable power plants that have excess of electricity to get rid of from time to time, possibly some places that can re-use the heat generated from the miners that can't rely on more efficient heat pumps, or simply pooling around places that have really cheap electricity.

At the very least, Bitcoin mining is a universal "overflow valve" - it's a simple place to push excess electricity production capacity (and to some extend - electronics production as well) and turn it into tangible money. The mining process will gladly take any amount of excess and give some returns. If the returns are better than the savings from spinning the operation down and then back up again - it's worthwhile.


Bitcoin is very unlikely to be a major consumer of the global energy production. On the other hand, it's a good sink for excess power generated from renewable sources, always allowing one to convert spare electricity into cash.


What crypto projects I'm looking looking forward to in 2018

2017 has been an important day for both Bitcoin and cryptocurrencies in general. While hopefully not as tumultuous, 2018 is looking like it will bring us a lot of interesting innovation in the space. Here are some of the things I'm personally looking forward to seeing unfold in the new year.

ICO Securities

After the SEC's investigative report on The DAO, we have seen a number of companies (mine included) start looking into ICO Securities. This might be a start of a new wave of ICOs that will be bigger than the entirety of the current market.

If a lot of sentiments I've heard so far are to be believed, we might see such ICOs replace traditional VC funding, bring in more traditional investment industry into the market, and get a number of people from various governments to watch closely where this trend will unfold. If properly harnessed, Security ICOs could also drive real-world innovation while providing more sustainable, long-term growth than the current trend of "sell vaporware with hype and turn 100x profit in a few months".

I'm certainly the most excited to see where this trend will go and whether my guesses will turn out to be correct or not...

Lightning Network adoption

In 2017 we got SegWit activated on Bitcoin and a few other currencies. So far it has alleviated a bit of the transaction traffic, but it's nowhere near useful enough to solve the Bitcoin scaling problem on its own. Hence why I'm excited to see if the Lightning Network will be able to deliver on its promises and go mainstream allowing Bitcoin to once more be used for everyday purchases. Betting on SegWit without blocksize increase has certainly been a large gamble that has allowed a number of alts to grow into their own prominence. Hopefully we'll see this year if this bet pays off, or Bitcoin might lose its luster...

Ethereum POS change

The anticipation of Ethereum changing from POW to mostly POS has been heard many times through 2017. We've seen the technology delayed to (hopefully) later this year. If successful, it would make Ethereum the most prominent POS coin out there, possibly driving some people to invest in it for the staking returns. While I'm not sharing the paranoia surrounding Bitcoin's POW (claiming that its energy consumption will continue to grow at a massive rate eating a significant chunk of world's energy production in a few years), it's still a worthwhile experiment to see undertaken.

Interledger, Codius, etc.

Ripple is another company / crypto to look out for in 2018. While I might have my reservations about XRP the currency, I have strong respect for Ripple the network and its creators.

Other than the growth of the Ripple network itself, there are two interesting projects from Ripple Labs that might become more prominent in 2018. The first one is the Interledger Protocol, a protocol aiming to help facilitate payments across different ledgers / blockchains / etc. The second one I was surprised to see the light of day again was Codius (which has been shelved for some time in 2015) - a universal hosting standard for smart oracles.

Ripple Labs is definitely a company that will be doing interesting projects for years to come. It will be interesting to see what they will cook up for us in 2018...

Tether and other fiat IOUs

Tether has been an interesting fiat IOU these past few years. The space itself has been a bit paradoxical honestly - there have been a lot of fiat IOUs on Ripple, but only one prominent IOU on the Omni network and so far not all that much on the Ethereum network. Tether as a currency has been rather unremarkable until it started having some banking problems and despite that its market cap has increased to almost 1.5B USD at the time of writing. This has sparked at least one very prominent Twitter user to start calling it out on every given opportunity.

There are two ways I could see this play out in 2018. On one hand, we might see fiat IOUs to appear more prominently on the Ethereum blockchain (Tether has apparently already made that leap), possibly to compliment the above mentioned ICO Securities. On the other hand if some more paranoid people are to be believed, Tether might turn into another MtGox and implode with such a force as to crash the crypto prices by a lot.

One way or another 2018 is looking like a year where fiat IOUs might become more important in the crypto space.

Government-backed cryptos

For years a lot of Bitcoiners have been stating that some governments should adopt Bitcoin as a national currency. A few years back we saw Canada looking into doing the opposite - adopting its fiat currency into a crypto form with MintChip. Unfortunately, that project went nowhere, but it's looking like this year we might have the next serious contender - Venezuela aiming to launch its Petro.

Petro is designed to be "backed by oil, gas, gold and diamond reserves", making it a bit more of a commodity IOU than a fiat IOU. It might be an interesting experiment, especially if this creates an alternative to the hyper-inflating bolivar accessible to the people of Venezuela. It will remain to be seen whether the government will be able to keep the value of the new currency stable and keep it backed by the natural resources, or will we one day see the currency stop being backed by anything.

If successful, this might be the first time a government-created currency will have to complete on somewhat equal footing to private currencies and digital cats.


2018 is looking like another exciting year in crypto space. We will see how the echos of the prior year will play out, as well as get to experience entirely new developments shape the space. There is never a dull moment in this industry...


Bitcoin's second near-death experience, aftermath of the scaling debate, the SEC - Crypto year 2017 and what's to come in 2018

2017 has been one of the most turbulent year in crypto history to date. We have seen important changes in technology and the political climate, divides in the community, as well as wild jumps in prices of many cryptos. I would like to take a moment to talk about a few key takeaways from this year and what I think had the most impact on the future of crypto.

Bitcoin's second near-death experience

Bitcoin has been declared dead so many times it has basically become a meme. As of the time of writing, there have been 222 obituaries proclaiming the death of the currency. I'm not here to talk about those, but about a feeling you could get from old-timer Bitcoiners.

I've been in the community since 2011, and I have experienced two moments where Bitcoin's future was uncertain. I came in right around the first notable bubble, when the price soared to the unthinkable... $30/BTC (or about ~$40 in the polish markets). After that bubble has popped, the price began to decline. Slowly creeping down, taking with it confidence of many bitcoiners. At the time nobody could tell for certain what was going to happen - whether the coins will become worthless, or will we see something different happen entirely.

People nowadays despair when Bitcoin drops 30% from all-time-high peak, but back in 2011, we saw Bitcoin go down to about $2 per coin, or a decline of about 93%. The future of the project was uncertain, everyone was depressed, and for me, that was Bitcoin's first near-death experience.

Of course, we recovered. After that, when the next bubble came, you had more confidence that Bitcoin will bounce back. We've seen it before. "There is no bubble like the 2011 bubble" I tend to say.

In 2017, we had to deal with the scaling problem that has been anticipated since at least 2015. We had to figure out what solution might be the best - whether to go with big blocks, or go off the chain. At the same time, we had to anticipate that ever since The DAO and Ethereum's split, any major, contentious change to the Bitcoin protocol would create a similar split. Piled on top of that we had the covert ASICBOOST scandal and over a year of the community being forcibly divided in discussing the scaling solutions.

In other words, the pressure was rising from all sides and something had to give. At the same time, many sides have remained rigid, not willing to make a compromise. Instead we saw warring solutions - SegWit, 2x, UASF, etc. In the end we saw a group trying to reach a solution - "SegWit now, 2x in half a year", which allowed SegWit to activate but would backfire when that second part was to come due.

However, before SegWit could be activated, we had a different fork be proposed - Bitcoin Cash. Increasing the block size and changing a few other things. However, this one didn't wait to reach a majority, instead opting to declare a fork happening and going through with it.

The period following the announcement has been Bitcoin's second near-death experience. The future was once again uncertain - would this split in mining power mean some crazy oscillations in the difficulty? Would the currency retain its value after the split? Would one chain dominate the other and just take over? These were uncertain times in which the altcoins thrived.

The forks came and went, Bitcoin is still around, so is Bitcoin Cash. We now know how Bitcoin responds in this situation, so we will be ready in the future once more. "There is no split like the 2017 split" I suppose?

The aftermath of the scaling debate

Even though SegWit has been activated, we are still seeing a lot of transactions waiting to be confirmed in the mempool. With the lightning network being months away from being ready, it seems the transaction fees will keep on increasing. We can also see an interesting trend lately - people trying to bully companies into integrating the "optional" SegWit into their system to lower fees. It's somewhat disheartening to see. I hope that in 2018 we will see an empty mempool again...

Another important event that took place this year was the failed attempt to follow through with the SegWit2x agreement and the subsequent backlash against the "transgressors". We've seen old-school bitcoiners wanting to change Bitcoin's POW to spite the miners or force various businesses to "sign a very simple pledge that acknowledges that Bitcoin is not ruled by miners in order to be linked from bitcoin.org". Luckily neither of those have gotten any traction and could be written off as a pendulum effect to the SegWit2x continuing up to the 11th hour before being called off.

The last unfortunate aftermath of the scaling debate has been the decisive split of the Bitcoin community. Up until the SegWit / Bitcoin Cash split I had hopes there could be some reconciliation (1, 2). After the scaling debate would be over and the project could be back on track that we could come back together and bury the hatchet. However, once a split happens and both sides survive long enough, there is no going back - there are people financially tied to one end but not the other that understandably won't leave their side. We had some high-profile people supporting one side or the other, and what seems like layers of narrative being spun on both sides (proclaiming something is being implemented because of X, but in reality it's done because of more selfish reason Y, for example - invading Iraq because of WMDs, while in reality it might be because of oil or the like). It's unfortunate that we have failed to keep the community together in the first place and to bring it back together before the differences were irreconcilable...

Here's to hoping we can learn to at least respect and tolerate one another and remember what we were fighting for in the first place...

Crypto securities and the SEC report

The DAO has been an important project that has already shaped the industry despite or perhaps precisely because its failing. It has split the Ethereum blockchain in twine, and this year it has given us something rather unexpected - a SEC investigative report. It concluded that The DAO has been a security, which has had a significant impact on the ICO community. Now you have to seriously consider whether you're creating a security or a utility token when creating an ICO and follow with the appropriate requirements.

This has created a new wave of interest in the community. Some people are embracing being a security and taking a full advantage of that, while others are moving away from being a pseudo-security not to be found guilty of fraud or other regulations.

The crypto-securities have definitely been dominating my conversations over the last months and I have no doubt they will be the big news in 2018. I also heard some rumours from credible sources that at least one notable project has been declared to not be a security, but I can't disclose what it is until some official announcement unfortunately. So there is development happening on both sides of the spectrum, which is always good to hear.


The Bitcoin scaling forks and splits have been a major event in the Bitcoin's history. They have left a lasting effect on the community and technology. This year we have also seen some important report coming from the SEC that has already began to shape the ICO landscape. We are likely to see that become a major influence of what 2018 will look like.

Here's to 2018 and what's yet to come!


The next wave of ICOs

About half a year ago, SEC released an investigative report concluding that DAO Tokens were securities. Since then there have been a number of high profile cases reinforcing this classification world-wide - UIP, LLToken, CCC, and HMS had to issue refunds to the ICO purchasers in ChinaProtostarr closed up shopREcoin and DRC World were charged with fraud and so on.

On one hand, the future of ICOs may be looking grim, with the law enforcement making it harder for various projects to raise money by issuing tokens. On the other hand, the new classification of (some) ICOs as securities might be one of the best things that has happened in the space lately. We might be on the bring of a new wave of ICOs, and here is why...

Historical waves

Long-term bitcoiners might start to see some pattern in history. Early on, we had the pioneering invention that was Bitcoin. After a few years, it became somewhat successful, earning its early adopters some hefty amount of money. We then saw a few other projects pop up saying "I too would like some money". We then saw first a trickle of new coins appearing, altering the Bitcoin codebase slightly, and then an entire wave of thousands of altcoins doing the same, tweaking the parameters and claiming they are better than Bitcoin, therefore they should get the money Bitcoin gets.

We then saw a new wave come in. Coins that were generally not mined, but created and pre-sold to raise the money the team needed to build their product. Mastercoin, Ethereum, etc. Soon after, once a few high-profile projects have made bank, we saw a repeat of what happened before - a large influx of projects also doing an ICO in a "me too" mentality.

It is rather likely that the next wave of altcoins / ICOs will follow the same trends - starting with a trickle of trail-blazers, following with a wave of followers.

ICO Securities and the next wave

For awhile now, you could see a number of ICOs skirting the line of being a security or a utility token. Perhaps giving a wink to their pre-purchasers - "of course you should not expect a profit, but you know we're just like that other ICO that made such great ROI. We're not promising ours will do the same, but you know...". Maybe they tacked on some functionality to have an excuse to call themselves a utility token - "this token will be used to pay for ads to display to our users. It only has a utility value of those ads. You should definitely not speculate on the token representing a share in the platform we're building" or something like that.

Now, with the SEC report, it seems that some ICO projects are taking things a bit more seriously. The grey area between a utility and a security token has become less of a safe harbour. We can expect ICOs to take a firmer stance on what they are. On one hand, we will have token ICOs staying far away from being a security to avoid the extra compliance burden associated with that, but on the other hand, we will see some new ICOs emerge - ICOs that fully embrace being a security and go all-out.

If you're already aiming to be a security and do all of the due diligence associated with it, you could drop the song and dance of utility from your token. We might see tokens that represent shares in a company, tokens that represent rights to dividends and so on, rather than trying to pretend they are tied to some specific functionality of a utility token.

More importantly, by embracing the due diligence of being a security, those tokens might attract the more traditional investors. Companies could do ICOs instead of IPOs, raise money through token presales rather than seed rounds and so on.

This might be the next big wave of ICOs - ICO securities. We will probably see first trailblazers like impak Coin soon, and we can expect the wave to come soon after. We might see a number of people trying to get rich quick, but hopefully we will also see some true innovators creating something new we haven't seen before in the crypto space. I have a few ideas of my own of what those might be, but one shouldn't give away the billion dollar ideas too quickly ;).


In the past, we have seen a wave of altcoins and a wave of ICOs sweep into the crypto world. Due to the recent SEC report, we might soon see a new wave of ICO securities repeat the same cycle, hopefully bringing in a wave of new kinds of investors into the space.

If you're interested in launching an ICO compliant with the securities regulation, perhaps you'd be interested in checking out the new company I work for - https://www.icomplyico.com/ . We're focused on helping new projects launch compliant ICOs.