Re:Goodbye ICOs, hello ILPs?
by bastawhiz on Thursday April 12, 2018 @10:51PM
(#16826817)
Let me get this straight. It's a "loan" that's managed as a smart contract that pays off investors as the company turns a profit.
It would seem to me that in order to make this not just a pipe dream, the company would have to operate 100% on the blockchain, presumably Ethereum. Otherwise, how could the smart contract do anything? If I pay one of these "companies" cash, the smart contract knows nothing about that. I would have to pay the business in cryptocurrency, and specifically through the mechanisms defined by the smart contract.
This seems RIPE for abuse. What if they just...don't? Crooked "founders" doing a chunk of revenue through some off-chain business or anonymously outside of the smart contract. "Investors" get decreased returns because the business does not appear to be performing well, all while the "founders" laugh their way to the exchange.
> To access and transact on the Blockhive platform, users must fully register and receive the protocol's Future Loan Access Tokens (FLAT) (transferrable loans that can be assigned to third parties) as soon as they lend funds to the company.
That sounds an AWFUL lot like a debt security to me. They're not even trying to hide it at this point. So in essence, they've invented an ICO where tokens pay dividends over a fixed term, where you just have to pray that the company is being truthful about their revenue.
This sounds like the setup for a giant pyramid scheme. I can totally see a company doing one of these "ILP"s and using the revenue from newer "loans" to pay the interest on older "loans".
It would seem to me that in order to make this not just a pipe dream, the company would have to operate 100% on the blockchain, presumably Ethereum. Otherwise, how could the smart contract do anything? If I pay one of these "companies" cash, the smart contract knows nothing about that. I would have to pay the business in cryptocurrency, and specifically through the mechanisms defined by the smart contract.
This seems RIPE for abuse. What if they just...don't? Crooked "founders" doing a chunk of revenue through some off-chain business or anonymously outside of the smart contract. "Investors" get decreased returns because the business does not appear to be performing well, all while the "founders" laugh their way to the exchange.
> To access and transact on the Blockhive platform, users must fully register and receive the protocol's Future Loan Access Tokens (FLAT) (transferrable loans that can be assigned to third parties) as soon as they lend funds to the company.
That sounds an AWFUL lot like a debt security to me. They're not even trying to hide it at this point. So in essence, they've invented an ICO where tokens pay dividends over a fixed term, where you just have to pray that the company is being truthful about their revenue.
This sounds like the setup for a giant pyramid scheme. I can totally see a company doing one of these "ILP"s and using the revenue from newer "loans" to pay the interest on older "loans".