Dogecoin Creator Jackson Palmer Is Concerned About Ethereum’s ICO Bubble

 One of the biggest stories in cryptocurrency over the past couple of  months has been the meteoric rise of the ether price and the speculative  frenzy around the Initial Coin Offerings (ICOs) launching on top of the Ethereum platform. In a recent video uploaded to his personal YouTube channel, Dogecoin creator Jackson Palmer shared some of his thoughts on ICOs and their effect on the ether price.
“The  real reason the [ether] price has been going up something like a  hundred dollars per week for the past month is really just greed: greed  from developers, greed from investors [and] greed from everybody in this  speculative market,” said Palmer in a summary of his main point on the  topic of Ethereum and ICOs. “And that’s not necessarily a bad thing.  People making money is how the world works. But it’s the way in which  it’s been happening and the speed at which people have been doing these  ICOs that is a little bit concerning.”

This Is Not Our First Rodeo with ICOs

Before  getting into the details of the current speculative bubble around ICOs,  Palmer pointed out that this is not the cryptocurrency community’s  first rodeo when it comes to these sorts of token sales and speculative  investment opportunities.As specific examples of past token sales from an earlier time, Palmer pointed to Mastercoin (now Omni) and Ethereum itself. Then there was Havelock Investments, “literally a platform where you could buy securities or invest and get equity in a company based on bitcoin,” added Palmer.In  addition to Havelock Investments, public offerings for investment were  also made on platforms such as Bitfunder, BTC-TC and GLBSE.Palmer also brought up several infamous cases of bad investments or outright scams from the past.He discussed Neo & Bee,  a startup that failed in spectacular fashion after raising funds  through various bitcoin-based stock exchanges. Cyprus eventually issued  an arrest warrant for Neo & Bee CEO Danny Brewster.Then Palmer also recalled the infamous case of Josh Garza and his schemes related to cloud mining and the altcoin known as Paycoin.“They  launched a coin that was literally just a token to facilitate their  Ponzi scheme,” said Palmer. “And they would actually sell a product that  didn’t exist.”

Why Are We Seeing a Flurry of ICOs Right Now?

So,  if these sorts of schemes have existed in the past, why are we seeing a  boom around the concept today? In Palmer’s view, Ethereum’s ERC20 token standard has made it easier for anyone to launch a token sale on their own.“Because  it’s so easy and a standard to copy, there’s been a lot of people that  can just fire up an ICO in a couple of minutes,” said Palmer. “There’s  actually a couple of websites out there that’ll let you generate an ICO  or generate a token on Ethereum with no coding required.”Although  previous token sales did not involve much more than a Bitcoin address  and a spreadsheet, Palmer said there’s something more tangible about the  process on Ethereum.“Something that is more tangible about  Ethereum ICOs is that when you send the ether to the contract, the  Ethereum network does recognize — and many wallets out there because of  the ERC20 standard will recognize — that you got whatever coin or  whatever token shows up in your wallet,” said Palmer. “So, it’s a lot  more tangible. You’re not just sending money somewhere and never hearing  about it again.”Palmer added that developers need to take a step  back and question whether it’s right for them to raise $150 million for  their “little startup.” As a comparison, Palmer noted that normal seed  round funding for a startup is between half a million to a million  dollars.“Many of them don’t even have a tangible product yet,” claimed Palmer.While Palmer’s video casted a cautious tone over the entire ICO market, he did mention Status.im and Civic as two projects with legitimate, tangible technology behind them.

How Are These ICOs Affecting the Price of Ether?

Another  aspect of the speculation around Ethereum-based ICOs is the effect  these digital assets have had on the price of ether. There’s been a  flurry of ICOs launched on the platform in the past few months, with  some projects raising over $100 million in a matter of minutes.“When  [an ICO is launched], the only way to buy into these ERC20 contracts or  these ICOs is through ether or Ethereum, so if these companies are  raising $150 million in ether, that’s locking that ether up in that  contract,” said Palmer. “And so, it’s taking that money off the market.  So, what happens is you have this shortened supply, but there’s an ICO  coming on the market every single week. And so, people are getting  really excited about this and trying to buy up ether.“This is  what’s really happening,” Palmer continued. “This is what’s driving the  bulk of the [ether] purchases and trade right now is people buying ether  to send to a contract in the hope they’ll get rich quick off one of  these ICOs.”In Palmer’s view, the speculative boom and FOMO driven by the ICO market has spilled out into the entire cryptocurrency 

Source: https://bitcoinmagazine.com/articles/dogecoin-creator-jackson-palmer-concerned-about-ethereums-ico-bubble/