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Cryptocurrency Speculators Watch Nervously as South Korea Bans ICOs

 Photo: AP
Photo: AP

The cryptocurrency market is having another rocky morning as South Korean authorities announced a ban on initial coin offerings (ICOs). While countries like the US and the UK have warned investors to exercise caution before becoming involved with such projects, China has completely banned the fundraising method, and Taiwan could be next.

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Reuters reports:

The Financial Services Commission said all kinds of initial coin offerings (ICO) will be banned as trading of virtual currencies needs to be tightly controlled and monitored ...

“Stern penalties” will be issued on financial institutions and any parties involved in issuing of ICOs, the statement added, without elaborating further on the details of those penalties.

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ICOs have become a hot new way for startups to raise money by offering new digital tokens in the cryptocurrency space, and according to Forbes, the method has pulled in over $2 billion in the first nine months of 2017. They’ve also been shown to be vulnerable to hackers looting funds and scammers taking advantage of overzealous investors.

For governments that take an active role in micro-managing their economies, like China, the ICO has become too risky to permit. But at the same time, these countries haven’t attempted to completely ban the use of cryptocurrencies. South Korea’s announcement on Friday made it clear that the country’s current tolerance of digital currencies should not be read as implicit acceptance. But it’s unclear how a country would regulate decentralized currencies like bitcoin even if they wanted to.

So far, cryptocurrency prices have dropped following market-shaking events like the hard fork into two currencies that split bitcoin this summer and China’s increased regulations. But values have always leveled back out. One reason could be that people really believe there’s a future in this market, but more likely, the stabilizations are just the result of speculators jumping in and out. “I sold at $5,000 or $4,980,” Mike Novogratz, a former Wall Street tycoon that’s focused on bitcoin at the moment, tells Bloomberg. “Then three weeks later I’m trying to buy it in the low $3,000s. If you’re good at that and you’re a trading junkie, it’s a lot of fun.”

At the same time, established financial firms like Fidelity are getting into the market, and companies like Overstock.com are offering their own digital tokens. Still, for every offering that’s coming from a responsibly-managed company, there’s a flash in the pan, get-rich-quick scheme that doesn’t have much going for it beyond a celebrity endorsement. Just know ahead of time, if you invest in an ICO just because DJ Khaled promoted it on Instagram, you played yourself.

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[Reuters]

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DISCUSSION

For a tech site its kinda wierd you still call cryptocurrency a speculation.

A decentralized automomous corporation that allows everyone using it to gain the wealth its success generates is a pretty amazing futuristic wealthsharing idea.

In 10 years you set your self driving car off at night to go give rides. It runs takes SelfDrive crypto from riders and pays you in SelfDrive crypto. If the SelfDrive program is successful the value of that crypto will go up so you participating and holding the crypto will earn you wealth the way middlemen in suits get it now. It pays out and functions fully automomously and the SelfDrive ecosystem is controlled by decentralized voting so those participating can determine what steps the company takes next. How much to charge.. etc

That is the future.. That is how we solve the issue of wealth distribution as things become autonomous. Everyone will be getting a cut of the profits because the cryptos used for each autonomous company will gain in value based on their success. And every autonomous company will perform better than the old school ones because they wont have 800 middlemen in suits that do nothing but soak up vast sums of money.

Its not speculation. Its how its going to be and its how wealth distribution is going to be solved. Right now it looks shady because its at the internet in 1992 stage. It was just born, and its still hard to use and needs a lot of work put in to it. The only speculation is whether corporations will collude with the government to shut it down before it makes them all obsolete.

BTW we could vote through blockchain and it would be instantly auditable and unhackable. Just in case a decentralized government seemed like a good idea in times where the one we have makes it easy to vote in a clown