A lot of new initial coin offerings have been happening lately, as everyone knows. As a tech reporter at the Observer, I generally don't write about all the ICOs. Just as it hasn't been news for a long time that a company is starting a campaign on Kickstarter, it also can't be news just that someone is creating a new kind of money out of thin air.
Recently, though, I wrote about the Useless Ethereum Token, a silly exercise that earned its creator a lot of money. It left me thinking.
Millions of dollars have been poured into these new "coins," and to some degree a dollar value is a measure of news.
So I wrote a piece that went live today that looks down the road and asks, what would happen if entrepreneurs just keep creating new cryptocurrencies forever?
Here's a quick summary:
Kik Messenger is launching a cryptocurrency called Kin. It's the first company with a track record to do an ICO.
Kik has a tendency to do things that larger chat apps emulate (like Facebook and WeChat).
Any single cryptocurrency can have a finite supply, but the supply of crypto is infinite.
On any platform that insists on using one crypto (such as BAT in Brave's browser or Filecoin to buy its cloud storage), that currency obviously has value because you have to use it, but off that platform one currency is really, at its core, as good as another. The differences between them are mostly of interest to the super obsessives, but at their heart they are all just a medium of exchange.
So what happens if crypto goes mainstream and the market stops seeing meaningful differences in currencies and the supply is effectively infinite (because there is nothing stopping people from making new currencies)?
The answer: the price of all currencies could go to or very close to zero. Theoretically.
(Or governments start making new coins so additional ICOs become impossible to justify)
The post I wrote plays this argument out in more detail, but that's the quick run down for folks who don't need quite so much background.
This will be a time to remember. I'm fairly sure it won't last. They never do.
