Edumacational Edition: Much Acronym, So Crypto

As you may or may not already be aware, there currently exists a plethora of acronyms and abbreviations in the cryptocurrency space.

It is a word that allows us to use this meme

Unfortunately, many of these acronyms and abbreviations have become emotionally-charged objects of scorn and ridicule, like saying “Bcash” instead of “Bitcoin Cash,” for example.

“Whoa! Hey, there, Roger! Nice to see you, too!” 😅

Furthermore, some of these acronyms can have multiple meanings, like “ICO” which can stand for either “Initial Coin Offering” (if you like them), or “Illegitimate Criminal Operation” (if you don’t). The bottom line is that the number of acronyms and abbreviations in cryptocurrency is too damn high. But instead of just complaining about it ourselves, we thought it made more sense to educate our readers so we can all complain about it together. 😊

This is going to be another one of those “meme” posts, isn’t it…🙄

Note: Because this is an “edumacational” post, we’re going to dumb things waaaay down. Not for the reader’s benefit, mind you, but to obfuscate our own lack of knowledge on any of this shit. What?!? Were you expect smart ass clowns 🍑🤡?

ICOs, TGEs, STOs & FreeCOs

In this article we will focus on the following four acronyms, which mean the following:

  • ICO – “Initial Coin Offering”
  • TGE – “Token Generation Event”
  • STO – “Security Token Offering”
  • FreeCO – “Free Coin Offering”

ICO

“ICO” stands for “Initial Coin Offering,” and it is kind of like the granddaddy of the other three. The term ICO was actually “coined” …  😃

Get it? 😃

“Coined?” 😃

“Initial Coin…” 😃

😐

Fuck. Never mind. 😤

An ICO is a way for a blockchain startup company to raise funds that is similar to an IPO (or “Initial Public Offering”).

But different.

In an IPO, a company is selling shares, or “equity,” in itself to “investors.” In an ICO, a startup is selling coins, or “tokens” to “participants.” No equity involved.

What’s the difference between a “coin” and a ” token?” If you ask ten different blockchain experts that same question, you’ll get ten completely different fucking answers. In other words, what in the hell are you asking us for? 😃

One of the benefits of an ICO is that you can theoretically avoid having what you’re selling to people considered a “security.” Thus you can avoid “government regulators,” which to most people in the crypto space are the moral equivalent of Adolph Hitler, Attila the Hun, Judas Escargot (he’s the one who killed Jesus, right?) and Hillary Clinton (wait … did she kill Jesus? 🤔), all rolled into one.

Meh, the SEC is way worse than any of these lightweights…

It was soon pointed out, however, that if you’re trying to avoid having something considered a security, you probably shouldn’t call it something that sounds like a security, the way “ICO” sounds just like “IPO.”

Whoops.

Thus, everyone started using…

TGE

“TGE” stands for “Token Generation Event,” which certainly doesn’t sound anything like “IPO,” and therefore was recommended for use by outfits like crypto industry lobbying arm non-profit policy center Coin Center. For a while in 2017 it became the “name du jour” giving an air of sophistication and credibility to projects and signalling to potential contributors that “Hey! These guys must have actually talked to a lawyer!”

The birth of “cryptocurrency law”

In addition, Coin Center, together with Coinbase and some other major crypto industry players published a handy guide called A Securities Law Framework for Blockchain Tokens, which included both a fairly comprehensive overview of the applicable law, as well as a nifty spreadsheet that had drop-down buttons which allowed the reader to guesstimate whether the SEC would consider their token a security or not.

Given the industriousness of most founders and developers in the blockchain space, many of them chose to ignore the non-interactive, “wordy part” of the Framework, as well as the whole “hiring a lawyer thing,” and instead just used the nifty spreadsheet with its drop-down buttons to practice armchair securities law on their own (although to be fair, many of those DIY cryptocurrency lawyers probably did the same thing). Either way, since Coin Center and Coinbase published the Framework, it must be accurate, right?

Wrong.

Thus…

STOs

In February of 2018, SEC Chairman Jay Clayton put the kibosh on the whole ICO/TGE thing when he testified before Congress and uttered the following:

And you thought we were joking about that “evil” shit…

Conspiracy theories abound as to why Jay Clayton made such a broad statement, but no sooner had it left his lips than the narrative in the financial press began to change, with many (especially those in “white shoe” law firms, management consulting firms, etc.)  shouting from the rooftops that “The ICO is dead! Long live the STO.”

Basically STOs are just like IPOs, in that you have to go through a lot of regulatory hurdles and spend a lot of money on lawyers and consultants to do everything properly. Of course, we would never suggest any sort of connection between Jay Clayton’s statement and the fact that a reduction in ICOs/TGEs and an increase in STOs would directly benefit the types of people that run in his circles, i.e., the chumps people at those same big law firms and consulting firms who apparently weren’t paying attention when the ICO craze hit and thus missed out on all those sweet legal and consulting fees.

Fun Fact: Speaking of evil, did you ever notice that Jay Clayton’s initials are J.C.? Jesus Christ’s initials are also J.C. Wasn’t there something in the Bible about an “Antichrist?”

Ultimately, though, it is unlikely that STOs will have nearly as much of an impact as ICOs simply because the costs associated with them are just too damn high (and don’t worry, we’re not going to use that meme again, at least not in this post). What we are likely to see more of (and in fact are already starting to see more of) are…

FreeCOs

A FreeCO, as its names implies, eschews traditional fundraising (i.e., money) and opts instead to give away tokens for free (i.e., no money). This can be done via “airdrops,” where tokens are given away for free to wallet holders of other cryptocurrency, or “bounty campaigns,” where they are distributed to community members in exchange for “spreading the word” on social media and elsewhere.

One might wonder why would anyone want to do a FreeCO, especially since $10,000,000 (or more) worth of fat stacks via ICO looks a heck of a lot sweeter than a pile of nothing. Our response to that would be

¯\_(ツ)_/¯

Proponents of FreeCOs, on the other hand, cite the benefits of regulatory clarity, lots of free advertising and traction, and greater community involvement, which should translate into more interest in the token (and the project) from potential investors and token holders. Our response to that would be

¯\_(ツ)_/¯

Bottom line?

It’s still too early to say which of the different “fundraising acronyms” will end up being the most successful.

But it’s not too early to say that you, dear reader, have successfully learned their meanings, so you can go out and impress your friends and family with this newfound crypto knowledge, just like we did.

At least until you have no more friends and family because you bored all of them to death sharing your newfound crypto knowledge, just like we did.1

Welcome to the always interesting (and lonely) world of crypto!


1Prior to driving away all of your friends and family, please consider sharing this post using the buttons below and also follow us on Twitter!

Post Author: Grock

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.