“Absolute Scam,” Says Jimmy Wales of ICOs

There’s been plenty of hue and cry of late when it comes to cryptocurrency, and especially to the growing numbers of first-time cryptocurrencies entering the field. These initial coin offerings (ICOs) have the potential to see explosive gains or end catastrophically, and this variance is enough to have some governments looking seriously at whether or not these should even be allowed. One famous name in internet circles, Wikipedia founder Jimmy Wales, seems to be on this side, as noted in a recent interview with CNBC.

In the interview, Wales noted that ICOs were in many cases an “absolute scam”, and that investors should approach such offerings with more than the normal amount of caution. This comes despite the fact that ICOs so far have pulled in around $2.4 billion this year alone, and there’s still a little under three months left to the year.

Wales, however, suggested that the underlying element of many cryptocurrencies, the blockchain, would be around for “some time to come.”

Wales’ negative assessment was backed up by JPMorgan’s Jamie Dimon, who noted that any traders working with cryptocurrencies would be fired immediately, at least for now. Dimon noted “The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.” Dimon reportedly further referred to bitcoin itself as “…a fraud.”

Dimon and Wales alike here have forgotten a point that should have gone back to their college economics classes, as reiterated in a classic tune by the Barenaked Ladies. “It’s all about value.” Essentially, a thing has value if someone says it has value, and is willing to exchange that thing for another thing that has value to someone else. It is the basis of all trade, and has been for centuries. As long as someone puts value on bitcoin, dogecoin, litecoin or anything else, it will have a trading value.

Sure, it’s a safe bet that this is a bubble right now—the chances of “another bitcoin” emerging are slim to somewhere around nil—but as long as people are willing to buy the ticket, or the coin, and take the ride, neither bitcoin nor any other coin will lose its value.