Lecture 7 Flashcards

1
Q

What is an ICO?

A

An unregulated means by which funds are raised for a new cryptocurrency venture

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2
Q

Are ICO’s more commonly tokens or coins?

A

Tokens

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3
Q

What are the 4 types of tokens that seem to circulate?

A
  1. Payment tokens = cryptocurrencies = coins
  2. Utility tokens - give access to product or service
  3. Security tokens for underlying assets (eg gold)
  4. NFT
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4
Q

What is Ethereum’s token template?

A

ERC-20

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5
Q

What is ERC-20?

A

Universal language all tokens on Ethereum uses

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6
Q

How are ERC-20 tokens created?

A

Smart-contracts

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7
Q

What are some examples of precursors of tokens?

A
  • Games - valuable in game tokens bought for real money
  • sports arenas - sell personal seat licence to season ticket holders (reserves seat)
  • royal albert hall - can purchase seats indefinitely
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8
Q

What does Filecoin do?

A

Provides decentralized storage using a global network of computers with available space

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9
Q

How do you earn tokens with Filecoin?

A

Storage nodes bid to host files and minors earn by validating files via “proof of space” algorithm

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10
Q

What is the payment you receive from Filecoin?

A

Filecoin token (FIL)

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11
Q

Why would a company use tokens rather than currency?

A
  • incentivise to recruit new users
  • allows customers to share in the value created
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12
Q

What is the allocation of Filecoin tokens?

A
  • 70% to minors
  • 15% to protocol labs
  • 10% to investors
  • 5% to Filecoin foundation
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13
Q

How are ICO scams advertised?

A

“get rich quick” scheme

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14
Q

What are some examples of red flags that indicate ICO’s?

A
  1. claims of high guaranteed returns
  2. Celeb endorsements
  3. claims of “SEC” complaints
  4. investing with credit cards
  5. pump and dump scams
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15
Q

What are the 2 major regularity issues with ICO’s?

A
  1. are ICO’s covered by securities laws?
  2. What are the tax consequenses?
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16
Q

Why is it important that ICO’s are covered by the securities laws?

A
  • disclosure - cost of filing/ release of competitive info
  • Potential liability