The Securities and Exchange Commission (SEC) of the United States has announced the settlement of charges against two companies selling initial coin offerings (ICO). The response of this new asset class?
A major market collapse. Coming on the heels of the "dust up" created by the failure of the various "camps" to successfully collaborate and reach consensus on their latest efforts to improve the bitcoin cash (BCH) blockchain.
Combined with all of the other relative market weakness of the last several weeks, it was a significant one-two punch that sent the cryptosphere reeling.
As I have written elsewhere "in here," I am first and foremost an investor in this new asset class and everything else I do comes second to that. Put simply, if I had not first been an investor in the Steem blockchain, I would never have made the attempt to establish an "online presence." Don't have the time. Not interested ...
So ... As much for it representing a "journal entry" for my own reference in the future, as it is a Steem blockchain post, this morning I want to write down my thoughts and reactions to this "heavy" news heading into our great American holiday - Thanksgiving.
SEC Background and the News
So, who and / or what is the SEC?
"The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation."
"As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever."
A lot of detail follows these introductory statements, which my readers may wish to check out for themselves. Fundamentally, they claim then to exist for the "protection" of the American people.
How did they just "protect" us?
"The Securities and Exchange Commission today announced settled charges against two companies that sold digital tokens in initial coin offerings (ICOs). These are the Commission’s first cases imposing civil penalties solely for ICO securities offering registration violations. Both companies have agreed to return funds to harmed investors, register the tokens as securities, file periodic reports with the Commission, and pay penalties."
Sounds painful!
Much has been written of the whole initial coin offering market and what percentage of them are legitimate and what percentage of them are outright scams. We'll all have our own opinion on which of these two categories our personal investments into any of them fall.
The Market Response
While this news release mentions two ICOs, there are many other ICOs that are in "the cross-hairs" of the SEC. And this latest news clearly has them in "panic mode," as they scramble to raise the funds needed to either "pay up" or to defend themselves in court.
Given this new asset class is a market that I would classify as in its relative "infancy," I doubt there are very many ICOs that have the "deep pockets" to mount much of a challenge. I do not know any details on this. It is just my presumption. I welcome any input on this in the comments below.
Overall, the marketplace can be cold-heartedly and ruthlessly efficient. In our current time in human history, our technology allows the market's "decisions" to be executed with amazing speed. We have just experienced that and I doubt there is anyone still invested who has not been negatively impacted.
How many of these new "digital assets" will survive this latest threat to their existence? Time will tell ...
Volatility of the Digital Asset Class
The challenge for any of us who have chosen to invest our hard-earned money into this new asset class is the remarkable volatility of it. It is simply beyond dispute. And this is not new, but has been the case all along, since it was created in 2009 ...
Many are simply not prepared to handle it. Particularly those who have not invested wisely and ended up getting badly burned.
Setting my own feelings (yes, I have one or two ... 😉) aside, my steely resolve to “stay the course” has two primary components:
- This volatility is directly related to an asset class in its ”infancy.” It has a ways to go in proving itself. While a definite problem, it can also be viewed (as I try to do) as an opportunity. Both the potential risk and reward are high. As it matures, this volatility will decrease. But so will the “reward” …
- A lot of very smart people have put a great deal of time and money into realizing the full potential of this new asset class. While the ”masses” will run off in fear and absorb substantial losses, these people will stay the course and ultimately prevail through all of the inevitable challenges of “bringing it to life.”
Wishful thinking? Foolishly naive? Anything else negative? Again, we'll all have our own opinions ...
Fundamentals Reinforced
For this "old warhorse," this most recent experience has provided an opportunity to reexamine and reinforce in my mind the fundamentals of my original decision.
I wasn't going to invest any more money than I can reasonably survive going down to absolute zero. And I mean exactly that. Absolutely worthless!
I was going to invest in a number of these "digital assets," to spread the risk around as much as possible. Why? Well, among other things, I believe that some of these digital assets really will ultimately become absolutely worthless. And some will be valuable. And that I am not smart enough to know which is which ...
I would buy into the "dips" as opportunities to cost average down the price of any of them into which I have invested.
Overall, the concept of what blockchain technology represents has true value. To support investing into it in the first place. But clear, that as an entirely new creation, it will take time to "prove out" that value, with many ups and downs along the way.
The last point is life. No matter what anyone tells you, there is no "something for nothing." Never has been. Never will be. It takes work to persevere through the tough challenges and faith that it is worth doing, for the vision of what one knows can be, if they don't give up.
The toughest challenge is time. If there is any merit at all in the thought this asset class has genuine value, how long will it take to "prove out?" Whatever the answer, we can all rest assured market corrections like this one will set the timetable back ...
I genuinely hope, dear reader, in the face of a market correction like this one, you have your own very clearly defined answer to the question of why you are involved in an asset class like this one.
Closing
So ... At the end of all this, where does @roleerob stand? I remain fully invested and am even buying some "when there is blood in the streets." I have always been a long-term oriented investor, not a short-term speculator. Good thing. If not, I might be looking for a high place to jump off of right about now ...
I have elected to write all of this down on my first day off work in a while. So ... Obvious question to me is where does the Steem blockchain fall in light of this recent SEC ruling? I personally don't know. What I do know is STEEM is now worth about 50% of what it was a few short days ago ...
Does anyone know anything specific about STEEM and its standing before the SEC? I welcome input on this or any other feedback you may be inspired to provide.
Until "next time," all the best to you for a better tomorrow, as we all work together to build our Steem Community! 👍 😊
Respectfully, fellow Steemian @ roleerob
Posted using SteemPeak and “immutably enshrined in the blockchain” on Wednesday, 21 November 2018!
P.S. Need to write down the usual caveats in this post that I am not offering professional investment advice. I am not professionally trained nor do I possess any other credentials that would classify me as an investment adviser. This post just represents one man's opinion. You are free to do with it what you will ...
Interested to read more of my HODLer "series"? Great! Here you go:
- HODLers of the World Unite!
- HODLer Alert! Chicago Board Options Exchange (CBOE) and Bitcoin
- HODLer Alert! Goldman Sachs announces Megabucks Investment into the Cryptosphere!!
- HODLer Alert! Cryptosphere "invades" our Backyard!!