Dogecoin … you can’t make this up…

Great NYT story about a guy who made a digital coin as a “satirical mash-up” to poke fun at the Bitcoiners… But then it’s market value climbed to $400m before dropping to a mere $100m! You literally cannot make this up: read the whole thing.

During the South  Sea Bubble someone floated a company to “drain the Irish Bogs” and this is of a similar ilk.  No one can really believe this. I keep quoting Keynes beauty theory here because nothing else sums it up better:

“It is not a case of choosing those [faces] that, to the best of one’s judgment, are really the prettiest, nor even those that average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and higher degrees.” (Keynes, General Theory of Employment, Interest and Money, 1936).

The article contains a definition of an initial coin offering that is set to become a classic:

Imagine that a friend is building a casino and asks you to invest. In exchange, you get chips that can be used at the casino’s tables once it’s finished. Now imagine that the value of the chips isn’t fixed, and will instead fluctuate depending on the popularity of the casino, the number of other gamblers and the regulatory environment for casinos. Oh, and instead of a friend, imagine it’s a stranger on the internet who might be using a fake name, who might not actually know how to build a casino, and whom you probably can’t sue for fraud if he steals your money and uses it to buy a Porsche instead. That’s an I.C.O

You think it’s a joke but the Wall Street Journal found:

Union Square Ventures, Bessemer Venture Partners and Sequoia Capital all have reacted—using investor funds—by buying digital tokens directly or by putting money into hedge funds that buy tokens. Some venture investors, such as Nick Tomaino of Runa Capital, left their firms to set up crypto hedge funds.

“If you are in the business of investing in the future you probably have to change the style of investment to accommodate novel ideas and opportunities,” said Brad Burnham, managing partner at Union Square Ventures.

Union Square Ventures is a tier 1 NYC VC firm whose founders made hundreds of millions in South American telcos and social media. Maybe cash shells represent the apex of a bubble: Social Capital Hedosophia Holdings Corp. got $600m in an IPO to buy another company who wants to go public but doesn’t want the hassle of it (but then it will be public?).

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