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The problem with the bad apples analogy

October 27, 2017

I’ve heard regulators talk about ICO’s and saying that they don’t want a few bad apples to ruin it for everyone.  The trouble with this is that it doesn’t really describe how ICO’s work.

It turns out that there aren’t a “few bad apples”.  The majority or even the vast majority of ICO’s are scams.  So it’s not a matter of stopped a few bad apples.  Most of the apples are bad.  The hard part is that mixed in with the scams and terrible deals, there are a few good apples.  So if you have a regulatory regime that assumes that there are a few bad apples, it just won’t work.  Most of the apples are bad.

However, the difference now is that you can tell that there are some good apples.  One thing to remember with regulation is that each day, we all get bombarded by thousands of e-mails that are scams.  Just open up your spam folder.  It turns out that there is no regulatory system that protects you from scams, and what ends up happening is that people come up with common sense stuff to avoid spam scams, and we use AI (!!!!) to filter out the scams.

What’s different now is that instead of being 100% scams, we now have the technology to set things up that you can verify information and so it’s now only 90% scams.  Once you have a few good apples, that’s enough to build an industry.

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