David Siegel had a problem. However when Siegel pitched his company Twenty Thirty to capital raising firms, he was met with blank looks. Investors weren’t thinking about Pillar, and Siegel couldn’t get funding to construct it. After months of rejections, Siegel made the decision do something different: instead of phoning just another investor, he resolved to get help from future users. July On 15, he is going to sell 560 million “tokens” – digital products of payment which will be essential to use Pillar, once it’s ready – in exchange for ether, an up-and-coming cryptocurrency exchanged on public blockchain Ethereum. 4 million worthy of of Ethereum’s currency, ether – in 34 minutes.

“I couldn’t raise hardly any money for Twenty Thirty from traders, because they didn’t get what we were doing; we’ve regular people hammering our email about Pillar now,” Siegel says. Siegel’s fund-raising model is named Initial Coin Offering, or ICO – and you might have heard about it, as it is the latest big part of the frenzied world of cryptocurrencies. But tokens often grow into mini-currencies in their own right: these are traded for cryptocurrency or fiat on blockchain marketplaces, and the more successful their related task grows, the more valuable its tokens become. This powerful is undoubtedly appealing to significant amounts of speculation.

• Savings, deposit, checking, and brokerage accounts held with a bank or broker-dealer
• Recessions are periods when real GDP
• The yen has risen against the dollar
• A cost model

The question is: why? Ask people in the field plus they tend to reflect two main narratives, one optimistic, the other decidedly sceptical. The positive you are that ICOs are a new, smart way to fund projects that struggle to get VC’s support. Etienne Brunet, an investment executive at FinTech VC firm Illuminate Financial, factors to traders’ recent desire for private blockchains (members-only ledgers banking institutions and financial institutions are tinkering with) as the primary cause for ICOs.

“In 2016 it was very hard to raise funding unless you were doing private blockchains,” he says. “The main point is that now, for the first time ever, open-source initiatives can be profitable for traders,” he says. “Previously, these were relying upon donations plus they were inherently unprofitable – people would just do them for an ethical goal.

There is a stick-it-to-the-man undertone behind this take on ICO: the theory that smart, self-employed groups are raking in millions from the anarchic crypto-crowd to defend myself against blindsided VCs and bank-loving private blockchainers. And increasingly, ICOs are being used by companies outside of the blockchain field, such as messaging service Kik, which portrayed its upcoming ICO as a last-ditch try to compete with juggernauts such as Facebook.

Burke does not have any doubts where this leaves traditional investors. “The VC model is dead,” he says. “Over time people like us will stop being the main source of capital. VCs shall become more like auditors. Still, Burke admits that, while this is the direction he sees ICOs evolving over the next few months and years, the current state of affairs is definately not optimal. “Most of the projects that have launched ICOs are poorly designed and won’t scale,” he says. That brings us to the second narrative, which portrays the ICO frenzy as an enormous speculation game, or worse.

ICOs might have lowered obstacles to entrance, but most token sales are dominated by a small number of large traders -“whales” in crypto parlance – snarfing up virtually all the cake. 35 million ICO for Brave, a browser created by Mozilla co-founder Brendan Eich, only 130 people bought coins and half of them were purchased by just five purchasers -.

Although most projects specify – risibly- that tokens are “not for speculation”, token speculation reaches the core of ICO’s success at increasing so much money so quickly. Big crypto owners are tossing money at token sales hoping that coin value increase in the brief run, diversifying their crypto profile along the way. 200 million worth of bitcoin or ether, what should you do?

” Illuminate’s Brunet says. The side effect is that a huge number are going to entities which, aside from tokens and a project format – crypto parlance: “white paper” – have very little to offer. 350 million before being busted by the Indian law enforcement. The elephant in the room, has to do with financial regulation: with tokens being auctioned, traded, and speculated on as if these were securities, as long as they are considered by us and regulate them as securities?

In most countries, the answer would be no: if something is not formally a security, it won’t be treated therefore. Whether that applies to tokens- bizarre entities that have sort of intrinsic value (as theoretical payment models) but are also being flipped around like shares, is anybody’s think. Right now, the US Exchange and Securities Percentage has been silent on the matter, explains Peter Van Valkenburgh, a researcher at blockchain-focussed think container Coin Center.